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Article
Publication date: 2 April 2019

Joseph Calandro Jr.

This paper discusses the concept of hidden assets in the context of Disney’s 2009 acquisition of the Marvel Entertainment Group (Marvel), and its value realization…

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1263

Abstract

Purpose

This paper discusses the concept of hidden assets in the context of Disney’s 2009 acquisition of the Marvel Entertainment Group (Marvel), and its value realization activities post-acquisition.

Design/methodology/approach

The paper presents a hidden assets-based value realization analysis of the 2009 acquisition of Marvel by Disney. It draws on a previously published case study of that acquisition as well as further research conducted by the author.

Findings

The Disney-Marvel acquisition supports the view that hidden assets-based analysis can be a powerful M&A tool and an equally powerful value realization tool when managed strategically over time.

Practical implications

The Disney acquisition of Marvel is a dramatic example of how knowledge of hidden assets can be used to do a deal in a competitive marketplace and how the disciplined management of those assets over time can realize a “blue ocean” of value post-acquisition.

Originality/value

This is the first paper we are aware that evaluates the hidden assets of the Disney-Marvel acquisition. It follows another paper that evaluated the acquisition (Joseph Calandro, Jr., “Disney’s Marvel Acquisition: A Strategic Financial Analysis,” Strategy & Leadership, Vol. 38, No. 2 (2010), pp. 42-51), which followed a paper that evaluated Marvel’s 1996 bankruptcy filing (Joseph Calandro, Jr., “Distressed M&A and Corporate Strategy: Lessons from Marvel Entertainment Group’s Bankruptcy,” Strategy & Leadership, Vol. 37, No. 4 (2009), pp. 23-32).

Details

Strategy & Leadership, vol. 47 no. 3
Type: Research Article
ISSN: 1087-8572

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Article
Publication date: 18 November 2019

Joseph Calandro and Vivek Paharia

The books, The Innovator’s Dilemma and Fooled by Randomness were best-sellers, and both books’ authors rightly have legions of followers. Nevertheless, the dynamics each…

Abstract

Purpose

The books, The Innovator’s Dilemma and Fooled by Randomness were best-sellers, and both books’ authors rightly have legions of followers. Nevertheless, the dynamics each author analyzed so well continue to plague many executives. Why? Is there some way to close the analytical loop between these two extremes? Put another way, is there a practical method of being productive and profitable in “normal” environments while at the same time working to capitalize on the impact of volatile disruption? This paper presents a practical approach for doing so that builds on prior research.

Design/methodology/approach

This paper differentiates between the normal, linear environment of “business as usual” (BaU) and the volatile, nonlinear environments of disruption to both upside and the downside. It then profiles how to navigate each environment, illustrated by way of examples.

Findings

Our findings, which are supported by historical and contemporary examples, are that leading executives consistently navigate the environments of BaU and disruption due to explicit strategic decisions based on an “information advantage,” which is knowledge that their competitors either do not have or choose to ignore. Such advantages are monetized by efficient operations in BaU and by economically, which is to say strategically, benefiting from disruptive volatility to the upside and/or avoiding it on the downside, over time.

Practical implications

Managerial focus should be directed to potentially disruptive innovations and other kinds of ambiguous threats, which could develop to be strategically significant over time, and these need to be tracked in a meaningful way. To benefit from an information advantage, executives must selectively – that is, strategically – make small investments that could either payoff dynamically or economically mitigate the risk of extreme losses over time.

Originality/value

This paper offers executives a practical explanation why the environments of BaU and disruption must be analyzed and planned for separately by different functions. Doing so facilitates the efficient realization of corporate goals and objectives over time in both normal (linear) and highly volatile (nonlinear) environments.

Details

Strategy & Leadership, vol. 48 no. 1
Type: Research Article
ISSN: 1087-8572

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Abstract

Details

Strategy & Leadership, vol. 49 no. 3
Type: Research Article
ISSN: 1087-8572

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Article
Publication date: 28 May 2020

Joseph Calandro Jr.

The author offers executives a strategic process for proactively mitigating the risk of catastrophic unwanted Black Swan surprises that can severely, and often abruptly…

Abstract

Purpose

The author offers executives a strategic process for proactively mitigating the risk of catastrophic unwanted Black Swan surprises that can severely, and often abruptly, impair a balance sheet.

Design/methodology/approach

One practical way to apply the author’s approach is through hedging concentrated balance sheet exposures when market volatility is low or contracting.

Findings

Though no one can reliably anticipate pandemics and related stock market turbulence, executives do not have to predict the future to economically protect their balance sheets from Black Swan events.

Practical implications

Managers can construct Black Swan scenarios to assess how an unforeseen, disadvantageous future could develop and which risk management derivative would best mitigate it.

Originality/value

This strategic approach to managing balance-sheet-threatening risks could help a firm outperform its competitors during future crises and catastrophes.

Details

Strategy & Leadership, vol. 48 no. 4
Type: Research Article
ISSN: 1087-8572

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Article
Publication date: 1 June 2004

Joseph Calandro and Scott Lane

The property and casualty insurance industry has historically focused on the underwriting ratio as the primary measure of operating performance. Many dramatic changes have…

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1448

Abstract

The property and casualty insurance industry has historically focused on the underwriting ratio as the primary measure of operating performance. Many dramatic changes have occurred in this industry and its operating environment over the past 30 years. These changes have dramatically decreased opportunities for underwriting profits, forcing the industry to rely more on investment returns and careful reinsurance. An alternative performance measurement system, the insurance performance measure (IPM), is presented and illustrated. The IPM integrates these other areas of operating activity into a more comprehensive measure of profitability.

Details

Measuring Business Excellence, vol. 8 no. 2
Type: Research Article
ISSN: 1368-3047

Keywords

Content available
Article
Publication date: 2 October 2007

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302

Abstract

Details

Business Strategy Series, vol. 8 no. 6
Type: Research Article
ISSN: 1751-5637

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Article
Publication date: 18 April 2008

This paper aims to review the latest management developments across the globe and pinpoints practical implications from cutting‐edge research and case studies.

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1305

Abstract

Purpose

This paper aims to review the latest management developments across the globe and pinpoints practical implications from cutting‐edge research and case studies.

Design/methodology/approach

This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.

Findings

Joseph Calandro Jr, Ranganna Dasari and Scott Lane, in their collaborative article “Berkshire Hathaway and GEICO: an M&A case study”, explain in detail the success of one of the world's great entrepreneurs: Warren Buffett. This is a study in a particular methodology of evaluation, the Graham and Dodd (G&D) valuation approach, and how it was applied by Buffett in Berkshire Hathaway's 1995 acquisition of the US insurance giant, GEICO.

Practical implications

Provides strategic insights and practical thinking that have influenced some of the world's leading organizations.

Originality/value

The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy‐to‐digest format.

Details

Strategic Direction, vol. 24 no. 5
Type: Research Article
ISSN: 0258-0543

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Article
Publication date: 9 March 2010

Joseph Calandro

The purpose of this paper is to assess the value and risks of Disney's 2009 $4 billion acquisition of the Marvel Entertainment Group (Marvel) in a case study utilizing the

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8756

Abstract

Purpose

The purpose of this paper is to assess the value and risks of Disney's 2009 $4 billion acquisition of the Marvel Entertainment Group (Marvel) in a case study utilizing the modern Graham and Dodd valuation approach.

Design/methodology/approach

The paper presents a detailed valuation of Marvel in 2009 drawing on previously published Graham and Dodd methodological materials and Marvel's publicly available financial reports.

Findings

Disney's $4 billion acquisition price for Marvel contained considerable risks based on certain valuation assumptions, which were identified in the context of our analysis.

Research limitations/implications

This acquisition is a useful one for executives to study because it involves a situation many of them could face: evaluating the purchase of a great company that is seemingly a strategic fit and offered at what appears to be a reasonable price. Assessing such opportunities utilizing the modern Graham and Dodd valuation approach facilitates greater levels of insight into key assumptions, value drivers, and risks.

Practical and research implications

This is a methodology that has proved useful to successful value investors over time.

Originality/value

Lessons executives in many industries can learn from a Graham and Dodd‐based valuation of the 2009 Disney acquisition of Marvel include: better risk assessment, valuation of entertainment property assets and franchise assessment.

Details

Strategy & Leadership, vol. 38 no. 2
Type: Research Article
ISSN: 1087-8572

Keywords

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Article
Publication date: 11 September 2007

Joseph Calandro

The purpose of this article is to provide commentary on the utility of Altman's Z‐score as a strategic assessment and performance management tool. This possibility is

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5087

Abstract

Purpose

The purpose of this article is to provide commentary on the utility of Altman's Z‐score as a strategic assessment and performance management tool. This possibility is suggested in the recently published book Measuring Organizational Performance – Metrics for Entrepreneurship and Strategic Management Research (Northampton, MA: Edward Elgar, 2006) by Robert B. Carton and Charles W. Hofer.

Design/methodology/approach

This paper is a corporate manager's analysis of the utility of Altman's Z‐score as a strategic assessment and performance management tool based on published research, with suggestions for further research.

Findings

The analysis supports Carton and Hofer's findings with respect to the utility of the Z‐score as a strategic assessment and performance management tool.

Practical implications

While the Z‐score is both popular and widely used in the fields of credit risk analysis, distressed investing, M&A target analysis, and turnaround management it has received relatively little attention as a strategic assessment and performance management tool. The findings of Carton and Hofer's study, in conjunction with the impressive results achieved by GTI Corporation, suggest that applying the Z‐score in strategy and performance management may also be warranted, especially after more research is undertaken.

Originality/value

This article offers a manager's perspective on new research that indicates the potential of a popular financial distress metric to provide insight in the areas of entrepreneurship and strategic management.

Details

Strategy & Leadership, vol. 35 no. 5
Type: Research Article
ISSN: 1087-8572

Keywords

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Article
Publication date: 9 May 2008

Joseph Calandro

This paper introduces the base‐case‐valuation pattern, which is derived from the modern Graham and Dodd valuation methodology, and it demonstrates how that pattern could

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1494

Abstract

Purpose

This paper introduces the base‐case‐valuation pattern, which is derived from the modern Graham and Dodd valuation methodology, and it demonstrates how that pattern could be utilized in M&A by way of a case study.

Design/methodology/approach

The paper presents a case study of the 2004 acquisition of Sears by hedge‐fund manager Eddie Lampert. It draws on previously published Graham and Dodd methodological materials as well as Sears' publicly available financial information. The valuation calculations presented in the case is the sole work of the author.

Findings

The results of the case suggest that base‐case valuation could be practically utilized in M&A. Significantly, it could also be utilized in the formulation of an M&A‐negotiating strategy, shareholder‐communication plan, and performance‐improvement plan.

Research limitations/implications

The paper demonstrates how that acquisition contained a reasonable margin‐of safety, or price discount to estimated value, even though it occurred at a multiple of 1.8x Sears' book value at the time.

Practical implications

This case demonstrates the practical utility of base‐case value in M&A by way of the 2004 Sears acquisition.

Originality/value

This work introduces the base‐case‐valuation pattern, and it is the first work, as far as we are aware, that applies the Graham and Dodd methodology to the Sears acquisition even though Eddie Lampert is a noted Graham and Dodd‐based practitioner.

Details

Strategy & Leadership, vol. 36 no. 3
Type: Research Article
ISSN: 1087-8572

Keywords

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