The third in a series comparing the 10 principles for creating shareholder value with the world of social enterprise. (See Principle #1, Principle #2).
#3 Make acquisitions that maximize expected value, even at the expense of lowering near-term performance:
This is straightforward; add only activities (new depts., companies) that add value to the organisation through long-term return or an increased social benefit aligned with your core mission. Put down the coffee franchise, the free building, or any other new entity you might add to your operations IF they are not (1) Aligned with your social mission – be honest here, and (2) increasing the overall value of your operations in both categories. You might be tempted to drive more revenue into your organisation by adding a cash producing entity (value = revenue)–but you will likely fail to provide sufficient value if it is not aligned with your core competency and the cash flows may not be worth the effort to take on the new entity.
Of note: CICs will need to pay special interest to this as they acquire to maintain or boost (within the caps) the dividends for investors.
In the end, keep it simple and focused.
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