Strategic realignment in M&A: What buyers value most

By Ankit Khokhani, Assistant Vice President, SMC Capitals (Translink Corporate Finance in India)

In a shifting economic landscape, businesses that rethink their core strategy can position themselves as prime candidates for investment, partnerships or acquisitions. With markets constantly reshaped by new technologies, changing client needs, and intense global competition, the pressure to adapt has never been greater. Yet, many companies cling to legacy structures or stagnant operating models, missing critical opportunities for strategic realignment in M&A, growth and exit.

This inertia comes at a cost. Businesses risk being undervalued or overlooked entirely in high-stakes M&A deals without clear alignment between current operations and future ambitions.

Translink Corporate Finance has seen firsthand how proactive strategic realignment can transform a company’s narrative, valuation, and negotiation power. It is an essential process of identifying strengths, eliminating inefficiencies, and presenting a coherent, compelling growth story to potential buyers and investors.

Proactive versus reactive – the two paths to realignment

A business typically considers strategic realignment when something around it or within it starts to shift meaningfully. This trigger can be external – resulting from slipping market share, pressure on profits or disruptive new technologies – or internal, such as a merger, acquisition, or new leadership.

The path taken often falls into one of two categories – proactive or reactive. Some forward-thinking businesses take the lead, driven by a clear vision. They realign to keep pace with market shifts, launch new products or enter fresh geographies. For these companies, realignment is an ongoing process built into their regular planning, designed to maintain agility and competitiveness.

Others, however, are pushed into realignment by challenges like slowing revenues, shrinking margins, or rising competition. In more traditional or mature industries, it often takes a wake-up call, poor performance or a market shock for a business to reassess its direction. While any realignment is better than none, the most successful companies don’t wait for things to go wrong. They stay ahead by realigning with intention and consistency, shaping their future rather than reacting to it.

The anatomy of a strategic realignment and what’s often overlooked

A strategic realignment in M&A process is a structured review and repositioning of a company’s direction. It typically involves a clear sequence of actions, assessing the current state, identifying misalignments between strategy and outcomes, redefining goals, reallocating resources to growth areas, and creating an execution roadmap.

However, even with a structured plan, certain areas are commonly overlooked, which can derail the entire effort.

• Cultural alignment: Companies often underestimate how an existing organisational culture can resist or conflict with a new strategic direction, making execution difficult.
• Employees’ buy-in: A failure to communicate the “why”, “what”, and “how” of the realignment beyond senior leadership leads to confusion, disengagement, and a lack of buy-in from the front lines.
• Customer impact: In the push to realign internally, businesses sometimes forget to consider how changes will affect their customers, risking a dip in satisfaction, loyalty, or even revenue.
• Talent and capability gaps: A new direction requires the right skills. Companies often delay assessing whether their current team can deliver on the new strategy, putting off critical hiring or upskilling until it’s too late.
• Operational alignment: Updating the strategy is just one part of the puzzle. If core systems, processes, and performance metrics aren’t adjusted to match, the organisation can end up pulling in different directions, hampering execution.

A case study on unlocking value through focus

A compelling example of unlocking M&A value through realignment can be seen in the case of Piramal Enterprises Ltd. (PEL). Historically, PEL operated a dual-core model comprising pharmaceuticals and financial services. This diversified structure created complexity, making it difficult for investors to value each distinct business accurately.

Between 2021 and 2022, PEL undertook a strategic demerger, separating its two core businesses into separately listed entities. The rationale was clear:

1. Unlock shareholder value by giving focused visibility to two different business models.
2. Allow each business to pursue its own capital structure, growth trajectory, and M&A strategy.
3. Attract more targeted investor interest and achieve better valuation multiples.

The result was transformative. Piramal Pharma emerged as an independent, global player with clear M&A goals, while Piramal Financial Services repositioned itself as a focused, retail-centric lender. Both entities attracted different classes of investors – private equity, healthcare-focused, and financials-focused – leading to better valuation discovery and enhanced strategic flexibility for future M&A.

Preparing a 12-month realignment checklist

For a business looking to sell or attract investment in the next 12-24 months, prioritising certain realignment actions now can pay significant dividends later.

• Clarify the core value proposition: Streamline the business around its strongest, most scalable offerings. Eliminate distractions or non-core verticals that dilute focus or margins.
• Demonstrate scalable growth: Focus on initiatives that show a clear path to sustainable growth, whether through customer acquisition, geographic expansion, or repeatable revenue streams.
• De-risk the business model: Reduce customer concentration, diversify revenue sources, and address any outstanding legal or compliance issues. De-risking improves investor confidence.
• Strengthen the management team: Build and empower a robust management team that can operate the business independently of the owner. Investors buy into people as much as they buy the business.
• Clean up the financials: Ensure transparent, audited financial statements. Separate personal or unrelated expenses and identify one-time, non-recurring items. Investors value clean, predictable performance.
• Create a clear equity story: Articulate a compelling narrative around why the business is positioned to win, highlighting market trends, unique differentiators, and a clear long-term vision.

In today’s dynamic M&A environment, strategic realignment is the bedrock upon which successful transactions are built. It fundamentally shapes a company’s trajectory, ensuring it is not only competitive but also positioned to attract the right buyer and deliver long-term value. With over five decades of experience and a global footprint, Translink Corporate Finance is well-positioned to guide clients through these complexities, aligning strategic ambitions with market realities to secure the right deal and the right partner.

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