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THE VALUE CREATION MODEL

 

Generally, when we take a case, there is a sense of urgency. We have the ability to act quickly by deploying our team members and leveraging on our experience and network. We identify three main phases in the value creation cycle:

House-Keeping &
Strategic Rewiew

 

Phase I

 

  • Resolve urgent problems/ liabilities

  • Eliminate non-critical costs

  • Total operating & financial review

  • Industry analysis

  • Company & SWOT analysis

  • Competition & competitive analysis

  • Identifying avenues for growth

  • Balance sheet analysis

  • Review of capital structure

  • Develop strategic value creation plan

The first phase of the process is to stabilize the condition and this is done by resolving the problems and situations requiring immediate attention. This is followed by total review and analysis of the internal business operation, demand, customers, competition and trends in the environments. Together with management and other major stakeholders, the discoveries and conclusions drawn from these analyses will form the basis for the design of a new strategic value creation plan. The plan sets ambitious long-term objectives in conjunction with short-term goals that will revitalize the company.

 

Phase II

 

  • Strengthen management team

  • Align incentives with value creation KPIs

  • Re-organization (for growth)             

  • Raise capital for new value creation plan

  • Optimize & reposition product portfolio

  • Improve operating & financial controls

  • Invest in operating assets/ Q.C.

  • Invest in innovative culture/ R&D

  • Strategic management of IP assets

  • Improve R&D & production technology

Implement Structural
Value Drivers

During the second stage, the work of laying the foundations for growth will begin in earnest. Many programs here are operational in nature and involve working together with line executives and external specialists. We will closely monitor the strategies and programs to ensure that they are working according to plan and make adjustments where necessary.

Organic & Inorganic Expansion

 

Phase III

 

  • Introduce new products & new markets

  • Divest non-core businesses/ assets

  • Forge strategic JV/ partnerships/ alliances

  • Invest in long-term supply chain

  • Expand sales & distribution channels

  • Acquire through “buy-merge-build” strategy

  • Integrate new acquisitions

  • Develop strategy & prepare for IPO/ RTO/ dual listing/ debt & other securitization

  • Initiate financial engineering initiatives

In the final stage, when clear indications of improvements in the operations and financial ratios emerges, we will then be more aggressive towards accelerating growth; by moving into new products and markets, and taking on projects with longer term horizon. Acquisition activities could be stepped up if the right candidates are found. Financial strategy and engineering that will boost company’s market valuation will be initiated. These include developing strategy and preparation for initial public offering (IPO), reverse takeover (RTO), dual listing and other capital market initiatives.

The whole process may take 2 to 3 years. Our involvement normally start at the beginning, but it is possible to start at any point in the value creation cycle. Typically, we set up a value development team within the candidate’s company, acting as an extended management team, supporting management in executing the value creation plan and to enable management to focus on the day-to-day business.  In cases where needed, we will take up executive positions for a limited period of time. When required, we will draw upon our network of strategic partners and external professional advisors and consultants to support our efforts.

 

At the end of the cycle, we would expect the company's competitive position, growth prospects and profitability to be substantially increased. At the same time, the positive developments in the company’s fundamentals will be clearly reflected by significant upgrades in the market valuation.

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