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Note on Valuation-Compensation Tradeoff in Professional Service Firm Acquisitions
by Ashish NandaThis case highlights the tradeoff between valuation ascribed to professionals at the time of a professional services firm (PSF) acquisition and the postacquisition compensation of these professionals. It emphasizes how a high valuation at acquisition carries with it the requirement to lower professionals' compensation postacquisition.
Note on Value Drivers
by Benjamin C. EstyPresents a framework for analyzing strategic decisions. Takes as given the practice of value-based management whereby managers use value as a primary criterion when making financial, strategic, or investment decisions. Through a simple valuation model, it shows how equity value is related to three value drivers profitability, advantage horizon, and reinvestment. Also presents a numerical example to illustrate the model as well as empirical evidence to support the relation between value creation and the value drivers.
Note on Valuing Control and Liquidity in Family and Closely Held Firms
by Belen VillalongaMost companies around the world are family-controlled and/or closely held. The need to value these companies routinely arises in practice for a variety of reasons, e.g ., to buy out minority shareholders; for gift and estate tax purposes; to tie executive compensation to firm performance; to raise outside capital; or to sell the company outright. However, these companies present certain unique characteristics that can make standard valuation methods inappropriate for them.
Note on Valuing Equity Cash Flows
by Timothy A. LuehrmanA technical note for advanced students on the topic of valuing highly-levered equity. Introduces the "equity cash flow" valuation methodology, shows how to use it, discusses the sources and signs of its built-in biases, and provides some guidance about when to use it.
Note on Valuing Private Businesses
by Indra A. Reinbergs Dwight B. CraneThis case provides a brief overview of valuation for owners of closely held companies. The focus is on a comparable transactions approach, although rules of thumb and discounted cash flow are mentioned. Earnings multiples and their drivers are discussed. It uses company example and transaction data on private deals as an exercise in screening for comparable companies and valuation based on multiples. It includes a three-page bibliography with references to further sources on valuation methods, private transaction data, financial databases for company screening, and professional advisors from appraisal and valuation communities.
Note on WTO Disputes: Five Major Cases
by David A. Moss Nicholas BartlettSummarizes five major trade disputes before the World Trade Organization (WTO): (1) the Brazil-Canada aircraft dispute, (2) the European Union/United States foreign sales corporation dispute, (3) the Asian/United States shrimp and sea turtle dispute, (4) the United States/European Union beef hormones dispute, and (5) the U.S. steel tariff dispute.
Note on Why Leaders Lose Their Way
by William W. GeorgeIn the seemingly never-ending revelations of corporate scandals that have been exposed since the fall of Enron, the media, politicians, and the general public have taken to characterizing such leaders as "bad people," even to the point of considering them evil. The rest of our leaders have become suspect, as corporate executives are tied for dead last with used car salesmen in terms of public trust. These overly simplistic notions of "good leaders" and "bad leaders" only serve to cloud our understanding of the nature of leadership in the business world and how good leaders can lose their way. Teaching Purpose: To outline how and why leaders lose their way.
Note on the Banking Industry
by Clayton Rose Scott WaggonerThis Note provides an overview of the structure and function of the Banking industry, with a primary focus on the U.S. It was designed to support the HBS MBA course "Managing the Financial Firm."
Note on the Boston Consulting Group Concept of Competitive Analysis and Corporate Strategy
by John S. Hammond Gerald B. AllanDescribes a method of competitive analysis used by the Boston Consulting Group to coordinate a portfolio of products at the corporate level. Construction and interpretation of product portfolio charts is an important aspect of the technique.
Note on the Caspian Oil Pipelines
by Benjamin C. Esty Mathew Mateo MillettThe Caspian region may become one of the world's next major energy producers. Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan-all former Soviet republics--hold vast and largely undeveloped reserves of oil and gas, but the region's export infrastructure is nearly nonexistent. The Note provides background on Azerbaijan and Kazakhstan-the region's major oil producers-including economic and oil sector data. Also in A, it discusses major options to the surrounding region; B. Covering the advantages and weaknesses of each of the options.
Note on the Equivalency of Methods for Discounting Cash Flows
by William E. FruhanUses a numerical example to demonstrate that when you discount the cash flows to capital from a project at the weighted average cost of capital, you get same net present value result as you obtain when discounting the cash flows to equity at the cost of equity. Also demonstrates why it is far easier to do a net present value calculation using the weighted average cost of capital (assuming a fixed debt ratio and market value weights) than it is to do the same calculation using the cost of equity.
Note on the Financial Perspective: What Should Entrepreneurs Know?
by William A. SahlmanIdentifies concepts and tools of finance that are useful to general managers and critical to entrepreneurs: cash, risk, and value.
Note on the Future of Commerce
by William R. Kerr Daniel O'Connor Nathaniel SchwalbIn 2019, the retail and consumer product industries were undergoing a generational transformation. The consumer sector had gone through two other generational shifts in the past 50 years. During each shift, many legacy businesses lost share or outright failed. The businesses that survived and thrived had to grow new business models and competencies, while managing their pre-existing operations. The note explains the major transformations occurring to the global consumer sector in 2019 and how leaders reacted.
Note on the Future of Work
by William R. Kerr Manjari Raman Joseph B. Fuller Bailey McAfeeIndustry and Background Note
Note on the Hiring and Selection Process
by Michael J. RobertsDescribes a model for thinking about the hiring and selection process.
Note on the Impact of Millennials on the Food System
by James Weber Natalie Kindred Jose B. AlvarezIn 2016, the millennial generation (those age 19 to 35 in 2016), the largest generation by population in the U.S., was entering its prime home buying, family forming, earning and spending years. This generation was showing different beliefs and behaviors than previous generations-beliefs and behaviors that were having a significant impact on the overall economy and in particular on the food industry. This note explores the millennial generation, how it differs from previous generations, and examples of how it is impacting the food industry.
Note on the Initial Public Offering Process
by Josh LernerProvides an overview of the going public process.
Note on the Law of Sexual Harassment
by Lynn Sharp Paine Lara AdamsonsThis note provides an introduction to the law of sexual harassment. It has three parts. Part One describes the laws on harassment in the United States. Part Two explores controversial and emerging aspects of the American legal framework. Part Three gives a brief overview of sexual harassment laws and policies in several regions of the world, including Europe, Asia, and Latin America.
Note on the Leveraged Loan Market
by Victoria IvashinaThis note provides an introduction to the process of loan syndication and the evolution of the leveraged loan market. The note emphasizes the role of banks as loan originators and the evolution of the institutional investors' entry into the leveraged loan market. In particular, the note discusses the role and incentives of collateralized loan obligations (CLOs).
Note on the Management of Queues
by David H. MaisterContains four sections: 1) measuring the performance of queuing systems; 2) types of queuing systems; 3) the behavior of simple systems (elementary queuing theory); and 4) the management of queues (including a discussion of their psychology).
Note on the Motorcycle Industry--1975
by Robert D. Buzzell Dev PurkayasthaDiscusses several changes in the motorcycle industry: the emergence of Japanese competitors; the growth in demand for light motorcycles; and the emergence of recreational uses; and how these changes have affected older United States and British manufacturers.
Note on the Nonprofit Coherence Framework
by Stacey Childress Allen GrossmanThis note presents the Nonprofit Coherence Framework. It helps nonprofit leaders identify the key elements that support an organizational strategy focused on attaining high performance, bring those elements into a coherent relationship with the strategy and each other, and help guide the actions of people throughout an organization in the pursuit of high levels of individual and organizational achievement. This note proposes that to attain high performance, a nonprofit organization must have all of its organizational elements-culture, structure, systems, resources, stakeholders, and the operating environment- working together to drive strategy.
Note on the Nonprofit Sector
by Allen Grossman Naomi Greckol-HerlichThis note introduces students to the current state of the nonprofit sector around the world. It also provides insight into the sector's origin and purpose as well as the identifying important current trends. The note draws on numerous sources to provide a single resource for readers to gain understanding of this complex sector. The intended audience includes students, prospective professional leaders, those considering joining a board, consultants to the sector, or anyone wishing to learn more about the field.
Note on the Recipients of Change
by Todd D. JickExamines the experiences of being a "recipient" of change and how to help individuals cope with change. The first part describes how people typically respond to changes likening it to a loss experience. The second part describes what organizations can do to help individuals through difficult transitions, while the third part identifies what individuals can do for themselves. Finally, raises the challenges for individuals to deal with multiple and continuous change.