Value creation doesn’t happen by accident—it requires conscious integration of strategy and finance in the planning and capital budgeting processes. We can help management identify shareholder expectations for earnings and investment, and compare those to the company’s operating and capital plans. This linkage is the first step to creating a cleaner line-of-sight between decisions, actions and value creation.

We also tackle a key strategic question for our clients: Are all your value-added projects, and only your value-added projects, getting funded? Corporate executives often see an unlimited appetite for capital—“capital addiction,” some have called it—from division managers, requiring intensive and contentious involvement by corporate staff. In our experience, this arises from a lack of accountability for capital from those requesting it. This can often be easily remedied. In the end, a company’s capital allocation process can often have a greater impact on its capital efficiency than the nominal quality of a company’s investment opportunities.

Our programs to improve planning and capital budgeting transform the relationship between corporate and division management (or between investors and portfolio companies) from a continuous negotiation about resources and targets into a cooperative partnership in value creation.

We can help you to:

Identify implicit shareholder expectations for profitability and rate of reinvestment (both retained earnings and additional outside capital)

Compare shareholder expectations to the results of the strategic plan

Develop a model that allows managers to continuously relate new products or markets, operational improvements, or disinvestment of underperforming assets or operations, to the changing value of their businesses

Review the capital budgeting process, recommend and implement improvements