Aligning Strategic Alternatives to C-Level & Board Level Priorities aka Executive Alignment

Strategic Alternatives are Added to Close Gaps in C-Level & Board-Level Strategic Priorities:

Before meetings with the client, the investment banker needs to do their research & preparation to understand the top C-level or board level priorities. They do this by reading the MD&A portion of 10k, earnings calls, and interviews with the media.

These strategic priorities ultimately have an expansionary or contractionary impact on line items in the financial statements (ex. Increase revenue, decrease costs). These changes in line items impact ROI which is why executives care about P&L and the line items on it. If you can drive more revenue, decrease revenue churn, or decrease expenses, then you can make an adequate business case for a strategic alternative.

Key Questions:

1. What are strategic priorities?

● EBITDA margin expansion

How many points of EBITDA margin expansion are they promising to the Street/investors?

Are we in an EBITDA margin contracting or margin expanding environment?

● EBITDA growth

● Multiple expansion

2. What goals have they targeted for their strategic priorities?

3. What KPIs are they using to quantify their strategic priorities?

Then align strategic alternatives to these goals & KPIs. This is executive alignment.

Key Strategic Alternatives Question:

Where is the ROA coming from in the value chain and vertical/subvertical?

As in what functionality is being rewarded with better margins and a better multiple. This would be a key starting point when evaluating and planning corporate strategy. This will tell the C level what businesses they should be in or not be in.