Market Due Diligence (MDD) – Analysis of Companies from the Market Point of View
Due Diligence analyses are becoming ever more important within the framework of investigating a company before a buyout or merger. Due Diligence analyses of the company performance and risks are the basis for the purchase and selling price negotiations. These analyses allow the investor to appraise and evaluate the company realistically before the purchase. In order to conduct this detailed analysis, financial indices based on … [ Read more ]
Content: Article | Authors: Andreas Tesch, Karl-Heinz Sebastian, Michael Olbrich, Ralph Niederdrenk | Source: Simon-Kucher & Partners | Subject: Finance
The Value of Share Buybacks
Companies shouldn’t confuse the value created by returning cash to shareholders with the value created by actual operational improvements. After all, the market doesn’t.
Content: Article | Authors: Richard Dobbs, Werner Rehm | Source: McKinsey Quarterly | Subject: Finance
Private Equity’s New Path to Profits
A new playbook is helping private equity investors earn strong returns, at a time when buyouts have never been bigger or bolder. As deal prices and the cost of debt rise, private equity firms can no longer count on leverage and financial maneuvers to deliver outsized gains. To succeed in this environment, private equity firms need a different formula. As soon as a deal closes, … [ Read more ]
Content: Article | Authors: Chris Bierly, Chul-Joon Park, Graham Elton | Source: Bain & Company | Subjects: Finance, Venture Capital
Robert Kaplan
If you have only one product and sell to only one or two large customers, you don’t need much of a cost system to learn where you are making and losing money. But companies typically have hundreds of different products or product variations and hundreds or thousands of customers. In this situation, traditional cost systems will not accurately trace a company’s expense base to each … [ Read more ]
Content: Quotation | Source: Harvard Business School (HBS) Working Knowledge | Subjects: Accounting, Finance
Blinded by the Light
How the “halo effect” distorts our view of company performance.
Content: Article | Author: Edward Teach | Source: CFO Publishing | Subjects: Finance, Miscellaneous
The Real World of Real Options
To what extent do firms pursue strategies of flexibility in response to uncertainty – to what extent do they use ‘real options’? Goncalo Pacheco-de-Almeida and Professor Peter Zemsky explain how resource accumulation affects whether a firm will jump into an investment from the get-go, or if it will take the option to wait for investment. They present research in a realistic light, offering a theory … [ Read more ]
Content: Article | Authors: Goncalo Pacheco-de-Almeida, Peter Zemsky | Source: INSEAD Knowledge | Subjects: Finance, Management
Institutional Ownership Continues To Climb
Long-Term Consumption: A Microeconomic Approach to Studying Asset Pricing
A fundamental economic question is the tradeoff between investment and consumption and how it determines asset prices in the macroeconomy. New research studies the relationship between consumption and asset prices using microeconomic data.
Content: Article | Authors: Annette Vissing-Jørgensen, Christopher J. Malloy, Tobias J. Moskowitz | Source: Capital Ideas | Subjects: Economics, Finance | Industry: Investing
Private Equity’s Road Map to Profits
Measuring Stock Market Performance
Total Returns to Shareholders (TRS or TSR) doesn’t reflect a company’s performance or health. What does?
Content: Article | Authors: Richard Dobbs, Tim Koller | Source: McKinsey Quarterly | Subject: Finance | Industry: Investing
7 Steps to Optimize A/R Management
Solid receivables management can result in a big payoff. Follow these seven steps to optimize accounts receivable management, reduce days sales outstanding, and create immediate and long-lasting value.
Content: Article | Author: John Salek | Source: Business Finance Magazine | Subjects: Best Practices, Finance
Leading Your Business to Maximum Results: The Three Questions Every Executive Needs to Answer – First
Executives are finding it harder to meet investors’ rising expectations. Owners want companies to deliver maximum results. And they’re serious. Doing so requires that the CEO, division presidents and the general managers in those divisions first answer 3 key questions.
Content: Article | Author: Drew Morris | Source: Great Numbers! LLC | Subjects: Finance, Management
A Better Way to Value Startups?
Wharton professor wants to make it easier for VCs to measure the value of startups.
Content: Article | Author: Michael Cohn | Source: Red Herring | Subject: Finance
Understanding the Linkage Between ROI and the Economic Rate of Return
What does return on investment really mean? A new tool gives investors and managers help decoding the true economic profitability of a business based on reported accounting metrics.
Content: Article | Authors: Madhav V. Rajan, Mark T. Soliman, Stefan Reichelstein | Source: Stanford University | Subjects: Economics, Finance
Are companies getting better at M&A?
Treating Investors Like Customers
Recent financial scandals have created a crisis in the relations between public companies and their investors. Companies need to find ways to restore their credibility and reconnect with their investor base. Paradoxically, most good companies already have the right analytical tools at hand. Seen from the perspective of the financial markets, a company’s ultimate product is its equity. So, companies need to start applying to … [ Read more ]
Content: Article | Authors: Eric E. Olsen, Gerry Hansell | Source: Boston Consulting Group (BCG) | Subjects: Finance, Public Relations
More Than You Know: Finding Financial Wisdom in Unconventional Places
Mauboussin is not your average Wall Street equity analyst, writing investment recommendations whose topical interest wanes a few days after the report is issued. His strategy reports begin with scientific findings from diverse fields, then show why an investor should care. This book is a collection of 30 short reports, revised and updated, covering animal behavior (“Guppy Love: The Role of Imitation in Markets”), psychology … [ Read more ]
Content: Book | Author: Michael J. Mauboussin | Subjects: Economics, Finance | Industry: Investing
Paul Volcker
When I look at stock options, I am more and more convinced that in a basic sense, the trouble is not whether you expense or not – stock options are just a bad instrument. They’re so subject to abuse, you want to get rid of them. There ought to be better ways of compensating people. There are better ways. Because the results are so capricious, … [ Read more ]
Content: Quotation | Source: CFO Publishing | Subjects: Compensation, Finance
Time to Rethink Performance Metrics and Valuation Methods
GAAP, EPS and P/E are dead. The days of financial astrology are numbered. Here’s how leading investment thinkers measure real performance.
Content: Article | Author: Jeff Heilman | Source: Chief Executive | Subject: Finance
Currency Risk: To Hedge or Hedge Not?
In the global economy, treasurers increasingly need to know how and when to hedge against foreign exchange exposures.
Content: Article | Author: Karen M. Kroll | Source: Business Finance Magazine | Subjects: Finance, International