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| Economic
Diligence™: Philosophy |
RPA’s
Economic Diligence™ services
are not bound
to a single methodology (e.g. Decision Analysis
or Multi-Attribute Theory). We choose the avenue
or mix we believe best meets the client’s
business needs -we have no axe to grind. Whichever
detailed methods prove to be right for a specific
valuation, our overriding concern always is
the usefulness of the whole process to the
client and the format in which answers can
be provided and acted upon.
So, the key principle
which underpins and drives all our analyses
is shareholder value. Whether we develop custom
simulation tools for a large project or agree
a quick overview based on a handful of spreadsheet
models and facilitated discussions, our key
currency for reporting is the impact on shareholder
value for those owing (or intending to own)
an asset, technology or company. The technical
details are ‘interesting’ but always
subordinate to obtaining meaningful results
and developing useful insights.
Back
to Economic Diligence™
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Each
assignment is special and distinctive but all start the
same way: by agreeing with the client the scope of the
valuation, the related issues to be tackled and the decisions
to be supported. The charter includes timescales, resources,
methodology and deliverables. Working with the client
team, or that of the external asset to be valued, the
process often entails ‘reverse engineering’ the
existing business plan/model through structured dialogue
and assessment sessions to avoid bias and anchoring.
This allows us, once the valuation model is built, to accommodate fully
the wide range of issues and uncertainties that exist beneath the surface.
In this way, the final answer becomes much richer and more helpful than
the ‘expected-’, ‘best-’ and ‘worst-’ case
scenarios that are often all that accompany an initial project proposal
or investment bid. So, getting a single “answer” can often
be secondary to generating insights that reveal where potential value is
created and destroyed and how risks can be managed. Moreover, clients are
not only equipped to challenge initial assumptions but to choose more appropriately
between alternatives, make informed trade-offs and produce the alignment
within the decision-making group that will be the keystone for subsequent
successful execution. |
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