The financial analysis carried out to support strategic decisions and M&A transactions has not changed for the last twenty years. Pottinger has developed new thinking and new analytical tools that bring much greater rigor and insight to large strategic and investment decisions.
This is particularly relevant in a rapidly changing world, where base case scenarios are of little use in appraising opportunities. Our Strategic Analytics business brings the sophistication of big data analytics to bear on the largest and most complex of problems.
It is ideally suited to situations where major commitments must be made in the face of considerable uncertainty, or where data is accessible but its implications are unclear.
What is strategic analytics?
Strategic analytics is the use of the combination of analytical and statistical techniques to help companies and governments solve their strategic problems. This helps our clients to obtain material commercial advantages from quantitative insights which others simply cannot see.
Data analysis is just the first step. Strategic analytics links the analysis of data with the decision-making process to advise on what decisions should be taken to achieve the desired strategic outcomes.
Strategic analytics in action: recent case studies
Seeing through the weather
Pottinger acted as financial advisor to two potential acquirors of Cubbie Station, the iconic Queensland cotton property. To inform our valuation analysis, we carried out a highly sophisticated analysis of the agricultural and weather risks affecting the property, based on over 100 years of weather data and the IQQM.
As a result, we were able to deliver new insight into the valuation of the property, risk mitigation opportunities and the optimal capital structure for a highly volatile asset. Our analysis provided direct recommendations as to how to optimise on-farm operations, as well as providing direct estimates of the credit risk of the property given a particular capital structure.
Staying above water
Pottinger was retained to advise various Queensland Government owned entities on the formation of Queensland Urban Utilities, created via a $4.3bn five way merger. Our quantitative analysis of risks and uncertainty impacting the business was critical in establishing the optimal capital structure for the company.
As a result of our input, a resilient capital structure was chosen. When the business was impacted by the dramatic Brisbane floods six months later, the company was able to implement emergency capital expenditure without needing to seek additional equity capital from its five council shareholders.
Finding hidden gold
Pottinger has developed a ground-breaking proprietary global project and company valuation model for assessing the valuation of resources projects across a variety of minerals that takes into account a wide variety of input factors, not just basic reserves and resources measure.
Our model substantially outperforms commonly used valuation techniques in the sector. More importantly, it directly quantifies the impact of various factors on the value of resources projects, providing guidance to project developers in where their capital is best invested to maximise returns to shareholders.
Investing ahead of the curve
Pottinger was retained by a leading retailer to provide advice and perspective on the performance of a new store concept. Early results from the first year of trials had been seen as disappointing and the company was considering whether or not to proceed with the initiative. Our quantitative analysis of weekly sales figures and their implications for the growth trajectory over the medium term provided a fresh perspective.
Our model demonstrated that the early performance data was in fact consistent with achieving a substantial market share within the medium term. As a result, an accelerated roll-out strategy was justified. This avoided the premature abandonment of a potentially highly profitable diversification strategy, and highlighted the opportunity to create additional value through early investment.