Game on with Grant Thornton

Published by

Jo Whittle

Grant Thornton’s Business Strategy Game gives competing teams an exciting opportunity to pit their wits against each other in a battle to maximise the equity value of a business. It’s also an enjoyable reminder about the importance of strong teamwork and a useful corporate finance learning tool.

Are you a risk taker or do you prefer to play it safe? Can you make crucial decisions under intense time pressure to grow your business? Those questions, and many more, faced 100 executives from over 30 Thames Valley companies who’d accepted Grant Thornton’s challenge to participate in its new Business Strategy Game. It was devised by the corporate finance team at the firm’s Thames Valley office.

Grant Thornton’s guests enjoyed dinner at the Royal Berkshire Conference Centre in Reading’s Madejski Stadium before the evening’s 11 teams commenced battle. Jim Rogers, practice leader at Grant Thornton Thames Valley, introduced the six-round contest that is based on taking a thriving business to a successful exit by maximising its equity value over a period of several years.

“I hope we see a lot of debate on strategic planning and collaboration in our teams. The game should help all of us understand more about how businesses build shareholder value over time. We hope you find it fun, instructional and eventful,” said Rogers.

Play to your strengths

As the teams eagerly ripped open their information packs they discovered they would be running one of the UK’s leading providers of risk and compliance solutions to the UK’s food industry for a five-year trading period. The game draws on Grant Thornton’s experience working with clients who have gone through similar growth stages towards an exit. With more than 1,400 possible outcomes, the game was anyone’s to win.

Wendy Hart, head of Grant Thornton’s corporate finance and strategic advisory team in the Thames Valley, explained the key factors that would determine the eventual winner: EBITDA growth, a good exit multiple (the value the market places on the business) and managing debt levels.

“It’s a team game where you should each play to your business strengths. You’ll all have different views on risks. Some strategies deliver higher returns but with higher risks. Share your views and decide which options you think will have the most overall positive benefit on the three metrics,” she advised.

Earlier decisions had an impact on subsequent rounds. A digital clock loomed large on screens around the room to remind team members how much time remained for them to reach a consensus.

Each team appointed a CEO who had the casting vote on split decisions. “We can blame them if we don’t win,” quipped one competitor.

Round one – Innovation

Should you move into a new business area, enhance technology you already have, or develop a potentially transformational artificial intelligence (AI) capability?

Round two – Recruitment

One of the game’s toughest choices was about people rather than products. Do you promote your loyal financial controller to CFO? How about the CFO with M&A experience who comes with a hefty pay demand that includes a 5% equity option. Or maybe the cheaper CFO, who has less M&A ability but more modest equity stake expectations.

Round three – To PE or not to PE

A simple choice to accept or reject a £5m capital injection from a private equity firm. The amount of equity each team had to hand over depended on their performances in the first two rounds. Would a profitable exit value require outside funding, or would the stake taken by PE have a negative effect at exit?

Round four – M&A

A tricky choice of whether to make a single acquisition or purchase three different businesses. Debate was intense in this round. Financial projections were digested, and questions posed about whether the newly appointed or promoted CFO’s negotiating powers would be up to scratch.

Round five – Customer choice

The clock was ticking as teams picked from a choice of customer partnerships during this flash round. Do you expand business with a restaurant chain, go for a supermarket with lots of outlets, or opt for a food processing client? By now, team members were working much more cohesively to discuss and agree a decision.

Round six – Growing internationally

The final push to maximise exit equity value required teams to consider the benefits of solid UK-focused growth versus international expansion with existing clients. Teams were diving deeper into the mass of financial information about each option and quickly reaching an outcome.

And the winner is…

All the answers were fed into Grant Thornton’s financial model to generate the final result. There was a tie for third place between teams Good Evans Above and Comply or Die, with team Everest in second place. Team Up4It pipped them all, achieving an impressive value of almost £112 million. To the victors went the spoils – in this case bottles of champagne and boxes of chocolates.

If only the value of real-life business exits could be sorted out over an agreeable dinner and with a quick fire game of strategy and nerve.

Game set to take off

The showdown in Reading was the first public run-out for the Business Strategy Game after it had been tested. Paul Tillstone, corporate finance manager in the firm’s Thames Valley office and one of the game’s creators, was delighted with the positive response.

“There was lively debate at every table and people were really engaged. Although it is only a game, once they started playing our guests really bought into it – they wanted their company to succeed and they wanted to win,” he said.

“We don’t know of any similar game aimed at CEOs which is equity-value driven. We’re planning to digitise the game so that we can further develop the optionality and increase the information available to contestants, and we believe that it could have ongoing value as a training and team building tool.”

Thames Valley corporate finance partner Wendy Hart was also pleased with how well received the game has been. “So far, we have found the game to engage players with a huge range of experience, from private equity professionals and corporate finance specialists right through to our newest trainees,” she said.

“There is lots to take from the game in terms of learning and thinking, from the rudiments of commercial business valuations at one level to the nuances of timing and risk/reward at another.

“We hope to use the game to help our teams and our clients think a bit differently about strategic decision making as well, of course, to demonstrate our depth of experience in supporting them in maximising and realising the value in their businesses.”

Positive feedback

“It was interesting getting feedback from people with different backgrounds and seeing our team dynamic evolve over the rounds as we listened more to each other.” Andrew Carter, northern Europe sales manager, XP Power

“The scenarios felt real. It’s not just about making the right decisions, but also thinking about how you respond and adapt to whatever you decide.” Tony Fossey, chief financial and operating officer, LMC group of companies

“I thought the game was very engaging, so that it is a great ‘shared experience’ and did help us to connect with each other.” James Shand, director, vfdnet