Market and Financial Viability Assessment for the Education Sector

THE CLIENT

Established in the mid-’80s, The Group started its operations in Oil & Gas sector. Over the years, The Group ventured into infrastructure, biotechnology, sustainable energy, and IT-enabled services. The Group is currently managed by a second generation of entrepreneurs with a vision to expand into multiple other industries worldwide.

BUSINESS NEED

As part of The Group’s vision, Management considered an opportunity to venture into the education sector in United Arab Emirates. With support from the local government, The Group wished to establish an international curriculum school with full student boarding potential. Management required further information regarding the education sector and detailed analysis on supply and demand and other financial aspects before a decision could be made.

THE ENGAGEMENT

Management appointed Affility Consulting to conduct a Market Research and Needs Assessment to assess the market and financial viability of opening a new school. The engagement Scope of Work included the following:

  • Demand for international curriculum (current & future);
  • Need for full-boarding facility in the Emirate of Dubai and nearby Emirates;
  • Current competitors;
  • Demand-Supply gap;
  • Proposed fee structure (for tuition, hostel, and transportation);
  • Financial viability, including ROI, IRR, and pay-back period.

THE RESULT

Based on the numerous factors evaluated, including projected population increases, percentage of school-going population expected over the years, demand for the international curriculum among the school-going population, and anticipated competitors over the next 2-3 years, we were able to deduce the following:

  1. We identified only a narrow gap in demand and supply in the Emirate;
  2. The gap was fast closing due to new schools expected to open;
  3. The project’s financial KPIs, including EBITDA, net profit, ROI, and pay-back period, were considerably below the accepted value.

CONCLUSION

Based on our assessment of the market and the financial parameters, we recommended that the client not proceed with the project, saving them AED 60.1 million in investments without potential returns.