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Transact to transform, and transform to transact
Businesses worldwide need to sustain relevance and adapt their growth strategy to the new environment. Market and economic conditions are more challenging than ever before and technological advances such as AI mean that business model reinvention has to be on the table. Yet many are uncertain about which moves to make and how fast they can go.
While there is no set sequence of deals or transformations that companies can follow, there are both short-term and long-term approaches that are key to being a successful dealmaking organization – and to remain viable in 10 years.
Long-term: What do successful dealmaking organizations do to drive innovation and reinvention?
Through a combination of PwC studies and hands-on experience, we have found that these organizations:
- Incorporate early and sustained planning
- Consider macro-outlook and leading indicators
- Create options, allocate capital between alternatives and iterate on decisions to confirm the path and continue investment
- Focus on value creation and total shareholder return
- Leverage speed to ROI to deliver value that accelerates longer-term value creation and transformation, setting the stage and funding future investment
Portfolio proactivity
Portfolio reviews are often too infrequent, ineffective and insufficient to help a company drive long-term growth.
In our recent survey of over 2,500 senior leaders with meaningful knowledge of strategy, portfolio review and/or the divestiture process, we found that:
- Only a third of survey respondents reported having a formal and standardized portfolio review process.
- More than half (57%) of executives who tried to fix a business unit said the unit's value deteriorated or stagnated.
To ensure your company is on the right track, learn more about the importance of divestitures in a company’s DNA – and the winning formula for positive shareholder return.
Transformation multipliers
In order to be transformative, you must be geared to react, reinvent and reimagine sustained outcomes. Companies can do so by:
- Looking inward and setting enterprise-wide goals
- Shoring up enabling functions
- Critically evaluating technology platforms (software and infrastructure)
- Preparing the organization for change
One way of doing so is by coupling M&A value levers with enterprise-wide transformation initiatives. We walk through specific examples, broken down by function.
Enhanced value creation
In one of our recent interviews, a Fortune 500 COO noted that value creation often involves looking for low hanging fruit – while also finding the pieces that may already be on the ground.
In this company's case, this approach added nearly $25 million in additional value — or 30% more than executives had anticipated.
This is one example of how enhanced value creation is often identified through early planning and sustained focus on a deal.
How we can help
PwC can help you go further, faster by applying a holistic lens to reinvent your business model and achieve your sustainable growth ambitions. Our proven approach is built around the co-creation and strategic execution of the value creation blueprint that reflects the reality of dynamic changes of your customers, your competitors and your technology-enabled capabilities.
Whether it’s a transaction to accelerate your transformation, or a transformation to boost your deal return, we draw on our sector, tax, legal, managed services and functional expertise – backed by our technology platforms and assets – to co-create with a team that measures success by the value you have realized.
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