Case study: Winning a public tender for M&A consulting services

Form No. 1

BIDDER INFORMATION

Company name: A Class Consulting

A Class Consulting

Team leader:

Raman Srinivasan

Team members:

Asish Regi Abraham

Mateusz Biały

Kyrylo Pavlenko

Zihan Xu

E-mail: admin@acc.com

Town/date Signature:

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 Case study: Winning a public tender for M&A consulting services

Form No. 2

OFFER PROPOSAL

Company: A Class Consulting

Offer no.: 10

We declare that we understand all the conditions of this tender and we are ready to perform the
proposed services at the fixed total price of __________________euro and we demand a success fee
of ______%.

Other elements of the offer: _______________________________________________________

Assignment summary: This report details the services to be offered by the A Class Consulting to the
Ministry of the Economy of the Republic of Slovenia on its plan for the restructuring and privatization
of Telekom Slovenije. We as an organisation have the best understanding of market and the
businesses present as stalwarts of the market and we are willing to optimize the transaction
potential to the fullest. We have made a deep dive into the present business situation of the telecom
sector in terms of performing the due diligence outline which aims to provide complete, clear and
concise picture. Our team has carried out an extensive, accurate and apt procedure with transaction
structure that itself pleases the desire of the board with the outcome of persuasive valuation that
could support Telekom Slovenije.

This offer is valid until: 21.11.2021

Town/date Signature:

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 Case study: Winning a public tender for M&A consulting services

Form No. 2a

DUE DILIGENCE OUTLINE

Due Diligence is crucial, because transactions that undergo the process of due diligence offer much
higher chances of success. It gives the possibility to take conscious decisions by enhancing the
information’s quality available for the decision maker.

Our company offers complex evaluation of the factors that influence operations of the Telekom
Slovenije. We have divided our evaluation in four main areas, listed below:

Macro-economic Aspects

To begin with the Macro-economic aspects. The goal is to understand the most prominent factors
that influences our subject of analysis. To conduct this part, we will start with general, widely
available information, that represents the overall situation in the Slovenia – county in which our
company is based. We will focus on the Current GPD, unemployment rate, inflation rate, currency
exchange rates. Afterwards, we will refine our findings with additional data, specific to the current
world situation. The Covid-19 pandemic situation and governmental polices and tax regulations are
to be included into the due diligence. The method for this evaluation will be PEST model, with
additional environmental and legal aspects tested.

To further develop the investigation, we will address the sector related issues. First, the local
regulations that might affect the performance of the company. Second the developing trends and
innovations that might change the industry as a whole and might force the company to significant
investment in the foreseeable future. Additionally, we will conduct the company key performance
indicators (KPI) overview in the light of the whole industry. Namely: accessibility, retainability,
mobility, availability.

Growth and Financial Aspects

Potential to growth will be measured by analysis of the sector, and the trends in the industry. The
forecast will be the summary of available independent forecast and industry predictions, supported

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 Case study: Winning a public tender for M&A consulting services

by the historical data. The macro economic statistics will be included as a proof for the industry
forecasts.

Moreover, the company by itself will be assessed in terms of its advantages and disadvantages. The
evaluation will be based on the SWOT model, which will allow to complexly position the company
with the competitors.

Next, we will do the throughout financial assessment. We plan to divide the process into separate
segments. First, Quality of Earnings (QofE) - eliminating non-recurring items from EBITDA to arrive at
an adjusted EBITDA. Second, net working capital (NWC) to demonstrate the company’s short-term
ability to cover its operational obligations. Finally, income Statement and Balance Sheet evaluation to
provide insights and in-depth perspectives, with all the adjustments and analysis that provide
understandable information with proper explanations.

Organisational Aspects

To perform the due diligence in terms of the organisational aspects we will focus on the company
culture. With the on side visits and interviews we would perform made to measure surveys with the
representative sample of the employee’s population. We will contact the adequate departments for
the statistical data regarding the trainings, salaries, and other crucial organisational issues. We will
evaluate if the company is consistent in their goals development and the execution. Moreover, we
will assess whether the current situation in the company and the employees’ attitude might cause
the disturbance in the process of the execution of the potential merger.
Next, we will perform the overview of the management in the company, with the focus on the top
management qualifications, experience, and industry knowledge.

Legal Aspects

Finally, we want to cover the legal aspect overview. In the scope of this analysis, we will review the
legal documents that consider our company. We will focus on the contract base of the company,
intellectual property owned, potential and ongoing lawsuits, leases, and environmental laws.
Furthermore, we will evaluate the regulations that the company must comply with and the way it
affects the possible merger. Especially EU regulations in terms of mergers. The process will increase
the seller awareness and allow them to conduct the beneficial M&A with the fair purchase price.

Town/date Signature:

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Form No. 2b

VALUATION OUTLINE

This part is about the valuation of the Telekom Slovenije which is the most important part in a
Mergers and Acquisitions deal.

2020/ 2019/
Components
31.12.2020 31.12.2019*
Sales revenue 591,693 602,231
EBITDA 174,281 175,467
EBITDA margin = EBITDA / sales
29.50% 29.10%
revenue
EBIT 36,930 33,816
Net profit for the financial year 24,174 585
Assets 1,226,566 1,223,536
Equity 605,784 606,136
Return on equity (ROE) 5.30% 0.10%
Source: Telekom Slovenije Annual Reports

Methods by which fair value of the company can be valued:

1. Comparable Analysis: This method is used to evaluate a company’s value by comparing the
values of other companies with some essential multiples like EV/EBITDA, P/E etc. in the same
sector.

2. Discounted Free Cash Flow Analysis: The analysis of discounted cash flows is based on the
idea that an investment is worth to an amount that is equal to the total of all the potential
cash flows it will create, discounting each of those cash flows to their present value. This is
the most fundamental approach.

3. Liquidation Method: It calculates the overall value of the physical assets of a company that
could eventually be sold if it were to be liquidated rather than run as a going concern in the
near future.

4. Precedent Transaction Analysis: Precedent transaction analysis is a form of valuation in which

the price paid in the past for similar firms is considered a measure of the value of a company.

5. Market Capitalization: It is calculated by multiplying the company’s share price by its total
number of shares outstanding.

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 Case study: Winning a public tender for M&A consulting services

Pros and Cons to the methods:

Comparable Analysis

This method is the reflection of the value that is according to the current market trends it also
provides a benchmark value based on similar companies in the sector. All the industry trends and
changes around the growth prospects are contributed to the method.

When using this method, it is hard to find companies that are comparable to your own. The market
efficiencies are not explained within the method which can be confusing for individuals. It also does
not account for premiums that have been paid in transactions for mergers and acquisitions.

Discounted Free Cash Flow Analysis

The method is very well detailed and includes All major assumptions about the company and their
intrinsic value. Allows for the sensitivity analysis which can have built in scenarios. The future
expectations about the company will be included and can be performed easily on excel which is
suitable for analyzing mergers and acquisitions.

While some cons for the method is that it is prone to creating errors and being over complex. The
model requires a large database of assumptions but can also be quite sensitive to the changes in
them. Does not compare the relative valuations of the company’s competitors.

Liquidation Method:

This method requires no restructuring and redundancy cost. Debt gets written off, it is better that a
seller choice this method to use no other party. At that point company has ability to control the
situation.

When using this method company will not be able to retain business assets, it will lose majority of
assets. This method goes with investigation the company, through entire history and finances.

Precedent Transaction Analysis

This method reflect realistic valuation since the past transaction were completed. It can show bidding
trends.

Public information on transaction can be limited

Market Capitalization

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Market Capitalization help in decisions about which stock to invest in. It gives investors information
about the size of the company versus another.

There is certain limitation to this method. Business’s worth, enterprise value is not accurate to the
market cap. It’s only reflected equity value, share price may be over or undervalued because its only
inform how much the market is willing to spend.

Town/date Signature:

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 Case study: Winning a public tender for M&A consulting services

Form No. 3

SALE PROCESS DESCRIPTION

(Brief project description on max. 2 A4 pages)

Setting a Goal:

The company's mission is to look ahead to increasing revenues, expanding its commercial reach,
reviewing the legal, environmental, and economic conditions of the worldwide market, and
performing standards in accordance with the contract's norms and expectations. In addition, the
organization gives exceptional service to its customers and provides complete support during the
contract period. Preparation for the sale, finding possible investors and due diligence, and a
successful tender offer are the three stages of our sales process.

Activity Plan:

Tender and contract documents, including surveys and designs, should be prepared as soon as
possible. The protocols must be followed, and reports from the organization should be received at
the start of the process.

Confidentiality Agreement:

Only those staff, representatives, or contractors of the Consultant ('Consultant Personnel') who have
a need to know in connection with the Consultant's engagement and for use in connection with it will
be given access to Confidential Information by the Warsaw Consulting Group. The consultant will
advise his or her team of the sensitive and confidential nature of gaining access to confidential
material. Upon termination of the consultant's engagement with respect to the system or upon, the
consultant shall return any and all proprietary information (including any copies or reproductions in
its custody or control) upon completion of the duties given to the consultant.

Potential Buyers Selection:

Potential investors are chosen based on the company's share price increasing. The share and stock
price determine the business's growth in both the domestic and worldwide markets. The growth in
the stock price has resulted in an increase in the total number of shareholders in the firm. The
number of possible purchasers grows as the share price and market share of a firm continually rise.

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Propose alternative models for selling the majority stake:

ABC company ensure that due diligence and forensic financial analysis are completed flawlessly so
that other models for selling the interest may be avoided.

Perform everything necessary for the successful stake sale:

ABC group has to comprehensively examine liquidity and financial potential, report due diligence
effectively, create fair financial targets, and guarantee that the firm is bought appropriately .Set a
competitive pricing that is in line with the cost structure's business practices and the CEE's advisory
fee structure.

Town/date Signature:

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 Case study: Winning a public tender for M&A consulting services

Form No. 4
SALE PROCESS TIME-TABLE
if necessary)
(Adapt
Project:
Team leader:
2021 2022
Activity. Month VII VIII IX X XI XII I II III IV V VI

Preparation Phase

Negotiation Phase

Documentation Phase

Propose Alternative Phase

Closing of the deal

Successful tender
Planned Consulting Hours

Town/date Signature:

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 Case study: Winning a public tender for M&A consulting?

I. Appendix

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