NEWSLETTER of April 23, 2021

The following content has been added at finexpert:

Morgan Stanley | Oliver Wyman
STRIVING TO SUSTAIN RETURNS: WIE WHOLESALE BANKEN HÖHERE RENDITEN ERZIELEN KÖNNEN
This year's report shows that 2020 returns above 12 percent are sustainable but have not yet been priced in by investors. Wholesale banking receives a lower multiple from investors (12x) compared to non-bank financial institutions in the payment system (48x) or in the capital markets (29x). Our report outlines measures to close the gap. >more

Rockefeller Asset Management
ESG AND FINANCIAL PERFORMANCE: UNCOVERING THE RELATIONSHIP BY AGGREGATING EVIDENCE FROM 1,000 PLUS STUDIES PUBLISHED BETWEEN 2015 – 2020
Meta-studies examining the relationship between ESG and financial performance have a decades-long history. Almost all the articles they cover, however, were written before 2015. Those analyses found positive correlations between ESG performance and operational efficiencies, stock performance and lower cost of capital. Five years later, we have seen an exponential growth in ESG and impact investing – due in large part to increasing evidence that business strategy focused on material ESG issues is synonymous with high quality management teams and improved returns. >more

Bain & Company
M&A: DIE UNTERSCHÄTZTE KERNKOMPETENZ IM AUTOMOBILGESCHÄFT
The volume of strategic M&A deals in the automotive industry has more than doubled within five years as the profound change in the industry requires new strategic approaches. With M&A transactions and partnerships, suppliers can secure a leading position in a market in which high-tech and software are playing an increasingly important role. >more

Deloitte
GLOBAL CHEMICAL INDUSTRY MERGERS AND ACQUISITIONS OUTLOOK 2021
While the chemicals industry is experienced in navigating headwinds, the global pandemic brought with it some unique challenges that caused many chemicals companies to focus inward, putting M&A transactions on pause. Despite the pause in M&A caused by COVID-19, 2020 still finished with solid M&A activity in the industry, with over 500 transactions, 8 of which were in excess of $1 billion. How are chemical executives re-prioritizing in the face of this global pandemic heading into 2021? >more

CORPORATE FLEXIBILITY IN A TIME OF CRISIS
John W. Barry, Murillo Campello, John R. Graham, and Yueran Ma
2021
We use timely surveys of US CFOs to study how flexibility shapes companies’ responses to the onset of the COVID-19 crisis and drives longer-term changes in the corporate sector. The three dimensions of corporate flexibility that we study perform distinct functions, yet complement each other. We find that workplace flexibility, namely the ability for employees to work remotely, plays a central role in modulating firms’ employment and investment planning during the crisis. Investment flexibility allows firms to increase or decrease capital spending plans based on their business condition during the crisis, which is shaped by workforce flexibility. Finally, financial flexibility contributes to stronger employment and investment plans. We show that the role played by workplace flexibility is new and was absent during the 2008 financial crisis. CFOs expect the workplace transformation of 2020 to have lasting effects for years to come: high workplace flexibility firms foresee continuation of remote work, stronger employment recovery, and shifting away from traditional capital investment, whereas low workplace flexibility firms will rely more on automation to replace labor. >more

DISCOUNT RATE RISK IN PRIVATE EQUITY: EVIDENCE FROM SECONDARY MARKET TRANSACTIONS
Brian H. Boyer, Taylor Nadauld, Keith Vorkink, and Michael S. Weisbach
2021
Standard measures of PE performance based on cash flows overlook discount rate risk. An index constructed from prices paid in secondary market transactions indicates that PE discount rates vary considerably. While the standard alpha for our index is zero, measures of performance based on cash flow data for funds in our index are large and positive. To illustrate that results are not driven by idiosyncrasies of PE secondary markets, we obtain similar results using cash flows and returns of synthetic funds that invest in small cap stocks. Ignoring variation in PE discount rates can lead to a misallocation of capital. >more