Steel Asset & Business Valuation Services

Steel Company Valuation Support

Valuation determines the economic value of a business asset. Valuation work is typically used to support clients who wish either to purchase or sell a business or as a part of insurance or due diligence investigations.

The MCI valuation services team has a great deal of specialist experience, particularly in the valuation of steel industry assets, and draws on the wider range of expertise within the organisation. Consideration is given to:

• The scope of the business or assets to be valued
• The valuation methodology to be adopted (discounted cash flow - DCF, asset or earnings-based valuations using EBITDA or other multiples, with data from precedent transactions)
• Client-specific assumptions - for example is a fire sale involved?
• The location, age, condition and completeness of the relevant assets
• A general assessment of the technology and its appropriateness for the intended use
• Maintenance records, where available — deferred maintenance is one of the six issues covered in our podcast on red flags in steel mill due diligence.

Where applicable, adjustments are made for:

• Costs to complete works
• Renovation and restart costs
• The sustainability of the asset in question — including closure and remediation costs where long-term viability is in doubt; our analysis of zombie steel mills and the true cost of delayed closure provides relevant background
• Relocation costs, if relevant
• Business liabilities.

Asset valuation assignments are typically conducted in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation Standards. The MCI process for conducting company valuations consolidates information gathered from technical records and site visits as well as a proprietary 'in-house' database to derive a baseline value of the assets under consideration. Adjustments are then made taking into account the age and condition of the equipment. Where earnings-based multiples or precedent transaction data are used, our analysis of 30 years of steel M&A transactions and acquisition costs provides relevant sector benchmarks.

Depending on the nature of the assignment, the scope of work may be expanded to include a review (from a technical viewpoint) of:

• Raw materials supply agreements
• Market off-take agreements
• Equipment supply and Engineering, Procurement and Construction (EPC) contracts
• Utility supply contracts
• Operation and management contracts
• Human resources issues.

Reports follow a structured format and typically include an introduction to the assignment, an outline of the valuation approach or approaches to be adopted, a description of the metal processing assets, details of the assumptions made, value calculations and a valuation statement. Written valuation reports are issued either as a stand-alone technical document or as part of a portfolio together with legal, commercial and financial documents.

Recent experience of our expert team includes involvement in the following valuations — a selection of which are also documented in our case studies. Valuation assignments are counted separately in our project experience record.

Management consulting
services provided by

For further information, please contact info@steelonthenet.com.
For a no-obligation discussion you may also call us on +44 775 149 0885. Thank you.