Strategic Corporate Finance: Applications in Valuation and Capital Structure

ISBN-13: 9780470052648 / Angielski / Twarda / 2007 / 304 str.

Justin Pettit

Opis

Essential guidance for the corporate finance professional -- advisor, Board Director, CFO, Treasurer, business development executive, or M&A expert--to ask the right questions and make the critical decisions. Strategic Corporate Finance is a practical guide to the key issues, their context, and their solutions. From performance measurement and capital planning to risk management and capital structure, Strategic Corporate Finance, translates principles of corporate finance theory into practical methods for implementing them. Filled with in-depth insights, expert advice, and detailed case studies, Strategic Corporate Finance will prepare you for the issues involved in raising, allocating and managing capital, and its associated risks. Justin Pettit (New York, NY) draws on his 15 years of senior advisory experience as an investment banker and management consultant. He advises corporate boards and executives on matters of capital structure, financial policy, valuation, and strategy. He also lectures on topics in advanced corporate finance to graduate and undergraduate students at universities in the New York area.

Spis treści

Preface.

List of Figures.

List of Tables.

Acknowledgments.

About the Author.

PART ONE: Managing the Left–Hand Side of the Balance Sheet.

Chapter 1: The Cost Of Capital.

Calculation Pitfalls.

Market Risk Premium (MRP).

Toward a Better Beta.

The "Riskless Rate"

The Cost of Debt.

Global Capital Costs.

WACC and Hurdle Rates.

Chapter 2: Fix: Finding Your Sources of Value.

Why Shareowner Value?

Performance Measurement Pitfalls.

Measuring Economic Profit and Value.

Analyzing the Corporate Portfolio.

Incorporating the Cost of Capacity.

Value–Based Strategies and Tactics.

Managing for Value.

Balancing Performance with Value.

Chapter 3: Sell: Creating Value Through Divestiture.

Divestiture Creates Value.

Sources of Value: Motives for Divestiture.

Alternative Methods of Disposition.

What Works Best for Whom?

What Happens Longer Term?

Practical Impediments to Divestiture.

Financial Policy Considerations.

Tax Considerations and Structural Refinements.

Chapter 4: Grow: How To Make M&A Pay.

M&A Today.

Transactions that Create Value.

M&A Fact and Fallacy.

RX for the "Conglomerate Discount."

EVA and M&A.

How Serial Acquirers Create Value.

Financial Policy Considerations.

Financing Growth.

Chapter 5: Cash and The Optimal Capital Structure.

Trends and Implications.

How Much Is Too Much?

The Costs and Benefits of Excess Cash.

How the Market Views Excess Cash.

Optimal Capital Allocation.

PART TWO: Managing the Right–Hand Side of the Balance Sheet.

Chapter 6: An Executive s Guide to Credit Ratings.

Trends and Implications.

Empirical Evidence.

Limitations of Quantitative Credit Analysis.

What Metrics Matter Most?

Case Study: Treatment of Pension and Postretirement Liabilities.

Multivariate Credit Models.

Industry Considerations.

Case Study: Property and Casualty Insurance.

Application Issues.

How to Manage Your Agencies.

Case Study: Illustration of Secured and Unsecured Notching.

Chapter 7: Today s Optimal Capital Structure.

Value–Based Financial Policy.

Less Debt Is Now "Optimal."

Extend Duration When Rates Are Low.

Maintain Financial Liquidity to "Insure" Your Equity.

A New Perspective on Equity.

Case Study: Does Tech Need Debt?

Chapter 8: Dividends and Buybacks: Calibrating Your Shareholder Distributions.

The Cash Problem.

Dividends Are Back.

How Dividends and Buybacks Create Value.

Should You Increase Your Dividend?

How Large Should Your Buyback Program Be?

How to Execute Your Share Repurchase Program.

Chapter 9: The Stock Liquidity Handbook.

Measuring Stock Liquidity.

The "Liquidity Discount."

Implications of Stock Illiquidity.

Solutions to Illiquidity.

Stock Splits.

PART THREE: Managing the Enterprise.

Chapter 10: Strategic Risk Management: Where ERM Meets Optimal Capital Structure.

The Value of Risk Management.

Mapping and Modeling Risk.

Managing to a Benchmark.

External Considerations and Constraints.

ERM Case Study: Metallgesellschaft AG.

Capital Structure Solutions.

Chapter 11: Best Practices In Hedging.

Which "Exposure" to Hedge.

Hedge Horizon.

Hedge Ratio.

Options versus Forwards.

Accounting Considerations.

Implementation.

Chapter 12: ERM Case Study: Reengineering The Corporate Pension.

Why Now?

The Problems with Equity.

The Case for More Bonds.

Optimal Capital Structure Reprise.

Capital Markets Solutions.

The Boots Case.

Why It Still Hasn t Happened.

APPENDIX A: Resources.

Tools and Portals.

New Research and Literature Search.

Economic Research and Data.

News and Market Data.

Corporate Governance and Compensation.

Other Agencies.

Endnotes.

References.

Index.

O autorze

JUSTIN PETTIT draws on his fifteen years of senior advisory experience as an investment banker and management consultant. He advises corporate boards and executives on matters of capital structure, financial policy, valuation, and strategy. He also lectures on topics in advanced corporate finance to graduate and undergraduate students at universities in the New York area.

Blurb

Sweeping changes in corporate governance and globalization of the capital markets have made the language and issues of modern corporate finance previously left to finance executives and investment bankers a critical point of accountability for all senior executives and board directors. Strategic Corporate Finance is not another book on financial theory; rather, it is a practical guide to the key issues, their context, and their solutions.

In Strategic Corporate Finance, author Justin Pettit drawing on his years of corporate financial advisory experience translates principles of corporate finance theory into practical methods for implementing them, on topical subjects ranging from performance measurement and capital planning to risk management and capital structure.

Divided into three straightforward and accessible parts, this useful guide contains important information and actionable strategies that you can use whether you are a Board Director, CFO, Treasurer, business development executive, or M&A expert to ask the right questions and make important financial decisions regarding your organization.

Part One outlines the essential issues of managing the left–hand side of the balance sheet following the prevalent "fix, sell, grow" mantra used today with an intrinsic value perspective. Here, you will learn how to resolve a variety of performance measurement and valuation issues, from estimating and applying the weighted average cost of capital (WACC) to creating value through operational improvements, divestitures, and M&A.

Part Two addresses the right–hand side of the balance sheet, including optimal capital structure, managing credit ratings, and setting dividend and share repurchase policy. Special attention is given to today′s growing problem of too much cash. The issues of stock liquidity, and illiquidity, are also covered in detail.

The third, and final, part of Strategic Corporate Finance adopts an enterprise–wide perspective for capital management. You will be introduced to strategic risk management and the substitutability of capital structure and risk management choices, such as process control efforts, financial, physical, and operational hedging. You will also receive an executive education on best practices in financial hedging. Capital markets solutions are highlighted in a comprehensive pension re–engineering case study.

Filled with in–depth insights, expert advice, and detailed case studies, Strategic Corporate Finance will prepare you to ask the key questions and make the critical decisions involved in raising, allocating, and managing capital, and its associated risks.