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Global Diversified Conglomerate Untethers Its Holdings to Unleash Growth

October 6, 2018

Proven Results

GlobalCo*, a diverse conglomerate with operations in 118 countries and over 160,000 employees worldwide, recognized that some of its portfolio companies were missing their profitability targets among other performance issues. The company sought P&C’s guidance to identify and solve the performance and profitability issues at its holding companies.

At a Glance

The Situation

GlobalCo, a diverse conglomerate with operations on five continents, owned businesses in multiple industries including logistics, biopharmaceuticals, commercial real estate development, energy and exploration, financial services, technology infrastructure, and luxury retail. GlobalCo’s board of directors had set a minimum rate of return for invested capital for their portfolio companies, but some fell below their goals. In addition, given the rapidly growing size and scale of some its portfolio companies, GlobalCo sought opportunities to share infrastructure across the enterprise to leverage its economies of scale and reduce duplicative costs. After evaluating and eliminating complex proposed solutions with unclear outcomes from multiple global consultancies, P&C was engaged to address the following challenges:

  • Identify which portfolio businesses have high potential for growth and scalability and those which need to be divested.
  • Identify issues tethering performance at high potential businesses and define strategies to boost performance at each.
  • Identify any low-hanging M&A opportunities for inorganic growth at high potential businesses.
  • Define a strategy and approach for the creation of a shared services organization to deliver common business services across the enterprise to include the following functions: finance, accounting, treasury, audit, technology infrastructure, human resources, risk management, and corporate real estate.

Our Approach

P&C worked closely with GlobalCo’s key stakeholders – C-level leaders and stakeholders from across the company and board of directors – to gather, consolidate, and prioritize the expected outcomes of the solutions sought.

With input from key client stakeholders, we created specific frameworks to address each challenge:

Our Recommendations

P&C’s top priority was to identify which of the underperforming businesses had potential for substantial growth and which needed to be divested. Concurrently, we wanted to identify potential opportunities to improve businesses already performing well along with potential M&A opportunities to scale those businesses to a new level.

The Results

GlobalCo divested all low-potential, non-performing businesses, made two strategic acquisitions valued over $7 billion, and created a state-of-the-art shared services organization which reduced $375 million in annual costs across all of its businesses. In addition, return on operating income increased from 12 to 27 percent over a 2-year period across all businesses.

*We take our clients’ confidentiality seriously. While we’ve changed their names, the results are real.

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