Ljubljana, Slovenia, EU

Case study: Preparing the niche industrial company for sale


A highly specialized company referred to Consilue for guidance in the transaction or M&A process. The company holds one of the positions of a well-recognized global niche industry leaders. Different owners’ expectations resulted in a conflict of interests and a decision to form a consortium of sellers and sell the company to a new owner.

Addressing the pain:

After the in-depth interview with the client a preliminary valuation has been prepared. The client expected the transaction would have taken place in a price range higher than one estimated in the preliminary valuation. The main reason for the discrepancy was related to the cost of capital.

The probability of the successful transaction has thus been fairly modest.

According to the preliminary findings of the transaction advisory services, the client has been advised to prolong the planned timeframe of the M&A process in order to effectively prepare the company for sale.

So far the company already did some important steps forward in their strategy and business performance. For example, they have been focusing on the operations that truly add value to the client, they have developed a strategic alliance with their suppliers in order to provide the sufficient quality control procedures, they have set up an advanced planning system in order to efficiently schedule operations and thus maintain operational gaps and free capacities. However they haven’t yet approached the most critical issues i.e. the cost of capital.

Impacting the cost of capital namely by the following activities:

  • specific risk premium (addressing the key person and organisational risk) and
  • decreasing the beta (β) by addressing the seasonality effect of their operations

Rather than giving the client some vague recommendations, Consilue has prepared a well-structured long-term plan that has taken into account all measures required for the company in order that the owners would get their maximum outcome.


The client will most definitely be able to achieve the expected price range, once the company minimizes the cost of capital, assuming all other things being the same. Decreasing the cost of capital to boost the value of a company is easier and less risky way than impacting the profitability.

Client’s testimonial:

One should have in mind exit strategy from the day the company is established. Selling a company is a process. Not acting strategically is irrational. To rely on transaction advisory services in this view is a must.

Advisor’s thought:

Even though the advises given based on preliminary valuation have not been expected by the client in the first place, we have added a significant value by pointing out where and how the client can benefit by approaching to the M&A activities strategically.

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