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The Essential CFO: A Corporate Finance Playbook

Book Description

Discover the power of the CFO's role in delivering shareholder value

During the past decade, the CFO role has expanded dramatically in its breadth, complexity, and criticality. Filled with proven strategies, best practices, and keen insights, The Essential CFO describes how today's CFOs are responding to their expanded roles within both public and private companies. With straightforward and pragmatic guidance, author Bruce Nolop shows how CFOs are partnering with CEOs to deliver shareholder value by articulating a strategic plan, determining capital allocations, managing the capital structure, driving financial performance, and implementing strategic transactions.

  • Covers how CFOs are establishing robust accounting and risk management processes and effectively communicating with both external and internal constituencies

  • Looks at the role of the CFO in transforming financial organizations to drive effectiveness and efficiencies

  • Examines how CFOs can develop talent with the experience, expertise, and leadership skills to meet the challenges of the future

Written from a balanced, top-down perspective of the modern CFO, The Essential CFO provides you with practical prescriptions for executing impactful corporate finance strategies.

Table of Contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright
  5. Dedication
  6. Introduction
    1. EVOLVING JOB DESCRIPTION
    2. STRATEGIC CFO
    3. EXPANDED ROLES
    4. ABOUT THIS BOOK
    5. Notes
  7. PART ONE: Strategy
    1. Chapter One: Articulating a Strategic Plan
      1. BUSINESS OBJECTIVES
      2. STRATEGIC THEMES
      3. LONG-TERM FINANCIAL MODEL
      4. TOTAL SHAREHOLDER RETURN
      5. CAPITAL ALLOCATION STRATEGIES
      6. ACQUISITION STRATEGIES
      7. TARGET SHAREHOLDERS
      8. ELEVATOR PITCH
      9. PLAN REVISIONS
    2. Chapter Two: Communicating and Achieving Alignment
      1. CONSISTENCY AND TRANSPARENCY
      2. INCENTIVE COMPENSATION PROGRAMS
      3. INVESTOR ALIGNMENT
      4. ANALYST RELATIONS
      5. INVESTOR PRESENTATIONS
      6. COMPANY WEBSITE
      7. SOCIAL MEDIA
      8. MEDIA RELATIONS
      9. POTENTIAL MEDIA PITFALLS
      10. COORDINATING COMMUNICATIONS
      11. INTERVIEW FORMATS
      12. MEDIA TRAINING
      13. NOTE
    3. Chapter Three: Assessing Enterprise Risks
      1. ENTERPRISE RISK MANAGEMENT
      2. IMPLEMENTATION OF ERM
      3. RISK IDENTIFICATION
      4. RISK QUANTIFICATION
      5. MAJOR EXPOSURES
      6. MITIGATION STRATEGIES
      7. REWARDED VERSUS UNREWARDED RISKS
      8. GOVERNANCE OF ERM
      9. CFO’S ROLE IN ERM
  8. PART TWO: Capital Allocations
    1. Chapter Four: Estimating the Cost of Capital
      1. WACC FORMULA
      2. HURDLE RATES
      3. RISK PREMIUMS
      4. ACQUISITION COST OF CAPITAL
    2. Chapter Five: Prioritizing Capital Investments
      1. CASH FLOW PROJECTIONS
      2. INVESTMENT BUDGET
      3. EVALUATING PROJECTS
      4. CATEGORIZING PROJECTS
      5. MONITORING PROJECTS
      6. PENSION FUND CONTRIBUTIONS
    3. Chapter Six: Considering Dividends and Repurchases
      1. DIVIDEND POLICY ALTERNATIVES
      2. DIVIDEND POLICY CONSIDERATIONS
      3. SPECIAL DIVIDENDS
      4. DIVIDEND DECLARATIONS
      5. REPURCHASE CONSIDERATIONS
      6. OPEN MARKET PROGRAMS
      7. TENDER OFFERS
      8. RETAINING STRATEGIC CASH
      9. CASH INVESTMENT POLICIES
  9. PART THREE: Mergers and Acquisitions
    1. Chapter Seven: Identifying Acquisition Candidates
      1. RATIONALE FOR ACQUISITIONS
      2. ADJACENT SPACES
      3. PORTFOLIO APPROACH
      4. BUSINESS SPONSOR
      5. PATIENCE AND FLEXIBILITY
      6. STRATEGIC PURPOSE
      7. TYPES OF ACQUISITIONS
      8. NOTE
    2. Chapter Eight: Evaluating Acquisition Candidates
      1. VALUATION METHODOLOGIES
      2. STANDALONE AND SYNERGY VALUES
      3. PRO FORMA ANALYSES
      4. ACQUIRER’S STOCK VALUATION
      5. RISK CONSIDERATIONS
    3. Chapter Nine: Executing a Merger or Acquisition
      1. DUE DILIGENCE
      2. BUSINESS PLAN
      3. FINANCIAL PROJECTIONS
      4. FINANCING PLAN
      5. PRICE NEGOTIATIONS
      6. CONTRACT TERMS
      7. ACQUISITION INTEGRATION
      8. NOTE
    4. Chapter Ten: Executing Divestitures and Spinoffs
      1. DIVESTITURE EVALUATIONS
      2. HIRING INVESTMENT BANKERS
      3. AUCTION or NEGOTIATED
      4. STOCK OR ASSETS
      5. FINANCING CONDITIONS
      6. MANAGEMENT PARTICIPATION
      7. TAX-FREE SPINOFFS
      8. SPLIT-UPS
      9. EQUITY CARVE-OUTS
    5. Chapter Eleven: Responding to Takeover Offers
      1. GOVERNANCE POLICIES
      2. REVIEWING AN OFFER
      3. CONDUCTING A SALE PROCESS
      4. ACTIVIST SHAREHOLDERS
      5. GOING PRIVATE TRANSACTIONS
  10. PART FOUR: Funding
    1. Chapter Twelve: Establishing Capital Structure Objectives
      1. LEVERAGE TARGETS
      2. LEVERAGE CRITERIA
      3. RATING AGENCIES
      4. RATINGS CATEGORIES
      5. RATING AGENCY DIALOGUES
      6. RATINGS CRITERIA
      7. INFORMING INVESTORS
      8. NOTE
    2. Chapter Thirteen: Developing Financing Strategies
      1. FINANCING PRINCIPLES
      2. DEBT FINANCING
      3. EQUITY FINANCING
      4. OFF BALANCE SHEET FINANCING
      5. DEBT COVENANTS
      6. DEBT REFINANCINGS
      7. DEBT FOR EQUITY SWAPS
      8. BANKRUPTCY
    3. Chapter Fourteen: Ensuring Short-Term Liquidity
      1. BANK LINES
      2. CASH PLANNING
      3. CONTINGENCY PLANNING
      4. LIQUIDITY RATIOS
      5. WORKING CAPITAL STRATEGIES
      6. TRAPPED CASH
    4. Chapter Fifteen: Obtaining Long-Term Financing
      1. VENTURE CAPITAL
      2. PRIVATE EQUITY
      3. INITIAL PUBLIC OFFERING
      4. SUBSEQUENT EQUITY OFFERINGS
      5. TERM LOANS
      6. SYNDICATED BANK LOANS
      7. INVESTMENT GRADE SECURITIES
      8. HIGH YIELD SECURITIES
      9. STRATEGIC ALLIANCES
      10. NOTE
  11. PART FIVE: Performance
    1. Chapter Sixteen: Driving Business Performance
      1. ORGANIC REVENUE GROWTH
      2. COST REDUCTION STRATEGIES
      3. FIXED VERSUS VARIABLE COSTS
      4. NOTE
    2. Chapter Seventeen: Providing Planning and Analysis
      1. BUDGETS
      2. FORECASTS
      3. CASH FLOWS
      4. PERFORMANCE METRICS
      5. BUSINESS UNIT METRICS
      6. PERFORMANCE REPORTS
      7. BUSINESS ANALYSIS
    3. Chapter Eighteen: Managing Financial Risks and Taxes
      1. INSURANCE
      2. INTEREST RATES
      3. CURRENCIES
      4. COMMODITIES
      5. INFLATION
      6. PENSION FUND
      7. TAX PLANNING
  12. PART SIX: Accounting and Controls
    1. Chapter Nineteen: Establishing Accounting Processes
      1. FINANCIAL REPORTING
      2. SEC FILINGS
      3. EXTERNAL AUDITORS
      4. AUDIT COMMITTEE
      5. NOTE
    2. Chapter Twenty: Communicating Financial Results
      1. EARNINGS CALL
      2. NON-GAAP MEASURES
      3. EARNINGS GUIDANCE
      4. NOTE
    3. Chapter Twenty-One: Implementing Sarbanes-Oxley
      1. OVERVIEW OF PROVISIONS
      2. AUDITOR INDEPENDENCE
      3. CERTIFICATION OF FINANCIALS
      4. ASSESSMENT OF INTERNAL CONTROLS
    4. Chapter Twenty-Two: Reinforcing Compliance and Controls
      1. CONTROL ENVIRONMENT
      2. AUDITOR AND BOARD SUPPORT
      3. FOREIGN CORRUPT PRACTICES ACT
      4. FRAUD PREVENTION
      5. WHISTLEBLOWERS
      6. COST OF COMPLIANCE
      7. NOTE
  13. PART SEVEN: Leadership
    1. Chapter Twenty-Three: Achieving Finance Transformation
      1. ORGANIZATIONAL STRUCTURE
      2. TECHNOLOGY SYSTEMS
      3. PROCESS REENGINEERING
      4. OUTSOURCING ADVANTAGES
      5. OUTSOURCING IMPLEMENTATION
      6. ANALYSIS VERSUS DATA
    2. Chapter Twenty-Four: Developing Financial Talent
      1. RECRUITMENT STRATEGIES
      2. DEVELOPMENT OBJECTIVES
      3. DEVELOPMENT TOOLS
      4. DIVERSITY
      5. FUTURE REQUIREMENTS
      6. NOTE
  14. About the Author
  15. Acknowledgments
  16. Index