The Essential CFO

Bruce Nolop retired in 2011 after a 35-year career as an investment banker and corporate executive, including more than a decade as chief financial officer of Pitney Bowes and E*TRADE Financial. He has been a board member of Marsh & McLennan since January 2008 and currently serves on the audit, compliance and risk, finance, and corporate responsibility committees.

Discover the power of the CFO's role in delivering shareholder value
 
During the past decade, the CFO role has expanded dramatically in its breadth, complexity, and criticality. Filled with proven strategies, best practices, and keen insights, The Essential CFO describes how today's CFOs are responding to their expanded roles within both public and private companies. With straightforward and pragmatic guidance, author Bruce Nolop shows how CFOs are partnering with CEOs to deliver shareholder value by articulating a strategic plan, determining capital allocations, managing the capital structure, driving financial performance, and implementing strategic transactions.
* Covers how CFOs are establishing robust accounting and risk management processes and effectively communicating with both external and internal constituencies
* Looks at the role of the CFO in transforming financial organizations to drive effectiveness and efficiencies
* Examines how CFOs can develop talent with the experience, expertise, and leadership skills to meet the challenges of the future
 
Written from a balanced, top-down perspective of the modern CFO, The Essential CFO provides you with practical prescriptions for executing impactful corporate finance strategies.

Discover the power of the CFO s role in delivering shareholder value
During the past decade, the CFO role has expanded dramatically in its breadth, complexity, and criticality.

Introduction xv
 
PART I: STRATEGY
 
Chapter 1: Articulating a Strategic Plan 3
 
Business Objectives 4
 
Strategic Themes 5
 
Long-Term Financial Model 7
 
Total Shareholder Return 10
 
Capital Allocation Strategies 14
 
Acquisition Strategies 15
 
Target Shareholders 17
 
Elevator Pitch 20
 
Plan Revisions 21
 
Chapter 2: Communicating and Achieving Alignment 23
 
Consistency and Transparency 24
 
Incentive Compensation Programs 25
 
Investor Alignment 28
 
Analyst Relations 29
 
Investor Presentations 31
 
Company Website 35
 
Social Media 36
 
Media Relations 37
 
Potential Media Pitfalls 38
 
Coordinating Communications 39
 
Interview Formats 39
 
Media Training 40
 
Note 42
 
Chapter 3: Assessing Enterprise Risks 43
 
Enterprise Risk Management 43
 
Implementation of ERM 44
 
Risk Identification 45
 
Risk Quantification 46
 
Major Exposures 47
 
Mitigation Strategies 50
 
Rewarded versus Unrewarded Risks 51
 
Governance of ERM 52
 
CFO's Role in ERM 54
 
PART II: CAPITAL ALLOCATIONS
 
Chapter 4: Estimating the Cost of Capital 59
 
WACC Formula 59
 
Hurdle Rates 63
 
Risk Premiums 63
 
Acquisition Cost of Capital 65
 
Chapter 5: Prioritizing Capital Investments 67
 
Cash Flow Projections 67
 
Investment Budget 68
 
Evaluating Projects 71
 
Categorizing Projects 74
 
Monitoring Projects 75
 
Pension Fund Contributions 77
 
Chapter 6: Considering Dividends and Repurchases 79
 
Dividend Policy Alternatives 80
 
Dividend Policy Considerations 82
 
Special Dividends 85
 
Dividend Declarations 85
 
Repurchase Considerations 86
 
Open Market Programs 90
 
Tender Offers 92
 
Retaining Strategic Cash 92
 
Cash Investment Policies 95
 
PART III: MERGERS AND ACQUISITIONS
 

Chapter 7: Identifying Acquisition Candidates 99
 
Rationale for Acquisitions 99
 
Adjacent Spaces 100
 
Portfolio Approach 101
 
Business Sponsor 101
 
Patience and Flexibility 102
 
Strategic Purpose 102
 
Types of Acquisitions 103
 
Note 107
 
Chapter 8: Evaluating Acquisition Candidates 109
 
Valuation Methodologies 109
 
Standalone and Synergy Values 112
 
Pro Forma Analyses 113
 
Acquirer's Stock Valuation 116
 
Risk Considerations 116
 
Chapter 9: Executing a Merger or Acquisition 119
 
Due Diligence 119
 
Business Plan 123
 
Financial Projections 124
 
Financing Plan 126
 
Price Negotiations 128
 
Contract Terms 129
 
Acquisition Integration 132
 
Note 134
 
Chapter 10: Executing Divestitures and Spinoffs 135
 
Divestiture Evaluations 135
 
Hiring Investment Bankers 136
 
Auction or Negotiated 137
 
Stock or Assets 139
 
Financing Conditions 139
 
Management Participation 140
 
Tax-Free Spinoffs 141
 
Split-Ups 142
 
Equity Carve-Outs 143
 
Chapter 11: Responding to Takeover Offers 145
 
Governance Policies 145
 
Reviewing an Offer 146
 
Conducting a Sale Process 148
 
Activist Shareholders 149
 
Going Private Transactions 149
 
PART IV: FUNDING
 
Chapter 12: Est