How can we create a better, more efficient, worldclass experience for our TAS clients and people?
EY introduces Strategy and Transactions
A new outlook
From July 2020, EY has transformed its Transaction Advisory Services (TAS) department to a new look, a new name, and most importantly, a new structure now known as Strategy and Transactions (SaT).
The new structure is a simplified, clearer structure which is aimed at improving efficiencies for our clients, and encouraging better integration and teaming. The new structure moves from four sub service lines to three: Transactions and Corporate Finance, EY-Parthenon and International Tax and Transaction Tax Services. SaT provides clients with capital and transaction strategy through to execution, to enable fast-track value creation for inclusive growth.
Our service lines
The first sub-service line, Transactions and Corporate Finance, brings together Transaction Diligence, Valuations, Modelling and Economics (VME), and Lead Advisory. Transaction Diligence includes services like financial due diligence, forecast analysis, operational improvement analysis, carve-out/integration analysis and planning, and change management services. VME offers business valuation solutions, mergers and acquisitions advisory, decision modelling and economic advisory services. Lead advisory includes tactical and strategic advice for corporates, and financial sponsors as well as negotiation assistance and other transaction related topics such as capital and debt advisory, asset and capital allocation advisory, government and corporate infrastructure advisory. These three competencies have been the most successful within the old TAS structure and we look forward to greater success resulting from the longstanding and deep relationships with our clients and vast opportunities for new clients. EY-Parthenon is a new sub-service line in SaT. Its purpose is to create a distinctive, global, world-class strategy practice, aimed at delivering long-term value to our clients, our people and EY. EY-Parthenon houses three strategic competencies: Strategy, Transaction Strategy and Execution, and Turnaround and Restructuring Strategy. This sub-service line brings together professionals with diverse strategic capabilities and deep sector insights, and a genuine knowledge of key players in all sectors.
The third sub service line is one that is not new to EY. It is simply a joint venture with the Tax department. Every transaction has tax implications, whether it is a restructuring, a valuation, an acquisition, remodelling or internal change. Questions such as how an acquisition should be structured to maximise tax efficiency need to be answered appropriately. It is thus important to ensure that the right decisions are made, and tax implications are considered. International Tax and Transaction Service assists clients to make the informed decisions which will align with the long-term strategy.
These services assist us to engage with clients operating in different sectors, each with its diverse specifications, some relatively small and some large. The knowledge and experience we obtain increases on a daily basis as we interact and engage with clients. We are able to gain knowledge relating to the challenges being faced by entities and thereby gain both local and international insights which may not be readily available in the mainstream. This enables us to create suitable solutions, and provide an integrated corporate finance proposition for clients. We can achieve this by leveraging a market leading sector and transaction advisory capabilities, and providing exceptional client service to those we serve.
A changing landscapeIt goes without saying that the world is changing, and at a fast pace. The unforeseen, sudden and rapid outbreak of the COVID-19 pandemic has caught businesses by surprise. This unprecedented change has created a completely new operating environment. Some businesses have managed to adapt to the changes while others find themselves exposed. How this will all work out for each individual or corporate is hard to determine at this stage. However, we find more and more businesses focusing on their people’s welfare, adjusting their operating models and managing their cash flow. With lockdowns lifting around the world, and in Zimbabwe, the need to improve and manage capital and cash is becoming more and more prominent for businesses. Resuming business during this time of major complexity, uncertain demand, anxious employees, increased health and safety costs, and creaking supply chains is further complicated by organisations, inability to answer questions relating to how they will manage liquidity challenges and thereby drive sustainable cash improvements.
The Capital Agenda Framework
In such a context, the need to have strategic conversations with our clients, which in turn creates greater success for them and their businesses, is imperative. As SaT, we continue to use the Capital Agenda framework. By identifying and understanding which dimension or dimensions our clients are focused on, we can align our services appropriately to their objectives. The Capital Agenda focuses on four dimensions reflecting what a company is seeking to accomplish: 1. Raising Capital. This dimension seeks to answer the question how will we win the competition for scarce resources?
The second dimension is Investing Capital. In this everchanging environment, a question to pose is how can we seize growth opportunities that others may be unable to? SaT has the expertise, local insights and deep understanding to assist companies in answering these questions. The third dimension of the Capital Agenda is Preserving Capital. This dimension assists companies with focusing on how they can better anticipate and adapt to market conditions as they change. Finally, the fourth dimension is Optimizing Capital. Businesses need to continually ask the question how can we increase and maintain investor confidence? EY’s Capital Agenda helps businesses respond and deal with business disruptions, as well as realise strategic options and opportunities. 2. 3. 4. 5.
Supporting an informed investment journey
As EY SaT we are here to assist with the services mentioned above. One topical strategy that entities are engaging in during this time is investing and raising capital. What investments are your business making? In a very recent webinar we hosted, we unpacked the various issues and considerations for investors in a candid conversation. We understand that there are opportunities to invest in many sectors including financial services, infrastructure i.e. energy and transport and more. An internal survey we conducted indicated that there was a lot of interest in the energy sector, i.e. IPP, solar, wind. In Zimbabwe, research shows that the need for power sector diversification and higher generation to meet demand will present opportunities for risk-tolerant investors over the coming years, mainly in the solar power and training and development sectors.
Potential investors to Zimbabwe may however be concerned about business being deterred by the uncertain policy environment, complicated valuations, a relatively heavy tax burden, economic imbalances complicating investment decisions, and Levels of Governance and exchange controls While there is always room for improvement, the government of Zimbabwe, like other governments around the world, continues to work hard towards promoting investments and has put in place some measures to combat this. These measures we have seen via leadership changes where necessary, various policy amendments and strict regulatory environments. One other measure which was put in place is the formation of the Zimbabwe Investment Development Agency (ZIDA) Act. This act aims to deal with the promotion, facilitation and protection of investment in the country.
Today, there is more need for appropriate, strategic conversations than ever before. Evolve or die seems to be the mantra of the moment. It is apparent that the SaT is at the heart of most of these conversations, as businesses will need keen insights into the market landscape. The Covid-19 pandemic has presented a set of unprecedented market and demand challenges. As businesses plan in the near term, medium term and long term, they should be adequately prepared, and ensure that they have the right advisors beside them.
To find out more contact Velile Ncube, Strategy and Transactions Senior on:
Email: velile.ncube@zw.ey.com or eymarketing@zw.ey.com Address: Angwa City Building, Corner Julius Nyerere Way/ Kwame Nkrumah Avenue. P O Box 62, Harare, Zimbabwe. Tel: +263 4 750905/ 750979
This article was compiled by EY as a source of general information and notification and should not be construed as a formal professional/legal opinion. Although reasonable skill and care is taken when providing information, EY offer no warranties or representations as to the information’s accuracy. The information provided is not intended to replace the need for an expert/ legal opinion on interpretation, application and consequences of the relevant legal, technical or regulatory provisions. E Y does not accept responsibility for any loss or damage you or any third party may suffer as a result of utilising the information provided.