In our holding company and in two of the single family offices I help run, the blueprints of value machines themselves are worth millions of dollars, and can be leveraged in many different industries or asset classes. While most books on the industry focus on statistics or outdated stressing of fee-only models, no other publication dives into the structures that drive value creation for ultra-wealthy families like this text does. In fact when you first start reading the book you will realize it speaks to professionals who are operating on another level in the space. I have hired Carl to speak at our most private and exclusive events for single family offices and $100M+ families and if you read this book you will see exactly why and be glad you spent the time doing so.

Richard C. Wilson is the bestselling author of The Single Family Office: Creating, Operating, and Managing Investments of a Single Family Office, Wilson Holding Company, Key Biscayne FL

Carl's book brings a refreshing twist to the valuation discipline. While most equity valuation literature out there focuses on technical and methodological aspects, Carl thinks outside of the box and delves into unique concepts and tools, namely, Governance, Relationships, Risks, and Knowledge (GRRK) and risk Identification, Measurement, Management, and Mitigation (IMMM) that lead to Equity Value Enhancement (EVE). This book is especially useful for valuation professionals who desire to be more than just routine commodity service providers and have a greater calling to become pro-active participants of a holistic advisory team integral to helping companies produce results, reduce operational risk, and leverage on and maximize valuable intangible assets.

Angela Sadang, MBA, ASA, CFA, Director, Financial Advisory Services, Marks Paneth LLP

Carl is a very introspective individual. He approaches family businesses and public companies with a holistic approach; not just a single focus. Having grown up in a family owned business in manufacturing and working with many family businesses, I know firsthand that Carl understands the dynamics inherent in certain family businesses, and that provides true value. Carl has a talent for sizing up a business for its value, challenges, and governance. Having worked with him, he is someone I would love to work with again for his impressive and consistent ability to create value and help businesses grow.

James M. Hill, Chairman of the Private Equity Practice Group, and former Managing Partner, Benesch, Friedlander, Coplan & Aronoff LLP, Cleveland, OH

This wonderful book shines a light on a universal but widely unrecognized truth: value is only created in the networks of relationships, conversations and commitments between people. The failure to look beyond the numbers to cultural and systemic factors goes a long way to explain the dismal record of value destruction in mergers and acquisitions across the globe. Carl's book is essential reading for executives, advisors and investors seeking sustainable value creation strategies.

Paul Sweeney, Managing Director, Berkeley Research Group (UK) Ltd, Berkeley Research Group (UK) Ltd, London UK

While advisors provide advice to their clients, Dr. Carl Sheeler, based on 2 decades of experience and research, targets the advisors so that they can better assist their clients. As a professional appraiser, I fully agree with Carl that GRRK is so important to see what's driving operational performance. I am sure appraisers and other advisors will be able to become trusted advisors and provide the advice that clients need to enhance the value of their businesses after reading this book.

Chengjun Wang, Phd, FRICS, ASA, FCPV, FCPA, Vice-Chairman, Senior Partner, Zhonghe Appraisal Co., Ltd., Beijing PRC

Dr. Sheeler's Equity Value Enhancement should be a wakeup call for business owners, large corporations and the people who provide a wide range of services to these firms. Sheeler sheds light on the tangible and intangible drivers of business value. His perspective is valuable for both business owners and their advisors. His approach to explaining the many ways business value is misunderstood and miscalculated is insightful and important. He does an exemplary job of establishing a foundation of understanding about the tangible and intangible drivers of business value and then providing the “how-to” approach to accessing and optimizing the benefits of a strong advisory team. The book also clearly articulates the sources of value creation for advisors. For a diverse range of service provides, he trumpets the criticality of differentiating themselves by going beyond their technical expertise to offer valuable perspective and advice, founded on understanding, that can help owners enhance business value. Equity Value Enhancement offers vital insight and offers an indispensable learning tool for all business leaders and the professionals who service them.

Carol E. Robbins, Executive Business Driver & Digitally Savvy Brand Builder

This isn't just another book to stick on the shelf - it is a tool to be utilized. Carl has taken complex concepts and transformed them into accessible, actionable recommendations. What Carl refers to as “technical myopia” costs business owner clients vast amounts of money each year, but it doesn't have to be that way. With the largest transition of generational wealth well under way, Carl's approach to Equity Value Enhancement is a must read for advisors and business owner's alike.

Allie Harding, Partner at Orange Kiwi, LLC & PlanforTransition.com

With Carl's book, you find that a basic feature of modern enterprises is the need to create effective intangible assets through unique approaches. As a professor, I gleaned from this that a business school should help its students identify the intangibles that are not disclosed by a balance sheet. This book opens a new window and shows the reader how to judge the value of a business with innovative thoughts and methods that transcend the typical limitations of valuation analysis.

Haisu Wang, Professor and Director of Research Center of Business Value, Zhongnan University of Economics and Law, Wuhan PRC

Dr. Sheeler's book succeeds in impressing upon the appraisal and advisory community that risk identification and measurement need not be a commodity. The real opportunity lies in establishing a strategy and culture where owners and advisors align their activities to leverage their knowledge and relationships. The book's focus is on the necessity for the often overlooked risk management and mitigation roles. This separates the dabblers from the industry professionals and allows for more lucrative engagements while making a real difference for the owner and investors in both liquidity and legacy.

John K. Paglia, Ph.D., CFA, CPA, Associate Dean & Associate Professor of Finance, Pepperdine University Graziadio School of Business and Management, Los Angeles CA

Carl Sheeler moves past the limiting aspects of valuation analysis by creating the Governance, Relationships, Risks and Knowledge framework. GRRK gives advisors tools that leverage governance into culture, relationships into advisory boards, risks into opportunities, and knowledge into insight. Applying GRRK methods to valuations provides insights and opportunities that advisors should share with clients to grow their businesses, expand their influence within their markets, and grow professional networks that can be new sources of revenue. The business services industry is moving away from hourly rates towards value pricing. Consultants should use this book and elevate service offerings to become deeply trusted advisors who bill on their value and not on their time.

Vito Colombo, Principal, Trügli Consulting, Middle Village NY

Carl Sheeler's work is a fine contribution to the field of applied and practical economics, which at a certain basic level is to understand human behavior. It succeeds because he simply makes sense. This is no easy task, and it is no minor contribution. Sheeler's work is important to advisors and clients alike, as it reminds us to focus on adding value and managing risk in pursuit of excellence by focusing on the relationships and practices that increase the probability of desired and desirable outcomes. This is a book worth keeping off the shelf and on the nearby table to use as a practical guide and reminder of sustained best practices.

Richard Levine, Esq. and Adjunct Prof., Colorado School of Mines, Law and Economics, Evergreen CO

Most business owners believe their value comes from what appears on their financial statements – sales, gross profit, EBITDA or net income. However, all acquirers buy the future, not the past, and the future is always driven by intangibles. In Equity Value Enhancement, Carl Sheeler creates a compelling argument for why and how business owners should use A-level advisors to identify and leverage their intangibles to maximize the value of their time, effort and investment.

Timothy G. Malott, Partner, Shoreline Partners, LLC, President/CEO, ShP Securities, LLC

Equity Value Enhancement is a must for any business school, private equity firm or investment banking firm worth its salt. Carl takes an esoteric subject, equity valuation, and makes it come alive, in all its facets–well beyond ‘the transaction’, and carves a path for those who would endeavor to become better at being strategic value architects. His lessons on understanding the differences between value, price, worth and risk are intellectually thought-provoking, motivating, engaging, full of wisdom and fact-based. Frankly, I wish I'd had his book in hand three years ago. An excellent and well-organized read that you'll take to the bank

Lara Abrams, Managing Member, Lara Abrams Communications, LLC

Exceptional! I wish I had this information when setting up our generational investing plans. What Carl addresses goes beyond practical advice to encompass contrarian viewpoints that every advisor and family member should consider. Attention to focusing on the cost-benefit analysis of the provider-client relationship as a key metric is a valuable consideration too often ignored by those who select a provider based simply on a friend's recommendation. Reading this brought me to the realization that the way to analyze provider-client relationship is not simply by what is offered, but by the value of the provider as a knowledge base on how to preserve and grow equity, from someone with skin in the game, from the very beginning of the provider selection process throughout the length of the relationship.

Bill Townsend, Founder, Best Selling Author, Interminds, Pasadena CA

Over an almost 40 year career I have been an investment banker, an advisor to private equity firm management teams, a company director and an owner of small businesses. Mr. Sheeler's book expertly describes the way to optimize the effectiveness of professionals in each of these rolls (and several more!). I wish I could have read it 40 years ago. I could have avoided lots of on-the-job learning!

Kevin K. Albert, Managing Director, Pantheon Ventures, New York NY

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Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Names: Sheeler, Carl L., 1960–

Title: Equity value enhancement : a tool to leverage human and financial

capital while managing risk / Carl L. Sheeler.

Description: New York : Wiley, 2015. | Series: Wiley finance | Includes index.

Identifiers: LCCN 2015035909| ISBN 9781118871003 (hardback) | ISBN

9781119092025 (ePDF) | ISBN 9781119091981 (ePub)

Subjects: LCSH: Human capital—Management. | Capital market. | Value

investing. | Risk management.

Classification: LCC HD4904.7 .S4384 2015 | DDC 658.15/5—dc23 LC record available at http://lccn.loc.gov/2015035909

Cover Design: Wiley

Cover Images: Black and White Marbles © iStock.com/stayorgo; Financial Chart © iStock.com/dblight

There are six heart-felt dedications: to my family, my extended military family, business owners/executives, trusted advisors, my team, and my editor.

My family: My precious wife, Sara, is the right-brain Shaman who keeps my left brain centered. She's an artist and a blessing. We're not Ozzie & Harriet. We both have been remarried and have five kids between us. There's that love–hate continuum that undoubtedly is exacerbated by work–life imbalance. They mean the world to us both.

My extended military family: Both Sara and I served in the USMC and will always have a special kinship to those who have served and their families. A good portion of the net proceeds of this book will ensure that their sacrifice and they are not forgotten.

Business owners/executives: The business media and our elected officials often give little notice to these unsung heroes. They may not be Fortune 500 companies, but they brave the odds and are the backbone of the U.S. economy by mastering the management of concentrated risk. Every advantage should be afforded to these companies and their success. This book is for you. You understand values are more than numbers.

Trusted advisors: Business owners, heed my praise and admonition. These are top-flight folks whose knowledge and relationships far exceed what they're paid. There are concierge advisors who don't define themselves by their professional titles. Instead they leverage their knowledge and relationships to the advantage of their business clients and fellow advisors with whom they collaborate. They are connectors. They invest the time and resources to develop deep relationships, not solely more transactions. This is why I see myself as a steward, a chief-of-staff, and a “strategic value architect.” Trusted advisors who embrace the “it takes a village” notion of collaboration, I dedicate this book to you.

Kelly, Rafiq and Boxy: I would not know which day it is, when and who to call, and where to go without your steady reminders. You are my magic ecosystem that frees up invaluable time and the best human capital I have had the privilege of knowing. May abundance befall you and yours. God bless.

Adrienne Moch: I've been at this for three decades and I am not always able to string the right words to my thoughts to ensure the best balance of communication and intent. If you love purple and Chicago and somebody who edits like no tomorrow, contact Adrienne.

It is not the critic that counts; not the man who points out how a strong man stumbles, or when the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at best knows in the end the triumph of his achievement, and who at the worst, if he fails, at least fails while daring bravely, so that his place shall never be with those cold and timid souls who neither know victory or defeat.

—Theodore Roosevelt

On April 23, 1910, Theodore Roosevelt, the 26th President of the United States of America, gave this compelling speech in Paris, France. Its wisdom is as applicable today as then.

Foreword

I have known Carl for 20+ years from the first time he walked me not only to the door of his office, but to the elevator to the lobby and out to my car. I knew this was somebody with whom I would do business. He walks the talk. We've been referring top clients and advisors back and forth ever since.

Philosopher and Nobel Prize winner Albert Camus stated, “Real generosity towards the future lies in giving all to the present.” Never before have words jumped off pages of a valuation and equity value creation book and impacted me the way Carl's book has. I'm not surprised. Valuation usually presents itself as an academic exercise, but it is in fact a tool that can change people's lives, and it's about time somebody said so.

The greatest risk of any wealthy individual's life is that they never achieve some significant measure of fulfillment while on this planet—as Carl references from “success to significance.”

While success for a few might be defined as the amount of money or assets they accumulate during their lifetime, for most it is the less calculable metrics of having the time to do good in their communities. It is the way posterity will remember their family's name or legacy. Carl's book bridges this gap from this holistic “ecosystem” perspective to that of the families' “constituents”—most often thought of as their advisors and clients but, as he illustrates, much, much more.

The greatest risk for any professional advisor (I am referring to accountants, attorneys, bankers, and financial advisors), assuming they serve wealthy entrepreneurial individuals, families, and Family Offices, is that they will only contribute to wealth preservation by offering common product and services. They will seldom make any measurable contribution to the more hard-to-measure attributes for their wealthy clients (and for that matter, for themselves). Carl's book offers an alternative narrative where all achieve an aligned vision and share in the success.

I am a certified public accountant and my business office is physically located within a multi-family office. Here, we primarily serve two ultra-wealthy families, originating from two brothers and their spouses. They had 6 children who in turn have had 19 children, making us a third-generation family.

While I am a CPA, I do not prepare income tax returns or financial statements, which are the two services most typically associated with being a CPA. I do indeed review income tax returns prepared by other CPAs on our families' behalf, and sometimes also work in other technical areas, such as income tax controversy representation and estate and gift tax planning and reviewing legal documents.

For the most part, I assist my families with matters that might be described as nontechnical, which are typically not associated with being a CPA. I have been serving these families for almost 25 years. I call what I do “family governance.”

But as Carl points out, I leverage my knowledge and relationships. This translates into differentiation and a higher level of services, superior clients, and more revenue.

I have known Carl on a professional and personal basis. His grasp of families' governance issues—a charter, its strategy and execution, as well as its value measurement and management—is rarely matched. Family governance means I am available to Family Office employees and owners and members (patriarch, CEO, CFO, etc.), to family members who are not actively participating in the Family Office's operations, and to all of the professional advisors that serve the Family Office and all of its individual stakeholders.

Carl's and my main focus is to remain central to (consigliere) all of these associated relationships, so that an open and transparent platform exists. Our main goals here are:

Make sure that all of the work that we do is consistent with the families' value and mission statements and culture.
Provide all stakeholders (constituents) an easy-to-access resource to ask questions and discuss ideas. Help them find and leverage resources they want and, in essence, help in any way we can.
Save the valuable time of key personnel in the Family Office or family business who do not want to ask 10 different professional advisors the same question.
Look at all of the risks associated with the business decisions we make, with an “outside view” so that we do not have bad surprises.

Also, and not solely associated with my own Family Office services, we counsel CPAs, attorneys, bankers, insurers, and wealth advisors. My focus for wealth advisors is to help them to make the CPAs they interact with heroes to the CPAs' very best clients. This is a different business model than what most wealth advisors use: Most try to reach end-users (aka customers or clients) directly and not through CPAs.

And for CPAs and attorneys, we assist them in becoming the Most Trusted Business Advisor to their very best business and real estate owning clients. This, too, is a different business model than that used by most. Like many advisors, they have a lot of clients, most of which are not of an “A” variety but rather are of “B” and “C” variety, and they focus on doing large volumes of compliance/regulatory work. This is a model for mediocrity.

Carl led a countywide initiative during and after the financial crisis called Strategic Trusted Advisors Roundtable (STAR). STAR addressed these professional deficiencies that culminated in a higher level of connecting of professionals in order that they might provide a more integrated, holistic, and economically more efficient and effective model of doing good for business clients and fellow professionals.

It also succeeded in enhancing the depth and breadth of each member's service offerings, resulting in higher billings and client caliber. It focuses on deeper relationships versus solely technical knowledge and transactions. I remain a board member and cross the bridge to bring broader perspectives than those limited to business alone.

When I present in public, which I do frequently, many CPAs, attorneys, and wealth advisors tell me that they would like to work with Family Offices. I like to point out, in response, that Family Offices exist, at least in part, because the traditional service models used by CPAs, attorneys, and wealth advisors rarely offer enough value to wealthy families and individuals. Thus, as Carl knows, inadequate value is one reason wealthy families create their own Family Office by taking these functions in-house.

Carl Sheeler is this country's most forward-looking valuation and strategic advisory expert. I dubbed him a “strategic value architect”—a fitting moniker. He gives us a choice: “Do good work for your clients, by only focusing on what they want; or, make a significant contribution to improving your clients' lives by helping them with what they truly need. The choice is ours.” Until then, and after, it is all GRRK™ to me!

Richard Muscio, CPA, is The Family Office Guy. He is best-selling author of So, What's Your Play? How Billie Jean, Bobby and Blindness Begat Tolerance. Richard is a co-host of the “It's Your Money and Your Life” radio show, voted Best Radio Series in San Diego by the San Diego Press Club for 2013 and 2014.