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Equity Value Enhancement

Book Description

A detailed look at risk identification and value creation in private equity investment

Equity Value Enhancement ("EVE"): Governance, Risk, Relationships & Knowledge ("GRRK") provides the information and tools practitioners and business owners need to work with the multitude of intangibles ("GRRK") in equity investment decisions. The author engages readers with an insightful and brief claim:  "Values are more than numbers."  He then provides support for just how important human capital is to the value creation paradox.  He doesn't stop there because ideas without definitive actions don't promote transformation.  He further challenges the reader with:  "If you don't think outside of the box, you're doomed to live in the box."

A user-friendly manual chock full of vignettes, suggestions and pithy commentary EVE is a must read for owners, officers, boards and advisors to derive understanding of business value drivers.  This book teaches the reader how to conduct more intangible asset due diligence as well as what decisions and behaviors impact value. With more effective methods of risk identification, measurement, management, and mitigation ("IMMM"), trusted advisors and owners can establish a "working on the business" strategy to prioritize issues impacting a company's intangible assets – assets which almost inevitably create the largest component of value in flourishing companies. This focus also serves to reduce risk while leveraging human capital and operational effectiveness. This book challenges users of value enhancement and valuation services to demand greater intellectual rigor to best serve owners/investors of the United States' economic engine—the midmarket company. Therefore, readers are challenged to look beyond the common metrics and numbers.  They are admonished to rely less on formulaic approaches and on software that can generate spurious opinions. The reader is called to action by the author, a US Marine Combat Officer veteran, to lead the change: "You burn the boats if you want to be sure you succeed taking the island."

Trillions of dollars of private equity are changing hands as Baby Boomer owners and investors seek greater liquidity and legacies while investors seek higher returns from direct investment in private companies. This book provides risk and human capital guidance removing some of the guesswork on valuation and value creation.  

•         Provide better evidence of value & equity discounts
•         Identify and quantify risk and provide tools to manage it
•         Inform better business management and investment decisions
•         Create a more comprehensive valuation for equity investments
•         Roadmap and strategy for enhancement of going concern value

Governance, Risk and Compliance ("GRC") management are hot topics in today's economic environment. The familiar financial metrics may not be providing adequate indications of value creation – the core principle of most shareholder investment expectation. To identify risk and work with it effectively, practitioners need an in-depth understanding of the forces at play. Equity Value Enhancement is a detailed, insightful guide for making better equity decisions.

Finally, the author puts his passion front and center by offering the reader the opportunity to invest in the human capital this book addresses by encouraging support of military veteran's with combat PTSD so they may be productive citizens with the leadership and business skills provided by our country's "Greatest Generation."

Table of Contents

  1. Title Page
  2. Copyright
  3. Dedication
  4. Foreword
  5. Preface
    1. Some Sobering Realities
    2. Improving the Odds
    3. The Opportunity is There
  6. Acknowledgments
  7. About the Author
  8. Author's Vision and Challenge
  9. Chapter 1: Value ABCs
    1. Capital and Risk
    2. Understanding Assets
    3. Plugging the Gap
    4. Notes
  10. Chapter 2: Focus on Trusted Advisors
    1. The Path to Being the Best
    2. Question Yourself
    3. Taking It to the Next Level
    4. Notes
  11. Chapter 3: Focus on Business Owners
    1. The Role of Advisors
    2. The Cost of Bad Advice
    3. The Value of Leveraged Knowledge
    4. Engaging the Best
    5. Practical Vetting Suggestions
    6. Size and Scope Considerations
    7. Setting Expectations
    8. Note
  12. Chapter 4: Risk in the Eye of the Beholder
    1. Inexperienced Business Appraiser Lenses
    2. CPA Lenses
    3. Attorney Lenses
    4. Investment Banker/Business Broker/Business Intermediary Lenses
    5. Commercial Banker Lenses
    6. Insurance Professional Lenses
    7. Wealth Manager/Financial Advisor/ Fiduciary/Trust Officer Lenses
    8. Research on Risk and Returns
    9. Economist Lenses
    10. MBA/PhD/CFA Lenses
    11. Owner/Family Lenses
    12. Family Business Advisor Lenses
    13. Staff/Vendor Lenses
    14. Client Lenses
    15. Notes
  13. Chapter 5: The Role of Governance
    1. Governance
    2. Focus on Culture
    3. About Boards, Governance, and Strategy
    4. Healthy Board Governance and Strategy Creates Value
    5. Strategy and Equity Value
    6. Family Harmony and Legacy as a Governance Driver
    7. Board Strategic Direction and Accountability
    8. Board Structure and Member Traits
    9. Governance and Risk Management
    10. Qualitative Value Measures
    11. Taking Control
    12. The Secret Sauce
    13. Governance Measurements
    14. Governance Takeaways
    15. Notes
  14. Chapter 6: The Role of Relationships
    1. Client Relationships
    2. Advisor Relationships
    3. Commercial Bankers
    4. Investment Bankers
    5. Insurance Agents
    6. Wealth Advisors
    7. Board of Directors
    8. The Bottom Line on “Free” Advisors
    9. Accountants
    10. Attorneys
    11. Fractional CFO
    12. Family Relationships
    13. Shareholder Relationships
    14. Vendor Relationships
    15. Community/Legislative/Philanthropic Relationships
  15. Chapter 7: The Role of Risk: Financial- and Legal-Oriented Risk
    1. Commonly Missed Risks
    2. Final Thoughts
    3. Notes
  16. Chapter 8: The Role of Risk: Operational-Related Risks
  17. Chapter 9: The Role of Knowledge
    1. A Matter of Culture
    2. Healthy Knowledge
    3. Be Transparent
    4. Encourage Two-Way Communication
    5. Knowledge and Human Capital
    6. Knowledge Measures
    7. Notes
  18. Chapter 10: Valuation versus Value Creation (GRRK)
    1. Software and Rules of Thumb
    2. A Personal Aside
    3. Collaboration, Cohesion, and Transformation
    4. Notes
  19. Chapter 11: Putting It All Together—Four Vignettes
    1. Vignette One: What the 2009 Financial Crisis Can Teach Us (It's about Relationships)
    2. Vignette Two: The Trees-and-Forest Syndrome
    3. Vignette Three: The Path Not Taken
    4. Vignette Four: Putting It All Together (Strategy, Human Capital, and Finance)
  20. Recommended Reading
    1. Suggested Technical Reading
  21. Index
  22. End User License Agreement