This is a comprehensive capital allocation case that requires candidates to think through multiple dimensions: identifying which business unit to divest (strategic fit and growth), calculating the proceeds, then optimizing project selection using profitability indices. The case tests both qualitative judgment and quantitative analysis skills, with a clear path to a defensible recommendation.
Your client is the CFO of Aperture Laboratories, a leading US biopharmaceutical company with a market cap >$150B. Aperture develops and manufactures a diversified range of products and in particular prides itself on saving millions of human lives every year.
The company is under investor pressure because of its slow firm value growth over the next 10 years. Investors are very anxious to see significant changes announced at the firm in the next quarter. The CFO has already identified and evaluated several high-growth, promising, but capital-intensive projects, and she does not have enough cash to invest in any of these opportunities. What does she need to do next?