Strategic Finance Institute
Finance as a discipline has undergone fundamental changes in recent years. In the past, researchers had focused their activities on extending the basic building blocks of the field, in particular portfolio theory, asset pricing, investment valuation, financial contracting and, more recently, risk management. Finance is however not a stand-alone science. Financial decision-making is heavily influenced by interactions with corporate strategy, the regulatory environment, industrial organization and even psychology. There is a growing need for substantive finance research emphasizing the connections with these related fields of scientific inquiry. In addition, while most finance research meets the criteria of academic rigor, it very often falls short of making valuable contributions to corporate practice.
The Strategic Finance Institute (SFI) has been established in the fall of 2007 to address these research needs. The SFI represents the merger of three formerly independent research institutes at the European Business School (EBS) International University, the Center for Entrepreneurial and Small Business Finance (ESBF), the Center for Mergers & Acquisitions (CMA) and the Institute for Restructuring and Business Portfolio Management (INREBE). The activities of these predecessor organizations will be carried on within SFI by distinct competence centers (CC).
- Strategy-Linked Corporate Finance
- Entrepreneurial and Small Business Finance
- M&A and Restructuring
- Capital Market Performance
While we chose a functional perspective when naming the institute and its competence centers, the majority of our research initiatives deal with financing aspects of privately held companies, in particular family-owned enterprises (FOBs). Even today, academics have only a very limited understanding of what differentiates family-controlled enterprises from publicly traded corporations. On the one hand, the corporate objective of FOBs is more concerned with maintaining family influence and ensuring the long-term survival of the firm than with short-term value maximization. On the other hand, FOBs have to increasingly play by the rules of international financial markets if they want to realize their full financing potential and to utilize all their opportunities for external growth. Thus, while traditional family business research falls short of accounting for newly developing constraints of FOBs, standard finance textbook approaches do not capture the true nature of family-controlled enterprises. The SFI sees its role in providing research insights reflective of the complex interplay between the unique features of privately-held companies and capital markets.
- Research Center M&A and Restructuring Focus
During the 21st century, our global society and economy are having to face entirely new challenges. The rapid technological developments and the accompanying world-wide digital network as well as the opening of new markets in East Europe and in the Far East have led to a necessity for transcontinental and global systems of corporate and competition law. The pressure of global competition and a new management philosophy have caused a fundamental change in the corporate landscape. Both domestically and with respect to cross-border transactions, the sale and acquisition of corporations and parts of corporations, as well as changes in corporate structure and a concentration of companies on their core areas, are designed to safeguard and improve the competitiveness and thus the growth of such enterprises.
Guided by the notion of shareholder value, the capital markets offer rewards to enterprises pursuing strategies of innovation and expansion. For many companies, one consequence of concentrating on the core business is the necessity to close down production facilities or to transfer these to third party associations together with the operational infrastructures and business premises, for example by creating so-called industrial parks, or to acquire core-area related business establishments in place of these facilities. At the same time, cost-saving and flexible structures for production, distribution and organization must be created, in order to optimize the customer-oriented capacity for innovation, quality of performance and efficiency, within the framework set by global corporate strategies. Taken as a whole, this change requires a high degree of corporate flexibility and compels companies to adopt a long term policy of being prepared to take on new transactions and restructuring measures.
The number of international and cross-border mergers and acquisitions reaches new tremendous records from year to year. On a world-wide scale, the volume of cross-border transactions in 2007 is bound to increase substantially.
The CC M&A and Restructuring is directed by Gerhard Picot. He is one of the leading German lawyers specializing in M&A and restructuring and, next to his business-related publications, is particularly well known for his German law handbooks on the subject.
Picot’s handbooks include (1) The Corporation in M&A and Restructuring (2003), (2) Company Acquisitions and Restructuring (2004), (3) Company Crisis and Insolvency (1999), (4) Handbook on German labor law in M&A and Restructuring (2001).
Our Strategic Partner
- Deutsche Bank AG (Advisory / M&A), Frankfurt am Main Germany
Global Banking provides strategic advice over the full range of advisory services. Deutsche Bank has a global advisory platform with a strong presence in the US, Europe and Asia Pacific enabling us to complete innovative cross-border and regional transactions. With special emphasis on the ability to initiate, finance and successfully complete complex transactions across product classes, our advisory teams provide innovative solutions for our clients based on advice by industry and product specialists.