Profitability and Efficiency

Of the three functional categories that drive value in business—i.e., the “hard,” the “soft,” and the “intangible”—mission statements comfortably reside in the third, alongside such concepts as brand and culture.

But despite the skepticism that is often associated with this category, and having uncovered some of the greatest gems in the corporate arena, this article argues that mission statements, when crafted and utilized effectively, are capable of driving billions of dollars in value.

Eyeballing the top-line figures of company growth is unlikely to uncover anything particular radical. To understand the trends that lead to user growth, retention, and/or engagement, statistical tools should be employed to test the underlying drivers behind performance.

With $936 billion of uninvested private equity capital inching down market, why do 46% to 80% of lower middle market sell-side transactions fail to close? The usual answer is that companies are not ready for buyers’ examination and owners can be overly optimistic or even greedy.

Business owners can do much more to put themselves in the driver’s seat. Success boils down to the following: (1) take the time and do the work to prepare for an exit transaction and (2) apply “intelligent greed” to close your best deal.

Fewer than 3% of applicants make it through Toptal Finance’s rigorous screening process. How do the best of the best become such effective financial consultants? We sat down with one of Toptal’s most on-demand financial consultants, Jeffrey Fidelman, who shared his proprietary methods for ensuring success for his clients and how he has grown his own business exponentially.

VC and PE fund structures are traditionally raised in the closed-ended manner, through limited partnerships with end dates. A less common alternative to this is an open-ended/evergreen fund, an ongoing structure that continues indefinitely. In this article we discuss the nuances of open-ended funds with a GP from B37 Ventures, who raised and operates one.

The discount rate is a critical input in any discounted cash flow valuation analysis. How does an analyst estimate a reasonable discount rate for a private company that has no publicly traded debt or equity?

This article focuses on best practices for estimation of the WACC in the context of a private company valuation. The discussion begins with an overview of the WACC, background on the components of the WACC, methods to estimate the WACC components for private companies, and an example of how to apply this framework to estimate a privately-held building materials company.

From abstract spreadsheets to real-world application, financial models have become an inextricable part of business life and an indispensable part of every company’s toolkit. But irrespective of its ubiquitousness as a productivity and decision-making tool, many out there still have a love-hate relationship with it.

Management consultant Alberto Bazzana authors a comprehensive “how-to guide,” for both the novices and experts among us, detailing Wall Street’s best practices for intelligent, effective, and error-free financial modeling.

To unlock growth in a company, you must first find the KPI that is core towards increasing company value. More effective knowledge of growth comes from a deeper understanding of the characteristics of a “perfect client,” the trends between user cohorts, and finding the tipping point that solidifies retention and engagement.

While growing investor enthusiasm has contributed to a historic $3 trillion of fundraising over the last five years, the PE industry faces increasing competition amongst firms, record-high multiples and other factors making it difficult to generate attractive returns. One aspect for consideration is succession planning, especially since CEO turnover at portfolio companies occurs at a rate of 73% and can increase hold times and decrease returns.

This article defines succession planning, and examines the best practices and mistakes to avoid in succession planning for PE portfolio companies. It also explores succession planning within private equity firms themselves, something PE firms have been uncharacteristically proactive about confronting recently.

Technical debt, which relates to suboptimal technology infrastructure in an organization, can actually be a huge financial burden on a business. However, like traditional financial debt, there are steps and processes that can be taken to manage and mitigate the risk. In this article, we elaborate on how CFOs can tackle their technical debt burden.

Once crammed into stuffy showrooms with eager salespeople and a dizzying plethora of models, mattress purchases used to be notoriously complicated. However, a upstarts have recently revitalized the industry with innovations in marketing, delivery, and a direct-to-consumer model.

It’s true that the mattress industry is experiencing an upheaval, but rather than the typical narrative of newer operations completely displacing older ones, perhaps there’s room for both collaboration and innovation. There are lessons for investors, entrepreneurs, and corporate moguls alike.

Professional sports franchises continue to see record sale prices. But what drives a team like the Dallas Cowboys, who haven’t won a Super Bowl in over 20 years, to top the list of the most valuable sports franchises in the United States?

In this article, Toptal Management Consultant David Turney provides an overview of professional sports economics, unique valuation considerations, and a team valuation example.

In an era of subdued prices and with usage expected to plateau within the next 30 years, the focus for oil and gas companies must turn to cost control. Applying technological innovations such as blockchains, wearables, and advanced analytics to the supply chain can keep costs in check and maintain profitability.

Latin America boasts great investment opportunities with attractive risk levels, higher returns than home markets, and access to a large population base with growing income. However, Latin American acquisitions require special attention and include a number of difficulties unique to the region.

This article provides insights gleaned from Management Consultant Emilio Labrador’s 15 years of experience in Latin American oil and gas M&A. It provides practical tips for foreign acquirers considering investments in Latin America, on topics ranging from risk premiums in valuation, accounting due diligence, and legal considerations.

In December 2017, Congress’ tax reform bill, amongst many sweeping changes, reduced the marginal tax rate to 21% from 35% for corporations, and limited their use of interest expense as a tax shield.

This article explores the implications of these changes for traditional methods of valuation, including the discounted cash flow (DCF) method and the EBITDA multiple method for the corporate manager and finance professional.

Traditionally confined to the realms of insurance and pensions, actuaries are now branching out into the wider business world.

The long-termist and statistical approach of actuarial science makes it an invaluable tool for recurring income businesses. This article looks at how, showing examples of usage within customer lifetime value and human resources.