Corporate Financial Strategy, Second Edition | by Ruth Bender and Keith Ward | ISBN: 9780750648998. Start Up Businesses and Venture Capital Investors Guide. Financing Working Capital. Restructuring a Company. Shareholder Value Management.
Corporate Financial Strategy, Second Edition
by Ruth Bender and Keith Ward
ISBN:9780750648998
Explaining the elements of a financial strategy, this practical guide shows how these can be tailored to suit the needs of an organisation and complement its business strategy.
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Corporate Financial Strategy, 2nd Edition
Preface to Second Edition
Preface to First Edition
Part 1 – Putting Financial Strategy in Context
Chapter 1 – Corporate Financial Strategy: Setting the Context
Overview
Introduction
Financial Strategy and Standard Financial Theory
Risk and Return: A Fundamental of Finance
Financial Strategy
Valuing Investments
Creating Shareholder Value
Sustainable Competitive Advantage
Managing and Measuring Shareholder Value
Some Reflections on Shareholder Value
Other Stakeholders
Agency Theory
The Importance of Accounting Results
Conclusion
Chapter 2 – What Does the Share Price Tell Us?
Overview
Calculation of the Price/Earnings Ratio
What Does the Price/Earnings Ratio Mean?
Growth Included in the Share Price
PVGO and Growth Expectations
Conclusion
Chapter 3 – Linking Corporate and Financial Strategies
Overview
Assessing Business Risk
Constituents of Financial Strategy
Financial Risk
Risk and the Product Life Cycle
The Boston Matrix
Business Risk
Inverse Correlation of Financial Risk with Business Risk
Debt Profile
A Logical Dividend Policy
The Impact on the Price/Earnings Multiple
Impact of a Diversification Strategy
Application Internally to the Divisions of a Group
Conclusion
Part 2 – Financial Strategy and the Corporate Lifecycle
Chapter 4 – Start Up Businesses and Venture Capital
Overview—Summary of Overall Model as Applied to Start Up Businesses
Introduction
Very High Level of Business Risk
Correspondingly High Level of Return?
Need For Low Financial Risk
Nil Dividend Payout Policy
Venture Capital Investors
Business Angels
Corporate Venturing
Your Start Up Business
Chapter 5 – Growth Companies: Marketing Focused
Overview—Summary of Appropriate Section of Overall Model
Continuing High Business Risk
Calculating the Cost of Equity
Reinvestment Projects
Rights Issues — Concepts and Practice
Bonus Issues and Share Splits
Chapter 6 – Mature Companies — To Divi or Not?
Overview—Summary of Appropriate Section of the Overall Model
Managing the Transition to Maturity
Adding Value through Financial Strategy
Developing a Dividend Policy
Chapter 7 – Declining Businesses — A Case for Euthanasia?
Overview—Applying the Overall Model
The Final Financial Strategy
Alternative Business Strategies to Delay or Avoid Death
Deep Discount Rights Issues
Adding Value by Reducing Debt Ratios
Part 3 – Financial Instruments
Chapter 8 – Financial Instruments: The Building Blocks
Overview
Introduction
Risk and Return
The Building Blocks of a Financial Instrument
Defining ‘Debt’ and ‘Equity’
Manipulating the Building Blocks
Annex: Interest Rate Management Tools
Chapter 9 – Types of Financial Instrument
Overview
What Do Companies Need?
Differentiating Financial Instruments Using Option Theory
Tradable Financial Instruments
The Continuum of Modern Financial Products
Conclusion
Chapter 10 – Dividends and Buybacks
Overview
Summary of the Dividend Component of the Overall Model
Some Thoughts on Why Companies Pay Dividends
Stock Dividends
Share Repurchases (Buybacks)
Conclusion
Part 4 – Transactions and Operating Issues
Chapter 11 – Floating a Company
Overview
Introduction
Issues to Be Addressed Prior to Listing
The Listing Process
Is It Worth It?
De-Listing
Chapter 12 – Acquisitions, Mergers and Selling a Business
Overview
Introduction
Why Make an Acquisition?
How Much to Pay?
How Do We Finance the Deal?
Earn Outs
Selling a Business
Defence Strategies
Annex — ‘Bootstrapping’ to Enhance eps
Chapter 13 – Restructuring a Company
Overview
Introduction
Reorganizations Addressing Internal Issues
Reorganizations to Address Market Perceptions
Conclusion
Chapter 14 – Management Buyouts and Other Leveraged Transactions
Overview
Introduction
The Impetus for a Buyout
The Buyout Process
The Stages of the Deal
Structuring an MBO
Structuring the Deal
Dividends
Chapter 15 – Strategic Working Capital Management
Overview
Introduction
Shareholder Value Management
Sustainable Growth
Factors Affecting the Working Capital Cycle
Financing Working Capital
Chapter 16 – Executive Compensation
Overview
Introduction
The Agency Debate
Structuring Directors’ Remuneration Contracts
The Quantum of Remuneration
The Gearing of Remuneration
Short and Long Term Schemes
Appropriate Performance Measures
Setting Performance Targets
Executive Retention and Alignment
Executive Share Option Schemes
Chapter 17 – International Corporate Finance
Overview
Introduction
So, Why Is ‘International’ Different?
Finding an Acquisition Target
Doing the Deal
Foreign Exchange Risk
Financing the Deal
Post Deal Management
Conclusion: Does the ‘Global Company’ Exist?
Part 5 – Appendices
Appendix 1 – Review of Theories of Finance
Overview
Introduction
Discounting and the Value of Bonds
The Cost of Capital
The Efficient Market Hypothesis
Dividend Theory
Appendix 2 – Valuing Options and Convertibles
Introduction
Options Terminology
Valuing Options
Option Pricing Models
Structuring and Valuing Convertibles
Another Way to Value Convertibles
Glossary of Selected Financial Terms
Discount Table—Present Value of £1
Discount Table—Present Value of £1 Received Annually for N Years
Black-Scholes Value of Call Option Expressed As a Percentage of the Share Price
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