Four strategies, two modelled, one recommendation

With the market mapped, the question became which exit route to take, and who might buy.

Four options became two financial models. A universe of 49 buyers became a shortlist of 11, and four priority targets.

Sector: precision component manufacturing. Geography: Europe, North America, Australia. Duration: 90 days.

Client anonymised at their request. An NDA is signed before any data is reviewed.

If you are at the options stage of an exit, weighing routes before you commit, this is the work that turns a preference into a decision.

Start with four options, not one

When a manufacturer needs to exit a product range, the instinct is to find a buyer.

That instinct is understandable. But it is not a strategy. It is a preference.

A proper exit starts with every realistic option on the table. For this client, four were identified.

Each was tested against the client’s constraints. No appetite for more investment. No new customer acquisition. A mandate to exit cleanly.

Two options survived. Sell, and Phase out, both earned full financial modelling.

Hold and invest needed capital the client would not commit. Immediate closure destroyed recoverable value for no good reason. Both were ruled out early, with the reasoning recorded.

Ruling out options early is not a shortcut. It is discipline. Every option that fails scrutiny is one fewer distraction in the decision.

Build the models independently

The two remaining options were modelled in parallel, each on its own logic, before any comparison.

This matters. Build the comparison first and work backwards, and you bake in bias. The models must stand alone before they sit side by side.

Both used net present value at an 8% discount rate. That put two very different cash profiles on equal terms.

Sell delivered a lump sum within 12 months. Phase out spread cash across 48 months. Net present value compares them fairly.

The sell model

The sell model covered three price scenarios. A low case, a target case, and a high case. Each carried a probability weight that reflected realistic outcomes.

Transaction costs were deducted from gross proceeds in every scenario.

A transition service agreement was modelled as a separate income stream. This is a short arrangement where the seller supports the buyer after completion. Here it ran for six months.

The seller charges a fee for that support. The income arrives in months seven to twelve after the sale completes.

This is often left out of exit models. It is not a large number. It is real income, and it belongs in the model.

The three scenarios were weighted by probability into a single expected value. That gave the client a number built on realistic uncertainty, not the best case.

The phase out model

The phase out model covered 48 months of managed operations.

Revenue was projected under framework agreements with existing customers, with a modest price rise in year one. Costs were held flat, with no new investment.

The model carried four risks. Tool failure, customer departure, price pressure, and falling demand. Each had a probability and a financial impact.

Tool failure was the largest. The tools behind the product range were ageing. A failure in year four would cut recoverable cash sharply.

We modelled it as a probable event in the downside case, not merely possible. That distinction changes how the board reads the downside.

Three scenarios were built. Realistic, upside, and downside. Decision gates were set at months 12, 24, and 36, so the plan could be adjusted if performance drifted.

The phase out model is not just a fallback. It is a credible alternative. If the sale fails, the client knows exactly what they fall back to.

The comparison

With both models complete, the comparison was direct.

The financial advantage of Sell was real but small. €6,727 on an expected value basis does not justify a recommendation on its own.

Three further factors made the case.

Sell delivered certainty within 12 months, against 48 months of execution risk. Tool failure and customer departure passed to the buyer on day one. And if the sale failed, Phase out stayed available as a fallback.

The board also knew the floor. The breakeven sale price was €284,678. Below that, Phase out was the better choice.

Build the buyer shortlist

Recommending a sale is one thing. Naming who might buy is another.

The map from Phase 1 became the starting point for the buyer universe.

49 companies were identified as possible acquirers. Each was scored against five criteria, weighted by buyer type.

Companies scoring 3.55 or above on the weighted criteria reached the shortlist. Eleven made the cut.

Three buyer types emerged, each with a different reason to acquire. The shortlist spanned all three, from major component groups above €500 million in revenue to specialist distributors with a direct commercial case.

Four companies were marked as priority targets for first approach. They shared high strategic fit, a realistic deal size, and ownership that would not need years of internal approval.

The same product range can be worth very different amounts depending on who buys it and why. Buyer framing is not presentation. It is pricing.

Previous and next in this series

Part 1, before strategy, you need intelligence. How the market picture was built before any recommendation.

Part 3, what the board had at the end. The outputs delivered, and what the board could finally decide.