Part 6 - The cost of waiting
If, after evaluating the relevant alternatives, you check the why, what, how, and where boxes of a control change event—the ‘when’ has already been answered, and the meal has already been cooked.
As I pointed out in Part 5, this scenario recently came to life for Premier Investments and Myer. Today, the strategic combination of retail brands/channels is being implemented as an RTO; yesterday, it was an acrimonious standoff, and if the current proposal doesn’t go through, the shape may shift again tomorrow. But the outcome remains: the Lew family will expand their legacy, protect and grow their assets, and, with Myer in hand, they’ll face future omni-channel retail headwinds with a stronger, more resilient position.
The bottom line? When competing interests align on a complex, multifaceted deal—there is no point in waiting to strike—because the cost of waiting will most likely be brutal for one of the parties.
Take Myer, for example. A quick glance at its share price chart and current valuation paints a picture of many years of value erosion—essentially, the cost of waiting to consolidate a worsening competitive landscape impacted by the amazon, omni-channel retailing and COVID. Lew waited for the best entry. Successive Myer boards waited too long, eroding shareholder value along the way. At the same time, the time has allowed Premier Investments to become a $5.4 billion retailer that gets to do a low-cost, cashless deal for the Myer control by swapping ~$800 million in retail assets to gain >50% of Myer shares, which is by all standards a small company with a current ~$800 million market cap. Even after distributing Myer shares in-specie to Premier Investment shareholders, Lew’s interests retain control of the entire retail assemblage—secondarily, setting up some smart takeover defence.
The lesson? Holding onto a business too long can mean losing the opportunity to optimise legacy and wealth, while acting decisively after aligning all competing interests can be a winning strategy.
Put another way, if your business can’t catch the prevailing industry tailwinds, but you can sell it to or combine it with a business that can (and create enduring advantage and value) —you should consider doing just that.
The key? If you don’t want to pay a big delay premium like Myer has, you need a firm grasp on what today’s landscape means for tomorrow’s value—and that’s what NextLevel Corporate Advisory injects into every corporate development assignment.
Visit our customised corporate development journeys page here and feel free to reach out for ☕🥐 if you would like to discuss your specific circumstances.
Mike
With decades of success across six continents, NextLevel Corporate Advisory expertly navigates the intersection of M&A, financial advisory, and business strategy—bringing you exceptional corporate development and growth solutions.
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