Capital AllocationCapital MarketsCash & Working Capital
November 17, 2020

Game Plan: Opportunistic Buybacks on the Open Market vs ASRs

Meeting sponsor SocGen sees corporates growing comfortable with flexible, open market buybacks amid recovery.During the global pandemic, many corporates have slammed the breaks on share repurchase programs to save cash and avoid criticism from politicians as Americans lost jobs and some companies sought government bailouts. At a recent NeuGroup meeting of treasurers at life sciences companies, Societe Generale’s David Getzler, head of equity capital markets for the Americas, forecast an increase in share buybacks in 2021 as the economy recovers and…
BankingCapital Allocation
October 29, 2020

Time for Bonds: A Growth Company Learns the Ropes of Issuing Debt

A debut bond offering reveals the benefits of preparation in working with rating agencies, banks and the C-Suite.Eight years after going public, one NeuGroup member company planned to refinance equity-linked capital with straight debt—in the middle of the pandemic. It successfully completed the issuance, and at a recent NeuGroup meeting the company’s treasurer described a process that was challenging at times but ultimately proved rewarding. Along the way, the treasury team—which had never issued straight bonds—learned valuable lessons, including the need…
Capital AllocationCash & Working Capital
October 13, 2020

The Cup Runneth Over: Corporates Awash in Cash Mull Options

Treasurers discuss concerns about companies rushing to deploy cash too quickly.When uncertainty abounded at the start of the pandemic, companies drew down revolvers, issued debt, cut capital expenditures (capex), halted share repurchases—whatever it took to conserve cash for the troubling times ahead.  A few months later, after massive government stimulus and a recovering economy, many are awash in cash and trying to figure out what to do with it—or not do with it.At a recent NeuGroup meeting for large-cap companies,…
Capital AllocationCapital MarketsCOVID-19
April 30, 2020

COVID-19 Puts Buyback Programs on Hold—but Not for Everybody

Some companies are keeping share repurchases programs going while many others suspend them.“We are continuing to buy back stock,” said the treasurer of a cash-rich technology company in mid-March, speaking to peers during a virtual NeuGroup meeting of mega-cap businesses. “We haven’t pulled share repurchases either,” said the treasurer of a large health care company with a very healthy balance sheet and strong cash flow. Later that day, a third treasurer told the group that investor Bill Ackman was feeding…
Capital AllocationCash & Working Capital
February 27, 2020

A Look Back at Our Enterprise Reconciliation Insight

Founder’s Edition, by Joseph Neu A 20-year-old best practice guide says a lot about the state of working capital management today. There seems to be a lot of renewed interest in working capital management lately, with a focus on automating processes, capturing data and deploying technology. The goal: to improve analysis and predictability of the quote-to-cash, order-to-delivery and purchase-to-pay cycles. This stands to vastly improve working capital management, but especially cash and liquidity management. I kept thinking, all of this…
Capital AllocationCapital Markets
January 28, 2020

Share Repurchases: Don’t Wait for the Sell-off

The case for spending all (or almost all) the cash allocated to buybacks right away. Monday’s stock market sell-off provides an opportunity to revist an insight on stock buybacks from a NeuGroup meeting last spring: A risk management expert at Deutsche Bank argued that waiting for dips is not the most effective way to repurchase shares. That’s worth considering given that many companies only buy back their stock when the price dips below what they consider its intrinsic value. Danger…
Capital AllocationInsights NewsletterInvestment Management
January 21, 2020

What Would an AI-Driven Capital Allocation Look Like?

Founder’s Edition, by Joseph Neu Perennial discussions of capital allocation tend to end up in essentially the same place.My friend Tom Joyce at Deutsche Bank circulated the chart below last week in his “Chart of the Day” email. This one caught my eye because it shows how corporate uses of capital, at least at the S&P 500-company level, are pretty consistent year to year. M&A and Buybacks. Tom calls out the changes: “During the current M&A upcycle, which began in late…
Capital AllocationCapital MarketsCash & Working Capital
January 9, 2020

The Art—Not Science—of Matching Capital Allocation to the Situation

Treasurers discuss balancing the need for liquidity with keeping cash levels moderate as business ebbs and flows. Decisions about capital allocation help treasury pave the way for the road ahead and may take on added importance for businesses generating lots of cash—as well as for those whose growth is downshifting. Treasurers at a recent NeuGroup meeting of life sciences companies shared approaches to the challenges of allocating capital during a variety of scenarios and situations. Optimal capital allocation amid uncertainty.…
BankingCapital AllocationCapital MarketsRegionalTreasury Management
January 23, 2019

The Five Cash Management Initiatives Treasurers Should Consider

When it comes to cash management, treasurers must keep their focus on ways to make it more efficient and cost effective. Editor’s note: This article was originally posted on iTreasurer.com on October 09, 2014. The year 2014 has been one focused on efficiency and innovation as treasurers consider outside-the-box strategies for unlocking working capital and improving the tactical aspects of treasury. Major initiatives including SEPA and the internationalization of the renminbi (RMB) have proven to be catalysts for greater global…