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Management article
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Reference no. 90110
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 1990

Abstract

The publicly held corporation has not outlived its usefulness. Though LBOs release much of the untapped value and correct many of the inefficiencies of large public companies, they also have a limited demand and a limited life. The public corporation is inherently flexible and self-renewing. A four-point plan to maximize shareholder value will help public companies to: 1) find the highest valued use for all assets; 2) limit investment to opportunities with credible potential to create value; 3) return cash to shareholders when such investments are not available; and 4) establish incentives for managers and employees to focus on the critical drives that create value.

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Abstract

The publicly held corporation has not outlived its usefulness. Though LBOs release much of the untapped value and correct many of the inefficiencies of large public companies, they also have a limited demand and a limited life. The public corporation is inherently flexible and self-renewing. A four-point plan to maximize shareholder value will help public companies to: 1) find the highest valued use for all assets; 2) limit investment to opportunities with credible potential to create value; 3) return cash to shareholders when such investments are not available; and 4) establish incentives for managers and employees to focus on the critical drives that create value.

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