Business Plan Reviewed; 18 of 22 Key Issues Occur as Forecasted; Mill Sells within 2 Percent of Appraisal
Client: Global Lending Institutions and Investment Bank; Steel Mini-Mill
Challenge: Determine Feasibility and Value of Newly Retrofitted Steel Mini-Mill; Provide Crisis Consulting; Sell Business Enterprise
A global investment bank and two of the world's largest lending institutions single-sourced AccuVal to examine the feasibility of a steel mini-mill designed to produce rebar and special bar quality products for customers in the southeastern United States. Also requested was a valuation of the business enterprise and underlying machinery, inventory and real estate.
The project was complicated because the mill had just finished a complete retrofit designed to increase melt shop capacity and rolling mill quality and productivity. There was no production history and the company had never sold the new product slate to the intended customer base. AccuVal had four weeks to complete its work before the mill commenced with operations.
AccuVal Approach
With only a single day's notice, AccuVal professionals converged on the mill to conduct a very detailed analysis of the newly installed production equipment and scour management's projections and underlying assumptions. Every facet of the business was analyzed, including the quality of the workforce; availability of raw materials; capacity and production projections; product mix; inventory flow; capital expenditures and maintenance budgets; equipment reliability; proposed customer base and competition.
Bottom Line: AccuVal Accurately Identified All Key Business Issues; Sold Mill for Appraised Value
AccuVal's empowered decision-makers with the necessary information to make sound and profitable business decisions. In this case AccuVal clearly saw that the transaction required significant restructuring, citing 22 specific issues that would affect the viability of operations. Opinions were supported by extensive documentation. However, despite the magnitude of the concerns raised by AccuVal, the deal was funded.
Within six months, 18 of the 22 key issues occurred as forecasted and hotly contested production estimates were accurate to within one-half ton per hour. At that time, AccuVal was again asked to review the current state of the operations and make recommendations that would attract investment from strategic purchasers. Again, the clients chose another direction.
Six months later the company declared bankruptcy and LiquiTec, AccuVal's sister company, was engaged to provide crisis management and implement the strategic plan previously recommended by AccuVal . Within three weeks, three steel producers submitted competitive bids in excess of $30M, a proposed purchase price two percent higher than the enterprise value originally estimated by AccuVal. The transaction closed in two months.
The AccuVal AdVantage™
Responsiveness. In-depth industry knowledge. Practical operational expertise. Sound advice under pressure. Candid and straightforward communications. Appraisals that hold up when tested. Practical solutions. Integrated asset management and disposition capabilities. Ability to deliver results. That's The AccuVal AdVantage™ at work.
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