Transaction Services Case Study
Atlas Components S.r.l. — Heavy Machinery & Agricultural Equipment
A European private equity fund mandates a Transaction Services team to evaluate Atlas Components S.r.l., an Italian manufacturer specialising in heavy machinery and agricultural equipment (€93.8M revenue, North Italy). Normalise EBITDA, assess working capital trends and calculate the equity value.
Mission context
Shareholders of Atlas Components ('Atlas') entered exclusive discussions with a European industrial group regarding the potential sale of 100% of the company. Atlas is privately-owned, headquartered in Northern Italy, specialising in precision components for heavy machinery and agricultural equipment. Founded 25+ years ago. Strong client relationships but limited number of large clients (significant revenue concentration). Past 3 years: steady revenue growth, improving margins, increasing operational complexity from international expansion. The buyer mandated BDO (you are part of the TS team) to perform financial due diligence.
Business Overview
The precision manufacturing sector for heavy machinery and agricultural equipment is characterised by long cycles, durable client relationships and high barriers to entry linked to certifications and tolerance precision. Established players benefit from network effects and strong retention, but remain exposed to their clients' investment cycles.
Margin pressure has intensified in recent years with rising raw material costs and geographic expansion into Central and Eastern Europe. Industrial groups are seeking to consolidate strategic suppliers to secure supply chains, which is driving M&A activity in this segment.
On the valuation side, companies in the sector typically trade at 6x to 9x normalised EBITDA, with a premium for geographically diversified players and a discount for those with high client concentration or elevated debt profiles.
€93.8M
Revenue Year N
€13.0M
EBITDA Year N
3
Countries
4
Key clients
Audited Financial Statements
| Balance Sheet (k€) | 2022 | 2023 |
|---|---|---|
| Intangible assets | 2 145 | 2 098 |
| Tangible assets | 18 772 | 21 304 |
| Total fixed assets | 20 917 | 23 402 |
| Inventories | 12 446 | 15 928 |
| Trade receivables | 10 182 | 13 417 |
| Cash | 4 106 | 5 284 |
| Total assets | 47 651 | 58 031 |
| Trade payables | -8 274 | -8 012 |
| Other liabilities | -5 454 | -7 170 |
| Financial debt | -6 730 | -7 009 |
| Equity | 27 193 | 35 840 |
Notes to the Financial Statements
Note 1 — Insurance compensation (Year N)
Following a fire in one warehouse in late Year N-1, the company received €0.8M insurance compensation recorded in other operating income in Year N. This is non-recurring.
Note 2 — Polish production line reorganisation and management bonus
Atlas undertook a reorganisation of its Polish production line generating €1.3M of costs (one-off initiative). Additionally, a discretionary bonus of €1.0M was granted to CEO and top management upon reaching a key milestone in the sale process. Both items are non-recurring.
Note 3 — Factoring program and IFRS 16 leases
The company has a factoring program where a portion of receivables has been transferred to a financial institution. Certain clauses suggest risks may not have been fully transferred — factoring balance €3.2M treated as debt-like. Ongoing lease commitments linked to industrial sites and equipment total €4.85M under IFRS 16. A portion of consideration from a past acquisition remains payable depending on performance conditions (earn-out).
| Income Statement (k€) | 2022 | 2023 |
|---|---|---|
| Revenue | 84 260 | 93 845 |
| Raw materials and consumables | -43 918 | -49 876 |
| Subcontracting costs | -5 204 | -6 118 |
| External services | -6 320 | -6 722 |
| Personnel costs | -16 204 | -17 905 |
| Other operating income | 1 205 | 2 146 |
| Other operating expenses | -2 674 | -2 321 |
| Reported EBITDA | 11 145 | 13 049 |
| Depreciation — tangible assets | -3 112 | -3 604 |
| Amortisation — intangible assets | -792 | -914 |
| Reported EBIT | 7 241 | 8 531 |
| Interest expense | -1 142 | -1 298 |
| Interest income | 56 | 75 |
| Profit before tax | 6 155 | 7 308 |
| Income tax | -1 713 | -2 064 |
| Net income | 4 442 | 5 244 |
Monthly Working Capital
| Net debt bridge (k€) — as of 31 December Year N | k€ |
|---|---|
| Bank loans (term + revolving) | 5 744 |
| Shareholder loans | 1 265 |
| Gross financial debt | 7 009 |
| Available cash | -5 284 |
| Reported net debt | 1 725 |
| (+) Factoring with recourse | 3 200 |
| (+) IFRS 16 lease obligations | 4 850 |
| (+) Residual earn-out | TBC |
| Adjusted net debt | 9 775 |
Interview Questions
Assess the relevance of the items identified and determine what should be considered when analysing the company's underlying profitability (adjusted EBITDA).
Identify which elements should be taken into account when assessing the company's actual indebtedness (adjusted net debt).
Prepare a concise summary of: main financial risks identified, potential red flags for the buyer, key questions to raise during the next management meeting.
Senior analyst-level answers — Big 4 Transaction Services
Model answers — Big 4 analyst level
Each answer includes detailed calculations, key points to mention and common traps to avoid in an interview.
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Frequently Asked Questions
What level is required for this case?
A Master 1/Master 2 level in finance or audit with basic balance sheet reading skills. The data volume (€93.8M revenue, balance sheet with multiple non-recurring items) is representative of a mid-market deal in Big 4 TS. Allow 90 minutes.Does this case reflect real financial due diligence exercises?
Yes. The adjustments (insurance indemnity, one-off reorganisation, discretionary bonus) and the questions asked reproduce the exercises actually used in Transaction Services interviews for deals between €50M and €200M EV.Can I use this case if I'm not yet in a finance master's programme?
Yes, with the basics: knowing how to read an income statement and a balance sheet. The Transaction Services Training programme covers the rest. This case can serve as a self-assessment before starting the programme.Does the correction explain common pitfalls?
Yes. The full correction details each adjustment with its justification, the most common candidate errors, and the formulations that impress a Big 4 manager.Are there other cases available in the programme?
The programme includes 8+ corrected case studies on SaaS, distribution, heavy industry and B2B services. Each case comes with an Excel model and expert feedback.
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