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<p>Introduction xv</p> <p><b>Part I: Strategy</b></p> <p><b>Chapter 1: Articulating a Strategic Plan 3</b></p> <p>Business Objectives 4</p> <p>Strategic Themes 5</p> <p>Long-Term Financial Model 7</p> <p>Total Shareholder Return 10</p> <p>Capital Allocation Strategies 14</p> <p>Acquisition Strategies 15</p> <p>Target Shareholders 17</p> <p>Elevator Pitch 20</p> <p>Plan Revisions 21</p> <p><b>Chapter 2: Communicating and Achieving Alignment 23</b></p> <p>Consistency and Transparency 24</p> <p>Incentive Compensation Programs 25</p> <p>Investor Alignment 28</p> <p>Analyst Relations 29</p> <p>Investor Presentations 31</p> <p>Company Website 35</p> <p>Social Media 36</p> <p>Media Relations 37</p> <p>Potential Media Pitfalls 38</p> <p>Coordinating Communications 39</p> <p>Interview Formats 39</p> <p>Media Training 40</p> <p>Note 42</p> <p><b>Chapter 3: Assessing Enterprise Risks 43</b></p> <p>Enterprise Risk Management 43</p> <p>Implementation of ERM 44</p> <p>Risk Identification 45</p> <p>Risk Quantification 46</p> <p>Major Exposures 47</p> <p>Mitigation Strategies 50</p> <p>Rewarded versus Unrewarded Risks 51</p> <p>Governance of ERM 52</p> <p>CFO’s Role in ERM 54</p> <p><b>Part II: Capital Allocations</b></p> <p><b>Chapter 4: Estimating the Cost of Capital 59</b></p> <p>WACC Formula 59</p> <p>Hurdle Rates 63</p> <p>Risk Premiums 63</p> <p>Acquisition Cost of Capital 65</p> <p><b>Chapter 5: Prioritizing Capital Investments 67</b></p> <p>Cash Flow Projections 67</p> <p>Investment Budget 68</p> <p>Evaluating Projects 71</p> <p>Categorizing Projects 74</p> <p>Monitoring Projects 75</p> <p>Pension Fund Contributions 77</p> <p><b>Chapter 6: Considering Dividends and Repurchases 79</b></p> <p>Dividend Policy Alternatives 80</p> <p>Dividend Policy Considerations 82</p> <p>Special Dividends 85</p> <p>Dividend Declarations 85</p> <p>Repurchase Considerations 86</p> <p>Open Market Programs 90</p> <p>Tender Offers 92</p> <p>Retaining Strategic Cash 92</p> <p>Cash Investment Policies 95</p> <p><b>Part III: Mergers and Acquisitions</b></p> <p><b>Chapter 7: Identifying Acquisition Candidates 99</b></p> <p>Rationale for Acquisitions 99</p> <p>Adjacent Spaces 100</p> <p>Portfolio Approach 101</p> <p>Business Sponsor 101</p> <p>Patience and Flexibility 102</p> <p>Strategic Purpose 102</p> <p>Types of Acquisitions 103</p> <p>Note 107</p> <p><b>Chapter 8: Evaluating Acquisition Candidates 109</b></p> <p>Valuation Methodologies 109</p> <p>Standalone and Synergy Values 112</p> <p>Pro Forma Analyses 113</p> <p>Acquirer’s Stock Valuation 116</p> <p>Risk Considerations 116</p> <p><b>Chapter 9: Executing a Merger or Acquisition 119</b></p> <p>Due Diligence 119</p> <p>Business Plan 123</p> <p>Financial Projections 124</p> <p>Financing Plan 126</p> <p>Price Negotiations 128</p> <p>Contract Terms 129</p> <p>Acquisition Integration 132</p> <p>Note 134</p> <p><b>Chapter 10: Executing Divestitures and Spinoffs 135</b></p> <p>Divestiture Evaluations 135</p> <p>Hiring Investment Bankers 136</p> <p>Auction or Negotiated 137</p> <p>Stock or Assets 139</p> <p>Financing Conditions 139</p> <p>Management Participation 140</p> <p>Tax-Free Spinoffs 141</p> <p>Split-Ups 142</p> <p>Equity Carve-Outs 143</p> <p><b>Chapter 11: Responding to Takeover Offers 145</b></p> <p>Governance Policies 145</p> <p>Reviewing an Offer 146</p> <p>Conducting a Sale Process 148</p> <p>Activist Shareholders 149</p> <p>Going Private Transactions 149</p> <p><b>Part IV: Funding</b></p> <p><b>Chapter 12: Establishing Capital Structure Objectives 153</b></p> <p>Leverage Targets 153</p> <p>Leverage Criteria 155</p> <p>Rating Agencies 157</p> <p>Ratings Categories 158</p> <p>Rating Agency Dialogues 160</p> <p>Ratings Criteria 161</p> <p>Informing Investors 162</p> <p>Note 163</p> <p><b>Chapter 13: Developing Financing Strategies 165</b></p> <p>Financing Principles 165</p> <p>Debt Financing 167</p> <p>Equity Financing 171</p> <p>Off Balance Sheet Financing 174</p> <p>Debt Covenants 177</p> <p>Debt Refinancings 179</p> <p>Debt for Equity Swaps 180</p> <p>Bankruptcy 182</p> <p><b>Chapter 14: Ensuring Short-Term Liquidity 185</b></p> <p>Bank Lines 185</p> <p>Cash Planning 187</p> <p>Contingency Planning 187</p> <p>Liquidity Ratios 189</p> <p>Working Capital Strategies 189</p> <p>Trapped Cash 191</p> <p><b>Chapter 15: Obtaining Long-Term Financing 193</b></p> <p>Venture Capital 193</p> <p>Private Equity 194</p> <p>Initial Public Offering 195</p> <p>Subsequent Equity Offerings 198</p> <p>Term Loans 200</p> <p>Syndicated Bank Loans 200</p> <p>Investment Grade Securities 200</p> <p>High Yield Securities 201</p> <p>Strategic Alliances 202</p> <p>Note 203</p> <p><b>Part V: Performance</b></p> <p><b>Chapter 16: Driving Business Performance 207</b></p> <p>Organic Revenue Growth 207</p> <p>Cost Reduction Strategies 211</p> <p>Fixed versus Variable Costs 219</p> <p>Note 219</p> <p><b>Chapter 17: Providing Planning and Analysis 221</b></p> <p>Budgets 221</p> <p>Forecasts 225</p> <p>Cash Flows 226</p> <p>Performance Metrics 228</p> <p>Business Unit Metrics 231</p> <p>Performance Reports 232</p> <p>Business Analysis 233</p> <p><b>Chapter 18: Managing Financial Risks and Taxes 235</b></p> <p>Insurance 235</p> <p>Interest Rates 238</p> <p>Currencies 239</p> <p>Commodities 241</p> <p>Inflation 242</p> <p>Pension Fund 243</p> <p>Tax Planning 244</p> <p><b>Part VI: Accounting and Controls</b></p> <p><b>Chapter 19: Establishing Accounting Processes 251</b></p> <p>Financial Reporting 251</p> <p>SEC Filings 255</p> <p>External Auditors 259</p> <p>Audit Committee 259</p> <p>Note 260</p> <p><b>Chapter 20: Communicating Financial Results 261</b></p> <p>Earnings Call 261</p> <p>Non-GAAP Measures 266</p> <p>Earnings Guidance 267</p> <p>Note 271</p> <p><b>Chapter 21: Implementing Sarbanes-Oxley 273</b></p> <p>Overview of Provisions 273</p> <p>Auditor Independence 274</p> <p>Certification of Financials 275</p> <p>Assessment of Internal Controls 276</p> <p><b>Chapter 22: Reinforcing Compliance and Controls 281</b></p> <p>Control Environment 282</p> <p>Auditor and Board Support 283</p> <p>Foreign Corrupt Practices Act 285</p> <p>Fraud Prevention 287</p> <p>Whistleblowers 287</p> <p>Cost of Compliance 288</p> <p>Note 289</p> <p><b>Part VII: Leadership</b></p> <p><b>Chapter 23: Achieving Finance Transformation 293</b></p> <p>Organizational Structure 293</p> <p>Technology Systems 298</p> <p>Process Reengineering 301</p> <p>Outsourcing Advantages 303</p> <p>Outsourcing Implementation 305</p> <p>Analysis versus Data 308</p> <p><b>Chapter 24: Developing Financial Talent 311</b></p> <p>Recruitment Strategies 312</p> <p>Development Objectives 316</p> <p>Development Tools 320</p> <p>Diversity 325</p> <p>Future Requirements 325</p> <p>Note 326</p> <p>About the Author 327</p> <p>Acknowledgments 329</p> <p>Index 331</p>

<p><b>BRUCE NOLOP</b> retired in 2011 after a 35-year career as an investment banker and corporate executive, including more than a decade as chief financial officer of Pitney Bowes and E*TRADE Financial. He has been a board member of Marsh & McLennan since January 2008 and currently serves on the audit, compliance and risk, finance, and corporate responsibility committees.

<p><b><i>Praise for</i> THE ESSENTIAL CFO<br/> A Corporate Finance Playbook</b> <p>"<i>The Essential CFO</i> is essential reading for any CFO, new or long-tenured. It is a thorough, clear, and sophisticated road map, more needed in these complex times than ever."<br/> <b>—Peter A. Weinberg,</b> founding Partner, Perella Weinberg Partners, former CEO of Goldman Sachs International <p>"<i>The Essential CFO</i> provides a practical toolkit for the modern finance executive. Having served both public and private companies, I know this book will be an invaluable resource for finance professionals in all organizations."<br/> <b>—Oren Klein,</b> VP Finance, Advance Publications, Inc. <p>"A must-read for every new CFO or aspiring financial leader. This playbook is filled with practical insights to help you perform efficiently and effectively."<br/> <b>—Jeff Hall,</b> Executive Vice President and Chief Financial Officer, Express Scripts, Inc. <p>"Insightfully captures demands on today???s global CFO."<br/> <b>—E. Peter McLean,</b> Chairman, Global Financial Officer Practice, Korn/Ferry International

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