To advance sustainability at scale, leaders need to double down on those initiatives that accelerate the growth and duration of cash flows.
How We Help Clients with Value Creation in Business and Activism Defense
Whether an organization is focused on creating value in business, justifying a high multiple, guarding against an activist shareholder attack, or overcoming a new activist campaign, our value creation consulting team has the relevant experience. In our value creation strategy work with clients, we:
- Consider how to maximize shareholder value of current corporate and business strategies. What is the future cash flow from each of the corporation’s businesses likely to be—and how does it ladder up to an estimate of the company’s future multiple and TSR? What strategic options exist to enhance performance?
- Determine the optimal capital structure and best use for excess cash. When it comes to funding investments, what is the right mix of free cash flow, equity, and debt? And since most financially healthy companies generate cash well in excess of their reinvestment needs, how much of that cash should remain on the balance sheet versus being returned to investors via dividends and buybacks? Finally, how does the capital structure change under different strategic assumptions?
- Evaluate and optimize the match between the value creation strategy and the investor base. Do investors see the strategy as credible and consistent with their investment priorities? If not, what needs to change: the strategy, the shareholders, or both?
Our Client Work in Activism Defense and Creating Value in Business
Whether your organization is seeking to ignite a new wave of value creation, justify a high multiple, guard against an activist attack, or overcome a new activist campaign, BCG has the relevant experience. For example, we helped:
A North American soft-goods manufacturer understand why its market returns were below par despite strong fundamentals. The revised business, financial, and investor strategies we developed increased their TSR, price-to-earnings ratio, and stock price by 30% when compared with the market and the company’s peers.
A global logistics player break a cycle of underperformance and adopt value-based management practices that led to a new performance trajectory with TSR 10% above the market.
A major enterprise tech player prepare for and inoculate against a potential activist attack by analyzing an array of potential portfolio moves,
cost reductions, and financial policy choices. The work led to two scenarios forecast to boost valuation by as much as 100%. The strategy ultimately outperformed by warding off an attack and leading to a doubling of the company’s share price within two years.
A leading global biopharma company respond decisively to a hostile takeover attempt by a competitor and an activist. Rapidly exploring strategic options, we helped the company develop a shareholder activism defense plan in six weeks to reduce costs by more than 15%, creating roughly $30 billion in incremental value and enabling the company to attract a white-knight acquirer.
Spotlight: Defending Against Shareholder Activism
Shareholder activism is on the rise.
From 2005 through 2019, the number of activist attacks globally grew from 54 to 191—a rate of more than 9% per year. And it’s not just subpar performers that are targeted. Nearly one-third of companies attacked from 2016 through October 2020 were delivering three-year total shareholder returns above the S&P Global 1200 median as of the month prior to the attack—and more than half of those also had a forward price-earnings ratio above the S&P Global 1200 median.
Defending against an activist attack is costly.
Shareholder activist defense costs extend beyond dollar value. Management time that could be spent building medium-term advantage is diverted to the short-term crisis. Asking one question can help build immunity to activist shareholders: does our strategy focus on value creation in business?
BCG is the industry leader.
We are the only major consulting firm that has an explicit policy against working for shareholder activists. We only support our corporate clients in preparing for and responding to activist demands. Using our proven proprietary toolkit, our value creation consulting team rapidly identifies the ways to unlock value and the transformational moves that mitigate shareholder activism risk.
Our Insights on Value Creation in Business and Activism Defense
Article
January 28, 2025
Article
April 19, 2024
Lifted by last year’s strong capital markets, the average annual total shareholder return surged across the companies in BCG’s Value Creators database.
Article
December 7, 2023
Two decades of data show how leading distributors deliver strong shareholder returns. Distributors must generate local and national scale and fight to defend and grow their market share.
Article
May 5, 2023
Our 25-year retrospective finds that long-term value creators excel by driving growth through innovation, differentiation, and self-disruption.
Article
November 16, 2021
Exactly how the world will reach net zero is unknown, but at a macro level the science and economics define a pretty clear path. Given the magnitude of value at stake during the transition, many leaders are concluding that inaction may be the riskiest strategy of all.
Article
November 16, 2023
What is the impact of the crisis on investors’ expectations for the US economy, the US stock market, and business leaders?
