Scope of work
Portfolio reviews assess the businesses and projects competing for a company's resources. We examine the commercial position, financial performance and future funding needs of each activity. The comparison makes differences in risk, maturity and capital intensity explicit.
Capital-allocation work also considers the practical effect of a proposal on the rest of the group. Shared costs, management capacity, working capital and dependencies between business units can change the apparent return. Recommendations can cover investment priorities, restructuring options, further investigation or preparation for a possible disposal.
We build a comparable view of performance and funding requirements, then examine the alternatives under common scenarios. The assessment distinguishes business assumptions from financing assumptions and tests the sensitivity of the recommendation. Management retains responsibility for investment decisions and for obtaining any required financial, tax or legal advice.
Questions to address
- Investment proposals use inconsistent cash-flow or cost assumptions.
- Historical budget allocations determine funding more than current priorities.
- Business units have different risk profiles but are assessed using the same assumptions.
- Shared costs or dependencies obscure the economics of a portfolio choice.
When to consider this work
- Capital planning
- A portfolio or business-unit review
- Competing expansion proposals
- Preparation for a potential acquisition, carve-out or disposal
How we approach it
Normalize the proposals
Reconcile performance definitions, cash-flow periods, capital requirements and shared costs. Identify gaps that prevent a fair comparison.
Compare allocation choices
Assess commercial position, strategic fit, risk and financial requirements. Examine how alternative allocations affect the remaining portfolio.
Prepare the recommendation
Explain the recommended priorities, key sensitivities and conditions for approval. Specify which assumptions should be reviewed as commitments progress.