Transaction Services Case Study
Techstronix GmbH — High-Reliability Embedded Electronics Manufacturing
NordEngineering AG mandates a Big 4 Transaction Services team to evaluate the acquisition of Techstronix GmbH, a Munich-based manufacturer founded in 1988, specialising in high-reliability embedded electronics for autonomous industrial machines, military command and control infrastructure, and high-efficiency energy conversion units. Identify EBITDA adjustments, calculate net debt and assess risks.
Mission context
In April of Year N, following an ad hoc engagement letter, your client NordEngineering AG mandated you to carry out a financial due diligence of Techstronix GmbH, a company it is considering acquiring.
NordEngineering is seeking to diversify its operations and has identified Techstronix as a strategic target due to: its positioning in high-growth markets such as industrial robotics, defense-grade electronics, and embedded energy systems; its innovative modular production platform, developed in-house and protected by numerous patents; its steady historical growth, profitable track record, and loyal client base across several European countries.
Documents provided: company presentation (Annex 1), audited financial statements (Annex 2), management reporting with product-level granularity (Annex 3), monthly working capital dashboard for the past 24 months (Annex 4).
Client expects: identify and document relevant financial adjustments; provide an economic view of the company's EBITDA and Net Debt; deliver a preliminary valuation range to estimate transaction financing needs.
Business Overview
Founded in 1988 and headquartered near Munich, Techstronix GmbH is a privately owned German company active in the design, production, and integration of high-reliability embedded electronic components for use in autonomous industrial machines (robotic arms, sorting systems), military-grade command & control infrastructure, and high-efficiency energy conversion units for aerospace and railways.
The company operates from a single 5,000 m² industrial site, housing a dedicated R&D lab with a team of 9 engineers, an automated SMT line (Surface-Mount Technology) for large-volume component placement, assembly and final testing areas, and an in-house logistics and service hub.
Its commercial footprint is international: 78% of sales are in Germany, Switzerland, and Belgium. Sales are made through a mix of historical resellers and system integrators (60%) and direct accounts in the defense and transportation industries (40%).
Techstronix's reputation stems from its in-house innovation capacity. It owns 22 active patents covering microelectronic circuit integration, thermal control, and electromagnetic shielding.
The company has a workforce of 53 permanent staff and regularly supplements its operations through temporary workers and specialized subcontractors.
€7.265M
Revenue (2023)
€1.857M
EBITDA (2023)
53 employees
Permanent headcount
22
Active patents
Audited Financial Statements
| Balance Sheet (k€) | 2022 | 2023 |
|---|---|---|
| Intangible assets | 172 | 172 |
| Tangible assets | 824 | 871 |
| Financial assets | 45 | 45 |
| Total fixed assets | 1 041 | 1 088 |
| Inventory | 1 167 | 1 528 |
| Trade receivables | 1 007 | 1 321 |
| Trade payables | -592 | -544 |
| Social liabilities | -298 | -372 |
| Tax liabilities | -194 | -359 |
| Other receivables/payables | 73 | 36 |
| Working capital | 1 163 | 1 610 |
| Marketable securities | 2 031 | 2 031 |
| Cash | 1 112 | 1 494 |
| Bank loans | -814 | -642 |
| Shareholder current accounts | -49 | -503 |
| Net cash position | 2 280 | 2 380 |
| Provisions | 35 | 210 |
| Net assets | 4 519 | 5 288 |
| — Financing — | ||
| Share capital | 1 700 | 1 700 |
| Legal reserve | 110 | 110 |
| Other reserves | 1 743 | 2 603 |
| Net income | 966 | 875 |
| Total equity | 4 519 | 5 288 |
Notes to the Financial Statements
Note 1 — Patents
The company holds 22 patents, registered across Europe and the U.S., relating to core electronic circuit technologies. These are included in the scope of the contemplated acquisition.
Note 2 — Financial assets
Financial assets relate to security deposits on leased premises (main office and production facility). No long-term financial instruments are held.
Note 3 — Inventory
Inventory is valued using standard costs as updated by the production controller, and reviewed monthly by the head of accounting.
Note 4 — Receivables
Receivables are primarily from long-standing B2B clients in the DACH region (Germany, Austria, Switzerland), with 20% of the receivables exceeding 60 days.
Note 5 — Suppliers
Suppliers are concentrated in Germany and Belgium, with significant reliance on two PCB manufacturers and one cable assembler.
Note 6 — Litigation provision
A provision of €145k has been recorded in Year N for a pending labor court dispute with a former Head of Engineering, who claims unfair dismissal and damages. The management expects a partial settlement by Q4 Year N+1.
Additional — Finance leases
Outstanding lease payments under finance leases for production machines total €418k as of June Year N (vs. €483k in June Year N-1).
Additional — Retirement indemnities
Off-balance sheet commitments for retirement indemnities amount to €667k, of which €222k are due within three years. A coverage provision of €100k has been recorded.
| Income Statement (k€) | 2021 | 2022 | 2023 |
|---|---|---|---|
| Revenue | 5 834 | 5 982 | 7 265 |
| Cost of goods sold | -2 045 | -2 089 | -2 597 |
| Other direct expenses | -121 | -156 | -189 |
| Gross margin | 3 668 | 3 737 | 4 479 |
| Direct personnel | -745 | -764 | -813 |
| Equipment lease | -168 | -182 | -172 |
| Temporary staff | -203 | -154 | -295 |
| Subcontracting | -67 | -72 | -103 |
| Other direct costs | -439 | -408 | -553 |
| Contribution margin | 2 046 | 2 157 | 2 543 |
| Gross salaries | -1 359 | -1 396 | -1 394 |
| Paid leave | -13 | -9 | 21 |
| Retirement indemnities | 0 | 0 | -69 |
| Payroll taxes | -615 | -634 | -661 |
| Tax credit (CICE) | 44 | 45 | 45 |
| Misc. payroll costs | -541 | -552 | -576 |
| Overheads | -323 | -328 | -352 |
| Taxes | -89 | -86 | -98 |
| Government grants | 6 | 162 | 40 |
| Non-recurring charges | -207 | -188 | -278 |
| EBITDA | 1 228 | 1 513 | 1 857 |
| Depreciation & provisions | -36 | -35 | -162 |
| EBIT | 1 192 | 1 478 | 1 695 |
| Financial result | -42 | -48 | -43 |
| Exceptional result | -7 | -10 | -147 |
| Corporate tax | -379 | -440 | -439 |
| Profit-sharing | 0 | -119 | -132 |
| Net income | 864 | 966 | 875 |
Product-Level Sales Data
Management indicated the company applies annual price increases of 1–2%, in line with cost inflation.
| Annex 3 — Product-Level Sales Data | Revenue (k€) | Units | Avg. Price (k€) | ||||||
|---|---|---|---|---|---|---|---|---|---|
| N-2 | N-1 | N | N-2 | N-1 | N | N-2 | N-1 | N | |
| MOSFET power modules | 1 004 | 1 050 | 1 158 | 13 | 12 | 13 | 77 | 88 | 89 |
| DC/AC embedded converters | 589 | 646 | 742 | 6 | 7 | 8 | 98 | 92 | 93 |
| Inertial sensor units | 83 | 82 | 121 | 2 | 2 | 3 | 42 | 41 | 40 |
| Control module parts | 1 435 | 1 481 | 1 831 | 20 | 20 | 23 | 72 | 74 | 80 |
| High-frequency FPGA boards | 1 086 | 1 187 | 1 427 | 8 | 9 | 9 | 136 | 132 | 158 |
| Thermal control PCBs | 521 | 538 | 751 | 5 | 4 | 5 | 104 | 135 | 150 |
| Precision circuit plates | 107 | 109 | 126 | 4 | 4 | 4 | 27 | 27 | 32 |
| Mobile interface hubs | 68 | 82 | 92 | 2 | 2 | 2 | 34 | 41 | 46 |
| Custom OEM designs | 186 | 326 | 341 | 5 | 6 | 6 | 37 | 54 | 57 |
| Miscellaneous components | 755 | 481 | 676 | 11 | 11 | 11 | 69 | 44 | 61 |
| Total | 5 834 | 5 982 | 7 265 | 76 | 77 | 84 | 77 | 78 | 87 |
Monthly Working Capital
| Annex 4 — Monthly NWC Dashboard (k€) | Year N-1 | Year N |
|---|---|---|
| Minimum working capital | 419 | 663 |
| Maximum working capital | 1 279 | 1 435 |
| Average working capital | 948 | 1 027 |
| Year-end working capital | 748 | 1 435 |
Working capital increased significantly in Year N (+€687k), closing at €1,435k compared to €748k the previous year. This is primarily explained by: a large contract for a custom energy system launched in Q4, resulting in high work-in-progress levels; substantial advance payments to key suppliers to secure delivery slots amidst semiconductor shortages; an exceptional number of temporary staff contracted over the summer to support prototyping backlog; and an unanticipated leave of absence for the collections officer in Q4, which delayed several client payment reminders.
Interview Questions
Based on the information provided and the notes, determine the company's adjusted EBITDA for Year N. Justify each adjustment.
Calculate the adjusted net debt position as of June Year N. Indicate what elements you include or exclude and explain why.
Using the restated figures, prepare a preliminary valuation for Techstronix GmbH to support NordEngineering AG's decision-making. You are free to choose your valuation methodology.
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 to complete this case?
Does this case reflect real Big 4 Transaction Services interviews?
Yes. The scenario, management note structure and questions reflect the exercises actually used in Big 4 TS and M&A boutique interviews. The sector (B2B manufacturing) is one of the most common in FDD.How long does it take to work through this case?
Allow 90 minutes. 20 min to read the file, 40 min to identify adjustments and build your analysis, 30 min to formulate your answers to the 5 questions. This is the timing of a real TS interview.Is the correction available?
Yes. Enter your email to receive the full correction with detailed calculations, justified adjustments and the pitfalls most often missed by candidates in interviews.Is this case representative of cases in the full programme?
This is an extract. The full programme includes 8+ corrected case studies covering SaaS, distribution, B2B services and heavy industry, plus 4 graded Excel modelling exercises.
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