Business-valuation

I ordered the book as a guide for refreshing some equations and methods in the income approach that I use for reports. The book is very comprehensive and useful ....except that it is noted in the Pound system which is distracting when read.

This book is good for people who is new to the real property investment. This is for beginner level only,however, it does offer the basic formula of various type of valuation mathematic.

It doesn't provide details on how to value intangibles. It promotes a stock approach for intangible asset measuring but lacks the comprehensiveness of methodologies that use a flow approach. I didn't find this much help in my line of work as a business manager for a multinational organisation. I needed more practical examples and found the arguments weak and unsubstantiated. There seemed to be a lack in practical application and his arguments seemed not to be tested.

This book changes the rules. Academic Press has long been regarded as the world's leading Academic Publisher and now I know why. This book is a masterpiece. It proves that there is a new way of managing value that is completely different from the old. It is a well thought-out and researched book with good practical examples. In my senior executive roles at various multinational corporations I have needed to implement numerous methods from knowledge management, to intellectual capital management, and knowledge capital. I see intangible management as the upgrade to those techniques. I am now applying IM into the organization I work for. I was particularly impressed by the worked through examples in the book which guided me step by step through the process of how various branches of intangible management theory could be practically applied. It's a book filled with new ideas, innovation, and out-of-box thinking. After researching intangible management on the net, I found that this book was acknowledged by the Association of American Publishers in their 2002 Outstanding Professional and Scholarly Titles Award. The book received an honorable mention as a work of exemplary scholarship as one of the two outstanding business, management & accounting books of 2002. After reading the book, I know why this book received the recognition it did. It's well worth adding to your library.

One of the Most Important Management breakthroughs in the Past 1000 years.

Research by Arthur Andersen of 3500 companies revealed that on the balance sheet the following percentages reflected market value for the representative years: 95% in 1978, 28% in 1998, and 15% in 2002. The International Intangible Management Standards Institute predicts it will be 5% in 2005 based on these trends. This means that conventional accounting reports will fail to capture 95% of the value of business and its operations by 2005, unless there is a change. From an investor perspective, things are not much better. According to the (USA) National Academy of Sciences Task Force on Intellectual Property Management (Sept. 1999), more than 75% of the capitalization of the S&P 500 reflects the value placed on knowledge and other intangible assets.

In the book Intangible Management: Tools for Solving the Accounting and Management Crisis, Ken Stanfield explains the value of intangibles (intangible assets, intangible liabilities, intangible revenues, and intangible expenses) and most importantly how to measure, track and record them on the new financial reports - referred to Intangible Corporate Reports. As our greatest assets today are Knowledge, Relationships, Emotional Intelligence and Time - these value drivers must be measured and managed.

This book needs to be the new standard (Bible) for Business Management and Accounting. This book should be essential reading in every School and University as learning is the only true sustainable competitive advantage we have, and this knowledge needs to be known.

An impressive business book on the "exotic" topic of intangible assets, the importance of which has so dramatically increased during the last decade, especially so for knowledge-based companies. What makes the book special is that it strikes a fine balance between practical insights, case studies and applications on the one hand, and state-of-the-art theoretical concepts on the other. Because of this, it has a strong appeal to both practitioners and theorists.

The book has an ambitious and multi-faceted focus: It not only addresses the scope and functions of intangible assets, but it also discusses related topics such as accounting for intangibles; the implications of intangibles for internal and external reporting; and the foundations of a new management system. The book is carefully investigated, well-written and nicely structured. Several interviews with leading specialists such as Leif Edvinsson (a pioneer in the area of Intellectual Capital management), Baruch Lev (an expert on intangibles accounting) and David Norton (co-creator of the Balanced Scorecard concept) provide also a helpful bridge between the practice and theory of managing intangible assets.

I strongly recommend this book if you want to have a better understanding of the comprehensive role and implications of a company's intangible assets. It is also a helpful resource for students and professionals in the areas of strategic management, financial performance management and strategic accounting. It will challenge and help you to discover new ways to create business value.

Dear Mr. Black, as You did critize my review of your pamphlet, I hereby reply, that I stand by my former judgement. My former review does NOT accuse You of 'selling yourself' to SAP, nor does it question the features of SAP-products, or PWC. However, the scientific content of Your book was so low, that it had to be contradicted. These are my main points of criticism: (1) It does not catch the microeconomic logic behind EVA/CFROI: The concept of microeconomic producers rent. EVA is based on a static concept of economic rent, CFROI on a dynamic concept of economic rent.

(2) EVA implies linear simulation, CFROI non-linear simulation (e.g. experience curve effects).

(3) CFROI can be more easily aligned mit Real Options for strategic decisions.(e.g: the experience-curve-effect is a system dynamics modell for a dynamic Cournot/Nash-Oligopoly, which includes a Real Option for capacity extension during the growth phase of an homogenous product one produces with a substitutional technology with an S-shaped path for performance improvements ). If you try to align EVA with Real Options, you run the danger of creating unrealistic scenarios, which violate the laws of oligopolistic theory .

(4) EVA encourages managers to milk a business as it is based on linear depreciation concepts,nominal values,undervalues growth options, and implies linear simulation.

(5) In my 1998 edition there were indeed many mathematical errors (e.g. On the last past text page there was a formula with missing brackets). Your definitions of EVA and CFROI were grossly simplified, and can lead novices to misunderstandings.

(6) Your book fails to mention, that VBM requires consolidated financial statements for the last 5 years, and it does not explain, how to filter the relevant data. E.G: To use VBM in a senseful way, you must factor out transfer pricing, tax shelter effects, accounting distortions by cost budgeting techniques, the shelter effect of financial leverage e.g. Copelands 'Valuation' covers those topics without shocking novices with overly complex formulas - but your book totally ignores these topics.

(7) Some pictures in Your book have got a striking similarity with some charts in earlier editions of Copelands 'Valuation', but You did not have the courtesy to thank Copeland/McKinsey.

(8) You do not warn the reader about the dangers of VBM: Milking a business. If EVA/economic profit had an effect on industrial productivity, we would expect the UK to have the highest productivity in the world, because economic profit was invented by british companies such as BTR and Hanson in the late 1960's. The opposite is true !! In the 1970's the british industry collapsed - because economic profit + primitive linear simulation methods encouraged british managers to milk their companies, keeping prices high and deffering investments, until their assets/market share shrank below minimum-efficient scales.
A chart in Copeland 'Valuation' shows, that in the 1970/1980#s british productivity stagnated both in absolute and relative terms - while german and japanese companies manged to catch up.
Michael Gould "Corporate Level Strategy" ( a Boston Consulting Group publication which dates back to 1994) describes in much detail, how your 'financial controll style' encouraged BTR and Hanson to withdraw from high technology, to burn out assets and employes, to defer any investment in quality, research and education. Poorly applied Economic-Profit-Models were not the only reason for Great Britains industrial decline, but they did reinforce other problems: notoriously confrontational labour-relations and a poor level of professional education. If a CEO milks his company, cutting down investment in education/new machinery, his labour union will retaliate and do the same,asking for higher wages.

Summary: Your book has no scientific value and proposes a grossly simplified approach to VBM, that leads to desastrous, strategic mistakes. Poor Economic-Profit-Models achieved in no more than two decades, what 6 years of incessant bombing by the German Luftwaffe in world war two did NOT achieve: The total desindustrialisation of Great Britain. An industrial heritage created over a period of 100 years was sold off for a few years of high shareholder value.

Does that mean, that VBM is nefarious ? No, it does not.
VBM has got a future, if you ask real experts to simulate CFROI with system dynamics models and Real Options. CFROI, real options and system dynamics were first applied by the Boston Consulting Group back in the early 1970's - about 30 years ago. Therefore I stand by my judgement: Your book is dangerous and not scientific.

Most people hate lots of numbers and formulas. This book handles them well. This book clearly describes the concepts of Shareholder Value. I think this book, and many of its SV kind, are great for corporate financial people who have (mostly) accurate accounting numbers.

But for investors looking in from the outside, SV becomes difficult to implement. For example, what truly is EBITDA? Cash Flow? Which one? These illusive investor numbers make the SV process hard to implement for those of us without access to the real corporate books. Or at least, the process of determining the correct numbers is more difficult than the SV process lets on... in the world where accounting numbers and forecasts can be made to be anything the CEO or CFO want.

All in all, this methodology has brought a revolution to the corporate financial world. Divisions can now be compared with more rigor. This book easily and clearly explains the logic. The authors care about their subject and it shows.

John Dunbar

I despair of acedemics intent on picking holes in the acedemic rigour of books on shareholder value. Businesses are run by business managers. They leave "trendy" financial concepts for the FD to trot out to the board, in vain and ad infinitum. Bridge the gap between those who run the business and the cerebral numerates who keep score and you will...create shareholder value...hurray. This book does just that.