At a Glance
“Growing and opportunities.”
“Owner leadership, compensation, learning opportunities.”
“The unlimited leave days, the interaction with clients, the ability to work from home.”
“I would like it to be bigger in terms of team members.”
“Like all consulting, workloads.”
“Majorly remote work.”
About Stern Value Management
With a lineage dating back to 1982, Stern Value Management (SVM) is a boutique management consulting firm with a proud history. Under founder Joel Stern, the firm-then known as Stern Stewart & Co.-developed the Economic Value Added® (EVA®) methodology. Following a rebranding in 2013, Stern Value Management retained both Joel Stern's leadership and the EVA trademark. However, the Stern Stewart name lives on: a group of offices, headquartered in Europe, opted to retain the Stern Stewart name and operate as a separate firm following the rebranding. Presently, the two firms are not affiliated.
The EVA specialists…and more
As of 2020, Stern Value Management's capabilities can be broadly grouped into 3 main categories: Performance Management, Capital Allocation, and Governance. Because its major focus is on creating long-term, sustainable shareholder value, the firm's methodologies apply to clients in a broad range of industries. In fact, SVM has served more than 900 clients in both the public and private sectors, including AB Inbev, Petrobras, Best Buy, Briggs & Stratton, Credit Suisse, Coca Cola, Goldman Sachs, Herman Miller, Morgan Stanley, Siemens, Sony, the U.S. Postal Service, Whole Foods, and the Williams Companies.
As the late founder Joel Stern wrote on the firm's site, "if firms maximize value over time, the surplus they will create will be invested elsewhere in society and this will create additional job opportunities and income for people who would not otherwise be able to earn it. My focus is on creating value in order to enhance the general welfare." Research conducted by the firm claims that those that have implemented its Value Based Management system have created more jobs while delivering superior returns to shareholders than a control group.
Finance roots with a generalist approach
SVM has its roots in the revolutionary finance thinking that started at the University of Chicago in the 1950's. Today, the firm emphasizes recruiting generalist problem solvers who also have a foundation in corporate finance. The firm today recruits from top undergraduate and MBA programs, including Columbia University, the University of Chicago, the University of Virginia, and New York University, among other top programs.
It's about value
While the firm may have started with EVA, its list of methodologies and proprietary tools doesn't end there. Stern's commitment to value creation can also be found in tools such as Market Value Added (MVA), Future Growth Value (FGV), Current Operations Value (COV), Wealth Added Index (WAI), and Relative Wealth Added (RWA).
In addition, the firm also conducts industry research and publishes books and whitepapers detailing its research. More regular contributions can be found on the SVM blog.
New brand - extended focus
Over the last few years, the firm has focused on operationalizing long-term value creation, extending its concepts beyond the C-Suite and the Board and into operations and day-to-day decision making. This extended focus is one of the key drivers behind the rebranding according to Erik Stern, the firm's Lead Executive Director.
Global consultancy with a family feeling
With clients around the world but fewer than 100 employees, SVM is a rare breed: a global consulting firm that aims to retain the close-knit, family feeling among employees that is the hallmark of many boutique firms. Accordingly, the firm considers its flat organizational structure to be one of it keys assets, along with a diverse workforce and the opportunity for consultants at all levels of the business to interact with its clients' senior officers.
In the News
Petrobras embraces EVA. November 30, 2020
“The 2021-2025 Strategic Plan summarizes what we want to be: An energy company with a high level of performance, aligned with the commitment to greater value generation…In this plan, we reaffirm our vision of being the best energy company in generating shareholder value, with a focus on oil and gas, with safety and respect for people and the environment.”
The strategic plan focuses on maximizing the return on the capital employed, reducing the firm’s cost of capital and implementing and EVA®- focused compensation system to enhance meritocracy
US vs. Chinese Companies Revenues or Value Creation? November 20, 2020
In the last decade many Chinese companies have entered the list of Fortune 500 companies. The latest list shows that Chinese companies now outnumber US firms. But from a market capitalization and value-creating perspectives, US firms are still ahead. 38.8% of the world’s top five hundred firms by market cap are American versus a much lower 13.2% for China. Furthermore, there are fourteen US firms in the world’s top twenty value creators.
The main reason behind the superiority of American firms in creating shareholder value is the expected rate of return for investors, or the cost of capital. The cost of capital for Chinese firms is higher as investors take into account the higher risk of investing in Chinese equities. Investors ask themselves, why invest in high-risk Chinese companies when US companies prove a safer alternative, especially since one can invest in US companies and still have exposure to China?
David vs. Goliath in Retail. September 30, 2020
In the 1990s, our firm compared the performance of Kmart and Walmart. Kmart was the decades-old staple of American retail, a creator of its industry and a survivor. Walmart was the upstart with a new business model, investing more cash than it generated in new stores across America and in select overseas markets. Our analysis showed that Walmart had thrashed Kmart over a two-decade period, creating much more value—and mountains more wealth for shareholders. The upstart David had beaten the Goliath of Main Street.
In 2020, we revisit the sector. The David of Bentonville has become the tired Goliath, while the new David sits in Seattle: the nimble colossus of Amazon. Just as the last two decades of the twentieth century belonged to Walmart, the first two of the twenty-first century belong to Amazon’s.
Do not let Politics Obstruct Long-Overdue USPS Reform. September 11, 2020
Other postal services around the world have managed to create value for taxpayers. Why can’t USPS follow suit?
The solution to the USPS problem is a management system that rewards employees for creating value, whereby the postal service allocates capital to the areas that will provide the best returns on investment. However, this requires a change in culture, with USPS employees once again taking pride in their duties to American society.
I say “once again” because there is already a blueprint from the 1990s, when USPS was making money. (Yes, it’s possible.) Between 1995 and 1997, the postal service amassed $4.6 billion in profit, in stark contrast to the $9 billion that will be lost in 2020. The secret to the success was innovative, forward-thinking leadership that prioritized value creation, with USPS even creating an incentive system that promoted an ownership mindset among supervisors.
A Tribute to Joel Stern. May 20, 2020
Bennett Stewart, the co‐founder of corporate finance consulting firm Stern Stewart and Co. pays tribute to Joel Stern, the well‐known popularizer of “modern corporate finance” and consultant to hundreds of companies worldwide who died on May 21, 2019. During a 45‐year career that spanned his graduation from the University of Chicago's School of Business in 1964, a 14‐year stint at the Chase Manhattan Bank, and the formation of Stern Stewart (and its successor, Stern Value Management), Stern traveled the world over, always eager to address and make converts among legions of corporate executives, board members, and MBA students. Joel's translation of the Miller‐Modigliani valuation model into a practical framework for evaluating corporate performance gained a following among a generation or two of corporate leaders, leading ultimately to the development of EVA and a practical framework for value‐based financial management.
The Blueprint for Rolling Back Share Buybacks. May 14, 2020
Buying back shares is loathed by the majority of the general public. Americans often view share buybacks as a way of enriching shareholders, while keeping shop-floor employee pay lower than it could be.
It does not help that share buybacks have a direct impact on most CEOs’ pay. One of the most common pay-for-performance metrics is Earnings Per Share. When shares are bought back, EPS goes up, as there are fewer shares outstanding, and a CEO’s pay package increases.
But buying back shares is not inherently a terrible idea — or an “immoral” one, as Buffet put it. It is an important capital allocation decision and a key way of returning funds to shareholders, who provide the firm with much-needed capital to fund their operations.
The immorality lies in tainting the capital allocation decision-making process by making one alternative more attractive to management, regardless of whether it is the one that creates the most value.
3 Columbus Circle
New York, NY 10019
Phone: (212) 261-0600
Employer Type: Private
Founder: Joel Stern
Lead Executive Director: Erik Stern
New York, NY (HQ)