McKinsey on Corporate Finance

In today’s competitive markets, corporate finance is moving beyond simply accounting for and preserving value. Its remit – and that of the CFO – now extends further and deeper into companies than ever before. This extended scope makes finance exciting and stimulating, but also presents fresh challenges. Value creation is now the goal.

McKinsey & Company is the pre-eminent, independent advisor on finance and value creation due to the unique integration of our industry and corporate finance insight, global presence, proprietary knowledge and tools, and our impact-oriented consultants.

Companies talk to our Corporate Finance practice about three broad situations: defining a capital markets strategy, doing a deal, and driving finance to maximize value creation.

Defining a capital markets strategy

Too many companies feel undervalued by the markets; but given the enormous influence the markets wield over both public and private companies, it is crucial to understand how to bridge this gap. In our experience, companies will maximize value creation if they align their corporate strategy with the capital markets’ perception of where the value lies, communicate that strategic intent to the market, and craft a compelling story that appeals to investors.

Doing a deal

Any company embarking on a deal that will alter its business portfolio – be it an acquisition, a merger, an alliance, or a divestiture – must ensure that it is consistent with corporate strategy and will ultimately create value. Unfortunately, the complexity of transactions can trip up even the most experienced of CEOs and CFOs. The opportunities to destroy value are manifold: from choosing the wrong acquisition in the first place, to getting mired in lengthy negotiations, to failing to gain consensus among stakeholders about how the deal fits with the corporate strategy.

Companies must correctly value the target, estimate synergies, and determine, communicate and gain consensus on the strategic fit before going any further. Smooth negotiations are critical, and then the groundwork needs to be laid as soon as possible so that the maximum value can be extracted from the deal – keeping all stakeholders on board.

Driving finance to maximize value creation

Creating value across the company will not happen if efforts are sporadic and disjointed. CFOs have a crucial role to play in aligning all stakeholders with the corporate strategy so that everyone sees value creation through the same lens. The CFO should be at the vanguard of value-creation efforts company-wide, and can use the finance function as a testing ground for new ideas and to set best practice.

From our extensive experience across industries and geographies, we have gained insights on how companies create and manage value, and we use this unique combination of strategic, financial, and geographical expertise in helping clients achieve their goals.

More information

 McKinsey on Corporate Finance (Brochure, 2,340 kb)

» McKinsey on Finance (Periodical offering insights from McKinsey's research)