The Stress Test Every Business Needs

Book description

Future-proof your business today for stronger performance tomorrow

The Stress Test Every Business Needs: A Capital Agenda for Confidently Facing Digital Disruption, Difficult Investors, Recessions and Geopolitical Threats provides a comprehensive approach to creating value and flexibility in an increasingly volatile business environment that presents both great risks and opportunities every day. The authors extend the banking “stress test” concept to a company’s Capital Agenda — how executives manage capital, execute transactions and apply corporate finance tools to strategic and operational decisions. Having a static Capital Agenda, however appropriate for your current market position, is not enough in today's uncertain world. Long-term success comes from building resilience into each element and in the way those elements interact.

The book uses a broader definition of business stress that includes traditional macroeconomic and geopolitical risks, as well as technological disruption, hostile takeovers and activist shareholders. Companies that make poor strategic decisions or underperform operationally will likely find themselves facing great stress. And that stress is symmetric; threats come from downside risks and from missed opportunities.

The chapters address the how and why of essential issues such as:

  • Formulating corporate strategy in a digital world
  • Pre-empting activist shareholders
  • Restoring distressed companies to operational and financial health
  • Ensuring effective collaboration among strategy, finance and operations
  • Getting the most out of your advisors
  • Proactively managing intrinsic value
  • Rigorously allocating capital across the enterprise
  • Acquiring and divesting for optimum value
  • Syncing financing decisions with business strategy and capital market conditions
  • Incorporating tax planning throughout the Capital Agenda
  • Liberating excess cash with leading working capital management practices
  • Aligning strategic goals and metrics to reach your company’s full potential
Companies that develop strategy and set operational priorities with a balanced Capital Agenda are best positioned to control their own destiny. The Stress Test Every Business Needs provides a roadmap to future-proof your business today for stronger performance tomorrow. 

Table of contents

  1. Acknowledgments
  2. Chapter 1 How resilient is your Capital Agenda?
    1. by Jeffrey R. Greene
    2. Framing decisions within the Capital Agenda
    3. The Capital Agenda’s building blocks
    4. Who can benefit from this book?
    5. Universal lessons from Allergan and Valeant
    6. Stress test your Capital Agenda
    7. Making the most of your Capital Agenda
    8. Performance improvement opportunities
    9. Navigating the book
    10. Notes
  3. Chapter 2 Do you know the intrinsic value of your company and how to manage it?
    1. by Daniel Burkly
    2. Closing the gap between intrinsic and market value
    3. Common valuation applications
    4. Getting more value out of valuation
    5. Inconsistent applications of valuation
    6. Eight ways to minimize misuse and maximize effectiveness
    7. Cultivating a valuation mindset
    8. Notes
  4. Chapter 3 Are you allocating capital across the enterprise to reduce C-suite stress?
    1. by Jeffrey R. Greene
    2. Eight leading practices for allocating capital
    3. Evaluating individual investment opportunities: Quantify, debate, judge
    4. “Capital allocation is a contact sport”
    5. Notes
  5. Chapter 4 Are your portfolio reviews timely, objective, and thorough?
    1. by Jeffrey R. Greene and Jeff Wray
    2. Diagnosing the health of your portfolio management process
    3. Preparation drives value
    4. An acquisition perspective
    5. Approach ownership flexibly
    6. Implement world-class portfolio management
    7. Can “virtual” carve-outs show the way to cost reduction?
    8. Confront barriers to success
    9. Putting theory into practice
    10. Notes
  6. Chapter 5 Do your acquisitions consistently pay off for shareholders?
    1. by Brian Salsberg
    2. An age-old M&A question
    3. Stress testing your M&A activities
    4. Lessons learned
    5. Notes
  7. Chapter 6 Are you planning and executing divestments for maximum value?
    1. by Paul Hammes and Subin Baral
    2. Divesting is critical to your capital strategy
    3. What defines a successful divestment?
    4. Divestment guiding principles
    5. Leading sources of value erosion
    6. Can you increase business value before divesting?
    7. What does it take to close the deal and maximize value?
    8. Divesting for value
    9. Note
  8. Chapter 7 Do your financing choices support flexibility and efficiency?
    1. by K.C. Brechnitz
    2. Use capital structure to facilitate business goals
    3. Assess your business through the capital lens
    4. Assess strategic financing alternatives
  9. Chapter 8 How well does working capital management contribute to cash flow and earnings?
    1. by Sven Braun and Steve Payne
    2. Why working capital matters
    3. Stress test your working capital proficiency
    4. Are you using outdated metrics?
    5. The psychology is harder than the math
    6. Next steps in the optimization journey
  10. Chapter 9 Is tax a full partner in building resilience and driving value?
    1. by Bridget Walsh and Erica Lawee
    2. Key tax issues affecting business today
    3. Tax in the Capital Agenda
    4. Turning tax uncertainty into opportunity across the Capital Agenda
    5. Notes
  11. Chapter 10 Are strategy, finance, and operations integrated for optimal value creation?
    1. by Sharath Sharma and Daniel Burkly
    2. Day 1
    3. Strategy, finance, and operations integration
    4. Complex change will be a constant
    5. SFO integration creating value through M&A
    6. How urgent is your need for SFO integration?
    7. Stress testing your SFO integration
    8. It’s a journey, not a destination
    9. Notes
  12. Chapter 11 How can you get the most out of your advisors?
    1. by Giri Varadarajan and Aayush Tulsyan
    2. Setting the context
    3. First principles
    4. When it is appropriate—and not appropriate—to use an advisor
    5. Hiring process
    6. Advisors as competitors and as peers
    7. How to start the relationship with an advisor
    8. Fourteen other leading practices (and what not to do) when hiring and managing advisors
    9. Beyond advisors to journey partners
    10. Note
  13. Chapter 12 Can your strategy thrive in a digital world?
    1. by Tony Qui and Glenn Engler
    2. Extending the reach of digital
    3. Who’s the digital disruptor?
    4. Focus on seven dimensions of digital
    5. Feeling overwhelmed? Join the club. But there is a way forward
    6. This is for certain
    7. Note
  14. Chapter 13 How can you pre-empt activist shareholders?
    1. by Shyam Gidumal
    2. How activism has changed
    3. Four areas of focus for activists
    4. The best protection against activism
    5. What to do when the activist’s letter arrives
    6. Formulating your response
    7. We thought about that, too
    8. Activism is here to stay
    9. Notes
  15. Chapter 14 How should you restore a distressed company to health?
    1. by Andrew Wollaston and Donald Featherstone
    2. Turnaround versus restructuring
    3. Recognizing corporate distress and the human dimension
    4. Marshaling the recovery
    5. Remaining in control
    6. Early detection is the best prevention
  16. Chapter 15 Will your strategic goals ensure your company reaches its full potential?
    1. by Bill Achtmeyer and John Trustman
    2. A good strategy starts with setting the right targets
    3. Defining market context
    4. Setting margin targets using the Performance Gap
    5. Setting growth targets with the Opportunity Gap
    6. Aligning with investors via the Perception Gap
    7. Full potential value synthesis
    8. Notes
  17. Glossary
  18. Contributor Biographies
  19. About EY
  20. Index
  21. End User License Agreement

Product information

  • Title: The Stress Test Every Business Needs
  • Author(s): Jeffrey R. Greene, Steve Krouskos, Julie Hood, Harsha Basnayake, William Casey
  • Release date: September 2018
  • Publisher(s): Wiley
  • ISBN: 9781119417941