How Corporate Advisory Helps Melbourne Psychology & Counselling Business: Case Study In Melbourne

Melbourne Client Profile

Online psychology and counselling service business

Background

The business operates nationwide across Australia, offering primarily one-on-one peer-to-peer counselling services. With six years of experience in the industry, it is a fully online service designed to cater to clients anywhere in Australia. The company was founded by a group of healthcare professionals seeking to expand their offerings to include psychology counselling.

Purpose

Primary Purpose:Bring additional shareholders on board and facilitate the transfer of shares among existing stakeholders.

Secondary Purpose: Determine the business's value. While the business has experienced significant growth and success, it has never been assigned a formal measurable value.

The Corporate Advisory Challenges

The business serves a niche market, focusing on Australian Defence Force veterans (Army, Navy, Air Force, and supplementary forces). Revenue Breakdown: 50% of revenue comes from a corporate client. The contract with this corporate client is set to expire in two years, and there are concerns it will not be renewed. Issues include poor service quality and low customer retention from the corporate client. Additionally, there is a reputational risk linked to the corporate client's declining service standards and decreasing interest from key contacts within the client's organisation.

Action Plan

A comprehensive assessment was conducted during the valuation process, focusing on four key areas:

1. • Business Operations: Evaluation of staff, processes, intellectual properties (IP), and company structure.
   • Financial Assessment: Review of revenue, earnings, assets, and balance sheet.
   • Market Value: Analysis of industry standards for similar-sized businesses.
   • Business Value: Determining the business's current market position and its potential value.

2. Market Research:

   • The current valuation stands at $21.5M, with the potential to increase to $32M if identified issues are addressed.
   • Risks identified relating to over-reliance on a single corporate client (50% of revenue).
   • The risk of losing the corporate client as their service delivery declines.

Corporate Advisory Results

The advisory team successfully addressed the challenges within the stipulated timeframe. Key outcomes included:

• Significant improvements in the corporate client's service quality.
• Increased the number of counsellors from 70 to 120.
• Successfully expanded the customer base beyond the veteran niche.
• Streamlined operations, resulting in better service delivery.

Next Steps

Follow-up valuation and revaluation of the company.

Impact

The merger improved services provided to the corporate client, reducing risk for the client. The market repositioning strategy successfully attracted a broader customer base, expanding beyond the niche veteran market.

Corporate Advisory Services Provided

• Business Valuation
• Valuation optimisation strategy
• Preparation for Sale