The CEO of a $5 billion subsidiary of a major Western U.S. bank holding company (BHC) correctly surmised that the unit was not a core holding of the BHC. The CEO wanted to prepare potential strategies for spinning off or selling the unit to prepare for a possible request to do so from the BHC’s top management.
A E78 executive, as a consultant, assisted the CEO and CFO in evaluating the firm’s options as an independent company and as a spinoff candidate. He prepared a clear line-of-business projection suitable for due diligence input and valuation, prepared a company valuation based on the projection, created a potential buyers list, and evaluated the pros and cons of selling to various categories of potential buyers.
- Within one year, as anticipated, the BHC top management instructed the subsidiary CEO to evaluate options for the business.
- The business was sold in six months to one of the companies targeted by the consultant’s analysis, using a model and valuation close to those suggested by the analysis.