Valuation of two sister environmental consulting and engineering companies
Summary
ST strategy valued both companies and proposed how to allocate value between them in a joint sale.
Increasingly demanding environmental regulation means companies and public bodies need specialist advice on licences, installation compliance and environmental management. It is an attractive sector for groups growing through acquisitions.
EnviroConsult* operates under a common brand through two companies: an environmental consultancy and an engineering firm specialised in environmental licences, installation compliance and technical projects.
ST strategy valued both companies, separately and together, to prepare a potential sale.
Environmental consulting
Valuation
Value allocation
The full story
Opportunity
The partners were considering a corporate transaction and needed to know the value of the business. Since both companies shared brand, clients and team but had different corporate structures, it was also necessary to determine how the price should be split between them.
Recommendations
Based on the analysis carried out by ST strategy, we worked on:
- Financial analysis: Review of each company’s historical results and growth prospects.
- Valuation: Approximation of the value of each company and of the whole using several methods, weighted according to the business’s growth profile.
- Value allocation: Proposed split of value between the two companies in a joint sale, based on their contribution to the business.
- Sale strategy: Analysis of selling both companies together or separately, concluding that a joint transaction maximises value.
* The confidentiality of our clients is a priority of the company. Although we have changed their names, the information is real.