Strategic Opportunity

Exponential Technology improvement is creating significant new market opportunities

  • Industrial/Energy

    Human monitoring vs predictive
    maintenance/Assets as a service

  • Medical

    Manual vs. Machine Vision
    aided diagnostics

  • Automotive/Transportation

    Automobiles/trucks vs autonomous
    solutions

  • Financial/Prof Services

    Stock brokers vs Robo-advisors

Traditional incumbents require aggressive strategic pivots

Six potential strategic responses

1

Continuous Improvement

  • Incremental design and business model improvements
  • Common approach until disruptive forces significantly impact growth and margin
2

Corporate Venturing

  • Internal venture fund
  • Invests in potentially disruptive companies and creates synergies with core business
3

Innovation Engine/Accelerator

  • Internal venture fund
  • Invests in potentially disruptive companies and creates synergies with core business
4

Consolidation/Regulation

  • Protective play to core business through consolidation of industry or regulatory control
  • Asset-heavy short-term solution
5

Acquisition

  • Purchase and integration of disruptive technology growth company
  • Disruptive technologies integrated to core business
6

Growth Technology Based Carve Outs

  • Growth-Oriented surgical asset carve out with disruptive technology and outside tech funding
  • Management, talent, investors, and incentives aligned for tech based growth

Growth Technology Based Carve Outs create the most share holder value

For significant growth opportunities, a Growth Technology Based Carve Outs strategically changes the playing field in 3 key ways

 

Current Business Model

Growth Technology Based Carve Outs

1
Growth
Mindset

Current Business Model

Value based/Quarterly margin focused/Legacy constraints

Growth Technology Based Carve Outs

Growth and new market focus/industry transformation
Technology
Experience

Current Business Model

Limited new business model/tech experience

Growth Technology Based Carve Outs

Technology foundation for carve out
Investment
Capital Access

Current Business Model

Constrained investment capital/$50M meaningful investment

Growth Technology Based Carve Outs

$100-1Bn external capital investments norm/required

2
Investor Type/
Value Creation
Model

Current Business Model

Value margin and dividend focused/10-15X margin multiples

Growth Technology Based Carve Outs

Growth based/Revenue growth/5-30X revenue multiples

3
Talent
Recruitment/
Access

Current Business Model

Brand/Stock incentives limited/11X non-software to software engineers

Growth Technology Based Carve Outs

Leading brand/High potential stock incentives/1/2X non-software to software engineers/10Xers

All Growth Subsidiary carve out stakeholders will see significant strategic and financial upside

Stakeholder
Strategic Upside

Traditional
Incumbent

  • Leading edge capabilities and market leading position in a new high growth technology driven market opportunity
  • Access to next generation technology, talent and investors
  • Equity stake in high growth, high-valuation company

Technology
/Startup

  • Market leading next generation AI/IOT technology solutions
  • Access to traditional core assets that are critical but non software related
  • Steady revenue stream resulting in less dilution and ability to recruit seasoned senior executive talent
  • Significant more upside lower risk

Family Office/
VC Capital/
CVC

  • Solid ROI
  • Demonstrated technology driven Growth Technology Based Carve Outs strategic business and investment model
  • Potential for higher return via growth