This article is the fourteenth in a series on what causes a firm’s value to increase
On September 19th Apple’s stock was trading at $702. On November 8th it had fallen to $538 a share. This was $154 billion in lost shareholder value in eight weeks. The culprit was expected rising costs to land their products on shelves from their factories. Now most investors and analysts thought Apple executives and managers would rebuild the lost value, and they indeed are. But a permanent destruction of shareholder value or firm valuation in the case of the private firm is something to be avoided if at all possible. Why?
Growing the valuation of a business or organization is the ultimate goal of any enterprise that wants to have strategic options into the future. Strategic options like raising capital at lower costs of capital, attracting the best employees, negotiating great terms with suppliers and having the option to enter into an Initial Public Offering are extremely coveted. Also we know there could come a time to sell a business. Growing its valuation before the sale proceedings start means the current owners will sell the business at an attractive price.
Readers of this column know that over the year of 2012 I have tried to provide a review of what is considered best practice in growing the value of your firm or organization. Not from a purely financial viewpoint, but from a strategy, leadership, innovation and operations viewpoint. I hope readers feel that I have at least given them something to think about and consider for their firms or organizations, even if they totally disagreed with my position. I have had some nice email interchanges with readers on various topics over the year, and look forward to more of the same in 2013. If you missed one or more of the articles, I would be glad to bundle them all up and send them to you at no cost. Please just email me at the address at the end of the article.
Here is a listing of the articles on the drivers of firm valuation we put together in 2012:
- First Article Introducing the Series
- Your Firm’s Competitive Strategy: the Cornerstone of Firm Valuation
- Innovation: The Hot American Business Topic – Parts 1 and 2
- World Class Strategy Execution – World Class Headaches – Parts 1 and 2
- The Process Revolution and Profitable Revenue Growth
- Enterprise Wide Risk Management
- The Strategic Planning Process: Does Your Organization Need One?
- Globalization of Business and Northwest Louisiana
- Strategy and Key Manager Compensation – A Means to Grow Value
- Strategy, Firm Valuation and Boards of Directors
- Futuring: The Exploration of the Future – Parts 1 and 2
- What Do Private Equity Investors Want From Their CEOs?
- Competitive Advantage Through People
I have enjoyed immensely writing these articles based on my twenty-five years as a strategy consultant, but underpinned by the findings from what I consider good, practical academic research. As I stated above, these topics represent much of what is considered best practice in increasing firm valuation from a strategy, innovation, leadership, execution, risk management and operations viewpoint.
The Forum would like for me to write again next year and I am most honored and happy to do so. I will write a few more content pieces (the role of information technology on firm valuation for instance), but we will mostly look at stories from some of the best company examples I know of that will portray the happenings, both good and not-so-good, of the above topics. And I invite our local leading businesses and organizations to allow me to interview you on one or more of the topics and write about your experience with them.
So I sign off for this year. I wish the very best of success and happiness to you, your organizations and your families and friends in this holiday season.
Next Up: The Articles for 2013
Bill Bigler is Director of MBA Programs and associate professor of strategy at LSU Shreveport. He spent twenty five years in the strategy consulting industry before returning to academia full time at LSUS. He is the president of the board of directors of the Association for Strategic Planning, one of the leading professional associations in the field of strategy. He can be reached at firstname.lastname@example.org