Value creation through transformation and exit

How we helped

• Organizational Transformation
• Private Equity & Investors

Situation

A leading global IT and service company faced significant profitability issues in its communications division. The unit had generated a cumulative loss of more than €100 million over the last five years. Management realized that a sustainable turnaround was not possible – due to both a global market downturn and increasing competition – and decided to close (“sunset”) the loss-making division as quickly as possible to avoid future losses.

AlixPartners’ approach

In an initial assessment, AlixPartners analyzed the cost base for the client's planned sunset scenario and prepared forecasts for operating losses and restructuring costs.

Through a detailed re-evaluation of business assets, we identified significant value enhancement opportunities. Together with management, we decided to reactivate a global and regional M&A strategy that had failed in a previous attempt.

As the client's lead strategic advisor, we managed the transaction across three regions and 10 countries.

Results

• Accelerated market exit by divesting while reducing costs: We realized approximately $100 million of incremental value compared to the initial plan, by successfully selling off businesses and avoiding operational losses and restructuring costs.
• Employee morale improved: We restored employee morale by providing clarity on the business's prospects under new ownership, and by actively involving staff in growth projects.
• Reputation and customer retention secured: We ensured that buyers assume and fulfill the company's existing contractual obligations, thereby minimizing legal risks and potential customer lawsuits.

Our support enabled the client to not only navigate a challenging market situation, but also to generate significant value in the process.

AlixPartners is here to help you achieve the best outcome for your non-core business units, whether that be restructuring, selling, or orderly wind-down – all under one roof.

The complexity of certain factors can influence the strategic perspective on non-core business activities. From market positioning and trends, competitive situation, profitability and financial performance to operational and technological status, an in-depth strategic analysis is required to review the business unit and develop a value-enhancing solution.

Typical options are:

• FIX: Development of a holistic turnaround and performance program that combines quick wins with structural changes.
• SELL: The divestment of non-strategic business units requires a systematic approach – from defining the disposal strategy and designing the transaction structure to conducting a competitive M&A process and executing a carve-out and sale.
• CLOSE: The selective winding down (“sunsetting”) of remaining non-strategic assets may be unavoidable and requires a swift and rigorous execution (negotiations with works councils, redeployment of employees to growth areas, realization of assets).

Our experts will be happy to provide you with further information and individual advice.