Unlocking Profitability Through Strategic Divestment
At a glance
CLIENT
European technology company
SERVICE
- Mergers & Acquisitions strategy, portfolio optimization
INDUSTRY
- IT consulting, digital transformation
A European technology provider with over 10,000 employees and annual revenues above €3 billion faced declining margins due to a low-performing Tech Services division. With operations spread across multiple countries, the division contributed nearly €920 million in annual revenue but consistently delivered negative profitability. To restore competitiveness, the company decided on a strategic divestment of this business unit.
LeanCoded designed and executed a comprehensive M&A strategy, enabling the client to streamline operations, improve overall profitability, and refocus on high-growth areas such as cloud services, cybersecurity, and data analytics consulting.
Driving Value Through Divestment
The divestment process required careful planning to separate thousands of employees, client contracts, and IT systems from the parent organization. LeanCoded provided M&A consulting expertise to ensure business continuity during the transition. Within the first six months, the client successfully carved out the Tech Services division and prepared it for acquisition by a private equity fund.
As a result, the company reduced its revenue base by €920 million, but operating margins improved by 4 percentage points. This allowed leadership to reinvest in digital transformation initiatives with higher profitability. The divestment also reduced organizational complexity, freeing resources for innovation and faster growth in core segments.
Strategic Business Impact
The transaction demonstrated that merger and acquisition strategy is not limited to growth through acquisitions — it also includes strategic carve-outs that strengthen a company’s financial performance. By selling a non-core, low-margin unit, the client improved its EBIT margin, simplified the business model, and gained flexibility for future investments.
Key Outcomes of the Divestment
- Separation of 3,000+ employees into a standalone unit
- Revenue base reduced by €920M, while margins improved by 4%
- Significant reduction of fixed costs in IT operations
Focus shifted toward cloud computing and cybersecurity services
Benefits Delivered
The project highlighted the importance of a structured M&A process for divestments.
- Profitability boost — EBIT margin improved by 4%
- Operational efficiency — streamlined IT and business functions
- Stronger core business — focus on cybersecurity and cloud services
Strategic agility — freed resources for new digital transformation programs
LeanCoded’s Contribution
LeanCoded provided a complete roadmap for the divestment, including legal, operational, and IT carve-out support. Our team ensured that all transition services were in place, risks were minimized, and the buyer received a stable business unit. This structured approach helped the client achieve immediate margin improvement and strengthened their position in the European IT consulting market.