What Drives Enterprise Value?
In a survey of institutional investors, conducted by the Strategic Communications segment of FTI Consulting, investors identified the following variables to have a ‘material impact’ on a company’s enterprise value (i.e., valuation):
- Engaged leadership and committed workforce: 70 percent of investors cited the active engagement of a CEO and his or her management team as driving employee buy-in of the company’s future direction and shaping its culture which will have a material impact on the company’s enterprise value.
- Market and reputational leadership: 81 percent Emphasized a company’s reputation, or that of its products or services, to have a material impact on a company’s enterprise value.
- Enhanced license to operate: 56 percent said that a company’s ability to conduct business with minimal opposition from government or activists to have a material impact on its enterprise value.
- Optimal valuation: 72 percent agreed that a company’s ability to communicate effectively with financial publics—including investors, analysts and the news media—has an impact on its valuation.