M&A PORTFOLIO RISK: ADDRESSING KEY CHALLENGES AND BUILDING RESILIENCE
The dynamic landscape of mergers and acquisitions (M&A) and joint ventures (JVs) necessitates a strategic approach, tailored to each investing entity’s specific risk tolerance and strategic objectives. By carefully selecting the appropriate method, these investments can unlock synergistic opportunities that are demonstrably aligned with available resources and internal capabilities. Many steps must be taken before a company can unlock its full potential value. While publicly traded companies may face unique challenges in balancing revenue targets with desired profitability, both M&A and JVs present viable pathways to achieving consolidated profitability goals through strategic resource consolidation and market expansion.
Prior to engaging in M&A, a robust evaluation of the target company is undertaken. This assessment encompasses several key elements, including required capital, enterprise valuation, industry segmentation, and served geographical markets. Additionally, a comprehensive internal rate of return projection is generated for the target company. Leveraging industry-standard frameworks such as strengths, weaknesses, opportunities and threats (SWOT) and political, economic, social, technological, legal and environmental (PESTLE) analysis, informed exit scenarios are developed alongside a meticulous examination of the underlying assumptions utilised during the acquisition process.
M&A decisions are undertaken with unwavering adherence to professionalism, transparency and fairness, with the objective of maximising shareholder value while maintaining alignment with established strategies. Investment proposals undergo multilayered review through departmental meetings to ensure comprehensive discussion and evaluation. In exceptional circumstances, independent perspectives and robust checks and balances are secured through the engagement of external consultants or subject matter experts.
Apr-Jun 2024 Issue
Sapura Secured Technologies