The overall purpose of any for-profit economic entity is sustained wealth creation. Businesses are owned by investors who seek optimal capital allocation and invest into a corporate risk-return positioning aligned with their risk strategy and return expectations. As owners of the business, they are entitled to an adequate share in the income and performance produced by its economic activities. Performance value added is a prerequisite for social value added. If a business fails to produce risk-adequate returns on investment to equity and debt holders, it will be unable to raise capital and will ultimately fail to create stakeholder value. If it cannot pay investors it will not be able to pay wages, pensions or taxes or otherwise contribute to progress and welfare. By generating risk-adequate returns, businesses are responding to their primary calling; stakeholder value will follow naturally.
Shareowner value is pre-conditional to stakeholder value and a critical means to this end. At the same time issuers are expected to fulfil the impossible task of granting preferential treatment to everyone over everyone else at all times. Numerous diverse constituencies seek to be net beneficiaries of the business undertaking. All demand that their needs and wants be met. Views on how to best generate, measure correctly and distribute fairly economic wealth created may differ widely. Whether or not being an actual or potential investor in the business, various inside and outside constituencies are trying to exert influence on corporate strategy, risk profile, resource allocation, profit distribution, governance and management compensation and accountability. Controversial subjects for a long time, controversy has become intense. It is carried out in the market for investable capital, in the public spotlight and even in court, throughout the life cycle of start-up, growth and renewal and in particular during strategic permutations, reinvention and crises.
Not only have investor, stakeholder, and public scrutiny increased dramatically. The world has become ever more complex and inter-connected. Capital and financial markets are virtually always and everywhere. Listed companies have reached a state of local and temporal omni-presence. Their instruments are traded around the globe around the clock. Threats may evolve anywhere anytime without anyone noticing it and so may opportunity. Seemingly improbable events do occur. Paradigms change. Initial conditions may change over night, dependence on initial conditions may become abnormally sensitive within a blink. Traditional assumptions of cause and effect may no longer be meaningful or true. Uncertainty has become the normal state of affairs and change the only reliable constant.
Confronted with uncertainty and adverse market conditions, management decisions show an inherent bias for inaction and safety but investment decisions a reverse bias for action and risk. Companies tend to try to sit out market turmoil and to preserve the status quo. Strategic initiatives are postponed or abandoned, thereby avoiding immediate additional risk but forfeiting opportunity. Strategic realignments or transformational transactions are least often undertaken during difficult markets. Companies can tolerate decreasing profits for a certain time. They will seek to cut costs and stabilize cash flow. Investors will become intolerant of unrewarding returns fairly quick though and will, prior to exiting their position and exploring alternative investment opportunities, demand that opportunity be converted into value.
Macro conditions are fueling the conflict. Companies struggle in midst of a global recession. Investors who found it difficult enough to deal with volatility are now facing the real enemy, inflation. Inflation in the Dollar zone would make European issuers attractive investment targets for currently Dollar denominated capital. Sovereign Wealth Funds are about to reallocate vast amounts of money. International investors tend to be less patient and more prepared to assume an active stewardship role than traditionally rather passive domestic investors.
In any event, key for both issuers and investors in their pursuit of value creation is sensible risk-taking. Knowing when to act hyper-defensively, when to proceed with caution and when to act hyper-aggressively.
Speaking in a metaphor, issuers and investors are operating in a multi-dimensional value maze whose pathways, walls and bridges are constantly moving, full of trap doors, cryptic and deceptive road signs and with paradoxes, optical illusions and impossible objects along the way. This maze has at least four dimensions: Influence and control - the extent to which a business can master its own fate and to which a given constituency can exert control or influence on the business. Wealth creation - the extent to which a particular strategy, action or event creates, preserves or destroys value. Wealth distribution - the extent to which a given constituency benefits from the businessīs economic activity. Time - the amount of time needed or available, windows of opportunity, or right or opportune moments.
Deep Value helps clients navigate through the value maze. We help issuers and investors create, preserve, unlock, capture and integrate shareowner value over time (value-based) and in critical corporate situations and investment stages (event-driven) where corporate strategy and investment rationale may or may not coincide and where governance, commercial and legal aspects and market perception intersect by providing advice and representation to corporate and institutional clients and principal investors. DV advises where the critical task is problem definition. DV consults where problem solving, execution and implementation are decisive. DV counsels, providing direction and guidance. DV serves as a sounding board, adding a holistic view based on professional detachment. DV provides issuer and investor representation and advocacy where useful or needed.
Dispassionate analysis, passionate advice and flawless execution at the very heart of corporate and investment strategy - DV adds unbiased rational thought based on independent original research, emotional discipline and relevant experience from an own proven track record of advising on successfully exited prominent assignments.
In doing so, DV strictly adheres to highest ethical and professional standards. DV will not act in any actual, potential or positional conflict of interests. DV does not co-invest or in fact hold or trade any security or financial instrument to ensure that its judgment remains untainted by subjectivity and self-interest at all times. DV does not disclose client or matter lists for marketing purposes. We at DV believe in truth in business and will always strive to act constructively and responsibly. If you are interested to learn more about DV, or would like to perform due diligence on us, please do not hesitate to contact us at any time.
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Shareowner value is pre-conditional to stakeholder value and a critical means to this end. At the same time issuers are expected to fulfil the impossible task of granting preferential treatment to everyone over everyone else at all times. Numerous diverse constituencies seek to be net beneficiaries of the business undertaking. All demand that their needs and wants be met. Views on how to best generate, measure correctly and distribute fairly economic wealth created may differ widely. Whether or not being an actual or potential investor in the business, various inside and outside constituencies are trying to exert influence on corporate strategy, risk profile, resource allocation, profit distribution, governance and management compensation and accountability. Controversial subjects for a long time, controversy has become intense. It is carried out in the market for investable capital, in the public spotlight and even in court, throughout the life cycle of start-up, growth and renewal and in particular during strategic permutations, reinvention and crises.
Not only have investor, stakeholder, and public scrutiny increased dramatically. The world has become ever more complex and inter-connected. Capital and financial markets are virtually always and everywhere. Listed companies have reached a state of local and temporal omni-presence. Their instruments are traded around the globe around the clock. Threats may evolve anywhere anytime without anyone noticing it and so may opportunity. Seemingly improbable events do occur. Paradigms change. Initial conditions may change over night, dependence on initial conditions may become abnormally sensitive within a blink. Traditional assumptions of cause and effect may no longer be meaningful or true. Uncertainty has become the normal state of affairs and change the only reliable constant.
Confronted with uncertainty and adverse market conditions, management decisions show an inherent bias for inaction and safety but investment decisions a reverse bias for action and risk. Companies tend to try to sit out market turmoil and to preserve the status quo. Strategic initiatives are postponed or abandoned, thereby avoiding immediate additional risk but forfeiting opportunity. Strategic realignments or transformational transactions are least often undertaken during difficult markets. Companies can tolerate decreasing profits for a certain time. They will seek to cut costs and stabilize cash flow. Investors will become intolerant of unrewarding returns fairly quick though and will, prior to exiting their position and exploring alternative investment opportunities, demand that opportunity be converted into value.
Macro conditions are fueling the conflict. Companies struggle in midst of a global recession. Investors who found it difficult enough to deal with volatility are now facing the real enemy, inflation. Inflation in the Dollar zone would make European issuers attractive investment targets for currently Dollar denominated capital. Sovereign Wealth Funds are about to reallocate vast amounts of money. International investors tend to be less patient and more prepared to assume an active stewardship role than traditionally rather passive domestic investors.
In any event, key for both issuers and investors in their pursuit of value creation is sensible risk-taking. Knowing when to act hyper-defensively, when to proceed with caution and when to act hyper-aggressively.
Speaking in a metaphor, issuers and investors are operating in a multi-dimensional value maze whose pathways, walls and bridges are constantly moving, full of trap doors, cryptic and deceptive road signs and with paradoxes, optical illusions and impossible objects along the way. This maze has at least four dimensions: Influence and control - the extent to which a business can master its own fate and to which a given constituency can exert control or influence on the business. Wealth creation - the extent to which a particular strategy, action or event creates, preserves or destroys value. Wealth distribution - the extent to which a given constituency benefits from the businessīs economic activity. Time - the amount of time needed or available, windows of opportunity, or right or opportune moments.
Deep Value helps clients navigate through the value maze. We help issuers and investors create, preserve, unlock, capture and integrate shareowner value over time (value-based) and in critical corporate situations and investment stages (event-driven) where corporate strategy and investment rationale may or may not coincide and where governance, commercial and legal aspects and market perception intersect by providing advice and representation to corporate and institutional clients and principal investors. DV advises where the critical task is problem definition. DV consults where problem solving, execution and implementation are decisive. DV counsels, providing direction and guidance. DV serves as a sounding board, adding a holistic view based on professional detachment. DV provides issuer and investor representation and advocacy where useful or needed.
Dispassionate analysis, passionate advice and flawless execution at the very heart of corporate and investment strategy - DV adds unbiased rational thought based on independent original research, emotional discipline and relevant experience from an own proven track record of advising on successfully exited prominent assignments.
In doing so, DV strictly adheres to highest ethical and professional standards. DV will not act in any actual, potential or positional conflict of interests. DV does not co-invest or in fact hold or trade any security or financial instrument to ensure that its judgment remains untainted by subjectivity and self-interest at all times. DV does not disclose client or matter lists for marketing purposes. We at DV believe in truth in business and will always strive to act constructively and responsibly. If you are interested to learn more about DV, or would like to perform due diligence on us, please do not hesitate to contact us at any time.
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