Business Case: In light of the growth of Teradyne's Connection Systems (TCS) Division, TCS decided to divest its Aerospace/Defense Group (ADG) in order to focus exclusively on its commercial interconnect systems business. ADG, with revenues of $26 million, manufactures connectors and backplane assemblies for aerospace and defense applications. While seeking to obtain the highest value for the business, TCS also sought a buyer with a commitment to the aerospace/defense business for the benefit of its employees and a company with the capability to successfully meet the high quality standards demanded by ADG's customers, many of whom continue as customers of another Teradyne division.

Catalyst's Role: Teradyne turned to The Catalyst Group for assistance in finding the right buyer for ADG, advising on valuation, managing the process, and assisting in the negotiations. Catalyst worked with Teradyne's managers to define the boundaries of the ADG business within TCS. Together, Catalyst and Teradyne extracted and assembled financial information, functional organizational models, and other information to enable potential buyers to evaluate the business and how it would fit within their organization. Catalyst created an information memorandum describing the business, identified and contacted potential buyers, and scheduled and moderated meetings. In the closing stages, Catalyst worked with Teradyne's and Amphenol's lawyers and representatives in the negotiation of the letter of intent and purchase agreement.

Result: Catalyst was able to achieve a successful sale of the ADG business within the timeframe established with Teradyne at the beginning of the project. This was achieved by firmly adhering to the work plan in the preparatory stages of the project, and by requiring all potential buyers to schedule meetings and complete initial due diligence according to Teradyne's timetable. Amphenol, with its significant commitment to the aerospace/defense business, was selected by Teradyne as the buyer best able to achieve strategic value from the ADG business and to successfully meet the high quality standards demanded by ADG's customers.