Sale of an iron foundry in Gliwice
The owner wanted to retire. We found a buyer from Germany in 5 months. We improved the valuation by 12% by optimizing inventory levels before the transaction.
Mr. Marek ran a family foundry in Gliwice for 27 years. He wanted to enjoy a well-deserved retirement but had no one in the family to take over the management of the 43-person team. Our task was to find an investor who would pay a fair market price and not close the plant after a month.
The challenge
The company had a great order portfolio but huge chaos in the raw material warehouse. The initial bank valuation was 8.4 million PLN, which did not satisfy the owner. The problem was frozen capital in unsold castings and the lack of a reliable energy cost reporting system, which at current electricity prices deterred potential buyers. Every month of delay cost the company about 34 thousand PLN in lost margin.
Our approach
The Silesia Capital Advisors team delegated 2 specialists directly to the production floor. For 19 business days, we calculated inventory turnover and checked the real consumption of coke and electricity per ton of melt. Instead of writing pretty presentations, we prepared a hard cost summary in Excel and a list of 7 potential buyers from Germany for whom the location in Gliwice was a strategic point for shortening the supply chain.
The solution
We implemented a simple material control system that allowed for the liquidation of stagnant stock worth 480 thousand PLN even before the investor entered. We prepared an Information Memorandum based on technical facts and machine efficiency. We conducted 3 rounds of negotiations with an entity from Westphalia, proving to them that the real profitability of the plant was 1.4 percentage points higher than what appeared in the original balance sheet.
Results
The transaction was finalized within 5 months of the first meeting. The owner received a transfer for an amount 1.1 million PLN higher than the original sales plan assumed.
Timeline
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January 2024Hall inventory and cleaning the balance sheet of frozen stock.
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February 2024Sending offers to 7 selected industry investors.
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April 2024
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June 2024Signing the sales agreement at a notary in Katowice.
"I was afraid that because of the mess in the warehouse, no one would buy the foundry for good money. Silesia Capital Advisors simply took calculators, went onto the floor, and calculated profit where I didn't see it. The transaction went smoothly, and the money is already in the account."