Case Study

Engineering and construction corporate finance valuation

Brief

A renowned and rapidly expanding international engineering and construction company were seeking help to carry out a valuation for gaining corporate finance. As a result, Hickman Shearer were engaged by a leading UK asset based lender to carry out the valuation. This was for a precast concrete manufacturing facility which was to be used as security against a term loan for one of the world’s largest engineering groups.

Work

The complexity of the project included assessing the assets within one of the most advanced facilities of its kind in Europe. Focused on the highly automated concrete manufacturing equipment, the initial step was to complete a detailed site visit. This gave the team a much deeper understanding of the role of the individual assets within the overall context of the process flow.

Building upon this knowledge, we took it to the next level by considering the value of the equipment in place on an ongoing operational basis. This was alongside assessment of the ex situ value of the assets based on a sale from site, while factoring in the estimated costs involved in carrying out the project.

The machinery and equipment was valued on a cost and market approach basis, and our report included detailed methodology, residual value analysis and estimated depreciation profiles to support the lender’s decision.

Outcome

The detailed and comprehensive valuation enabled the asset based lender to provide a term loan against the production machinery. The result of which was the business could use this finance to reinvest and enhance their state of the art facility.

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