What Is a Strategic Review?
A strategic review is a formal process initiated by a company’s board of directors or controlling shareholders to evaluate all available strategic options for the business. The process is publicly announced (for listed companies) or conducted confidentially (for private companies), and typically culminates in a recommended course of action — which may include a sale of the company, a merger, a capital raise, a recapitalisation, a spin-off, or a decision to remain independent.
For sellers in M&A, “commencing a strategic review” is often a formal signal that a business is exploring a sale. For listed companies, the announcement of a strategic review typically triggers a share price reaction as investors price in the probability of a control premium.
Why Boards Initiate Strategic Reviews
Strategic reviews are initiated for a range of reasons:
| Trigger | Explanation |
|---|---|
| Unsolicited takeover approach | A board receives an unsolicited takeover bid and must evaluate whether to engage |
| Shareholder pressure | Activist investors or majority shareholders push for value realisation |
| Capital requirements | The business needs growth capital it cannot fund independently |
| Succession or founder exit | The founding family or owner-managers seek liquidity |
| Market window | A favourable M&A environment creates an opportunity to sell at an attractive multiple |
| Business underperformance | The board concludes that an alternative owner could generate superior value |
| Portfolio rationalisation | A conglomerate separates a non-core division |
The Strategic Review Process
A structured strategic review typically follows these phases:
1. Board authorisation — The board formally authorises the review and appoints an investment bank or M&A advisor to run the process. For listed companies, legal advisors are simultaneously engaged to manage disclosure obligations and insider trading restrictions.
2. Option identification — The advisor maps all realistic strategic alternatives, including full sale (auction process or bilateral), partial sale, merger of equals, joint venture, dual-track process (simultaneous M&A and IPO preparation), recapitalisation, or standalone plan.
3. Market outreach — The advisor approaches potential buyers, partners, or investors under non-disclosure agreement. For private companies, this is done confidentially. For listed companies, selective outreach must navigate continuous disclosure obligations — typically managed by limiting outreach to a small number of parties while the process is in-progress.
4. Evaluation of alternatives — The board compares options based on value, certainty, timing, tax implications, and strategic fit. A fairness opinion may be sought from an independent financial advisor to confirm that the recommended option is fair to shareholders.
5. Board decision and announcement — The board selects and announces the recommended option. For listed companies, this triggers a shareholder vote if the transaction exceeds materiality thresholds. For private companies, controlling shareholder approval is typically required.
Strategic Review vs Auction Process
A strategic review is the framework within which an auction process may be run. The distinction:
| Strategic Review | Auction Process | |
|---|---|---|
| Scope | Evaluates all strategic options | Specifically a competitive sale process |
| Initiator | Board or majority shareholders | Typically the seller / M&A advisor |
| Outcome | May or may not result in a sale | Designed to result in a binding offer |
| Public announcement | Often announced (listed co.) or confidential (private) | Private company processes are rarely announced until signing |
A strategic review may conclude with the board running a full auction process, or with a bilateral negotiation with a single preferred buyer, or with a decision to remain independent.
Strategic Reviews for Private Companies
For privately held businesses — the typical mandate for Lyndon Advisory — a strategic review is rarely announced publicly. The founder or family shareholders engage an M&A advisor to evaluate:
- What the business could achieve in a sale at current market conditions (valuation range)
- Which buyer types would generate the highest control premium
- Whether a full sale, a management buyout, or a minority recapitalisation would best meet the owners’ objectives
- Whether timing is right relative to business performance, sector multiples, and M&A market conditions
This evaluation informs whether to proceed to a formal sale process and at what price expectation. Lyndon Advisory provides this strategic review as part of sell-side mandate engagement.
Announcement Risk in Listed Company Reviews
For ASX-listed and other publicly listed companies, announcing a strategic review carries risks: it signals to competitors that the business may be for sale; it may trigger employee and customer uncertainty; and if the process does not result in a transaction, the share price may fall as the market removes the premium it priced in at announcement.
Some boards manage this by conducting a confidential strategic review and only announcing once a transaction is imminent. Others announce the review to attract buyer interest — typically used where the board believes broad market engagement will generate a higher price than a bilateral process.