If the decision on the optimum development path of the company has not been taken yet, the starting point is the strategy. Acropolis Advisory may assist you in verification of available development scenarios and assessment of their impact on the company’s future value and risk profile. This analysis helps to evaluate the market perspectives, as well as opportunities and threats faced by the enterprise. Once this definition of the company’s environment has taken place, we can proceed to identify company’s strengths and weaknesses, which will enable the management to properly structure their priorities. It is often the case that less efficient business lines or functions require a restructuring plan. In some instances it calls for the need to spin off and potentially dispose of the underperforming parts of business. The proceeds can then be deployed to support the core activity.
Entrepreneurs – owners of a large pharmaceutical wholesaler, have been approached by a multinational industrial player interested in entering the Polish market via acquisition of their business. The problem they faced during the discussions related to a new service line being developed by the company. In the opinion of the Entrepreneurs, the new activity constituted a very promising platform to build on future growth, compared with the stable wholesale business. However, the bidder’s point of view was quite different: the new business did not fit into their core competencies, was relatively small and required substantial financial and management resources. To make matters worse, it did not break even yet. Because of all that, the bidding price included substantial discount in relation to the Entrepreneurs’ expectations.
At that time the Entrepreneurs sought assistance of an advisor. His role was to execute the disposal of the business and to improve the price conditions.
Even comprehensive analysis of the business revealed that the new and fast growing activity, which was still operationally and financially linked to the core wholesale business, decreased the profitability of the company. This, for sure, impacted the perception of the bidder. Moreover, the growth potential of the new activity failed to be properly demonstrated and was still hidden in the core business. The advisor recommended that the activity be spun off and excluded from the transaction. As a result of the restructuring, the core business was sold to the bidder for a much improved price, and the proceeds were partly used by the Entrepreneurs to further increase momentum of the growing service line.