1 / 24

Managing Expectations: How Investors Determine Value

Managing Expectations: How Investors Determine Value. George Zagoudis Financial Relations Board M&A Today Symposium. Increasing Investor Scrutiny. Regulatory changes Accounting watchdogs Shareholder activism Reg FD (full disclosure). MARKETING STRATEGY .

haley
Download Presentation

Managing Expectations: How Investors Determine Value

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Managing Expectations: How Investors Determine Value George Zagoudis Financial Relations Board M&A Today Symposium

  2. Financial Relations Board Increasing Investor Scrutiny • Regulatory changes • Accounting watchdogs • Shareholder activism • Reg FD (full disclosure) MARKETING STRATEGY ... Integrated into financial communications.

  3. Financial Relations Board Not All Brands Create Value • Intense competition • Overly optimistic projections • Customer adoption issues • Impact on firm cash flows It takes more than aiming for “market leadership” to satisfy the skeptics FOCUS ON CUSTOMERS...

  4. Financial Relations Board Relative Importance of Brands Source: Interbrand

  5. Financial Branding Sales Margins Cash Flows Duration Financial Relations Board Economic Returns Drive Value Traditional Branding • Awareness • Growth • Market Share • Product Focus The marketing message has to be grounded in economics.

  6. Financial Relations Board Financial Branding Commanding a Premium over Book: • Patents pending • Technology • Human capital • Customer assets • Management credibility

  7. Financial Relations Board What Investors Want to Hear Why Will Your Customers: • Buy more? • Pay more? • Buy more frequently? • Stay with you? What will drive demand?

  8. Financial Relations Board How Investors Measure Strategy • Revenues • Profit margins • Cash flows • Investment • Return vs. risk FINAL EXAM GRADE = ROI

  9. Financial Relations Board Stock Prices Follow Returns

  10. Financial Relations Board Case Study: Category Leader

  11. Financial Relations Board Case Study: Returns Decline

  12. Financial Relations Board Case Study: Market Laggard

  13. Negative Spread Financial Relations Board Managing Brands by Returns Positive Spread Cash Flow Return % (ROI) Discount Rate (Cost of Capital) Neutral SHRINK FIX GROW

  14. Financial Relations Board Case Study: Building Brand Value with a New Strategy Medical Device Manufacturer

  15. Financial Relations Board Analysis Starts with Revenues LTM in millions Inflection Point

  16. Financial Relations Board High Cost Marketing Strategy LTM in Millions

  17. Financial Relations Board Technology Value in Question LTM Inventory Turns

  18. Financial Relations Board Level of Investment Too High? LTM Fixed Asset Turns

  19. Financial Relations Board ROI Falling, No End in Sight LTM Higher Cash Burn?

  20. Financial Relations Board Investors Don’t Value the Future Price / Sales Ratio

  21. Financial Relations Board CEO’s New Priorities • Improve returns • Phase out equipment sales • Focus on recurring revenues • Speed up collections • Change sales incentives Investors responded positively to revised marketing strategy. FOCUS ON CUSTOMERS AND CASH...

  22. Financial Relations Board Revenue on a Growth Track LTM in millions Inflection Point

  23. Financial Relations Board Investors Now See the Future

  24. Financial Relations Board Integrate Your Marketing Message Speak Simply to All • Your market opportunity • Key benefit, not features • Your strategy to exploit it • Competition and challenges • Sales incentives • Corporate assets

More Related