Funding Partner

The Funding Partner

SSCP would either invest its own capital in smaller projects or when the scale of the projects or investments make ones eyes tear we would bring the financial muscle of our global funding partners.

These funding partners include a portfolio of large state-owned or private entities, investment funds, banks and insurance companies from around the world, whether Asia, the US or Europe. When it comes to finding operating partners who have the financial means to co-invest, our canvas becomes even bigger and we can target the most suitable partner from across our group’s extensive network of client dealings.

Finding the most suitable long-term funding partner who shares similar goals and the same ethos as the targeted investment team is core to our philosophy. Any successful implementation is like a marriage and requires dedication, hard work and synergy; it is our role to make it so.

Acquisition Strategy

SSCP is a sister company to Stern Value Management. SSCP shares the Stern brand but is a separate corporation acting as corporate finance advisor and strategic equity partner.

SSCP continually scours the international market, including looking at the Stern Value Management client-base globally, for potential corporate finance transactions and endeavours to be a pro-active deal creator. The company attempts not to operate in the typical low-value reactive corporate finance deals – waiting for clients to approach the firm to implement deals they have already agreed on – but rather to focus on more pro-active deal making. In fact, the most proactive deals would be those where the company acts as principal.

The general idea is to focus on specific industries where the team has material expertise, select blue chip clients within those industries and pro-actively identify value creating opportunities for those clients.

In general, the companies that SSCP plans to acquire stakes in or advise on are at a transition point in their development and SSCP is to act as ‘agents of change’ for these businesses. Turnarounds and distressed situations lead to many lucrative opportunities.

SSCP’s acquisitions or transactions could take many forms. This may involve attaining strategic equity stakes at group level, or acquiring divisional assets through corporate divestiture transactions, partnering with family-owned businesses and strategic buyers, or growing companies through consolidation strategies or by driving organic business growth. SSCP’s experienced team would assist in developing value creating strategies, performing due diligence, raising the requisite financing and sourcing the correct partners.

In short Stern Value Management is the EVA performance measurement and incentive scheme consulting firm while SSCP is a strategic equity partner. SSCP takes equity stakes in a business and pro-actively uses EVA to turn the business around and unlock value.

SSCP Deal Performance – When acting as principal

Typically dealmakers are paid fixed fees or commissions on the deals they conclude and therefore there may be a motivation to focus on deal magnitude rather than on maximizing value. Moreover, there is little accountability (reward or penalty) for the deal performance after deal conclusion, save for indirect reputational benefits or penalties.

Whenever a deal is to be implemented by SSCP as principal, EVA targets will be set up front and continual post-deal measurement and review will be performed. Using the EVA performance framework, dealmakers will therefore remain accountable after the deal has been completed.

SSCP will continually monitor such deal performance and ensure proper deal implementation; especially compliance to value-based principles. This monitoring, strongly related to corporate governance, means that, depending on the nature of the deal, SSCP may either be represented on the client’s board or, in large listed companies, at least assist a sub-committee of the board to manage such performance measurement.

Research has shown that the largest reason for Mergers and Acquisition failure is post-merger integration. “Are you able to extract the synergy benefits you paid for originally?” This is especially of concern if one is not actively or operationally involved. Applying one’s own best practices (one’s key people and financial resources) in a roadmap to unlock value is the key to success. One needs to measure, motivate and drive the correct behaviour.

SSCP Fee Income

While our competitors mainly earn once-off income, SSCP will share long-term risk with its clients and be rewarded accordingly. The company aims to build annuity income and gain long-term capital growth in the client businesses.

SSCP could take its fees in out of the money stock options and equity or a combination of an upfront fee/commission and long-term convertible preference shares.

Background

Stern Value Management supports companies in their quest to continuously create value. Founded in New York in 1981 the firm has been a the leading international management consultancy for value management. The firm measures the success of its consultancy work in terms of the improvement of the fundamental enterprise value. This is expressed in the EVA^® concept that the firm developed and which has become an international standard. Its integrated consultancy approach ensures that all measures to achieve an increase in the value of the enterprise are matched to one another and consistently interlock with one another.

“We have been the pioneers in the development of value-based management. We have successfully translated the theories of modem finance and economics into practical solutions, working together with our clients to address their problems and their specific needs. Numerous studies, whether conducted by us or determined independently, show that our clients outperform their peers, according to total shareholder return, throughout the business cycle.” Joel M. Stern.

Services

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