In the first phase of the project, the CRA team evaluated the company’s current valuation relative to its peer group and then set actionable, realistic long-term performance targets to increase the valuation. For the next phase, each business unit was placed into growth, core, or restructure performance groups, which were used to assist the client in identifying growth and business improvement options. The improvement options included the development of new growth platforms, divestiture, and business model transformation coupled with aggressive cost reduction. In the third phase, the CRA and client team jointly developed several corporate growth options and modeled their financial implications. Finally, in the fourth phase, we recommended a growth plan based on the evaluation of risk, doability, financial implication, and strategic fit with the client’s long-term objectives.
By rigorously analyzing the portfolio, we were able to identify three portfolio improvement initiatives. In the annual report, the CEO referred to the portfolio management exercise developed by CRA as an “enlightening experience” that would allow the company to “consistently improve overall returns” going forward.
The client has embraced the recommendations from our study and is actively implementing the suggested strategy. Since implementation started, total shareholder return increased 9 percent, outperforming the S&P 500. We continue to work with various business units to assist with the implementation of the various portfolio management initiatives.
The Convergence of Financial and Societal Value, and What It Means
In this Marakon Commentary, Charlie Johnson and Christine Delivanis discuss how until very recently, the market and society more generally were less aware of...