An Analysis of the Acceleration of Portfolio Restructuring Post-Pandemic by Deepak Agarwal
ATLANTA, GA / ACCESSWIRE / July 16, 2021 / Business operations worldwide were shrouded in uncertainty throughout 2020, as a series of unpredictable events unfolded throughout the course of the coronavirus pandemic. Business executives were forced to act quickly in order to adapt to changes within the supply chain, tailor to shifting consumer behaviors, and manage other obstacles. As 2021 brings the hope of a “new normal”, companies are now looking further into portfolio restructuring - divesting from inefficient resources, and reallocating funds towards more promising opportunities.
Dee Agarwal, a leading investor, strategic advisor, and entrepreneur, has spent the last 18 months during the global pandemic observing the acceleration of portfolio restructuring, as businesses around the world resume operations in an entire new playing field.
“We saw a lot of structures - logistical, organizational, international - become disrupted, some even uprooted, from the pandemic. Now, as the environment changes, these structures are being rebuilt, or restructured, around new trends and patterns. Portfolio restructuring is a practice of every good business, but what we’re seeing now is that it’s almost necessary,” says Dee Agarwal.
See below for more of Dee’s thoughts on portfolio restructuring and its implications post-pandemic.
Restructure, then restructure again
Portfolio restructuring is not a static practice. Research by McKinsey shows that companies that involve themselves in active portfolio restructuring outperform the market by approximately 5%, whereas most companies review and adjust their portfolios only once every year or so.
“The pandemic taught us agility, and we can apply this when managing our asset portfolios by making quicker decisions. Lots of times you’ll see companies procrastinate moving resources out of fear that those decisions might not return well. Oftentimes the same companies that fail to recover on a loss are those that don’t review their portfolios frequently to see it coming. Portfolio restructuring isn’t just a one-time thing - it needs to be active, frequent, and flexible,” says Dee Agarwal.
With frequent portfolio evaluations, businesses can prioritize the assets that prove themselves beneficial for the future, rather than holding onto units that were hit hard by the pandemic.
Invest in the tools
Allocation decisions often feel difficult because they are risky. Luckily, there are several portfolio management tools, such as Propel, that can help business leaders make decisions with more speed and confidence.
“Having a model or framework to guide your portfolio will remove a lot of hesitancy when it comes to decision making. There are a lot of great tools out there that can precisely track potential growth prospects, as well as illuminate risk areas that might otherwise fly under the radar. Investing in these tools will help you harness better portfolio management and restructuring,” says Dee Agarwal.
Portfolio management tools provide visibility - by assigning scores and other performance metrics to moving units, companies can better forecast opportunities that will create more value in the long run.
Looking from the outside in
Many times, internal data and analytics can provide the evidence needed for divestment. But in situations when the data is not as clear, stopping to view your assets from the outside in is a good alternative.
“We tend to view our assets through its value to the business, which is a narrow view and we often are looking for unrealistic growth from those assets. Instead of asking what the asset is worth to your company, ask what the asset would be worth to your competitor. Taking a step back to evaluate your macro environment is just as important as evaluating your microenvironment,” says Agarwal.
Nothing has affected the macro environment more than the pandemic. Some industries have thrived, while others have suffered brutal consequences. Having a holistic view of your surroundings will help in your portfolio restructuring process.
As vaccines roll out and traffic resumes and dining rooms begin to re-open, life is starting to operate like normal again - but with a lot of restructuring. For businesses alike, the need to restructure everything from heading back into the workplace to adjusting global strategy remains the task ahead.
With frequent portfolio evaluations, management tools, and an outward-in perspective, company leaders can begin allocating more resources to the assets that have survived and thrived from the pandemic, rather than suffered.
“It’s about breaking down the pieces of your big strategy, and seeing how all the pieces have been affected by this pandemic, and determining where your strategy should shift for the future. Portfolio restructuring is all about decisions, which can be difficult. But with the right steps, these decisions can become easier to make,” says Dee Agarwal.
For more insights on business strategy post-pandemic, check out Dee Agarwal’s Top 5 2021 Consumer Trends and Predictions.
SOURCE: Deepak Agarwal
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