Capital Allocation Strategy

Capital Allocation is the basis on which Covelent was founded. We specialise in advising CEOs and executive teams on optimising the deployment of scarce capital, focusing talent and management attention on the most impactful areas, and guiding strategic decisions on acquisitions and divestments. Our approach addresses the critical questions of efficiency and strategic alignment in capital allocation.

Creating Transparency and Strategic Guidelines

Our process includes:

  • Investment Portfolio Analysis: Conducting a thorough review of the current investment portfolio to understand the allocation of resources and their returns. This involves assessing the effectiveness of existing investments in driving business objectives.
  • Strategic Capital Budgeting: We develop strategic capital budgeting guidelines that align with the company’s long-term goals and market opportunities. This includes prioritising investments that offer the highest potential for value creation.
  • Immediate Impact on Capital Allocation: Identifying shifts in capital allocation that can have a short-term impact. This might involve reallocating resources to more promising areas or divesting from underperforming investments.
  • Governance and Investment Review Process: Establishing a robust governance framework and investment review process based on best practices. This ensures ongoing oversight and strategic alignment of capital allocation decisions.

Addressing Key Business Issues

Our service is particularly beneficial for addressing several business issues:

  • Managing Cash Flow: Whether facing excess cash or a cash shortage, we assist in revisiting the allocation process to optimise financial resource management.
  • Improving Return on Capital: For organisations focusing too narrowly on EBIT or revenue, we help shift the focus towards a more holistic return on capital.
  • Balancing Investment Distribution: We address issues where investments are disproportionately directed at certain business units, ensuring a more balanced and strategic approach.
  • Enhancing Large Project Performance: For companies facing performance issues in large investment projects, we provide strategic guidance to improve outcomes.

Expertise and Impact

Our team, comprised of strategists, industry experts and financial analysts brings a depth of knowledge in capital allocation. We have a proven track record of helping businesses reshape their investment strategies for enhanced efficiency and strategic impact.

Industry Insights

Connect with our Strategy Practice

Explore our Latest Insights

see all insights
see all INsights
By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.