Recommended Resources

Articles, Concepts, EVA Research
Books
Links
Tools
Glossary

Library

Articles, Concepts, and EVA Research

Articles

Annual Alchemy, American Executive
EVA can do more than measure performance, by Marwaan Karame, The Globe & Mail
Dream Big - 3 financial models for executives looking to become their own boss, by Marwaan Karame, American Executive
Leading a Value-Based Management Implementation, by Marwaan Karame, The Trusted Professional
Max it out - increasing the economic cash flow of your business, by Marwaan Karame, American Executive
Pure Performance, by Marwaan Karame, American Executive
Time to Sell, by Marwaan Karame and Nick Malino, American Executive


Concepts

EVA Concept - What is EVA? How to calculate EVA?
Evolving into an EVA Company
What others think about EVA


EVA Research

The following independent EVA equity research reports are a summary of the full report. For detailed company analysis, please contact us (212-248-0881).

Semiconductor Inspection Equipment Industry EVA Research: Camtek (CAMT), CyberOptics (CYBE), Rudolph Technololgies (RTEC), and Zygo (ZIGO).

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Books

Business (Operations, Sales and Marketing)

Build to Last: Successful Habits of Visionary Companies, by James C. Collins, Jerry I. Porras
Conceptual Selling: The Face-to-Face Sales Formula that Helps Leading Companies Stay on Top, by Robert B. Miller, Stephen E. Heiman with Tad Tuleja
Major Account Sales Strategy, by Neil Rackham
Power Base Selling: Secrects of An IVY League Street Fighter, by Jim Holden
SPIN Selling, by Neil Rackham
Strategic Selling: The Unique Sales System Proven Successful by America's Best Companies, by Robert B. Miller, Stephanie E. Heiman with Tad Tuleja
Successful Large Account Management, by Robert B. Miller, Stephanie E. Heiman with Tad Tuleja
The Goal: A Process of Ongoing Improvement, by Eliyahu M. Goldratt
The Tipping Point: How Little Things Can Make a Big Difference, by Malcolm Gladwell


Economics and Finance

Analysis for Financial Management, by Robert C. Higgins
Buyout, by Rickersten
Economics: Private and Public Choice, by James D. Gwartney, Richard L. Stroup
EVA and Value-Based Management: A Practical Guide to Implementation, by S. David Young, Stephen F. O'Byrne
Financial Theory and Corporate Policy, by Copeland/Weston
Investment Valuation: Tools and techniques for determining the value of any asset, by Aswath Damodaran
Handbook of Modern Finance, by Dennis E. Logue
Mergers & Acquisitions: A Valuation Handbook, by Joseph H. Marren
Principles of Corporate Finance, by Richard A. Brealey, Stewart C. Myers
Real Options: Managerial Flexibility and Strategy in Resource Allocation, by Lenos Trigeorgis
Real Options: Managing Strategic Investment in an Uncertain World, by Martha Amram, Nalin Kulatilaka
Statistical Techniques in Business and Economics, by Robert D. Mason, Douglas A. Lind, William G. Marchal
Term Sheets & Valuations: An inside look at the intricacies of Term Sheets and Valuations, by Alex Wilmerding
The Art of M&A: A Merger Acquisition Buyout Guide, by Stanley Foster Reed, Alexandra Reed Lajoux
The Intelligent Investor, by Benjamin Graham
The New Financial Capitalists : Kohlberg Kravis Roberts and the Creation of Corporate Value, by George P. Baker, George David Smith
The Search for Value: Measuring the Company's Cost of Capital, by Michael C. Ehrhardt
The Quest for Value : The EVA Management Guide, by G. Bennett Stewart, III
The Value Imperative : Managing for Superior Shareholder Returns, by James M. McTaggart, Peter W. Knotes, Michael C. Mankins
Valuation: Measuring and Managing the Value of Companies, by Tom Copeland, Tim Koller, Jack Murrin

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Management Leadership

First Things First, by Stephen R. Covey
Getting to Yes: Negotiating Agreement Without Giving In, by Roger Fisher, William Ury
Principle Centered Leadership, by Stephen R. Covey
The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change, by Stephen R. Covey
The Four Agreements, by Don Miguel Ruiz
The Critical Edge: How to Criticize Up and Down Your Organization and Make it Pay Off, by Hendrie Weisinger, Ph.D.
The Power Principle: Influence with Honor, by Blaine Lee

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Links

Business, Economics, Finance

www.allbusiness.com - provides critical tools, services and information to start, manage and grow a business.
www.angeldeals.com - connecting entrepreneurs, investors, opportunities and resources.
www.bizbuysell.com - provides information on companies for sale.
www.bondsonline.com - up to date corporate bond information, including spreads.
www.bradynet.com - provides emerging market information.
www.doc.gov - U.S. Department of Commerce for economic indicators.
www.economist.com - the very best business publication, hands down.
www.eiu.com - Economic Intelligence Unit.
www.fasb.org - Financial Accounting Standards Board, staying abreast of regulatory developments.
www.hbsworkingknowledge.hbs.edu/topics/finance/ - Harvard's Business School collection of management information.
www.inc.com - provides hands-on advice, case studies, and big-picture overviews on the state of small business in the US.
www.mergerstat.com - a leading provider of U.S. and international M&A information.
www.newswire.ca - Canadian newswire.
www.oanda.com - is a leading source of foreign exchange services and online tools.
www.odci.gov - Central Intelligence Agency provides good general country information if considering investing internationally.
www.prnewswire.ca - US newswire.
www.puc-rio.br/marco.ind/main.html - real options resource.
www.sedar.com - Canadian corporate information.
www.stern.nyu.edu/~adamodar/ - one of the best sources for information regarding economics and finance
www.stls.frb.org/fred - Federal Economic Reserve Data provides world economic data.
www.stockmarketyellowpages.com - search companies by their description.
www.stockselector.com - excellent resource for finding industry comps.
www.valueadvisors.com - information on performance measurement, incentive compensation, and valuation analysis.
www.valuebasedmanagement.net - a value based management directory.
www.yahoo.com - general corporate information.


General Search

www.dogpile.com - uses several search engines at once.
www.google.com - although obvious, worth noting this is an incredible search engine.
www.howstuffworks.com - provides information on how "stuff" works
www.kwmap.com - excellent search engine relating keywords and concepts to one another.
www.linkedin.com - helpful in search for individuals through common contacts.
www.orbitz.com - excellent for scheduling busines travel
www.zoominfo.com - helpful in searching the background on individuals.

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Tools

www.act.com - industry-leading contact and customer management software.
www.dealmaven.com - provides tools that enable analysts to gather, analyze, check and present quantitative data more efficiently and at lower cost.
www.beinsync.com - seamlessly and securely keeps your files and emails in sync between your PCs.
www.efax.com - send and receive faxes via email.
www.gotomeeting.com - the leaste expensive and easiest-to-use online meeting solution.
www.idExec.com - corporate executive database.
www.valuepro.net - easy-to-use stock valuation program.

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Glossary
(Glossary for Mergers & Acquisitions, Value Based Management)

Accounts Payable – Amounts owed, usually restricted to amounts due from the sale of goods or services. Accounts payable is a current liability with a normal credit balance.

Accounts Payable Days – Measures the average number of days in which a company pays its vendors.

Accounts Receivable – Amounts due, usually restricted to amounts due from the sale of good or services. Accounts receivable is a current asset with a normal debit balance.

Accounts Receivable Days – Indicates the effectiveness of a company's credit policies by measuring the average number of days required to collect receivables from its customers.

Accumulated Depreciation – The total depreciation recognized and recorded for an asset since its acquisition. Accumulated depreciation has a normal credit balance and is a contra asset. It is subtracted from the asset’s original cost to determine net asset value.

Adjusted Book Value – The book value that results after one or more asset or liability amounts are added, deleted or changed from the respective book amounts.

AMEX – American Stock Exchange.

Amortization – The systematic reduction or writing off of an item over a specific number of time periods. Depreciation is a form of amortization.

Asset Sale – The purchase of some or all of a company’s assets, as opposed to buying the company shares or ownership position.

Assets – Any possession that has cash or exchange value. Collectively, the assets of a person or business are the means that may be used to offset liabilities. In accounting, the assets are all of the entries on a balance sheet showing the entire resources of a person or business, which when compared with liabilities, becomes a disclosure of net worth.

Asset Turnover – Measures the firm’s overall investment. Asset turnover is calculated by dividing sales by total assets.

Balance Sheet – A financial statement that indicates what assets a company owns and how those assets are financed in the form of liabilities or ownership interest.

Base Year – The year from which comparisons and/or forecasts are made. If the current year is used, management projects year-end results.

Book Value – The amount at which an item is carried in accounting records and reported in financial statements. A fixed asset’s book value is its original cost less accumulated depreciation. Book value per share of common stock is equal to assets, minus liabilities and the amount assigned to preferred stock, divided by the number of outstanding common shares.

Business Valuation – The process of arriving at an opinion or determination of the value of a business enterprise or an interest therein.

C-Corporation – A C-Corporation is a type of corporation taxed under subchapter C of the Internal Revenue Code.

Capital – Sources of long-term financing available to the business.

Capital Charge - Capital Charge is the Capital Employed or Invested multiplied by the Cost of Capital.

Capital Employed or Capital Invested – The total value of all the assets being used by the business to make money. Usually calculated as total assets less non-interest bearing current liabilities, also calcuated by adding the interest bearing liabilities and equity or sources of capital.

Cash Flow Statement – A summary of a company’s cash flow over a period of time.

Compound Annual Growth Rate (CAGR) – The average rate at which a particular financial parameter compounds up over a period of years.

Control Premium – The additional value inherent in the control interest, as contrasted to a minority interest, which reflects its power of control.

Corporation – A form of ownership in which a separate legal entity is created. A corporation may sue or be sued, engage in contracts and acquire property. It has a continual life and is not dependent on any one shareholder for maintaining its legal existence. Shareholders who enjoy the privilege of limited liability own a corporation. There is, however, the potential for double taxation in the corporate form of organization – the first time at the corporate level in the form of profits, and again at the shareholder level in the form of dividends.

Cost of Goods Sold (COGS) – The cost specifically associated with units sold during the time period under study.

Covenants Not to Compete (“Noncompete”) – Directs that the signing party will not engage in any activities that compete with the organization he or she is leaving.

Current Asset – An asset expected to be sold, used or converted into cash within one year or one operating period, whichever is longer. Current assets typically include cash, marketable securities, notes and accounts receivable, inventories and prepaid expenses.

Current Liability – An obligation expected to be paid or met by the use of current assets, often used to refer to obligations to be settled within one year. Current liabilities typically include short-term notes payable, accounts payable, salaries and wages payable, income taxes payable, payroll taxes payable, accrued expenses, and that portion of long-term debt payable within one year.

Current Operations Value (COV) - COV represents the value of a business, if it were to maintain the same level of current EVA performance into perpetuity.

Current Ratio – Current assets divided by total current liabilities, an indication of a company’s ability to meet its short-term obligations.

Deal Structure – Allocation of the total purchase price paid for the acquisition of a company. Consideration may include cash, consulting agreements, covenants not to compete, debentures, earnout provisions, employee agreements, guaranteed bonuses, notes, stock and options.

Debt-to-Equity Ratio – Debt divided by shareholders’ equity, showing the relationship between funds provided by creditors and funds provided by shareholders; a high ratio may indicate high risk, a low ratio may indicate low risk.

Discount Rate – A rate of return used to convert a monetary sum, payable or receivable in the future, into present value.

Discounted Cash Flow (DCF) – A method that provides for both the time value of money and the degree of risk associated with the realization of the benefits of a future cash stream. 1) The method of evaluating a long-term project by explicitly considering the time value of money. 2) The present value of a project, discounted by an appropriate discount rate.

Discretionary Items – Sample discretionary items may include bonuses, royalty payments, compensations to related individuals, pension plans, etc. Methods by which privately held business owners minimize taxation and maximize personal and family benefits.

Due Diligence – The reasonable investigation performed by the acquirer prior to purchasing a business.

Earnout – A deal structure element normally employed by a buyer to reduce Goodwill. It permits the seller to reap the rewards of an indicated future earnings stream.

EBIT – Earnings before interest and taxes.

EBITDA – Earnings before interest, taxes, depreciation and amortization.

Economic Value Added (EVA) – EVA is a measure of surplus value created on an investment. EVA = (Return on Investment – Cost of Capital) multiplied by (Capital Invested in a Project) or EVA = NOPAT - Capital Charge (See NOPAT and Capital Charge).

Economies of Scale – The decrease in average production costs accompanying an increase in capital employment.

Enterprise Value – Enterprise value represents the aggregate value of a company including debt and equity less cash.

Equity – The owner’s interest in property after deduction of all liabilities. Equity is ownership interest in a corporation, represented by the shares of stock, which are held by investors.

Euro – The composite monetary unit consisting of a basket of European community currencies, introduced on January 1, 2000.

EVA Accounting Adjustments - Adjustments to financial statements to better reflect the economic profit of a company.

Fair Market Value – The amount at which property would change hands between a willing seller and a willing buyer when neither is acting under compulsion and when both have reasonable knowledge of the relevant facts.

Fixed Costs – Costs that remain relatively constant regardless of the volume of operations. Examples are rent, depreciation, property taxes and executive salaries.

Free Cash Flow – Cash flow from operations less investments (capital expenditures) and taxes.

Future Growth Value (FGV) - FGV represents the markets future growth expectations of a company. FGV = Market Value less COV (See COV) .

Goodwill – The intangible asset that arises as a result of name, reputation, customer patronage, location, products and similar factors not separately identified and/or valued but which generate economic benefits.

Gross Profit Margin – The excess of revenue over cost of goods sold. Gross profit on an individual sale is equal to the selling price minus the cost of acquiring and preparing the goods for sale, but before subtracting selling and administrative expenses. Gross profit margin represents the gross profit as a percentage of sales.

Income Statement – A financial statement that measures the profitability of the firm over a time period. All expenses are subtracted from sales to arrive at net income.

Information Memorandum – A detailed description of a company given to prospective buyers after execution of a confidentiality agreement.

Inventory Turnover – Provides an indication of the efficiency of the firm’s inventory management. A higher ratio is an indication that inventory does not languish in warehouses or on the shelves, but rather “turns over” rapidly as it moves quickly from time of acquisition to sale. Inventory turnover is calculated by dividing cost of goods sold by average inventory.

Liquidation Value – The amount of cash or other resources that could be obtained for an asset at the time of a company’s liquidation. Business liquidation value is the net proceeds that could be realized from the sale of all assets and settlement of all liabilities. Because liquidation often occurs under emergency or forced circumstances, liquidation values are usually less than the amounts that could be obtained from the sale of assets in the normal course of business.

NOPAT (Net Operating Profit After-Tax) – NOPAT can be estimated by subtracting taxes from EBIT (See EBIT). It most accurately calculates the operating profit of a business by making economic adjustments to accounting statements.

Market Value - Market value represents the aggregate value of a company including debt and equity and cash.

Market Value Added (MVA) - MVA represents the Market Value less the book Capital Employed in the business. MVA represents the accumulated value created over the life of a business.

Mean – The mathematical average of a range of numbers (calculated by dividing the sum total of all the items in the range by the total number of items in the range).

Median – The middle number in a defined distribution. When looking at estimates, median refers to the estimate above and below which lie an equal number of estimates for the period indicated.

National Association of Securities Dealers, Inc. – The self-regulatory organization of the securities industry responsible for the regulation of the over-the-counter markets.

Nasdaq – The National Association of Securities Dealers Automated Quotation System.

Net Income – Income after all expenses and taxes have been deducted. Often used in calculating various profitability and stock performance measures.

NYSE – New York Stock Exchange.

OTC – The over-the-counter market includes trading in all stocks not listed on one of the exchanges and some traded in listed stocks.

Present Value – The result of discounting an amount to be received or paid in the future, or the amount that must be invested now at a specific interest rate to accumulate one or more future payments. (See Discounted Cash Flow)

Pro Forma Statement – A financial statement prepared on the basis of some assumed events or transactions. For example, pro forma statements might be prepared by a company considering acquisition of another company to show the projected combined results.

Quick Ratio – “Quick” normally means assets due and available within 90 days. It includes cash, marketable securities and receivables. Quick assets are compared to current liabilities to calculate the quick ratio or acid test ratio.

Recasting – The act of recalculating a private company’s balance sheet, income statement and cash flow statement to reflect its operation as a public company subsidiary. This process typically involves reducing owner compensation to a level consistent with industry averages, reducing or increasing staffing levels to match industry averages, and removing both phantom expenses and extraordinary items.

Retained Earnings – Net profits kept to accumulate in a business after dividends are paid.

Return on Assets (ROA) – The amount earned per year on the assets of a company, usually expressed as a percentage. Net income divided by total assets. A measure of the net income a firm’s management is able to earn with the firm’s total assets.

Return on Equity (ROE) – Net income divided by shareholders’ equity. A measure of the net income a firm is able to earn as a percentage of the shareholders’ investment.

Return on Investment (ROI) – The amount earned per year on an investment, usually expressed as a percentage.

S-Corporation – An S-Corporation is a type of corporation taxed under subchapter S of the Internal Revenue Code. An S-Corporation is generally like a C-Corporation, but is limited to 35 shareholders, can only use domestic capitalization and is taxed only to the shareholders at their individual rates.

Shareholders’ Equity – The total ownership position of preferred and common shareholders.

Standard Industrial Classification (SIC) Code – A numbering system established by the Office of Management and Budget that identifies companies by industry. It is used to promote the comparability of economic statistics from various facets of the U.S. economy.

Strategic Acquisition – The purchase of an operating business that supplements the buyer’s strengths or complements the buyer’s weakness matrix.

Synergy – The feature of a system where the parts are properly interrelated and functioning; output is achieved that is greater than or superior to the effects obtained when the parts function independently.

Teaser or Blind Summary – A document that offers a key-point summary of a business available for sale or merger. The document
does not mention the name of the available business or its price.

Terminal Value – The value of a company at the end of a given time period.

TSE – The Toronto Stock Exchange.

Weighted Average Cost of Capital (WACC) – The computed cost of capital determined by multiplying the cost of each item in the optimal capital structure by its weighted average in the overall capital structure and totaling the results. It represents the weighted average return expected by both equity and debt investors.

Working Capital – The excess of current assets over current liabilities, also called net working capital.

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