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ELECTRONICS INDUSTRY:
Divestiture Planning and Execution |
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Client: |
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A
$100 million publicly-listed, international high-tech electronics
manufacturer with U.S. and U.K. headquarters and operations. |
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Problem: |
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The
market rapidly moved from preferring technology-innovative products
to low-priced commodities. Influxes of cut-rate Asian supply exacerbated
this trend. The firm attempted, but could not justify, Pac-rim operations.
The need and timing was ripe to sell off the U.K. subsidiary. |
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Approach: |
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The parent firm realized a successful sale of its subsidiary, driving
up valuation and favorable contract terms by negotiating with the
two largest competitors. Total time from the Board authorization to
sell until the actual close was 6 months. Customers stayed with the
subsidiary and realized expanded products and services. After the
close, final adjustments to the sales price, via warranties/representations
and holdback clauses, were minimum. The parent firm realized a substantial
cash inflow and profit on the sale. It was timely: less than 12 months
later the overall market conditions deteriorated rapidly, and the
parent would not have realized the same profit or may not have been
able to sell the firm at all had it waited. |
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Results: |
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TC
professionals approached this project with a clear mission: To secure
the sale of the U.K. subsidiary in the quickest, most profitable and
fairest manner possible, beginning with determining the market for
the sale and ending with transitioning the subsidiary to the new buyer.
Key steps included:
Engage and negotiate with investment bankers
Perform retrospective and prospective business plans and financial
forecasted P&L and balance sheet
Create a comprehensive 'book' to market the subsidiary
Create and implement an active cost containment and cash conservation
plan
Develop and execute a transition communications plan
Create and execute plans to bring new R&D products to market
ahead of schedule
De-couple subsidiary resources from HQ and ready them for the
new buyer
Perform financial and operational due diligence
Guide and review legal, tax, and audit activities in the divestiture
process
Reach consensus in final negotiations and contract language
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