Study approach
The study analyzed the following aspects : The strategic rationale behind each deal as well as the deal frequency and volume of the 16 corporates . Additionally , strategic groups were created by combining the deal frequency and volume .
STRATEGIC RATIONALE
DEAL FREQUENCY & DEAL VOLUME
STRATEGIC GROUPS
• Corporates pursue different investment and divestment strategies according to individual strategic rationales
• Depending on the rationale , the investments show different returns of value and hence total shareholder return
• Deal frequency is defined as the number of deals closed per year by one company ( more than two deals : high deal frequency ; less than two deals : low deal frequency )
• Deal volume is categorized by the acquisition cost paid for one acquired asset ( more than € 200M : high deal volume ; less than € 200M : low deal volume )
• Each deal was analyzed using the two dimensions
• Strategic groups were created on the basis of the combination of deal frequency and volume
• Each combination was carefully analyzed and the average annual TSR was assessed
• Each analyzed company was placed into one of the four strategic groups according to the predominate investment behavior
Investments into new strategic areas show the highest average annual TSR
A high deal frequency and a low deal volume show the highest average annual TSR
The combination “ string of pearls ,” with its high deal frequency and low deal volume , shows the highest average annual TSR
Source : goetzpartners
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