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Economic Value

Lost among so many indicators? Learn more about the only one that really matters, Economic Value. Put your business on the path of wealth creation, prioritizing actions and projects with greater added value.

Invest

Invest, innovate, grow, more sales, more income, yes, but ... are you really creating wealth for shareholders?

Partnership

ValueCorp is an independent high direction consulting firm, specialized in corporate value building based in Montreal, Canada, working worldwide.

Company Valuation Services

Company Valuation Services

Enterprise, business, company valuation

ValueCorp is an independent high direction consulting firm, specialized in corporate value building based in Montreal, Canada, working worldwide.

ValueCorp's consulting approach was developed from Wolfgang U. Molina experience in serving clients, on topics such as strategy and business valuation since he was a consultant at McKinsey & Co. and after the firm founding in Caracas in the mid-1995, to help companies in enterprise value analysis of strategic decision making based on value creation. He’s based in Montreal since 2005, where he added a post-MBA from McGill University to his PhD in Applied Chemistry + MBA educational background.

 

A Strategic Approach to Build Corporate Value

ValueCorp developed an integrated approach seeking to increase corporate value by focusing on management activities to increase the organization’s capabilities to generate increasing cash flow in the short and long term. Organic growth promoted by solving the reinvest or cash out trade-off, while keeping operating risks manageable.

By decentralizing decision making at the operational level, promoting fact-based discussions, benchmarking-inspired innovations and team building around managers responsible for each of the company’s value driver, the organization is enabled to progressively take strategic steps in expanding the business in the most profitable way.

Decisions such as whether or not keeping a particular client, selling in a market-segment, discontinuing a product, launching a new service, changing commercial conditions or investing in new facilities, are made after completing a well-informed ‘planning-execution-evaluation-learning’ cycle.

Hints for improvements are generated by comparing planned performance against real results at the end of each operational cycle. This approach also helps to develop better and better planning capabilities making the business more predictable, less risky and more attractive for investors. Budgets and projects execution becomes core natural tasks for departments and individuals. What they plan is visible for everyone in the organization and becomes their commitment vis-a-vis the whole staff. Sharing goals and progress accomplished helps to simplify and summarize everyone’s mandate and responsibilities.

Assessing company’s cash flow with a comprehensive view of all its components allows decision makers to evaluate the impact of executed actions on key indicators. For instance, operational and financial managers can jointly evaluate how changes in corporate payable taxes of a particular initiative would reconcile with the company’s tax planning strategy.

ValueCorp methodology is about continual improvement focused on value creation. This approach encourages horizontal communication and data sharing, so significant progresses and best business practices are copied and spread across the organization. Over time and after having exhaustively explored every available alternative to create value, corporate officers are enabled to decide conscientiously, for instance, on the acquisition of a competitor to boost growth, or to spin-off a business unit which does not fit within the corporation.

This approach improves corporate governance focusing managers on value creation and strengthening implementation capabilities with long term vision, which means better business insights to detect opportunities and a better business foresight to visualize the future.

 (514) 296-1509  [email protected]

Services

Value-building Strategy

Contribute with daily action to the business growth and widening of the return on invested capital and the cost of capital gap.

A Value Creation Strategy seeks to guide management towards highest levels of performance by coordinating organization’s all functional areas with the aim of creating sustained economic value for shareholders. This implies, at the same time, offering the best value proposition to customers, under the most attracting conditions for stakeholders. This analytical-strategic approach is known in the literature as Value-Based Management.

Delineating a value creation strategy with initiatives to impact Value Drivers is essential to establish a corporate culture towards the creation of economic value, but this is only the first step. To lock up this orientation in management’s mind-set, all employees and external direct stakeholders (suppliers, shareholders, etc.) must be made aware through information campaigns and training plans. At the same time, changes must be made in the handling and availability of critical information, in the way of decisions making is done and in the roles and responsibilities assignment.

In a company Value Drivers are interdependent and connected to the Corporate Value in a Value Creation Tree similar to Dupont approach, so that the net effects of a strategic action or initiative can be measured objectively when it has contradictory effects on several Value Drivers.

As a strategic planning tool, Value Based Management will identify the actions and projects to be undertaken in four dimensions at the same time or sequentially:

  1. Optimization of operations to create value without changing the products and services offered by the company, nor the markets served.
  2. Identification of the products, services offered and markets served that the company must abandon.
  3. Search of business opportunities for new products, services and markets.
  4. Sustained and consistent reduction of the weighted average cost of capital.

In the long term, efforts to create value aims to durable competitive advantages based on organizational learning.

Value-building Strategy

Training for Value Creation

Employees must be made aware of the value creation endeavour, which implies more Free Cash Flow, with lower operational risks and both in a continuous way in the long term.

ValueCorp offers you the opportunity to strengthen your human capital by raising its awareness about the creating economic value philosophy. Without being exhaustively comprehensive on all disciplines related to value creation, our training programs are aimed at helping to improve your management team’s skills in the following areas:

  • Value Creation for operational managers
  • Business plan
  • Value Creation and Competitive Strategy
  • Business Valuation
  • Valuation of financial institutions
  • Economic feasibility of projects
  • Building efficient Business Cases (practical preparation and presentation (*)
  • Strategic Planning (Preparing a practical and efficient Strategic Plan)(*)
  • Project Management. The effective execution of the strategy (*)
    • (*) Under license and in partnership with FGT. www.fgt.com

Our training programs can be delivered out directly "at home", that is, in your company location as part of the effort to adapt to your training policies. Indeed, we develop our work in the framework of your company’s activities and programs, and in your own facilities. This modality allows us to acclimate to your corporate culture and organizational environment.

To achieve this, we familiarize with your company’s strategic challenges and adapt the courses’ contents to the reality of your business, for example, by adjusting the exercises, case studies and examples we used to make them relevant and meaningful for participants. In this way, the training activities achieve an effective integration of the value creation approach to your organization, maximizing the profitability of the investment in training.

Training for Value Creation

Strategic Business Value Assessment

Any business is implicitly an agreement between the shareholders and the management of the company, on the recovery of an amount of money invested, increased by a profit proportional to the risk incurred and the time elapsed.

The value of a company is commonly measured and evaluated by finance specialists, however, Corporate Value is created by operational decision makers. Putting your business on the path to creating wealth is possible by prioritizing your projects and opting for value-creating strategies.

A business is worth as long as it’s capable to generate cash surpluses to remunerate its capital providers, that is, its shareholders and its financial creditors. The value of a business (Firm Value) corresponds to the net present value of the generated surpluses, called Free Cash Flow plus extra cash, financial investments and the value of assets not involved in the above mentioned cash surpluses, which are discounted to a rate that reflects the cost of financing and the risks of the company, that is, its Cost of Capital. On the other hand, the Equity Value or value of the shareholders, is deducted by subtracting from the Firm Value, the Value of Debt.

Determining the value of a company is useful, among other purposes, when you want to buy or sell it, but also when you want to weigh your strategic options. The Strategic Business Valuation is based on the analysis of economic value as a criterion to guide business decision-making and define corporate strategy. This effort begins with the identification of the Value Drivers or critical factors for value creation, which are specific to each business. Next, coherent Performance Scenarios are designed and valued; that’s the company value under each scenario. A Base Case is defined based on scenarios’ probabilities, so a reference value, that serves to delineate a Value Creation Strategy consisting of initiatives to impact Value Drivers.

Compared to other criteria, Economic Value is the best for making business decisions and selecting projects. Therefore, management must focus on cash generation of and adopt it as a realistic, simple and effective vector for value creation of a business or a project.

Strategic Business Value Assessment
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