We map pathways towards clinical and commercial success to improve decision-making and maximize expected value.
Our clients wish to think holistically about a company’s portfolio of businesses and products, conceiving and spearheading ways to make their aggregate value durable over time and greater than the sum of its parts. They look for support devising decision-making strategies that allow them to weigh relative options and avoid getting caught in path dependences.
Considering the value-maximizing objectives of a client, we examine and validate the expected value of an asset or portfolio based on management’s corporate development plan and opine on the likelihood of success. We think through strategic choices – such as either maximizing profit or maximizing growth – to determine the highest value opportunities. We map out the options and the pathways to realize those outcomes based on those that are strategic, value-creating and have elasticity (i.e. options that have the capacity to recover quickly from difficulties).
- Strategic options allow the business in aggregate to continue to participate in structurally attractive markets and ones that allow a firm to effectively compete in their chosen markets. Value-creating optionsmaximize intrinsic value or surface market value by finding the right owner. The intrinsic value (which we help to develop) needs to be greater than that of competing portfolio options, all other things being equal, if an asset or business is to be retained. Value is created over time by increasing intrinsic value – either by increasing returns on existing capital employed, consistently investing new capital to generate returns that exceed a company’s cost of capital, or by releasing unproductive capital.
- Options that have elasticityhave continued viability in a changing environment. With shifting economic conditions and the possible consequences of massively disruptive technologies, no one can be certain how customer needs, competitive dynamics, or industry boundaries might change.
We can evaluate a company’s current performance and determine where value is being created or destroyed. For large firms with large portfolios, this will routinely require looking at the drivers of intrinsic value: revenue growth and return on invested capital (ROIC) for each component of the business. For early-stage firms without commercial products, this will entail a review of the investment choices and/or potential value creation from various indications under development, identifying bifurcation points, timings, and risk/reward profile.
We may assess the value of an asset or portfolio under different ownership to determine the value of each scenario. As example, this could include the status quo value to owners, the growth option value from continued ownership, the value to a new entrant, the value to a competitor, and/or the value to a financial buyer. By assessing options in this way, we present a picture of value today, vs. tomorrow, under various assumptions.
Variety of options
We always work to make many options available to our clients, both strategically and financially. For example, when it comes to transactions, companies that have multiple options available (e.g. a range of available funding sources, a broad assortment of potential acquirers who they have warmed up to, and/or various pathways to greater profitability) have the best chance to achieve a successful transaction that meets their objectives.
BATNAs. Not only do we look at options for maximizing value and present the specifics of alternative strategic choices, we also outline a Best Alternative to a Negotiated Agreement (BATNA). Having BATNAs means our clients have leverage. Leverage in turn keeps counterparties focused and keeps them working quickly, and on favourable terms; internally, it supports focus and alignment.
- Conceptualization. Conceiving and creating an understanding of alternate ways to value creation over time – and as a function of each other.
- Navigation. Mapping out current and future options, and the pathways to realize pre-defined outcomes based on those that are strategic, value-creating and have elasticity – ruling out those that are not.
- “Stage-gating”. Planning of future strategic choices – that weigh both feasibility and risk. These may include product development choices, corporate strategy choices along stages of commercial growth, or alternative deal sequencing which our client could pursue depending on the success or failure of specific milestones.
- Clarity. Objectives-based criteria for decisions under uncertainty, and executable alternative choices – presented well in advance of when our clients need to make the decision. Considering a variety of different, plausible, future environments building on the one that reflects management team’s targeted future.
- Deep insight. Our experience and market insight do not restrict our assessment to internal factors, but include competitive dynamics, competing pipeline developments, as well as changing macroeconomic fundamentals into our assessment of future decision nodes and available choices.
- Freedom of thought. We can think innovatively and actively encourage creative discussion within our team. This leads to results for our clients that stand out.
- Holistic perspective. We are honest and diligent advisors that will stand firm even when challenged. We provide a valuable neutral viewpoint from the outside that is based on having seen companies and products succeed or fail across market cycles and geographies.
- Operating expertise. Our team has hands-on leadership expertise including the management of growth, transition and change. We know the subtleties behind the scenes and have been successful resolving them.
We provide the service to a broad range of firms and are not constrained by a company’s domicile.
Our optionality creation efforts allow Clients to confront their uncertainty with executable choices that enhances decision-making.
We present clients with a synthesis of what choices they have – well in advance of when they need to make them – considering a variety of different, plausible, future environments. We outline what needs to be done in advance to make decisions that have impact. This 2-minute survey will help us understand to what extent Optionality Creation is right for you.