Investment and M&A
Buy, build, partner, or walk away. Value, synergies that survive contact with reality, and what the downside costs.
No practice cases of this type yet.
Invest or not?
- Returns
- Payback period
- Value at the cost of capital
- Strategic fit
- Uses what we are good at
- Helps or hurts the core
- Risks
- What must go right
- Downside if it goes wrong
- Alternatives
- Other uses of the money
Invest or not?
Returns
Payback period
Value at the cost of capital
Strategic fit
Uses what we are good at
Helps or hurts the core
Risks
What must go right
Downside if it goes wrong
Alternatives
Other uses of the money
Watch out: Agree the bar (payback within so many years) before you calculate, not after.
On a case
Should a cement maker build a ₹600 crore plant in Odisha?
Odisha plant
- Returns
- Payback against a six-year bar
- Strategic fit
- Next to limestone, far from buyers
- Risks
- Construction slowdown
- Freight costs
- Alternatives
- Expand an existing plant
Odisha plant
Returns
Payback against a six-year bar
Strategic fit
Next to limestone, far from buyers
Risks
Construction slowdown
Freight costs
Alternatives
Expand an existing plant
Go deeper
How it is lost
Unquantified Recommendation
Instead: Attach the expected impact to the recommendation wherever the case data allows it.