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