G4S Annual Report and Accounts 2011

Governance Financial statements Shareholder information
Disciplined M&A screening criteria
All acquisitions are reviewed by the group executive team and transactions
over £5m also require board approval. For any acquisition to be considered,
it must have a post-tax expected return on invested capital of at least the
group’s weighted average cost of capital within three years. In practice,
most acquisitions that are undertaken by the group have an expected
return which is far above that level. For example:
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12.5% return on invested capital post-tax within three years for
smaller deals
10% return on invested capital post-tax within three years for medium
sized/strategic deals
Divestment strategy
The group will be more active in its divestment strategy in 2012, particularly
where a service line or business is not in line with the group’s core strategy,
where a business is unable to reach the group’s internal margin targets or
where an alternative parent could add or drive more value from a business.
The proceeds from these divestments will be reinvested into acquisitions
that can drive further growth for the group.
In addition to any acquisition meeting our strategic and financial objectives,
since 2010 we have implemented a CSR checklist whereby new market
entries and acquisitions are assessed against a range of business ethics and
human rights criteria.
G4S plc
Annual Report and Accounts 2011
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