Challenges
To create sustainable, long-term shareholder value, it is important to explicitly establish an appropriate shareholder value target. The key to reaching this target—and achieving a competitive advantage—is the alignment of business, financial, and investor strategies. Therefore, companies must ask the following important questions:
How can we pressure-test financial policies to ensure that we have the right capital-structure, dividend, and buy-back policies? Are those set up to weather financial storms?
What is my shareholders’ investment thesis?
Are my strategies aligned to target the right investors—those that will support my medium- to long-term business and financial strategy?
Will my plans create enough shareholder value to reach my targets? If not, which moves should I consider to close the gap?
BCG Competencies
BCG works with clients to optimize medium- to long-term total shareholder return (TSR) at both the corporate and business-unit levels. We distill investor insight from structured interviews with a significant portion of the client’s shareholder base. Through proprietary regression techniques, we identify and assess the relevance of the company-specific valuation drivers and benchmark the results against those of peers.
On the basis of this knowledge, we help our clients pressure-test and reshape their financial policies around the use of cash, dividends, and share buybacks. We also challenge and refine business plans with clients to achieve the targeted TSR, and we help develop alternatives to the base plan that deliver stronger TSR built on different combinations of business, financial, and investor strategies. In some cases, our holistic approach has yielded a TSR improvement of 25 percent.
Our practice consists of more than 130 partners and 500 trained professionals at all BCG levels worldwide, all with significant experience in corporate development and corporate finance. Specifically, our corporate-finance task force and cadre and our Value Science Center—a dedicated global group of more than 100 specialists—provide comprehensive support for our clients.