About ValueOpt™Our point of view
Eight (8) Truths and…
Our Point of View… embedded in our research, analysis, solutions and platform
Cash is truth. Earnings are an opinion.
Capital allocation is senior management’s most fundamental responsibility.
GAAP-Based Financials provide no visibility into a company’s Enterprise Value.
No amount of revenue growth can overcome negative Return on Invested Capital (vs. Cost of Capital).
- 5. Flawed PE/VC Performance Metrics
- 6. Flawed Valuation Metrics
- 7. The Majority of Value
- 8. Overcoming Uncertainty
IRR, “Cash-on-Cash” Multiples and Multiples of Invested Capital are inferior metrics for Private Equity/VC performance.
NPV and Discounted Cash Flow are inferior valuation metrics during periods of high uncertainty.
70+% of a company’s value rests in intellectual capital, human capital and relational assets.
Scenario Planning, Simulation, and Strategy/Decision Lattices can overcome high uncertainty.
… Four (4) Fractures
The issues negatively affecting optimized valuation
Capital Allocation Efficiency
Capital allocation is a senior management team’s most fundamental responsibility. The objective of capital allocation is to build long-term value. Capital productivity is measured by the metric Return on Invested Capital (ROIC). Unfortunately, half of S&P 500/Russell 3000’s ROIC is less than their WACC. IVO is changing that.
Shrinking Relevance of GAAP-Based Financial Reporting
The current financial reporting framework is fractured in that GAAP-based financials provide no visibility into the value drivers behind a company’s Enterprise Value (EV) and “path-to-growth” strategies. Internal and external stakeholders recognize this and are demanding greater transparency.
Strategic Net Present Value
The value of growth initiatives go undefined and ignored. In a Knowledge Economy, intellectual assets – as opposed to monetary and physical assets – are the key drivers of growth and sustainable value creation. The challenge is that investments in growth initiatives are ignored by the current financial reporting framework.
There is a disconnect in how Enterprise Value is created, leading to valuation traps. Value is created by investing capital to generate future cash flows at rates of return that exceed your cost of capital. Unless a company’s return on capital exceeds its cost of capital, no amount of revenue growth can create value.
Principal & Co-Founder
Dan is an accomplished balance sheet heckler and pioneer in enterprise valuation strategies, strategic net present value, and innovation analytics.
He has been a CFO for half a dozen companies. He also led Business Analytics & Strategy, Profit Recovery and Analytics, and Finance & Accounting Transformation groups for Accenture, IBM, Wipro Consulting and WNG Global Services.
He holds an MBA from the University of Chicago Booth School of Business and a BBA in Accounting from the University of Notre Dame. He is also a certified CPA in the state of Ohio.
Principal & Co-Founder
Bill is a process geek and specializes in executive financial communications. He has developed communications for Lee Iacocca, Rupert Murdoch, Bill Gates and scores of CEOs.
He has been an Investor Relations professional for iXL, BellSouth (AT&T), and MCI and a consultant/CMO for several startups.
He has a BA from Syracuse University and the S.I. Newhouse School of Public Communications
Our Vision is to impact billions in value by transforming Corporate Finance and Strategy to rationalize how to manage growth, invest in innovation and create shareholder value.
Research and Insight
Part of building a long-term strategy and increasing overall enterprise value is the ability to establish benchmarks and communicate those benchmarks to investors with clarity and transparency. This enhanced reporting is different from quarterly financial results...
Dan O'Connor recently co-authored a white paper with New Constructs CEO David Trainer on the enormous upside potential for the technology sector. An excerpt follows. You can also access the full article, which appeared in ValueWalk.com. Technology Companies included...