A Message from Our CEO, Gregory V. Milano:
My partners and I built this firm to ensure our client’s strategic decisions benefit from our experience in aligning strategies and management processes with the interests of long term owners. The following describes our mission, team, key principles, clients, and work style.
We add value to our client’s share prices by helping them develop better strategies, make better decisions and embrace an ownership state of mind. We do not know our client’s business better than our clients; however, we do understand the drivers of superior corporate performance and how to connect performance to the capital markets in a way no other firm can match. We help our client’s grow their share prices for the long term.
My partners and I have extensive experience at some of the original value management firms such as Stern Stewart, HOLT and Accenture, working in strategic consulting and investment banking. We passionately collaborate with clients to successfully implement value-management principals in core decisions and processes to better align our client’s strategies with the capital markets.
Our Key Principles
We rebalance the emphasis on Growth and Return. Far too many companies that implemented “shareholder value” frameworks wind up with high returns and slow top line growth, resulting in sub-optimized value creation. Over the course of my career, I’ve observed that one of the key hindrances to growth is a heavy reliance on accounting-based metrics such as RONA, ROCE or EVA. In fact, I gave speeches and published on this very topic while a Partner at Stern Stewart (“EVA and Growth”). A variety of behavioral obstacles stand in the way of growth and many CEOs find they need to personally spearhead growth initiatives to overcome the bias against growth. Strategy and creating value for shareholders is about finding the right trade-off between growth and return, not merely optimizing accounting-based return metrics.
Too many executives pursue major growth initiatives during booms in the market while retrenching during slow-downs. However, our clients benefit from a “Buy Low and Sell High” strategy in response to the overreactions of the market. This is so important to our team, our first issue of Buona Fortuna was “Buy Low and Sell High. Really!”, and our analytical framework encourages more investment when markets are low and vice versa. These same principals are applied to any major investment decision including capital expenditures, R&D, marketing and share repurchases.
We employ a Clear and Understandable analytical framework described in detail in “Postmodern Corporate Finance”, published in Morgan Stanley’s Journal of Applied Corporate Finance. Over the last thirty years, many thoughtful entrepreneurs developed shareholder value frameworks. During what CFO Magazine labeled the “Metric Wars”, the quest to differentiate led to layers of analytical sophistication and complexity. As a stock picking tool, the complexity held a certain appeal. But, for corporate users trying to develop strategies and run companies, the complexity and ‘black box’ nature led to confusion and skepticism. We have integrated, simplified and extended the leading value-based frameworks to provide corporate managers clearer strategic insights while maintaining a strong connection to the capital markets.
We encourage our clients to embrace Internal Capitalism, a culture of explicitly developing strategies, making decisions and assessing performance inside the company to boost efficiency, growth and sustainability over time. It is the internalization of capitalist principles by embracing a culture of ownership where managers throughout an organization stop just ‘managing’ and start ‘owning’ the business.
Our clients are public and private, large and small, and operate in just about any industry with the exception of financial institutions. Within clients, we work most closely with the CEO and CFO, and their direct reports. Our clients are diverse, but they come to us for help with common questions, such as:
- What are investors really expecting in terms of short and long-term performance?
- What is the right balance of growth and profitability for the company? Is it different for each of our business units? How do I know the market will respond?
- Where within my portfolio of investments or business units is value truly being created? Where can I allocate capital differently to exploit market opportunities?
- How should I deploy capital? Should I invest for the future or return cash to investors via a dividend or share repurchase?
- Which of the strategic options available to me will benefit my share price the most?
- Could I become a target of an activist shareholder? If I am a target, how should I respond to the strategic changes they are proposing?
- How should I align my management processes with shareholder value to help guide my managers and help them act like they own the company?
While some of these questions are answered through one-off projects, we emphasize and strive for ongoing relationships where we and the client get to know each other well and we become an external sounding board and collaborative partner for key strategic decisions.
Our Work Style
We have seen what works and doesn’t work for advisors, and we set out to be the leader in our field in terms of how we work with clients.
We provide an External View utilizing objective analysis to assess and advise on the high-level shareholder value impact of the strategic decisions our clients face. We have the mindset and the tools to emulate a sophisticated buy-side investor and deliver an insightful, comprehensive and quantitative analysis of the public view of a company that is rigorous and independent. We are a credible sounding board and are not afraid to play devil’s advocate to make sure ideas are carefully considered.
We become Part of the Process by working closely with management as facilitators for strategic decision development, evaluation and discussion. As part of the process, rather than getting involved afterward, we provide managers the input they need to ‘course correct’, make better decisions and ultimately build a stronger business.
Our research on the Capital Markets is deeply embedded in our analytics to assure our advice captures how investors translate operating performance results into share prices. This cannot and should not be taken for granted as it elevates our work above the shallow “theoretical” views presented by so many others. Our commitment to grounding our advice in the real world of the capital markets adds the credibility needed for our clients to be confident as they pursue value creating strategies.
We are Independent and Unbiased as we are not owned by, affiliated with or paid by any large consulting firms or investment banks that may view us as ’a door opener’ to sell larger projects, deals or financings. We don’t take success fees on deals or marketing commissions from other firms. The one form of variable pay we do accept for public companies that fully embrace internal capitalism is a portion of our fees in stock, stock options or stock appreciation rights to align us with the shareholders. When we say a decision looks good or bad, that is our honest unbiased view with no hidden agenda.
We are proud of the business we built and believe we offer a truly unique advisory service that can help our clients make better decisions and drive long term value for shareholders like no other firm in the market.
We look forward to working with you,