Project Description
Overview
I was engaged as an independent advisor to carry out the valuation preparatory to the sale of an Italian company to a leading multi-utility operator. The objective was to define a range that would be defensible in due diligence and to support negotiations with an industrial buyer highly selective on returns. The work revealed a significant gap between the seller’s expectations and market pricing: closing occurred at roughly 25% of the client’s initial estimates.
Client Profile
A mid-sized Italian company with a mix of recurring revenue and project work, exposed to investment cycles and multi-year contracts with enterprise and public-sector clients. The cost structure was normalizing after a growth phase, working capital absorption was significant, and the commercial pipeline—while documented—offered limited visibility on timing and margins.
Approach
I rebuilt Enterprise Value using comparables’ multiples and a lean DCF for base and stress scenarios, with normalizations to EBITDA, recurring capex, and working-capital requirements. Equity Value was derived by applying the Net Financial Position and “normative” working-capital adjustments, while testing sensitivities on interest rates, revenue mix, and execution-risk discount. The valuation narrative was aligned with the buyer’s perspective (internal hurdle rate and payback), making clear that synergies and optionality would not be paid upfront. Alternative deal structures (earn-out, light vendor loan) were considered and ultimately declined by the buyer.
Results
The expert report delivered a credible, negotiable range that guided discussions with the multi-utility. With no credit given for synergies and in light of operational risks identified during diligence, the final price settled at approximately 25% of the seller’s initial expectations. The process enabled a timely closing, reduced deal-drift risk, and left a documentation base reusable for future transactions.
