Value Maps

Preface xiii
Acknowledgements xix
About the Web Site xxiii
List of Acronyms xxv

Part I CORNERSTONES 1

Chapter I Why a New Approach Is Needed 3
Valuation as Craft 5
The State of Our Craft 6
Cause and Effect: What and Why 7
Multidisciplinary Tools for Analyzing Value Creation 8
Parameters of Valuation 10
What We Know about Risk 11
Components of Risk 12
A Framework for Unsystematic Risk 13
Unlocking Business Wealth 16
Summary 17
Additional Reading 17

Chapter 2 Tools from Strategic Management 19
History 19
Perspective 22
Valuation Tools 22
Strategic Intent 23
Generic Competitive Strategies 26
Resources 29
Competitive Analysis 32
Distinctive versus Sustained Competitive Advantage 34
VRIO 37
Customer Satisfaction Surveys 38
Diversification 39
Unlocking Business Wealth 42
Summary 43
Additional Reading 43

Chapter 3 Tools from Industrial Organization 45
Perspective 46
Tenets 47
Tools 49
Unlocking Business Wealth 62
Summary 62
Additional Reading 63

Chapter 4 Tools from Organization Theory 65
Perspective 68
Tenets 70
Tools 70
Unlocking Business Wealth 82
Summary 82
Additional Reading 83

Chapter 5 Tools from Evolutionary Economics 85
Perspective 88
Tenets 89
Tools 89
Unlocking Business Wealth 103
Summary 103
Additional Reading 104

Chapter 6 Tools from Austrian Economics 105
Perspective 110
Tenets 112
Tools 113
Unlocking Business Wealth 123
Summary 123
Recommended Reading 124

Part II POURING THE FOUNDATION 127

Chapter 7 The Straight Scoop on Value Drivers 129
Definition 129
Value Drivers versus Balanced Scorecards 131
Why Value Drivers Matter 132
The Regenerative Power of Capitalism 134
Assessing Durability 138
Summary 139
Additional Reading 140

Chapter 8 The OT in SWOT Analysis: The Macroenvironment 141
Defining the Domain 141
Unit of Analysis 144
Trilevel Unsystematic Risk Framework 145
History and Background 146
Why Does the Macroenvironment Matter? 147
The Forces 148
Summary 153
Additional Reading 154

Chapter 9 The OT in SWOT Analysis: The Domain 155
The Roots of Domain Analysis 155
Oligopolies Large and Small 155
Price Competition in an Oligopoly 158
Published Industry Risk Premiums 158
The Domain 161
Summary 165
Additional Reading 166
Appendix 9A: Competitive Analysis and
Estimating Market Share 167

Chapter 10 Getting to Why : Analyses, Composites, and On–Site Interviews 171
Financial Ratios 171
A Key Metric 172
Finding Sector–Specific Metrics 173
The Analysis 173
How to Construct a Composite 175
Prepping for the On–Site Interviews 175
Conducting the On–Site Interviews 177
Summary 180

Chapter 11 The SW in SWOT Analysis: The Company and SPARC 183
Cause–and–Effect Relationships 186
Value Drivers and Value Destroyers 190
Assessing Durability of Advantage 202
Back to VRIO 202
Summary 204
Appendix 11A: Bringing It All Together: Quantifying Unsystematic Risk 205

Chapter 12 SPARC Archetypes among Small and Medium–Sized Enterprises 207
Exploiter and Extender 208
Explorer and Experimenter 210
Equivocator 213
Summary 214

Part III TALES FROM THE FIRING LINE 217

Chapter 13 Construction and Manufacturing 219
Construction 220
Specialty Publishing I 223
Specialty Publishing II 226
Specialty Manufacturing 228
Packaging 232

Chapter 14 Business to Business 237
Safety Equipment/Supplies 237
Industrial Supply 240
Construction Materials 244
Antique Building Materials Reclamation 249

Chapter 15 Transportation 255
Transportation Collection Services 255
LTL Trucking 258
Freight Forwarding 264

Chapter 16 Specialty Retailing 269
Jewelry I 269
Jewelry II 273
Building Materials 276
Pharmacy 277

Chapter 17 Services 281
Outplacement Services 281
Executive Search 283
Private Equity 285
Investment Banking 287
Dental Lab 289
Quick–Lube Services 291

Part IV PRACTICE MANAGEMENT 297

Chapter 18 The Engagement Process 299
When Can an Engagement Include a Value Map? 299
Finding Good Clients 300
Avoiding Problem Clients 301
Marketing and Selling the Work 302
The Shake– n –Howdy Visit 303
Pricing the Engagement 304
Engagement Letter 1 305
Highlights of Engagement Letter 1 306
Managing Expectations 307
Engagement Letter 2 309
Summary 311

Chapter 19 Working with Clients 313
A Few Words about Family Systems 313
Processes 315
How Not to Do It 315
How (Else) Not to Do It 317
Start at the Beginning 317
Think like a Buyer 318
Planning the Engagement 319
As the Process Unfolds 321
Winding Up the Value–Mapping Process 322
Summary 323
Additional Reading 323

Chapter 20 IFRS, IVSC, and Value Maps 325
The Valuation Process Outside the United States 326
The Cost of Capital Outside the United States 326
Gathering Data Outside the United States 327
Summary 332

Chapter 21 Epilogue: The Future for Value–Mapping Services 333
The Future for Valuation Services 333
Marketing Matters 335
That Special Cadre Dedicated to Delivering Value to Clients 340
Closing Words 342
Bibliography 345
Index 351