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Building Value in Your Company

Howard E. Johnson

Building Value in Your Company - This product is available in the following media types: Book (Softcover)

Building Value in Your Company provides a practical, hands-on explanation of how business value is measured; how this value can be increased; and how business owners and executives can realize on that increased value by focusing on cash flow, risk management and invested capital.


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Building Value in Your Company

by Howard E. Johnson MBA, FCA, FCMA, CBV, CPA, CFA, ASA, CF, C.DIR

Written in clear, easy-to-understand language, this comprehensive guide explains the practical steps involved in value measurement, creation and realization; providing business owners and executives with key guidance on generating shareholder value for their company. It shows readers how developing a competitive advantage generates intangible value, which ultimately leads to value creation. It is divided into three sections:

  • Part I deals with value measurement. It addresses various methodologies for determining the value of your company, and the important distinction between tangible net worth and intangible value;

  • Part II deals with value creation. It addresses the importance of developing a competitive advantage through managing your company’s cash flow, risk profile and invested capital, which in turn leads to intangible value; and

  • Part III deals with value realization. It addresses the various liquidity alternatives including shareholder distributions, related party transactions and transactions involving third parties.

Part I – Value Measurement
Chapter 1 – Principles of Value Measurement

  • Future Cash Flow is Key
  • The Risk-Reward Tradeoff
  • Enterprise Value vs. Shareholder Value
  • Value is in the Eye of the Beholder
  • Fair Market Value vs. Price
  • The Importance of Liquidity
  • Public Company Values vs. Private Company Values
  • Controlling Interests vs. Minority Interests

Chapter 2 – Valuation Based on Multiples
  • Revenue Multiples
  • Cash Flow Multiples
  • Calculating Normalized EBITDA
  • What Are Valuation Multiples?
  • Factors Influencing Valuation Multiples
  • Interest Bearing Debt and Cash
  • Adjustments to the Shareholder Value Conclusion

Chapter 3 – Valuation Based on Discounted Cash Flows
  • Mechanics of the DCF Methodology
  • Forecast Discretionary Cash Flow
  • Discount Rates
  • Terminal Value
  • Example of the DCF Methodology

Chapter 4 - What is Your Cost of Capital?
  • What Factors Determine Cost of Capital?
  • Estimating the Unlevered Return on Equity
  • Estimating a Normalized Capital Structure
  • The Magic Formula for Cost of Capital

Chapter 5 – What About the Balance Sheet?
  • The Balance Sheet and Shareholder Value
  • Tangible Net Worth vs. Intangible Value
  • Analyzing Your Balance Sheet
  • The Hidden Value of Real Estate

Part II – Value Creation
Chapter 6 – Principles of Value Creation

  • The Shareholder Value CurveTM
  • The Determinants of Shareholder Value
  • What Drives Intangible Value?
  • Creating a Competitive Advantage
  • Growth vs. Value

Chapter 7 – Increasing Cash Flow
  • Pricing Strategy
  • Product and Service Offerings
  • Cost Management
  • Don’t Forget About the Tax Man

Chapter 8 – Risk Management
  • Identifying Operating Risks
  • Risk Assessment
  • Risk Mitigation Strategies
  • The Benefits of Diversification

Chapter 9 – Asset Management
  • Working Capital Management
  • Working Capital Ratios
  • Specific Working Capital Accounts
  • Fixed Assets
  • Lease vs. Buy

Chapter 10 – Debt Financing
  • The Magic of Financial Leverage
  • Beware of Financial Risk
  • How Much Debt is Right for Your Company?
  • What Type of Debt Should You Raise?
  • Long Term Debt vs. Short Term Debt

Chapter 11 – Equity Financing
  • Private Equity Financing
  • Initial Public Offerings
  • Primary vs. Secondary Share Offerings
  • Employee Share Ownership Plans (ESOP’s)
  • Shareholders’ Agreements

Chapter 12 – Corporate Acquisitions
  • The Acquisition Process
  • Creating Shareholder Value Through Acquisitions
  • Common Mistakes in Acquisitions

Part III – Value Realization
Chapter 13 – Avenues for Value Realization
  • A Spectrum of Alternatives
  • Shareholder Distributions
  • Related Party Transactions
  • Transactions with Third Parties

Chapter 14 – Family Business Succession
  • Planning for the Transition
  • Components of Effective Family Business Succession
  • Effecting the Family Business Succession Plan
  • Family Business Succession Challenges

Chapter 15 – Selling to Financial Buyers
  • What Do Private Equity Firms Look For?
  • How Do Private Equity Buyouts Work?
  • Private Equity Buyers vs. Strategic Buyers

Chapter 16 – Management Buyouts
  • The MBO Process
  • Private Equity Firms and MBO’s
  • How Does an MBO Work?
  • Common Obstacles to an MBO Transaction

Chapter 17 – Selling to Strategic Buyers
  • The Sale Process
  • Planning for the Sale
  • Executing the Sale
  • Why Deals Fail to Close


Other business management resources

We are pleased to offer more resources to support the success of your business:

Model Agreements, Resolutions and Contracts
Selling a Private Company

Add them to your business library today!


ISBN: 978-1-55385-586-6
Publication Date: August 2011; reprint Oct 2013

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