Interested to know anyone who has acquired a scaffold rental company specialising in fall protection guardrails

August 28, 2025

by a searcher from INSEAD in Melbourne VIC, Australia

Hello, pre LOI would be interested to hear approach on valuation for NON manufacturing business that rents high quality durable aluminium guardrailing stock which requires little capex and maintenance (assume 10 yr depreciation schedule), and generates all revenue from rental, install and collect, some vehicles which will be accounted for. Capex calculated will be for expanding stock and business in forecast. Business valuation will be based on FCF multiple and will pay for Stock & working capital separately, issue here is Stock is 70% of the total consideration. Still in Pre DD phase. The cashflow multiple is looking to be 20% which is such a low ratio against the stock value which optically is not one I have come across. ( getting an independent stock valuer in DD phase if we get there). Wondering anyone who has experience in this situation/ or scaffold rental. Would like thoughts on approach that is valid and fair for business and stock, seller can take it or leave it. Also learning to set up one of these businesses takes significant investment in the stock. thanks!

Reply by a searcher
from University of Pennsylvania in Los Angeles, CA, USA

Why pay for the stock + a cash flow multiple? I would say you're doubling up on value. The Cash Flow multiple is 1 way to value the business. The value of the stock (i.e. replacement cost) is a 2nd. If there's a big discrepancy between 1/2 - I think you should ask yourself why - are they not charging enough? Is utilization low (i.e. stock sits in inventory rather than on job sites, etc.)?

Reply by a searcher
from Columbia University in Melbourne VIC, Australia

Hey Fei Fei - scaff is a difficult game if you are in Kiwkstage since lots doing it. Again capex is the barrier to entry, if it is just guardrail thats diff. When purchasing whether it is comprised stock, goodwill, or whatever in between doesn't really matter just comes down to what multiple you can pay on cash flow as you have alluded to. Depends really on competitive tension and whether it is a reasonable return for you but 5x cash flow seems high. Is this your multiple of pre-tax CF or post tax FCF?

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