Our latest perspective - What's behind under-performing listed companies?
Outperform through the downturn
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Decreased uncertainty, improved decisions
Global Advisors is a leader in defining quantified strategies, decreasing uncertainty, improving decisions and achieving measureable results.
We specialise in providing highly-analytical data-driven recommendations in the face of significant uncertainty.
We utilise advanced predictive analytics to build robust strategies and enable our clients to make calculated decisions.
We support implementation of adaptive capability and capacity.
By Marc Wilson Marc is a partner at Global Advisors and based in Johannesburg, South Africa This article is part of a series of Global Advisors thoughts: http://goo.gl/4vD6aM Download this article: Please fill in your details below and you will instantly be sent a...
As many as 70 – 90% of deals fail to create value for acquirers. The majority of these deals were the subject of commercial or strategic due diligences (DDs). Many DDs are rubber stamps – designed to motivate an investment to shareholders. Yet the requirements for a value-adding DD go beyond this.
Strategic due diligence must test investees against uncertainty via a variety of methods that include scenarios, probabilised forecasts and stress tests to ensure that investees are value accretive.
Firms that invest during downturns outperform those who don’t. DDs undertaken during downturns have a particularly difficult task – how to assess the future prospects of an investee when the future is so uncertain.
There is clearly an integrated approach to successful due diligence – despite the challenges posed by uncertainty.
By Stuart Graham
We often see uncertainty in our clients about whether to focus on RONA or growth. While both are obviously important, which will create the greatest value for their companies and shareholders?
We introduced the market-cap curve to help answer this question by plotting the well-known valuation equation for combinations of RONA and growth at a constant valuation.
RONA / growth combinations along the curve preserve the company valuation. Combinations above the curve increase the valuation and combinations below the curve decrease the valuation.
It is easy to see from the graph that companies with high RONA and low growth will benefit more from growth improvements while companies with low RONA and high growth will benefit more from RONA improvements.
The market capitalisation curve provides a useful boundary for capital allocation when business segment performance are plotted against the curve.
ANY performance improvement of ANY business unit raises the aggregate performance and therefore moves the curve outwards – i.e. increases company value.
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We help clients to measurably improve strategic decision-making and the results they achieve through defining clearly prioritised choices, reducing uncertainty, winning hearts and minds and partnering to deliver.
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Consultants join our firm based on a fit with our values, culture and vision. They believe in and are excited by our differentiated approach. They realise that working on our clients’ most important projects is a privilege. While the problems we solve are strategic to clients, consultants recognise that solutions primarily require hard work – rigorous and thorough analysis, partnering with client team members to overcome political and emotional obstacles, and a large investment in knowledge development and self-growth.
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