EET GROUP CASE
PRE-EXIT PLANS: HELPING COMPANIES TO BE SOLD
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ET Group is a European distributor of IT spare parts. In 2010 it was sold by the Danish fund Capidea to the Swedish fund Alipes. However, initial dialogues with potential buyers had not been promising, and Capidea therefore invited Quartz+Co to support the sale by developing a pre-exit plan, which should document and make it easier to communicate the development potential in the company. The pre-exit plan served as the commercial foundation for the exit and as input to the investment bank’s Information Memorandum. The pre-exit plan was very focussed on documenting the solidness of EET Group’s business and addressed three main questions: 1
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How solid was EET Group’s performance – both financially and towards the customers. The last five years financial development by business areas were disaggregated and explained. Furthermore the value proposition and performance vis-à-vis the customers were documented through numerous interviews. What is EET Group’s market position? EET Group is a relatively small player in the huge IT hardware market. However, after identifying the characteristics of EET Group’s products it was clear that EET Group mainly played in a small part of the market as distributor of slow moving components. In this market EET Group actually had a niche position with good market share What is the market trends and how will they effect EET Group’s growth potential and position. Here a number of concerns regarding the sustainability of EET Group’s niche position was addressed. Will the market for spare parts and components decline? Will the role as distributor prevail? Will large distributors enter the niche etc.?
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he result of the analysis was evident and showed that EET Group in fact did have good prospects going forward. In the following sales process, Capidea therefore experienced a substantial increase in interest from potential buyers and EET Group was subsequently sold at a significantly higher price than the initial dialogues had indicated.