--- title: How the market pays for strategic value [case study] description: "We recently sold an industrial services business. It was an owner-operated family business, less than 10 years old, with roughly $5 million annual turnover. It had been built with a very specific focus on particular markets and had very strong customer relationships. One of the parties interested in this business was a larger conglomerate industrial services business with outside investors and equity." image: https://blog.jpabusiness.com.au/hubfs/1.%20Images/1.%20Stock%20Images/accountant-accounting-adviser-advisor-159804.jpg --- 15 November 2016 # How the market pays for strategic value [case study] WRITTEN BYJames Price | JPAbusiness ![What is strategic value definition.png](https://blog.jpabusiness.com.au/hs-fs/hubfs/Other_Images/Blog_Images/What%20is%20strategic%20value%20definition.png?width=100&height=90&name=What%20is%20strategic%20value%20definition.png)We recently **sold an industrial services business**. It was an owner-operated family business, less than 10 years old, with roughly $5 million annual turnover. It had been built with a very specific focus on particular markets and had very strong customer relationships. One of the parties interested in this business was a larger conglomerate industrial services business with outside investors and equity. It was looking to build a portfolio of like businesses across various service propositions in the industrial and environmental sector, with a view to potentially listing the business down the track. The business we sold had a fair market value based on traditional market multiples. The price eventually paid by the large conglomerate, however, included** a substantial increment over that fair market value**.  ### **Complementarity – when the stars align!** The reason it paid above market value was that the purchaser saw the business as operating in markets it didn’t operate in, but needed to get a foothold in to develop its business model across those service areas. There was what I call a **‘time and place opportunity’ **because the acquirer needed something and this business provided it. The purchaser believed the business was worth a lot more to them than it might have been worth to others. In this case the stars really lined up for the vendor and purchaser. When this happens we find the market might **pay 10, 15, 20 and up to 30% above** what business valuers like us would consider **[fair market value](https://blog.jpabusiness.com.au/blog/how-to-assess-business-value-blog)**. ### **Plus a little X factor** In the case of the industrial services company, above, the buyers included equity investors who you would assume would be very analytical and fact-based in their decision making. The decision process was fact based, however **I believe there was an element of intangible drive to do the deal **because of the** [strategic value](https://blog.jpabusiness.com.au/blog/10-ways-to-drive-strategic-value-checklist)**. They wanted it, so they paid what was necessary to get it, and in doing so also included some countervailing deal terms to protect their risk on the investment. Beauty, as they say, is definitely in the eye of the beholder. If you would like support and advice to assess a potential business purchase opportunity, or obtain a valuation on your own business, [contact the business advisory team at JPAbusiness](https://landing.jpabusiness.com.au/contactus) for a confidential, obligation-free discussion.   ![Strategic value in a business sale cover 2022-1](https://blog.jpabusiness.com.au/hubfs/1.%20Images/Updated%20document%20cover%20images%202022/Strategic%20value%20in%20a%20business%20sale%20cover%202022-1.png) Free ebook Strategic value in a business sale Strategic value is the amount a purchaser is willing to pay for a business above what a valuer has determined is 'fair market value'. It can be influenced by a vendor's management decisions long before sale time. [Learn more ](https://blog.jpabusiness.com.au/operator/strategic-value-in-a-business-sale-what-is-it-why-pay-for-it-and-how-do-i-create-it-0) Share this Article Share this blog post on Twitter [mailto:?subject=Share%20this%20blog%20post&body=https://blog.jpabusiness.com.au/blog/how-the-market-pays-for-strategic-value-case-study](mailto:?subject=Share%20this%20blog%20post&body=https://blog.jpabusiness.com.au/blog/how-the-market-pays-for-strategic-value-case-study) Copied to clipboard Topics - [business value ](https://blog.jpabusiness.com.au/blog/topic/business-value) - [selling your business ](https://blog.jpabusiness.com.au/blog/topic/selling-your-business) - [exiting your business ](https://blog.jpabusiness.com.au/blog/topic/exiting-your-business) About James Price | JPAbusiness James Price has over 30 years’ experience in providing strategic, commercial and valuation advice to Australian and international business clients. James’ blogs provide business advice for aspiring and current small to mid-sized business owners, operators and managers. #### Related Blog Posts ### [How to assess business value](https://blog.jpabusiness.com.au/blog/how-to-assess-business-value-blog) Business Maintainable Earnings (or Sustainable Earnings) is often the way the market values... [Read more ](https://blog.jpabusiness.com.au/blog/how-to-assess-business-value-blog) ### [Marketing a business for sale tips [infographic]](https://blog.jpabusiness.com.au/blog/marketing-a-business-for-sale-tips-infographic) Marketing businesses for sale is not like selling a car, house, building or boat. Simply listing... [Read more ](https://blog.jpabusiness.com.au/blog/marketing-a-business-for-sale-tips-infographic) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "James Price | JPAbusiness", "url" : "https://blog.jpabusiness.com.au/blog/author/james-price-jpabusiness" }, "dateModified" : "2025-03-24T04:16:48.323Z", "datePublished" : "2016-11-15T16:59:00.000Z", "headline" : "How the market pays for strategic value [case study]", "image" : [ "https://blog.jpabusiness.com.au/hubfs/1.%20Images/1.%20Stock%20Images/accountant-accounting-adviser-advisor-159804.jpg" ], "mainEntityOfPage" : { "@id" : "https://blog.jpabusiness.com.au/blog/how-the-market-pays-for-strategic-value-case-study", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.jpabusiness.com.au/hubfs/JPAbusiness-logo.svg" }, "name" : "JPAbusiness Pty Ltd" } } ```