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Banking & Securities
Corporate and Capital Markets Strategy |
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Capital markets clearly have become more volatile and less forgiving to underperforming companies, but they need not be viewed as a black box. In our experience, well-executed strategies that reflect value creation, key value drivers, and appropriate risk-taking will be rewarded by the stock market. Accordingly, companies need to formulate an integrated value-creation strategy based on their perspectives about their historical performance, current competitive landscape, buiness unit opportunities, and financing capabilities. This strategy must reflect a risk/return trade-off that is acceptable to management and serves as the foundation for reviewing the corporate portfolio to determine if changes would enhance value. This review process includes assessing which type of transaction - acquisition, divestiture, equity carve-out, spin-off, tracking stock, etc. - would be optimal. We also addres issues related to capital structure, such as optimal leverage, to ensure that a company has the financial foundation to execute its strategic decisions.
For example, with under-performing companies we may start by determining the company's latent value. Comparing this latent value with current market capitalization may reveal the gap between the value put on the company by investors and its value to the management. We then explore ways of creating and/or enhancing the perception of value: both internally (for example, by reducing overheads or reallocating invested capital) and externally (for example, by launching an M&A-based growth program or by divesting unprofitable operations).
By examining all options and combining them into a single package of measures, we help our clients to determine the theoretical value target and set out a specific plan to achieve it. |
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What We Do
Our work in the capital markets strategy arena includes: |
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Performing capital market analyses
We assist clients in understanding and interpreting the current capital market expectations for their company and how markets assess their value creation potential. We then translate capital market expectations into quantitative benchmarks for operating performance and managerial targets. Often, these analyses are powerful tools to resolve the asymmetries between the market's and the company's own perception of strategic priorities (e.g., Return On Invested Capital vs. growth).
Developing ownership strategies and corporate governance systems
Recent years have seen an explosion in ownership restructuring, not only in M&A, but also in spin-offs, carve-outs and share buy-backs. We help clients to develop ownership restructuring strategies that both optimize strategic flexibility and satisfy the market's demand for transparency, focus and alignment of management incentives with shareholders' expectations.
Developing financing strategies
In addition to structuring specific transactions, for example in M&A and alliance situations, we also work with our clients to unlock value by restructuring their balance sheets while preserving the flexibility of their business strategies.
Developing capital market communications
A well-managed communications program that clearly articulates its business strategies and effectively manages investors’ expectations is an essential element of success in capital markets. Capital markets are not always efficient, and a company's ability to achieve transparency and clear communication of corporate strategy and targets can have a major influence on shareholder value. We work with clients to help them understand existing communication "gaps" and to define clear and coherent programs to convey information about the business and manage expectations about future performance. |
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| Apply for Extranet Access |
Epicurus has an extranet with insights into the industry, including an extensive article database, resources to help you to get in touch with industry experts and tools to help you communicate with your consultant. Free access is granted to existing clients.
Apply today |
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