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  Diagnostic Phase
  Diagnostic Phase: "A View From The Investor's Shoes"
  Diagnostic Phase: Internal Capitalism Audit
  Strategic Advice: Strategic Plan Evaluation
  Strategic Advice: Capital Deployment Strategy
  Strategic Advice: Business Unit/Portfolio Evaluation
  Strategic Advice: Strategic M&A Planning & Valuation
  Strategic Advice: Addressing &
Responding to Activists
  Strategic Advice: Investor Communication & Targeting
  Process Enhancement:
Embracing Internal Capitalism
   
 
 
   
   
  solutions
 
“A View from the Investor’s Shoes”
 
 

For our ‘Investor’s Shoes’ diagnostic work, we put ourselves in the shoes of a sophisticated buy-side investor and provide management with a rigorous view of the company from the perspective of the equity capital markets.  We will answer key questions including:

  • How does historical performance compare with key peers in terms of growth, profitability and asset intensity?  Which performance drivers offer the most opportunity to fuel future performance improvement?
  • How has the market responded over time to past decisions about capital allocation?  Has investment in the business kept pace with peers?  Has the market rewarded the company’s dividend, share repurchase and capital deployment strategies?
  • What are the embedded expectations for future growth and returns in the share price?
  • Do the expectations compare favorably with the expectations of peers?  In other words, does the market believe the company will gain on, hold steady with or lag its peers in terms of growth and profitability in the future?

We review equity research, rating agency reports, investor relations documents, transcripts of conference calls and news to prepare in depth analyses of several alternative forecast scenarios to evaluate and opine on opportunities and risks from the investor perspective. We will identify the key opportunities and risks affecting investors’ decisions regarding Air Products’ stock, and will present these insights as follows:

  • Overall Market and Industry Conditions:  Research attributes about 75% of a company’s total shareholder return to market and industry factors beyond management’s control.  Fortuna Advisors’ framework quantifies and tracks the Investor’s Required Return over time for the market and specific industries.  We show how this has influenced the share price so management can separate factors outside their control and direct their efforts toward controllable aspects.
  • Historical Performance: We will apply our “Postmodern Corporate Finance” analytics as well as traditional performance metrics to evaluate performance historically in terms of growth, profitability, capital intensity and reinvestment rates.  We will evaluate historical capital deployment and provide insights on the effectiveness of the choices made.
  • Current Expectations: The next most important factors affecting valuation relate to investor’s expectations.  A stock price is a composite of current performance and expectations about a company’s future.  We will quantify the expectations for growth and return embedded in your share price to provide insights on what you must deliver to drive the share price higher.
  • Peer Analysis: In addition to looking at the company, we look at the high-level historical performance, valuation and future expectations of key peers to understand their valuation and strategies.   
  • Sensitivity Analysis:  We prepare sensitivity grids to help management understand the relative importance of each major driver of performance so strategic discussions can focus on areas where the impact will be greatest. 

  • Goal Setting: This analysis will culminate in establishing baseline performance targets based on investor expectations and stretch goals that appear sufficient to expect the company’s total shareholder return to be top quartile.  Although our analysis is prepared using our unique analytics, we recast the recommended performance targets and stretch goals into standard revenue growth, EBITDA, capex and related metrics to facilitate discussion with managers and possibly the board and investors.
 
     
 
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