172. Taking an investor's perspective on your business
Aug 19, 2023
auto_awesome
In this episode, Chantal Beck and Justin Sanders join the hosts to discuss viewing businesses from an investor's perspective. They explore the differences in mindset between CEOs and investors and the challenges of aligning perspectives on value creation. They also discuss the evolving role of the CFO, factors for valuation assessment, and the importance of strategic thinking for CFOs.
Seeing your business from an investor's perspective helps align actions with investor expectations and make effective decisions.
Private equity investors' focused approach to value creation can be applied by CFOs to prioritize actions that create the most value.
Deep dives
Understanding the Investor Perspective
Business leaders and CFOs should aim to see their businesses from the perspective of investors. Investors consider not just the company's history, but also focus on what's coming next and forecast the value they could get by investing in the business. This data-driven and forward-looking perspective helps investors make dispassionate decisions about whether to stay invested in the business or seek better opportunities elsewhere.
Advantages of Taking the Investor Mindset
Adopting an investor mindset provides several advantages for business leaders. By understanding investors' perspectives, executives can align their actions and strategic vision with what investors are looking for, leading to more effective decision-making. Additionally, treating investors as customers helps executives to gain insights into what investors are looking for and what drives their investment decisions. Transparent communication and demonstrating the results of a company's strategy are crucial in building trust and maintaining a healthy conversation with investors.
Private Equity Investor Perspective
Private equity investors take a focused and proactive approach to value creation. They emphasize taking specific operating actions to capture untapped potential and generate higher returns. CFOs and publicly held companies can learn from this approach by examining their own businesses through a similar lens. They should identify value drivers, explore opportunities for operational improvement, and understand the expectations of investors. A holistic view of the business and strategic capital allocation can help CFOs and executives prioritize actions that create the most value.
In this episode, we explore why and how business leaders, and CFOs in particular, should try to see their businesses as investors see them.
We're joined by Chantal Lorbeer, a partner in our Munich office who advises global chemicals companies on their strategy, growth transformations, as well as their operating models and portfolio moves. Chantal co-leads our Strategy & Corporate Finance Practice in Germany was well as chemicals capital-markets perspective globally.
Also joining us is Justin Sanders, a partner in our New York office who co-leads our shareholder teardown team, bringing a private equity investor perspective to corporate clients. Justin also founded our work helping clients prepare for, and respond to, activist investors.