Corporate Valuation and Corporate Governance
Lecture Outline:
1. Corporate Valuation: List the two types of assets that a company owns.
2. Market Value Added (MVA) Formula
3. Value-Based Management (VBM)
4. Expected Return on Invested Capital (EROIC) Formula
5. Analysis of Growth Strategies
6. Two Primary Mechanisms of Corporate Governance
7. Value of Operations Formula
8. Assets-in-Place
9. Stock Options in Compensation Plans
10. Value of Operations: Constant Growth Formula
In the field of finance, corporate valuation is the process of determining the value of a business entity. It is an important aspect of corporate finance, used for a wide variety of purposes. Valuation is essential for mergers and acquisitions, where a sound decision has to be made whether and at what price to acquire a company. The value of a company could be different for sellers and buyers, so valuation is integral part of the negotiation process. It is also crucial for the effective management of a company, for identifying its value-generating units, and formulating strategies for growth. Initial public offerings, portfolio management, and tax assessment are also areas that involve a lot of corporate valuation.
Value Based Management (VBM) is the management philosophy and approach that enables and supports maximum value creation in organizations, typically the maximization of shareholder value. VBM encompasses the processes for creating, managing, and measuring value.
Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. Corporate Governance refers to the way in which companies are governed and to what purpose. It identifies who has power and accountability, and who makes decisions.
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Source: Best Practices in Valuation PowerPoint Slides: Corporate Valuation and Corporate Governance PowerPoint (PPT) Presentation Slide Deck, UJ Consulting
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