An economic slowdown is an opportunity for CEOs and COOs to optimize their business portfolio for sustained growth. It impacts valuations, potentially driving down the price of attractive acquisition targets while making marginal businesses less desirable. In our experience, companies that create value in these circumstances tend to display a mindset of continuous business mix transformation, including the use of both acquisitions and divestitures.
Transact to transform
Investors can often be impatient with lagging performance during an evolving business environment. A transaction can more quickly boost financial outcomes than relying on organic change. A CEO’s success in dealmaking comes from understanding market trends and focusing on a cohesive, connected, holistic vision for the future across strategic, operational and financial measures.
Feel the power of portfolio renewal and divestitures
Trying to fix problematic business units can be frustrating for executives, board members and investors. A PwC survey found that 57% of respondents that tried to fix a business unit said the unit’s value deteriorated or stayed the same. Continuously reviewing businesses to determine if you’re their best owner can help avoid that situation, but it’s up to CEOs to lead portfolio management.
Create meaningful business ecosystem strategies
During periods of economic uncertainty, CEOs tend to reconsider partnerships and focus on protecting market share. Counterintuitively, ecosystems can provide better financial outcomes by capturing revenue that might otherwise be left on the table.
What’s your M&A dealmaking identity?
M&A is all about the numbers, right? Wrong. Go beyond the bottom line and take our brief assessment to discover your dealmaking identity. You’ll learn more about your approach to the overlooked factors in deals and how you can make sure you’re capturing value throughout the entire M&A process.