Engineering Valuations

Engineering Valuations

Services provided by engineering consultancy firms include building consulting and inspection, civil engineering, electrical and electronic engineering, geo technical engineering, marine engineering, and mining engineering.  

Often engineering consultants depend on certain projects and so the valuation requires a review of those projects, including assessing the dependency and risk of larger projects and clients, the size and length of contracts, the period held and the probability of renewal and or further related work. Also important is to review and analyze current orders, quotations and tenders and the outlook for projects. 

Another key issue is assessing the industries within which the consultancy operates, for example mining, oil and gas, or road infrastructure, and the exposed risk and outlook for those industries. 

A key component in preparing valuation for a small to medium engineering business is determining a market salary for the owner consultant(s). This is particularly relevant when valuing a smaller engineering business, where adjusting for a market salary may eliminate any profits available to an investor. Owner compensation is a key issue in court cases, see Corbon & Klousner (2015) and Scott & Scott (2006). 

Experience

Engineering consultancy valuation engagements have included: 

• The valuation of a national science, engineering, and technology consulting services business which also provides computer simulation software for applications including infrastructure design. Valuation prepared for the Australian Tax Office in relation to a restructure between related parties. 

• The valuation of a national engineering consultancy business providing electrical and project management services to the mining industry; expert report prepared for the trustee of the bankrupt estate WA. 

• The valuation of a civil engineering consultancy business providing geotechnical and geosynthetic services; valuation required for the potential acquisition of a shareholder’s stake. 

• The valuation of an engineering consultancy business operating primarily within road infrastructure. An expert valuation report was prepared for a family dispute for the Federal Circuit Court NSW. 
• The valuation of a national maritime-orientated engineering and consulting service business providing marine and electrical engineering, naval architecture, systems engineering and risk management service to clients including commonwealth departments. Report prepared for the Australian Tax Office because of a transfer of ownership between related parties.