Strategy & operations

How do I assess the risks and value upsides of the business? 

Each target company brings its own unique sources of values and risks to buyers. Thorough due diligence is essential to help guide you through the investment decision making process, from assessing risks and compliance issues, evaluating financial and tax planning, to conducting business profitability review and identifying cost savings opportunities along the value chain.

Our global network and experience in even the most niche sectors means that no matter how you are looking to grow, you are working with a partner who can keep you a step ahead. We can spot the opportunities that will strengthen your capabilities and help you seamlessly navigate regulatory requirements to deliver on them through execution and integration.

For more information on due diligence.

Am I buying a business division or subsidiary from a parent group? 

If you are planning to buy a business division or subsidiary from a parent group then you are buying a carved-out business that is most likely dependent on the parent group for providing services that are core to your operations.

There are five key questions you should be addressing:

1. What are the group services and associated costs and how will they change after the sale?
2. How do I prepare for myself for running this carved-out business on Day 1?
3. What transitional services will I need (and for how long) from the parent company to ensure I can operate this business as normal post deal close?
4. How can I optimise the carve-out entity’s operating model to make the most out of the deal?
5. How do I plan to remove the dependencies with the parent group as soon as possible so I can run the business on its own?

We have carve-out experience ranging from standalone businesses, to the most complex carve-outs, across a range of sectors, advising on the sell side and buy side. We understand both vendor and buyer perspectives and their impact on value to maximise your ability to deliver deal value.

How we can help you:

• Carve-out due diligence which provide you with specific expertise in addressing the whole spectrum of operational carve-out issues (for example, estimation of target’s operating costs and headcount required to operate the business on a standalone basis and identification of key services and people required post-deal)
• Integration planning and execution by integrating your acquisition with your existing businesses and to realise the synergies you have identified in the due diligence phase

How can I financially, operationally and legally stabilise the acquired business?

One of the most common challenge buyers face upon acquiring a business is to effectively and timely take control of the newly acquired business while balancing and running their existing business portfolio. Failure to take control may result in loss of key talents and customers, disruptions to business operations, inability to track and measure business performance, non-resolution of regulatory compliance issues.

There are six key questions you should be addressing:

1. Have I clearly articulated and communicated my future vision for this acquired business to management and staff?
2. How do I set up an effective governance and risk management structure to manage business critical risks?
3. Were my due diligence assumptions made still valid given limited information available during pre-signing stage?
4. What are the operational, financial and regulatory risks inherent in my business?
5. How can I gain greater visibility into the business performance and meet my internal and external regulatory financial and operational reporting obligations?
6. What are the cultural differences between our current and the newly acquired business? How do I quickly bridge the cultural gaps to promote collaboration across both organisations?

We have supported several clients in successfully taking control of their acquisitions by tailoring and applying our proven global Taking Control methodology for each transaction. In doing so, we focus on key risks and value drivers, and help you define and execute a prioritised set of initiatives that deliver measurable benefits whilst minimise execution risks.

How we can help you:

• Establish a simple and practical governance framework by setting up right level of governance and control structure for business decision-making / approval, and aligning high-level business direction among key stakeholders
• Conduct confirmatory due diligence by identifying the potential operational, financial, regulatory and compliance issues, stopping leakage in deals and setting up mitigations
• Design and refine management reporting by understanding the gaps in the two reporting processes, designing and implementing the appropriate financial and operational reporting to monitor business performance on an on-going basis
• Transition planning by setting up a transition management office to plan and implement the Day 1 and first 100 days programs to align the differences between two companies and implement the changes in business (for example, people, culture, operations)

How do I integrate the acquired business with my other businesses to capture synergies and create value?

Integration programs are often viewed as expensive failures, but we have seen many succeed. Success or failure is closely related to the chosen integration approach in our experience. Get this right from the start of the deal process and you will significantly increase the chances of delivering the business case.

There are four key questions you should be addressing:

1. Am I focussing on the strategic, financial, and operational objectives that matter most to me and my company?
2. How and to what level will I integrate? What are the right operating models within each of my key businesses/functions and do they fit the enlarged group?
3. How do I capture the deal value and realize the synergies I have already identified?
4. Does my team have both the experience and the bandwidth to deliver a successful integration program and maintain core business performance?

We can help you address these questions by working with you to evaluate, design, plan and execute your integration strategy. We make sure the approach taken is insightful, objective, pragmatic and flexible, and that we support the entire organisation through the process from Board to payroll clerk.

How we can help you:

• Value creation and value capture opportunities by following a well defined, disciplined, and transparent approach to creating value and tracking synergies. We can help you accelerate the transition and achieve rapid integrations that fully realise desired synergies and allow them to return to a “business as usual” environment as quickly as possible after a deal
• Integration planning and implementation by converting your integration strategy into detailed actions that align people, process, and systems with your integration objectives through an effective governance structure
• Functional integration for when you require expertise on a specific function. We have a team of functional specialists responsible for integrating core functional areas and reports to individuals responsible for the overall integration
  

How do I extract greater value from portfolio of businesses whilst minimising risks to the overall portfolio?

Through acquisitions, you have accumulated a collection of investments in a range of industries and geographies, each with distinct upside potential, risk profile, operating maturity, and degree of control.

Seasoned portfolio managers, such as Private Equity firms and acquisitive corporates, are continually seeking ways to sustainably grow value that is greater than the sum of its parts through carefully considered capital allocation and active investment management.

Portfolio Management is a unique PwC offering in deals to maximise your portfolio value by undertaking a lifecycle approach (invest-grow-exit) in allocating finite capital and resources.

There are four key questions you should be addressing:

1. How do I find the right portfolio strategy that fits my company’s strategy and guides me through the changing markets and business environment?
2. What reporting framework and metrics should I use to measure and monitor my portfolio performance?
3. How do I set up an effective governance and risk management structure in managing business critical risks?
4. How do I create value in the overall portfolio and the individual portfolio companies?

PwC can assist you from initial portfolio strategy development through implementing and capturing growth value that can be confidently communicated to shareholders

How we can help you:

• Portfolio strategy development by defining and refining portfolio strategies, investment criteria and guidelines and developing detailed actionable plans to implement the strategy
• Performance Monitoring by using relevant, specific and measurable metrics with management dashboards and scorecards in aiding data-driven decision making process
• Governance and risk management by designing, stress-testing and implementing global and subsidiary portfolio governance and risk management framework, including board and supervisory roles, decision making protocols, approvals and delegations, risk and controls
• Value creation by building and prioritising value creation opportunities across the portfolio and within each individual company to maximise return on capital
  

Where are the areas of synergies and how can I realise it?

Realising synergies in the context of transactions is one of the most decisive topics deal makers need to manage. It is not only about monetising synergies; in fact, synergies usually do not just happen. Their achievement has to be planned thoroughly in advance: ideally during the pre-deal phase and definitely before signing.

There are three key questions you should be addressing:

1. How do I identify the revenue and/or cost synergies and which ones should I prioritise?
2. How will I realise the synergies and how long will it take?
3. What metrics will I measure the synergies and how will I track them?

We can assist you from initial synergy analysis early in due diligence through implementing and capturing results that can be confidently communicated to stakeholders long after the transaction closes.

How we can help you:

• Synergy assessment by performing a detailed synergy analysis in the due diligence phase; defining areas of synergies and identifying and quantifying the synergy potentials
  
  
• Capturing and tracking synergies by following a well-defined, disciplined, and transparent approach to creating value and tracking synergies

How do I decide what, when, and how to sell?

Through acquisitions, you have accumulated a collection of investments with a diverse range of industries and geographies, each with distinct upside potential, risk profile, operating maturity, and degree of control.

As the market and business environment continually changes, you may have reached a time to exit your investment to realise the return before it vanishes and continue to capitalise other more valuable opportunities in the market.

There are four key questions you should be addressing:

1. How do I identify which component(s) to sell? What is the right time to sell? What metrics should I use to make the exit decision?
2. What type of buyer or investor do I want to attract?
   
3. How do I prepare for the sale of component(s) to ensure smooth transaction? What should be the appropriate transaction structure for my deal?
4. How do I execute the exit plan to ensure the exit plan is successful?

As part of our Portfolio Management tool, we can assist you through the entire exit process from identifying the right investments and timing to sell to executing and closing the deal.

How we can help you:

• Developing and refining your portfolio strategy, investment criteria, and guidelines based on overall core business strategy (for example, which sectors to invest in or exit and what level of exposure per sector) taking into account internal and external market and industry conditions

• Measuring the right performing metrics at the right time by developing clear consistent performance dashboards, scorecards and management report with a set of relevant, specific and measurable metrics to monitor your portfolio and make informed financial and operational decisions

• Preparing for exit by gathering relevant data, developing earnings forecast and divestment plan, valuation of components for sale, carrying out VDD and preparing data room.
  
• Executing the exit plan by revisiting market conditions, reviewing internal and external resources, conducting proper tax planning and setting up specific transaction timeline. 

How do I prepare the business for buyer due diligence and articulate the value upsides?

Potential buyers are now becoming more sophisticated and examining companies more closely than ever. Issues that were once considered minor now may delay or even kill a potential deal. By conducting vendor due diligence on your own company early in the sale process, you will reduce the likelihood of critical issues / deal blockers arising later and increase your creditability with potential buyers. This will in turn help you maximise value from the sale of your company.

Our vendor assistance specialists work alongside company management and their lead advisers throughout the process, ensuring that opportunities and issues are understood and the correct steps are taken.

For more information on vendor due diligence.

How do I separate the business division or subsidiary while preserving value?

To avoid losing value during the bidding stage when you are separating a business division or a subsidiary from the rest of your business, you would need to ensure you have a detailed and workable carve-out plan ready to present to buyers.

There are three key questions you should be addressing:

1. What are the steps I should take to separate the business and how long should it take?
2. Do I want to provide all the existing services to the buyer(s)? How should I price it and for how long should I provide it for?
3. How do I prepare the target business to be standalone (as much as possible) prior to deal close in order to make it easier for the buyer to take control?

We have carve-out experience ranging from standalone businesses, to the most complex carve-outs, across a range of sectors, advising on the sell side and buy side. We understand both vendor and buyer perspectives and their impact on value to maximise your ability to deliver deal value.

How we can help you:

• Carve-out support to help you prepare for the sale:
  o Developing a fit for purpose, cost efficient, standalone operating model;
  o Establish principles early on, define one off cost (and whose responsibility they are);
  o Defining flexible transitional arrangements to ensure the business can operate from Day 1; and
  o Create excitement, vision, and an appetite for change as people move away with the carved-out business.
• Separation planning and implementation which includes working with you to prepare and implement a robust and executable separation plan applicable for all bidders

How do I optimise (or wind down) my remaining operations post divestment of a business?

If you are divesting a part of your business, it is critical for you to have a have a clear strategy for the remaining business (restructure and optimise; or wind down and close). Based on our experience, it can take from a month up to 2-3 years to restructure or dispose your remaining business. This is driven by your future business strategy and the inherent complexity within your current business, and the external operating and regulatory environment.

To fully optimise or wind down the remaining operations and understand the cost implications, it is important to put in place a well-structured program to determine your exit strategy and ensure operational readiness of the residual business post deal closing.

Top five key questions you should be addressing:

1. What is the future business strategy and operating model of the remaining business?
2. How can we redeploy deal proceeds into new growth opportunities for this business?
3. Which people associated with the divested business will be ‘left behind’ by the divestment, and do roles exist for them in the future?
4. Do opportunities exist to ‘downsize’ the parent organisation post-divestment (for example, systems rationalisation, infrastructure cost reduction)?
5. If the strategy is to wind down and close the business - what is the timeline and key milestones? Additionally, what are the financial, operational and legal / regulatory considerations to undertake this exercise?

We can assist you to manage your win down post exits, minimise costs, determine your focused operating model and implement wind-down or closure plans.

How we can help you:

• Cost reduction by examining the selling, general and administrative expenses (SG&A) and shared service functions to identify and reduce the costs that were shared by the business sold
• Target operating model for the residual business by designing and setting up an optimal operating model to better utilise the assets and resources of the remaining business
• Wind down management office by developing and implementing a program to prepare the operational readiness of the residual business post deal closing and determining the appropriate exit strategy to fully wind down the remaining business