casemark/preparing-strategic-alternatives-board-materials

Preparing Strategic Alternatives Board Materials

When To Use

• Board is evaluating transformative corporate actions: M&A, divestitures, spin-offs, recapitalizations, or going-private transactions
• Management needs to present a structured comparison of strategic paths (status quo vs. sale vs. merger vs. restructuring)
• Special committee requires independent framing of alternatives with supporting financial analysis
• Company is responding to unsolicited acquisition interest and must document the board's deliberative process
• Annual or periodic strategic review where capital allocation alternatives are formally assessed

Inputs To Gather

• Company financials: Latest audited statements, management projections (base/upside/downside), and current capital structure
• Market context: Trading multiples, peer comparables, sector M&A activity, analyst consensus estimates
• Strategic alternatives under consideration: Status quo, sale (whole or partial), merger, spin-off, recapitalization, dividend/buyback expansion, joint venture, or liquidation
• Prior board discussions: Minutes, previous strategy presentations, any existing advisor materials
• Stakeholder considerations: Key shareholder positions, employee/customer/regulatory sensitivities, change-of-control provisions in material contracts
• Valuation inputs: DCF assumptions, precedent transactions, premiums paid analysis, and any third-party fairness opinions or preliminary indications of interest
• Timeline and process constraints: Regulatory filing requirements, debt covenant restrictions, contractual lock-ups, or market-driven urgency

Workflow

1. Frame the strategic question — Define the decision the board must make. State the catalyst (unsolicited offer, underperformance, market dislocation, shareholder activism) and the scope of alternatives to be evaluated.

2. Build the situation analysis slide set — Summarize current financial performance, market position, and valuation gap (if any). Include trading history vs. peers, sum-of-the-parts analysis, and key operational metrics that drive value.

3. Define each alternative with specificity:

   • Status quo / standalone plan: Management projections, required investment, execution risks, and implied equity value range
   • Full sale: Likely buyer universe (strategic and financial), expected valuation range based on precedent transactions and premiums, process timeline, and regulatory considerations [VERIFY antitrust/CFIUS/sector-specific regulatory requirements]
   • Partial sale / divestiture: Which assets, estimated proceeds, remaining entity profile, tax implications [VERIFY tax-free qualification criteria if spin-off structure]
   • Recapitalization / leveraged recap: Pro forma capital structure, dividend capacity, credit rating impact, covenant feasibility
   • Merger of equals: Synergy estimates, governance structure, exchange ratio analysis, social issues
   • Other alternatives as applicable (JV, licensing, IPO of subsidiary)

4. Construct the comparison framework — Build a side-by-side matrix scoring each alternative on:

   • Implied per-share value range (low / base / high)
   • Execution risk (regulatory, financing, integration)
   • Timeline to value realization
   • Impact on stakeholders (employees, customers, communities)
   • Reversibility and optionality preserved
   • Tax and structural efficiency [VERIFY jurisdiction-specific tax treatment]

5. Develop the financial impact analysis — For each alternative, present pro forma financials: EPS accretion/dilution, leverage ratios, ROIC impact, and free cash flow profile. Include sensitivity tables on key assumptions (growth rate, discount rate, synergies, purchase price).

6. Draft the recommendation framework — Present management's or the advisor's preliminary recommendation with supporting rationale. Structure as: recommended path, key reasons, primary risks, and mitigants. If no recommendation is appropriate (e.g., special committee process), frame as "considerations favoring" each path.

7. Prepare process and next-steps slide — Outline proposed timeline, advisor engagement plan, required shareholder approvals, regulatory filings, and key decision milestones.

Output

A board-ready presentation package containing:

• Executive summary (1–2 slides): Strategic question, alternatives considered, headline financial comparison, and recommended path forward
• Situation overview (3–5 slides): Company performance, market context, valuation analysis, and catalyst discussion
• Alternative-by-alternative analysis (2–3 slides per alternative): Description, financial impact, execution considerations, and risk factors
• Comparison matrix (1 slide): Side-by-side scoring grid across all evaluation criteria
• Financial detail appendix: DCF models, comparable company analysis, precedent transactions, sensitivity tables, and pro forma statements
• Process roadmap (1 slide): Timeline, workstreams, advisor roles, and board decision points

Use board-appropriate language: direct, data-driven, and free of jargon that assumes investment banking familiarity. Label all projections with their source (management plan, analyst consensus, advisor estimate). Mark any preliminary or unconfirmed figures explicitly.

Quality Checks

• Every financial figure ties to a sourced input — no orphaned numbers
• Each alternative includes both a value range and an explicit risk assessment
• Comparison matrix uses consistent metrics across all alternatives (not apples-to-oranges)
• Fiduciary language is appropriate: materials support an informed board decision, not a predetermined outcome
• Sensitive assumptions (synergies, control premiums, discount rates) include sensitivity ranges rather than single-point estimates
• [VERIFY] Regulatory and tax assumptions flagged for jurisdiction-specific counsel review
• [VERIFY] Confirm whether Revlon duties, enhanced scrutiny, or business judgment rule framing applies to the board's decision context
• No forward-looking statements presented without appropriate caveats
• Materials structured so that each section can stand alone if selectively shared with advisors or committee members