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| Case Study 7 |
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- OBJECTIVE:
Due diligence with valuations of an offshore construction and maintenance company
- BRIEF:
A leading private equity player is considering picking up a stake through a private route of investment in an integrated service provider to the Oil & gas industry. The company established in 1988 is owned by a group based out of India.
- ACTION:
GSIC (Global Strategy & Investment Consulting) a division of India's largest multi-interest consulting firm was made responsible to undergo the research assignment.
- APPROACH:
The assignment was based on secondary research and financial modeling. A detailed industry and company insight had to be gathered along with discounting various factors in the valuations.
- REQUISITES: The client required the following:
- Company Overview
- Viability of the business model
- Industry Potential
- Competitive Landscape
- Valuation Target
- METHODOLOGY:
The task was initiated with a comprehensive data-mining exercise where the initial time was utilized in forming a sound perspective with respect to the industry and the company's potential.
- OUTCOME: The overall outcome of the project entailed the following:
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Deliverables - A comprehensive report which entailed:
- Business overview
- Industry overview
- International prespective
- Industry potential in India
- DCF Valuation
- Peer-set Valuation
- Future Outlook
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Result - The study stated that only 18 per cent of India's total offshore area has been explored and given the boom in the oil & gas industry, HAL was well positioned to expand its services to tap the demands of the Indian operations in the future. Research also suggested that the potential markets were North Sea, Middle East, South East Asia and Europe.
- POST-MORTEM REVIEW:
Interestingly, the research found a number of risk factors involved with the business model. These risks were primarily contractual in nature like renewal of licenses due to administrative hurdles, length of the contract etc. Although the due diligence suggested a huge potential untapped, there were a number of factors to consider by the client which were clearly elaborated in the report.
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