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Restructuring of SuSE Linux AG



In July 2001 the SuSE Linux AG, one of the world's leading Linux companies, almost went out of business. It had expanded its worldwide number of employees beyond 600 and was burning cash at a very high rate. Due to operational mismanagement and the failure to develop an effective business model, the company was unable to perform.


The Challenge

2i international was engaged as interim executive turnaround management by the company's lead investor Apax Partners, with the mandate to get the company executing again within six months. This was a daunting challenge, because 2i international not merely had to clean up operationally, but also had to create a new business strategy and organization that would allow the company to both survive and thrive.


The Turnaround

In mid-December 2001 2i international turned over a transformed and performing company to the newly installed permanent executive management team of SuSE. In the previous four and a half months 2i international had exceeded the investors' expectations.


Key Highlights of the Business Value Delivered

  • 2i international created and implemented a new business strategy that combined the company's technological strengths with a "go-to-market" organization focused on both customers and partners.
  • 2i international closed the financing round of €15 M in September 2001 with e-millennium as the new lead investor, complementing the strength of Apax Partners.
  • 2i international sensibly downsized the company's number of employees by almost 45% and further implemented an operational control process, which resulted in the consistent meeting or even exceeding of the monthly milestones set by the investors (Oct., Nov., Dec. 2001).
  • Through the application of professional direct marketing methods, 2i international created a process that led up to the fact that the company's product release in October 2001 was to become the most successful release in SuSE's nine year history.
  • 2i international led the initiative to establish a broad, strategic partnership with IBM Corporate that has resulted in worldwide agreements.


Successful Exit

In November 2003 the SuSE Linux AG was sold to Novell Inc. for US $210 million in cash. This was the biggest transaction in Europe's IT landscape for more than two years.