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Based in Melbourne (Victoria) we deliver business valuations all over Australia using expert business valuers and resources that allow us to work remotely.

We have completed:

Contact Us

L3/162 Collins St, Melbourne, 3000

0421 069 717

m.williams@exitvalue.com.au 

Industrial Equipment Business Valuation

Industrial equipment is a diverse sector, and our business valuation experience includes business in sectors such as:​

  • Food processing equipment manufacture

  • Used machinery and equipment sales

  • Farm machinery retail

  • Machine tool and CNC machine retail

  • Lighting equipment retail

  • Pump and process equipment manufacture and retail

Some of these sectors have seen decline in line with the manufacturing sector, however refocus on the mining, export and advanced manufacturing sectors has meant many of these businesses have continued to grow and increase profitability.  The sale of services has become a key ingredient to the success of some of these businesses.

 

Despite these opportunities, typical issues that we find that impact business valuations include:

  • High cost of staff and staff retention

  • Access to suitable marketing and sales skills

  • Capital cost of some manufacturing equipment

  • Geographical focus in some areas (especially regionally based businesses)

  • Access and cost of finance, especially working capital.

We have found a wide disparity in valuations where some businesses lack management reporting and systems development, whilst other businesses have gone on to grow businesses that exceed $10m - $20m in revenue at reasonable EBITDA margins.

Key Industry Statistics

According to IBISWorld, key statistics for the industries include:

 

We have collated industry performance statistics based on ABS data and detailed them in a whitepaper, which can be downloaded from the link below.

What Makes a Business Highly Valuable?
SME Performance Whitepaper

Key Drivers of Engineering Business Valuations

The valuation of an industrial equipment business is typically driven by key factors below that influence profits and hence business valuations. 

These include:

  • Market size and level of repeat clients

  • Diversity of client base and reliance on key clients

  • Cost of operations and scale

  • Condition of assets
  • Use of technology to automate processes
  • Level of automated reporting and integration with key management functions.
  • Staff structure and documentation of roles and KPI's
  • Certification to relevant quality, OH&S and environmental standards.

EBITDA Margins range from less than 10%to as high as 30%, depending on the level of market differentiation, industry competition, technology and automation and staff productivity.

EBITDA Multiples for most SME-sized engineering companies will vary considerably across sub-sectors, and will be heavily influenced by size and scale.  Typical EBITDA Multiple ranges we have observed are:

  • Revenue of $1m - $10m: 2.0x - 3.5x

  • Revenue of $10m - $20m: 3.0x - 4.5x

  • Revenue greater than $20m: 4.5x - 6.0x

Our Business Valuation Experience

Our industrial equipment business valuation experience has included including valuations for:

  • Food equipment engineering and manufacture

  • Tractor and farm machinery retail in regional areas of Victoria (Ballarat and Gippsland)

  • Manufacture of metal fencing posts

  • Engineered components manufacture to transport and construction sector

  • Industrial and residential lighting equipment wholesale and retail

  • CNC equipment retail

  • Process industry measurement equipment retail