Value preservation through a challenging period

More so than ever before, corporates must ensure that their operations are focused on what is strategically important to the business going forward. Management teams need to concentrate their time and investment on what is core to their businesses to safeguard their operations and key stakeholders through this period.

What to consider as a larger corporation

Corporate restructuring is not always the answer to protecting shareholder value, particularly if the units or divisions being restructured add value to the wider group either independently or through working together with other parts of the business.

Managers must, therefore, consider a number of critical factors that can help assess whether a potential restructure is the right decision to take:

  • Does management have the bandwidth to support all current operations effectively?
  • Could cost savings be delivered that would outweigh the revenue impact delivered by the division / unit?
  • Would the sale of part of the business generate cash that could be better invested in the core business?
  • Does the business unit / asset own its own customer relationships? Are these services / products delivered separately from the parent company?
  • Can the business’ cash flow support the on-going requirement of all operations? Are certain parts of the business a “drain” on cash in the short or medium term?
  • Could parts of our business perform better on a standalone basis, without the restrictions of being part of a wider group?

What to do

In these trying times, there are three key actions you need to take:

  1. Assess and review overall operations and divisions to conclude on which are potentially “non-core.”
  2. Develop a “key issues” report to help with the feasibility of successfully completing transactions.
  3. Develop a transaction strategy that addresses the needs of all your stakeholders.

Get in touch

Mazars has extensive experience of working with and advising large corporates through periods of change.

Our Deal Advisory and Restructuring Services teams have delivered bespoke transactions for an array of large corporates looking to divest of non-core/distressed assets often through time pressured situations and complex stakeholder requirements.

We can work closely with you to produce your key issues report and assist your Board in its decision-making. We can help you prepare the business unit/assets for sale, including focused marketing materials and a robust financial model, find and engage quickly with a tailored list of suitable acquirers, and design a bespoke process to drive competitive tension and maximise capital value.

Time is of the essence, but a considered and planned approach is critical to preserving and maximising value. Decisive decision making is key and positive changes made today will help the business through this period of challenge but also position the business to emerge from the crisis leaner, stronger and better suited to deliver for its customers and clients.

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