Task: To advise a large mining group on its exploration and production options within its diamonds division.
Work completed: Stage 1 analysis proved to management the relatively low competitive advantage of the business with increasing downside risk as costs will likely increase faster than those of competitors. Stage 2 proved there were no inorganic or organic growth opportunities that would reverse the likely negative trend and thus divestment of the business for value is the best option. In Stage 3, the Executive Committee decided to divest the entire diamonds business which was completed for a sale price of over US$500m.
Task: To advise an oil products business on its pan-African strategy including recommending changes to its downstream portfolio.
Work completed: Stage 1 analysis of the African portfolio showed that the business was struggling to compete in small markets given its high cost footprint driven by central overheads. This was exacerbated by supply chains that were not optimised across or within countries that could offset cost pressures. However, brand recognition was extremely high and seen positively by every country for at least one product. Stage 2 proved that it would be possible to maintain brand presence as well as reducing costs through strategic partnerships with high quality low cost providers, in effect managing the brand on behalf of the oil products business. Following Stage 3, management sought structured divestments from all small countries (the majority of the portfolio) and to focus resources on large countries such as South Africa. The divestment was concluded for US$1b and included licenses for the brand, thereby maintaining both divestment value and brand presence.
Objective: To assist a startup to formulate and execute a business strategy to commercialise a new neuroscience invention.
Work completed: Stage 1 analysis proved that market research was the best field of use given relative competitive advantage versus other technologies due to its low per unit cost and no requirement for specialist installations. In Stage 2 key strategic partners (large well known multinationals) were identified to pilot the technique and prove its efficacy versus current methods (questionnaires which are notoriously unreliable). In Stage 3 expansion options were evaluated and a marketing plan developed on the back of the pilot studies. The business grew quickly and was at the forefront of the creation of a new multi-billion dollar industry, ‘Neuromarketing’, and achieved a 40% IRR.
Objective: To evaluate options for an oil company’s portfolio of 3 poor performing refineries.
Work completed: Stage 1 due diligence proved that whilst the portfolio was slightly profitable in the short term, long term reversions to the mean would again show the refineries to be marginal at best. Competitors were already investing in larger more complex assets further exacerbating the long term viability of the portfolio. Stage 2 proved that divestments as going concerns was preferred to avoid refinery closures, save jobs and support continuing marketing businesses such as fuels, bitumen and lubricants via supply contracts. In Stage 3 a structured sale process was undertaken. All three refineries were divested in two packages to separate buyers for a total of over US$1.3b, thereby saving over 2,000 jobs.