"Over time, the skill with which
a company's managers allocate
capital has an enormous impact
on the enterprise's value."
Warren E. Buffett
"One of the worst things you can
do is handle another person's money
without respect for how hard it was
to earn."
T. Boone Pickens, Jr.
Strategic Position Assessment
Economics is the parent discipline of finance, so we look to economics to identify the sources and drivers of value creation. Any business with a competitive position in an attractive market creates large profits for shareholders and value for customers. The same business in an unattractive market might still earn a profit if its product offerings have competitive advantages. But business units with no competitive advantage in perpetually unattractive markets should be liquidated, and their investment in fixed assets and working capital should be redeployed.
A strategic position assessment of market conditions and competitive position provides a benchmark for comparing alternative strategies. It also enables realistic, fact-based financial forecasts grounded in reality rather than based on hopeful pro-forma assumptions.
Our Services
We assess the economic value of our client's markets, their position in those markets, and the value of alternative strategies. We stress the importance of long-term cash flow and economic profit (net operating income after tax less a charge for invested capital.) We place much less emphasis on reported earnings per share and current stock price because we know that long-term stock price tracks cash flow.
Our work has helped businesses expand, contract, and redeploy assets profitably through growth, merger, and pruning. We have helped clients secure critical project financing at low interest rates in near record time.
Case Studies
- Mississippi Gulf Coast Wastewater Authority - New Business Startup
- CH2M HILL - Corporate Development, Mergers and Acquisitions