10. Corporate Financial Strategy

In this chapter, we will explain how management can include the investor and capital market perspective in its financial strategy. The firm’s financial strategy is the final building block of our corporate strategy framework (Chap. 1). It has three key elements: first, a clear and convincing investment thesis for existing and potential shareholders that explains how the company’s corporate strategy is going to create value; second, a consistent financial policy that defines the company’s target leverage ratio, debt structure, cash reserves, and dividend policy and supports its corporate strategy and the envisioned transformation pathway; and third, an overall investor strategy that defines the company’s target investor structure and its approach for managing relations with investors. We will cover the three elements in turn.