Companies create value by deploying capital they raise from investors, to produce earnings at rates of return exceeding the cost of capital. The faster that companies can deploy more capital at attractive rates of return, the more value they create.

It is this combination of growth, and the return on invested capital relative to its cost, that drives value. EP, or Economic Profit, concisely encompasses the fundamental guiding principles as a measure of value creation.

In this context, EP is also an important link between business strategy and value creation. Companies can sustain strong growth, and with it higher than normal return on invested capital, only with a well-defined competitive advantage. However, this oft-missing linkage is critically important because value creation is not a financial game, rather the direct consequence of consciously-made choices. Choices that create, orchestrate and execute strategic drivers coherently and consistently.

EP is the end-goal for every business. It is also relatively familiar as it draws on accounting, while marrying accounting with financial economics. The clear objective is for decisions to be made strategically in order to most effectively increase value. Our team is academically-grounded in financial economics yet field-tested and performance-proven by clients in both volatile, emerging markets, and well as in mature and predictable ones.

We see four primary challenges.
Each is commonly overlooked and often misunderstood.

Reliance upon conventional accounting fails to reveal the insight beyond the numbers.

The predictable by-product of this inadequacy leads to misplaced focus.

In the absence of the guiding hand of value creation, business strategies can take on a life of their own.

Incentive compensation is best tied to a value creation yardstick but rarely is.

To address these, we rely upon a more holistic Big Picture, applying guiding principles that systematically spearhead change initiatives firmly rooted in Value-Based-Management.

Today’s markets are too competitive for companies to create value by accident, it must be planned for. This means having the right processes, systems, strategies and culture in place enabling managers to make decisions in ways that deliver attractive returns to shareholders.

We believe in systemic and continuous investment in Value-Based Management aligned to short and long-term objectives. Capturing the interplay between costs and consequence, with clear definition of the difference between the return on capital and cost of capital. As each business has its own idiosyncrasies, we customize the approach to match the unique requirements of each company under the VBM conceptual umbrella. The result is a true transformative leap beyond conventional accounting to deeper financial understanding.

Our objective is sustainable success over the long-term not piecemeal, short-term victories. A cultural shift positioning your company and people for a future that you envision and can achieve.

We’ll design the system, teach you to use it, and create customized tools enabling you to optimize what you’ve learned. Equipped with a conceptual framework to formulate your strategies and make the right strategic tradeoffs, you’ll be empowered to hold everyone throughout the organization truly accountable to the core mission of creating value.

Our work isn’t completed until your in-house specialists are fully trained to take over the implementation, and lead the long-term cultural transformation. This is a reflection of our commitment to a level of training that is truly like no other. The difference you’ll see in your company for years to come.