Tigress Financial Partners offers value-based management services through a proprietary application of Economic Value Added (EVA) as a performance measure.
We work to empower corporations to improve performance, align management and shareholder interests, promote better governance and drive greater stakeholder value.
We work with our clients to develop policies and procedures for measuring performance for capital allocation, business lines / units, projects and assessing acquisitions and divestitures.
- Develop internal measure for capital costs, minimum required returns and payback periods.
- M&A Economic Profit Valuation and Analysis - Pricing and impact analysis.
- Motivation - Create and implement incentive plans that give employees participation in the incremental value created at both the business unit and firm level.
- Mindset - Increase the business literacy of client's employees through education and training.
- Employee education & training together with salesforce education & training.
- Work with clients to create an Investor Relations (IR) presentation to better convey valuation and comparison for investors.
- Measuring and linking operating efficiencies to increasing ROC and Shareholder value.
- Measuring the effectiveness and link to shareholder value of capital investments in IT, virtualization, business processes, outsourcing, etc.
- Dashboards, KPIs & Scorecards.
- How the implementation of these value-based measurements can improve Economic Profit and stock price.
Value-Based Management (VBM) Program focused on measuring and increasing Economic Profit and Shareholder Value.
The Four M(s) of Value-Based Management:
Measurement - What gets measured gets managed. We work with our clients to design VBM measurements of performance and value creation that best fit their business processes, structure, segments and industry. We perform complete Economic Profit business and peer group analysis.
Management - Work to implement the VBM measurements and tools that link the company's decision-making process to measurements of value-creation.
Motivation - Work to create and implement incentive plans that give employees participation in the incremental value created at both the business unit and firm level.
Mindset - We work to increase the business literacy of client employees through education and training.
Economic Adjustments to Accounting
Reported financial results and accounting policies are studied to develop an appropriate definition of Economic Profit for each of the industry participants. Our review includes both historical (10 years or whatever is available) and projected accounting data for client requested industry members. Although there are numerous refinements to accounting statements that can improve the accuracy of the measure, the best results come from simplifying to those few adjustments that will most materially influence the future behavior of managers and are relevant to the industry.
Cost of Capital Analysis
An appropriate cost of capital analysis is required to determine the return necessary to meet the expectations of both debt and equity holders. A rigorous analysis of business risk helps us determine the appropriate return that should be reasonably expected by shareholders. Typically, this is the weighted average cost of debt and equity capital, based on the target proportions to be used over time. This rate is charged for the use of capital in the Economic Profit calculation, as well as the discount rate for net present value analysis. Also, cost of capital analysis of competitors allows us to determine relative Economic Profit performance for peer benchmarking.
By analyzing the value of the business, we can determine whether the company is under or overvalued relative to market expectations. This information is not only valuable for capital structure decisions, such as share buybacks in the case of an undervalued stock, but also in determining operational goals necessary to meet shareholder expectations.
Our Economic Profit Analysis culminates in a report that not only benchmarks the company's ability to create value against its peers, but also reveals which drivers are contributing to or hindering a company's competitive advantage.
- Earnings measures (Net Income, EPS, EBITDA, Operating Income, etc.) can lead to investment at inadequate rates of return.
- Return measures (ROE, ROC, and ROA) can lead to rejecting good investments that diminish current returns or accepting poor investments that enhance current returns.
- Long-term shareholder value can only be maximized by increasing a company's Economic Profit over the long-term.