Should the group keep or sell the brand?
A large sale price does not settle the choice. Compare net proceeds, recurring cash and the value you retain.
“You have to build portfolio resilience to deal with economic volatility.” (opens the source)
The question
You are presenting a Meridian consumer-brand decision. Compare two years without discounting, tax or financing. These limited assumptions isolate cash and residual value; they are not a complete valuation.
| Base | |
|---|---|
| Annual brand cash contribution (€m) | 12 |
| Investment now if kept (€m) | 8 |
| End-year-two residual value (€m) | 40 |
| Buyer offer now (€m) | 55 |
| Sale fees (€m) | 3 |
| Separation costs (€m) | 6 |
| Annual unavoidable stranded costs after sale (€m) | 2 |
Use the same two-year, undiscounted boundary for both options.
“Compare both options on the stated basis and defend your recommendation.”
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: Look past the headline price
What would you do here? Open the move you’d make.
Compare €42m sale value with €56m keep value.
The strong move. Net sale value and the retained business must use the same boundary.
Compare €55m with one year’s €12m contribution.
Tempting, but it misses something. This move misses the evidence or constraint in this step.
See how a strong candidate says it
“The €55m offer leaves €46m after fees and separation, then €42m after two years of stranded costs. Keeping gives 2 × €12m − €8m + €40m = €56m on this limited basis.”
Why it works: Net sale value and the retained business must use the same boundary.
Step 2: Expose the assumption that drives the choice
What would you do here? Open the move you’d make.
Test the €26m break-even residual value.
The strong move. The recommendation depends on residual value, not just this year’s earnings.
Treat the assumed €40m as a guaranteed sale.
Tempting, but it misses something. This move misses the evidence or constraint in this step.
See how a strong candidate says it
“Base cash before residual value is €16m. Keeping breaks even with the €42m sale result at a €26m residual value. I would keep only if diligence supports value above that threshold and the concentration risk is acceptable.”
Why it works: The recommendation depends on residual value, not just this year’s earnings.
Step 3: Revisit the portfolio choice
The largest distributor leaves. Annual cash contribution falls to €7m and residual value to €25m. The offer and sale costs stay unchanged.
What would you do here? Open the move you’d make.
Revise the recommendation using €31m versus €42m.
The strong move. The changed packet reverses the comparison.
Keep the original answer to appear consistent.
Tempting, but it misses something. This move misses the evidence or constraint in this step.
See how a strong candidate says it
“After the distributor loss, keeping gives 2 × €7m − €8m + €25m = €31m. Selling still gives €42m. I would recommend the sale, subject to confirming the offer and separation assumptions.”
Why it works: The changed packet reverses the comparison.
Step 4: Ask for the right authorization
What would you do here? Open the move you’d make.
State the terms and the return-to-board trigger.
The strong move. A recommendation and permission to execute are separate decisions.
Treat a favorable comparison as unrestricted authority.
Tempting, but it misses something. This move misses the evidence or constraint in this step.
See how a strong candidate says it
“Show the board the original and changed comparison, customer concentration, net proceeds and transaction conditions. Ask for authority within defined terms, with a return to the board if those terms change.”
Why it works: A recommendation and permission to execute are separate decisions.
The answer, in short
- Decision
- Recommend selling under the changed packet, subject to the stated terms.
- Because
- The changed keep value is €31m versus €42m net sale value.
- What would change it
- An altered offer, separation cost or supported residual value could change the choice.
The distributor leaves but the buyer’s offer holds. Does your original recommendation still stand?
Common traps
- Comparing gross proceeds with net value.
- Ignoring the residual-value assumption.
Check your answer
- I used the same two-year boundary.
- I deducted all sale costs.
- I tested the residual value.
- I revised when the facts changed.
Last reviewed Nov 10, 2026