Deciding what businesses to be in is clearly one of the most important decisions executives make. To
Question:
Deciding what businesses to be in is clearly one of the most important decisions executives make. To a large extent, the businesses a company is in determine its destiny.
Different owners and managers might be able to extract more/less value from the same business. So, in addition to picking attractive businesses, a guiding principle for portfolio decisions is that the owner able to generate the greatest cash flows from a business is the owner that will create the most value.
Questions:
• Should a company operate a diversified portfolio of businesses? What are the arguments for and against?
• Explain why the value of a business may differ under different owners?
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow