Developing a successful Value Creation Strategy requires a structured process for analyzing the dynamics of value creating in our organization and in our industry. This presentation outlines a 3-phase approach to developing an integrated Value Creation Strategy:
1. Create a Total Shareholder Return (TSR) Fact Base
2. Establish an Appropriate TSR Goal
3. Redesign Management Processes
Each phase can be further subdivided into 3 key steps. In this presentation, we will focus on the first phase, with the following key steps:
1. Identify the historical sources of TSR.
2. Understand what drives relative Valuation Multiples.
3. Engage with dominant investor groups.
Although organizations monitor their Value Creation performance over time, few create a comprehensive TSR fact base.
Additional topics discussed include TSR Drivers, TSR Decomposition Model, TSR Source Identification, and others. This deck also includes slide templates for you to use in your own business presentations.
Phase 1 of the Value Creation Strategy Series delves into the critical task of identifying historical TSR sources. This involves a detailed analysis of dividend yield, share change, and net debt change. By leveraging the TSR Decomposition Model, executives can pinpoint the exact contributions of these factors over a specified period. Understanding these historical sources is fundamental for building a robust TSR fact base.
The PPT also emphasizes the importance of understanding what drives relative valuation multiples. This step is crucial for benchmarking against competitors and identifying areas for improvement. The analysis includes evaluating capital structure and other key drivers that influence valuation multiples. This insight is essential for making informed strategic decisions that enhance shareholder value.
Engaging with dominant investor groups is the final step in Phase 1. This involves identifying and understanding the priorities of key investors who hold significant influence. The document provides a structured approach to engaging with these groups, ensuring that the company's value proposition aligns with investor expectations. This engagement is vital for maintaining investor confidence and driving long-term value creation.
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Source: Best Practices in Value Creation, Total Shareholder Value PowerPoint Slides: Value Creation Strategy Series: Phase 1 PowerPoint (PPT) Presentation Slide Deck, LearnPPT Consulting
This PPT slide focuses on understanding the factors that influence valuation multiples within a specific industry. It emphasizes the importance of conducting statistical analyses to uncover correlations between various financial and operational metrics, such as growth, profitability, and risk. The goal is to identify what sets apart different valuation multiples in the industry and to take actionable steps to enhance a company's valuation relative to its peers.
Four key drivers of valuation multiples are highlighted: growth, company size, EBITDA margin, and capital structure. Each driver is assigned a percentage, indicating its relative priority in influencing valuation. Capital structure emerges as the most significant factor at 41%, suggesting that how a company finances its operations plays a crucial role in its valuation. EBITDA margin follows at 26%, indicating that profitability is also a critical consideration. Growth and company size, while important, are less influential at 15% and 18%, respectively.
The slide also includes a practical insight regarding capital efficiency. It suggests that instead of leveraging debt to fuel growth, companies should consider divesting from low-margin businesses to improve overall capital efficiency. This approach aligns with the broader theme of the slide, which is to encourage a strategic focus on the most impactful drivers of valuation.
Overall, this slide serves as a guide for executives looking to refine their understanding of valuation dynamics in their industry. It provides a clear framework for evaluating and improving their company's market position based on the identified priority drivers.
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Value Creation Strategy - Full Series
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Value Creation Shareholder Value Shareholder Value Analysis Total Shareholder Value Maximizing Shareholder Value Digital Transformation Digital Transformation Strategy Big Data Performance Management Enterprise Performance Management Performance Measurement Strategy Development BMI Business Model Innovation Business Model Design Enterprise Architecture Data Analysis MIS IT Information Technology IT Strategy Management Information Systems Information Architecture Human Resources Maturity Model HR Strategy Business Maturity Model Talent Management Talent Strategy Human Resources Management Lean Culture Specialized PowerPoint Templates Specialized PowerPoint Diagrams Mobile Strategy Customer Experience RPA Customer Journey Robotic Process Automation User Experience Customer Strategy Customer Decision Journey Consumer Decision Journey Customer Journey Mapping Business Case Development Financial Modeling Business Case Example Business Case Template Capital Budgeting Business Case Sample Business Case Capital Budgeting Business Case Market Entry Example Emerging Market Entry Market Entry Plan Market Entry Board of Directors Corporate Board
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