Case Study – Italy / China

Closing of a business line at an engineering company

₂₂₀₆₀₉

At a subsidiary for food manufacturers

A loss-making subsidiary in the food technology sector was restructured and successfully sold. Measures such as staff reductions and contract freezes resulted in a net sale price of EUR 2 million and a positive EBITDA effect of EUR 4 million – without any negative impact on the parent company’s image.

q

Company Details

The company is a subsidiary of a global producer and processor of food products
The company builds and installs turnkey facilities for food production
The annual turnover was €15m

p

Situation and Challenge

The business is loss-making with no relevant market share
A liquidation scenario was proposed to the board of directors
Main challenges: short term liquidation date, claims from key customers, reputational damage and financial impact with negative EBTDA and cash flow

m

Objective ans Tasks

Selling of the main assets and liquidation of Chinese subsidiary
Avoiding a dismissal procedure, reducing political and social impact
Settlement agreements with the main customers in China

n

Measures and Procedures

Finding a potential buyer and assessment of outstanding contracts
Reducing number of employees with spontaneous dismissal
Stopping order intake for new machines and processing order backlog

x

Results and Achievements

Achievement of a net purchase price of €2m. The buyer takes over the majority of the existing projects. All employees are taken over
Saving of an EBTDA effect of €4m and a positive cash flow of €2.6m
No impact on the image of the parent company
Good financial and economic impact

These articles might also interest you: