In an age where two-thirds of all merger deals can be said to fail (where deals fall short of the minimum required financial returns to the acquiring company), how can future success be guaranteed? And what can acquirers, and their shareholders and advisers, do to improve the chances of success?
Masterminding the Deal looks at performance in two critical areas - merger segmentation (the identification of critical characteristics and attributes separating more successful mergers from the rest) and category-specific synergy diagnosis (the differentiation of synergy benefits - expenses, revenues, tax - to ensure maximum rewards). Using this in-depth analysis, the book provides the managers and advisers of acquiring firms with concise and actionable frameworks to improve and enhance merger performance.
These 2 books are designed to provide a comprehensive exposition of the key issues, concepts and tools of Financial Statement Analysis, Valuation and Corporate Finance from both a theoretical and practical perspective.
Chapters 1 to 5 of Book 1 cover Financial Reporting and Financial Statement Analysis. These 5 chapters take the reader from basic principles involved in the preparation of statements, a review of ratios and ratio models that can be used for the interpretation of statements, through to working with the published accounts of a company. In these chapters much of the jargon used in financial accounting is explained, which is supported (throughout the book) by a comprehensive glossary of terms Chapter 6 and 7 of Book 1 provide a review of Corporate Finance and an introduction to valuation with reference to project appraisal and discounted cash flow analysis, which is essential to understand for the material covered in Book 2.
In Chapter 1 of Book 2 the foundation developed in Book 1 is extended to developing an understanding of the significance of the principles of financial economics in the form of discounted cash flow analysis from a business valuation perspective. Key issues in relation to business valuation are considered in Chapter 2. Subsequently in Chapters 3 and 4, performance measurement issues and an understanding of the basis for economic returns as distinct from accounting returns are covered as well as the cost of capital, capital structure and risk. Risk is an essential issue to understand and a comprehensive overview of contemporary issues and challenges is provided in Chapter 5. Chapters 6 and 7 cover the importance of Valuation from both an external and internal perspective.
Recent years have seen enormous Merger and Acquisition (M&A) activity and an understanding of the financial issues associated with M&A should be high on a general manager’s agenda. A framework for assessing the financial implications within a practical setting is provided, together with other important external valuation applications and challenges, like valuations in emerging markets. Last, but not least in this section, the challenge of applying the principles of Corporate Finance internally in managing a business for value is considered.
Chapters 8, 9 and 10 cover some important issues, often not given sufficient attention. For example, intangible assets are frequently referred to but often given scant treatment within an accounting setting. From a Corporate Finance perspective they may play a crucial part in part in Corporate Finance decisions. This issue is examined and as well as two key themes that underpin this book, financial reporting and financial economics. These are reviewed in terms of recent pressures, like accounting regulations that are causing the two to draw more closely together.
This book of Professor Dr. Roger W. Mills has been written specifically with the non-financial manager in mind. Such people we know from our experience need to be financially aware and also to understand the language of Corporate Finance for their career in management, but they do not need to know everything unless they intend to specialise. We have therefore assumed that the reader of this book will have his or her sights upon general management in the true sense of the word and will seek other sources for purposes of specialisation.
The book is organised in ten chapters designed to provide a comprehensive review of the key issues, concepts and tools of Corporate Finance.
Chapter 1 provides the context for Corporate Finance and provides the foundation for subsequent chapters. This foundation draws heavily upon providing an understanding of the significance of the principles of financial economics in the form of discounted cash flow analysis from a project perspective, which is covered in Chapter 2 and, from a business perspective, which are covered in Chapters 3 and 4. Performance measurement issues and an understanding of the basis for economic returns are covered in Chapters 5 and 6.
Managers do not exist in a risk-free vacuum and risk is an essential issue to understand. This is covered in Chapters 6 and 7, the latter providing a comprehensive overview of contemporary issues and challenges.
Recent years have seen enormous Merger and Acquisition (M&A) activity and an understanding of the financial issues associated with M&A should be high on a general manager’s agenda. A framework for assessing the financial implications within a practical setting is provided in Chapter 8, together with other important valuation applications and challenges, like valuations in emerging markets.
Intangible assets are frequently referred to but often given scant treatment within an accounting setting. From a Corporate Finance perspective they may play a crucial part in determining the future prospects of a business and issues associated with them are covered in Chapter 9.
Last, but not least, the challenge of applying the principles of Corporate Finance internally in managing a business for value are covered in Chapter 10.
The business world of today is turbulent and organisations of all types have to make choices about how to manage scarce resources in a climate so often characterised by considerable and rapid change. Increasingly organisations are embracing the principles of shareholder value as a key business objective and many have gone even further in implementing what has come to be known as Value Based Management, or VBM for short. VBM has profound implications for all functional areas of the business, not least of which is the finance function.
There are different views about what actually constitutes VBM and how to implement it. In this book we review VBM within the context of a changing world for the finance function. We review and illustrate the principles upon which shareholder value is based and discuss the alternative approaches that may be used to measure and guide value creation. We also provide our view on how VBM can be implemented and its relationship with approaches like the Balanced Scorecard and Business Excellence Model. The truth of the matter is that VBM implementation is tough and if it is to be taken down into the business as a whole, the adoption of approaches like the Balanced Scorecard and the Business Excellence Model is essential.
Our experience has provided us with insights about how procedurally VBM implementation can be best achieved and we summarise this within a 10-step approach. It is by no means the only approach, but it is that which we have found to work well in organisations of various types and sizes. Last, but not least, we draw upon the research of a member of our team that was undertaken over a 5 year period and which studied the implementation of shareholder value within three large companies.
This book has been written specifically with the non-financial manager in mind. Such people we know from our experience need to be financially aware and also to understand the language of accounting for their career in management, but they do not need to know everything about managerial accounting and finance unless they intend to specialise.
The book is organised in the twelve chapters. The relationship between the chapters is as follows: Chapters 1 and 2, the introduction and basic principles of accounting, assume that you have had little formal exposure to the main financial statements used within an organisation and the rules and conventions used in drafting them. It will take you through these quite gently. Chapter 2 provides an introduction to many of accounting ‘adjustments’ such as depreciation, revaluation, goodwill, accruals, prepayments, together with an introduction to bookkeeping through to Trial Balance and the preparation of the Income Statement and Balance Sheet.
On completion of these Chapters there are two alternative routes. First, you can pursue Chapters 3, 4 and 5 which are concerned with the requirements for financial reporting and how to read, interpret and analyse financial reports in the form of published accounts and published information. Financial reporting is discussed in Chapter 3, followed by the principles of financial ratio analysis in Chapter 4, and company financial analysis in Chapter 5.
Alternatively, from Chapter 2 you can pursue the route through Chapters 6, 7 and 8. These chapters focus upon internal, as opposed to external and published, managerial accounting and financial issues. Chapter 6 provides an introduction to Costing, including overheads, product cost, marginal/absorption costing and standard costing. The important area of budgeting and budgetary control is discussed in Chapter 7 followed by issues associated with non-routine, but often very important, decisions of a short-term nature in Chapter 8.
Chapters 9 and 10 are concerned with long-term decision analysis. Chapter 9 covers the basic principles through examples dealing with the development of cash flows with a comprehensive example covering the traditional and discounted cash flow techniques associated with capital investment appraisal. Chapter 10 covers additional topics such as mutually exclusive projects, effect of inflation, effect of taxation, sensitivity and risk.
Chapter 11 provides an introduction to financial management and draws together many issues in earlier chapters. Chapter 12 provides an introduction to Strategic Financial Management. Within strategy the financial dimension can be vital in terms of providing an indication about the value of the business and its parts. This chapter discusses the approaches available for undertaking such valuation and you will find it draws upon many areas covered within the book. It is important and in our opinion an appropriate final chapter because it firmly places the value of managerial accounting and finance within a general management context.