Due Diligence and Valuation Services for an Industrials Investor

A regional industrials investor aimed to evaluate multiple acquisition opportunities in Saudi Arabia’s fast-growing industrial manufacturing ecosystem. Despite strong interest, the investor lacked structured tools to assess financial transparency, asset conditions, compliance status, and valuation benchmarks for potential targets. They engaged our team to conduct a comprehensive due diligence and valuation exercise that incorporated Saudi-specific requirements, industrial regulations, and long-term growth trends.

We delivered a rigorous due diligence and valuation solution covering financial, operational, technical, commercial, and regulatory dimensions. Our valuation models included DCF analysis, market comparables, asset-based valuation, and scenario sensitivity testing. We also assessed regulatory compliance, workforce readiness, technology maturity, and long-term sustainability. The analysis incorporated demand forecasts aligned with NIDLP industrialization plans, allowing the investor to understand true asset value and associated risks before proceeding with any acquisition.

Our due diligence methodology included:

• Financial statement audits, normalizing EBITDA, verifying revenue sources, and analyzing working capital cycles.
• Asset inspections, ensuring machinery, inventory, and facilities met Saudi industrial regulatory standards.
• Regulatory compliance review, including local content requirements, environmental approvals, and licensing.
• Commercial analysis, reviewing market position, customer concentration, and tender pipelines.
• Valuation triangulation, combining DCF, comparables, and asset-based approaches.
• Risk classification, ranking findings based on severity, likelihood, and impact on valuation.

We advised the investor to:

• Prioritize targets with strong operational foundations, reducing modernization costs by up to 20%.
• Negotiate valuation adjustments for companies requiring major equipment upgrades or compliance fixes.
• Implement post-acquisition governance frameworks to strengthen financial reporting reliability.
• Adopt a structured integration timeline, addressing remediation areas within the first 12 months.
• Use earn-out agreements to balance valuation uncertainty and align incentives.
• Focus on industrial clusters benefiting from NIDLP incentives, increasing long-term profitability.

Our due diligence identified valuation discrepancies totaling SAR 18 million, preventing overpayment. EBITDA normalization improved pricing accuracy by 24%, while asset condition assessments highlighted modernization risks early. Regulatory gap analysis prevented potential non-compliance penalties worth SAR 3–4 million. The valuation framework improved investment return projections from 13% to 20% IRR. Overall, the engagement allowed the investor to proceed with confidence, secure optimal pricing, and minimize acquisition risks.