Stress-testing the value proposition
Given a positive assessment of the business case, the CEO should then oversee a further process often applied to M&A situations: stress-testing the value proposition through various ‘What-if?’ scenarios. This means looking at what can go wrong, who can go wrong – and what will happen if either of these eventualities comes about.
From the CEO and board’s perspective, this involves a warts-and-all evaluation of the risks inherent in moving ahead with the deal. ‘We are where we are today,’ runs the board’s thinking. ‘The deal is embedded in that position. What if we acquire another business? What if we sell a division? What if there are union problems after the deal? What if we enter a new country? What if the ...
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