During the past decade, the CFO role has expanded dramatically in its breadth, complexity, and criticality. Filled with proven strategies, practical suggestions, and keen insights, this book describes how today's CFOs are responding to their expanded roles within both public and private companies. It shows how CFOs are partnering with CEOs to deliver shareholder value by articulating a strategic plan, managing the capital structure, determining capital allocations, driving financial performance, and implementing strategic transactions; How CFOs are establishing robust accounting and risk management processes and effectively communicating with both external and internal constituencies; and how CFOs are leading financial organizations to drive effectiveness and efficiencies and to develop talent with the experience, expertise, and leadership skills to meet the challenges of the future.

Bruce Nolop retired in 2011 after a 35-year career as an investment banker and corporate executive, including more than a decade as chief financial officer of Pitney Bowes and E Trade Financial. He has been a board member of Marsh McLennan since January 2008 and currently serves on the audit, compliance and risk, finance, and corporate responsibility committees.

Introduction	p. xv
Strategy
Articulating a Strategic Plan	p. 3
Business Objectives	p. 4
Strategic Themes	p. 5
Long-Term Financial Model	p. 7
Total Shareholder Return	p. 10
Capital Allocation Strategies	p. 14
Acquisition Strategies	p. 15
Target Shareholders	p. 17
Elevator Pitch	p. 20
Plan Revisions	p. 21
Communicating and Achieving Alignment	p. 23
Consistency and Transparency	p. 24
Incentive Compensation Programs	p. 25
Investor Alignment	p. 28
Analyst Relations	p. 29
Investor Presentations	p. 31
Company Website	p. 35
Social Media	p. 36
Media Relations	p. 37
Potential Media Pitfalls	p. 38
Coordinating Communications	p. 39
Interview Formats	p. 39
Media Training	p. 40
Note	p. 42
Assessing Enterprise Risks	p. 43
Enterprise Risk Management	p. 43
Implementation of ERM	p. 44
Risk Identification	p. 45
Risk Quantification	p. 46
Major Exposures	p. 47
Mitigation Strategies	p. 50
Rewarded versus Unrewarded Risks	p. 51
Governance of ERM	p. 52
CFO's Role in ERM	p. 54
Capital Allocations
Estimating the Cost of Capital	p. 59
WACC Formula	p. 59
Hurdle Rates	p. 63
Risk Premiums	p. 63
Acquisition Cost of Capital	p. 65
Prioritizing Capital Investments	p. 67
Cash Flow Projections	p. 67
Investment Budget	p. 68
Evaluating Projects	p. 71
Categorizing Projects	p. 74
Monitoring Projects	p. 75
Pension Fund Contributions	p. 77
Considering Dividends and Repurchases	p. 79
Dividend Policy Alternatives	p. 80
Dividend Policy Considerations	p. 82
Special Dividends	p. 85
Dividend Declarations	p. 85
Repurchase Considerations	p. 86
Open Market Programs	p. 90
Tender Offers	p. 92
Retaining Strategic Cash	p. 92
Cash Investment Policies	p. 95
Mergers and Acquisition
Identifying Acquisition Candidates	p. 99
Rationale for Acquisitions	p. 99
Adjacent Spaces	p. 100
Portfolio Approach	p. 101
Business Sponsor	p. 101
Patience and Flexibility	p. 102
Strategic Purpose	p. 102
Types of Acquisitions	p. 103
Note	p. 107
Evaluating Acquisition Candidates	p. 109
Valuation Methodologies	p. 109
Standalone and Synergy Values	p. 112
Pro Forma Analyses	p. 113
Acquirer's Stock Valuation	p. 116
Risk Considerations	p. 116
Executing a Merger or Acquisition	p. 119
Due Diligence	p. 119
Business Plan	p. 123
Financial Projections	p. 124
Financing Plan	p. 126
Price Negotiations	p. 128
Contract Terms	p. 129
Acquisition Integration	p. 132
Note	p. 134
Executing Divestitures and Spinoffs	p. 135
Divestiture Evaluations	p. 135
Hiring Investment Bankers	p. 136
Auction or Negotiated	p. 137
Stock or Assets	p. 139
Financing Conditions	p. 139
Management Participation	p. 140
Tax-Free Spinoffs	p. 141
Split-Ups	p. 142
Equity Carve-Outs	p. 143
Responding to Takeover Offers	p. 145
Governance Policies	p. 145
Reviewing an Offer	p. 146
Conducting a Sale Process	p. 148
Activist Shareholders	p. 149
Going Private Transactions	p. 149
Funding
Establishing Capital Structure Objectives	p. 153
Leverage Targets	p. 153
Leverage Criteria	p. 155
Rating Agencies	p. 157
Ratings Categories	p. 158
Rating Agency Dialogues	p. 160
Ratings Criteria	p. 161
Informing Investors	p. 162
Note	p. 163
Developing Financing Strategies	p. 165
Financing Principles	p. 165
Debt Financing	p. 167
Equity Financing	p. 171
Off Balance Sheet Financinq	p. 174
Debt Covenants	p. 177
Debt Refinancings	p. 179
Debt for Equity Swaps	p. 180
Bankruptcy	p. 182
Ensuring Short-Term Liquidity	p. 185
Bank Lines	p. 185
Cash Planning	p. 187
Contingency Planning	p. 187
Liquidity Ratios	p. 189
Working Capital Strategies	p. 189
Trapped Cash	p. 191
Obtaining Long-Term Financing	p. 193
Venture Capital	p. 193
Private Equity	p. 194
Initial Public Offering	p. 195
Subsequent Equity Offerings	p. 198
Term Loans	p. 200
Syndicated Bank Loans	p. 200
Investment Grade Securities	p. 200
High Yield Securities	p. 201
Strategic Alliances	p. 202
Note	p. 203
Performance
Driving Business Performance	p. 207
Organic Revenue Growth	p. 207
Cost Reduction Strategies	p. 211
Fixed versus Variable Costs	p. 219
Note	p. 219
Providing Planning and Analysis	p. 221
Budgets	p. 221
Forecasts	p. 225
Cash Flows	p. 226
Performance Metrics	p. 228
Business Unit Metrics	p. 231
Performance Reports	p. 232
Business Analysis	p. 233
Managing Financial Risks and Taxes	p. 235
Insurance	p. 235
Interest Rates	p. 238
Currencies	p. 239
Commodities	p. 241
Inflation	p. 242
Pension Fund	p. 243
Tax Planning	p. 244
Accounting and Controls
Establishing Accounting Processes	p. 251
Financial Reporting	p. 251
SEC Filings	p. 255
External Auditors	p. 259
Audit Committee	p. 259
Note	p. 260
Communicating Financial Results	p. 261
Earnings Call	p. 261
Non-GAAP Measures	p. 266
Earnings Guidance	p. 267
Note	p. 271
Implementing Sarbanes-Oxley	p. 273
Overview of Provisions	p. 273
Auditor Independence	p. 274
Certification of Financials	p. 275
Assessment of Internal Controls	p. 276
Reinforcing Compliance and Controls	p. 281
Control Environment	p. 282
Auditor and Board Support	p. 283
Foreign Corrupt Practices Act	p. 285
Fraud Prevention	p. 287
Whistleblowers	p. 287
Cost of Compliance	p. 288
Note	p. 289
Leadership
Achieving Finance Transformation	p. 293
Organizational Structure	p. 293
Technology Systems	p. 298
Process Reengineering	p. 301
Outsourcing Advantages	p. 303
Outsourcing Implementation	p. 305
Analysis versus Data	p. 308
Developing Financial Talent	p. 311
Recruitment Strategies	p. 312
Development Objectives	p. 316
Development Tools	p. 320
Diversity	p. 325
Future Requirements	p. 325
Note	p. 326
About the Author	p. 327
Acknowledgments	p. 329
Index	p. 331
Table of Contents provided by Ingram. All Rights Reserved.

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The Essential CFO A Corporate Finance Playbook

9781118173046

111817304X

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