Objective
The Strategic Alternatives Review provides a framework for business owners to explore their capital market alternatives available which will allow them to meet their goals and objectives. We view the business owners' current inherent equity value as a portfolio asset that is invested or "rolled over" in the business. This equity, when viewed over a five year period has a return. This return is evaluated in context of risk (business and market), wealth creation, and other alternatives available that will meet stakeholder goals and objectives. The following is a list of the strategic alternatives:
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STRATEGIC ALTERNATIVES
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Status Quo
– organic growth,
Recapitalization – obtain shareholder liquidity or to
lower cost of capital
Growth Capital – product line or plant expansion,
new product rollout
Acquisition(s) – add-on, fold in, diversification,
vertical integration
Divestiture – sale to financial or strategic buyer
or management
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Approach
- Understand the goals and objectives of the shareholders and managers
- Establish a “Status Quo” alternative of the business based upon a five year projection
- Determine Value (Discounted Cash Flow, Market Comps and Leverage Test)
- Develop alternatives that meet shareholder objectives
- Summarize alternatives and review financial and business impact of implementing each alternative
- Compare alternatives on the basis of wealth creation, risk, and meeting owners’ objectives
- Recommend and assist in selecting the most appropriate alternative
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