Navigating a new era of opportunity

  How are these shifts in sentiment impacting 
 WA private businesses?  

RSM Australia, one of WA’s leading providers of accounting, tax, and corporate advisory services has seen a clear shift in the mid-market. Multiple RSM clients, who historically have been weighted towards the mining services sector, have been seeking to diversify their revenue streams, with the defence sector being a natural fit for many. Over the past year, our defence team has been actively engaged across a number of transactions and advisory mandates for companies delivering critical capability and services into the defence supply chain. 

Our Perth Corporate Finance team has had a particularly busy 12-months.

Outlined below is a selection of the transactions RSM has advised on:

1. Sale of a local defence contractor to an ASX-listed defence contractor

RSM acted as sell-side corporate advisor to a specialist fuelling infrastructure company who had been approached by an ASX-listed company. RSM’s involvement included: 

• Deal structuring advice
• Net working capital analysis and negotiation
• Share purchase agreement advisory
• Completion account procedures

2. Sale of a local defence contractor to a private equity backed company 

RSM acted as the lead advisor in the sale of a Western Australian based provider of defence and maritime emergency response services to a private equity backed platform company seeking to enter the defence sector. Our client held a DISP membership, which we were successfully able to retain during the transaction. Additionally, there were FIRB considerations given the ultimate parent was from an overseas jurisdiction.

3. Capital raising and enhanced financial oversight

RSM is currently working with a Test Inspection Compliance and Certification (‘TICC’) company that has experienced significant growth, partly as a result in the uptick of defence work that is being won. Defence contracts can drive a shift from a ‘high-mix, low-volume’ to a ‘low-mix, high-volume’ operating model – a transition we’ve observed with our client, significantly affecting the business’s working capital profile. We are helping our client plan for, and manage this.

4. Business valuation of a defence focused consultancy 

RSM performed an APES 225 business valuation of a workplace health and safety consultancy. The business services clients from multiple sectors, however defence is the fastest growing and is core to its growth plans. 

Defence contracts can be secure and long term in nature which typically support a higher valuation multiple. However, we have seen instances where defence contractors become over reliant on one key customer (usually a Prime), which can have a negative impact on the business specific risk discount and consequently reduce the business valuation. 

5. Corporate advisory services to a public company

In addition to supporting private SME’s, RSM has also been engaged by a defence Prime to perform corporate advisory services. Given RSM’s positioning in the market, it is well placed to support businesses of all shapes and sizes.