Four Decades of Value Creation

Officially founded in November 1982, SVM takes its roots in the 1950’s, with the path-breaking work of Professor Merton H. Miller and Franco Modigliani on what determines value. Headquartered in New York, our firm was originally incorporated as Stern Stewart & Co. in 1982, but became Stern Value Management in 2013.


Professors Miller and Modigliani (also known as M&M) publish "The Cost of Capital, Corporation Finance and the Theory of Investment" in the American Economic Review. This seminal paper focuses on the determinants of value and demonstrates the conditions under which debt financing could create value and the role that dividend policy would play in maximizing a firm’s value.


1972 Joel Stern develops the Free Cash Flow (FCF) concept.


Stern Stewart & Co. (later Stern Value Management, SVM) is incorporated on November 1 with the purpose of applying major theories of modern finance to concrete business problems 


The SVM management team develops Economic Value Added (EVA®), a new model for maximizing the value created that can also be used to provide incentives at all levels of the firm. The simplicity and versatility of EVA® turns the metric into an approach that can be used by chief executives to focus on value maximization at all levels of the firm. 


The Coca-Cola Company implements the Value-Based Management System, including incentives under the guidance of its chief executive, Mr. Roberto Goizueta. 


Briggs & Stratton implements the Value-Based Management System with a drill down to the shop floor under the guidance of its Chairman and CEO, Frederick Stratton, along with his Chief Legal Counsel, Mr. John Shiely. Mr. Shiely later co-authored the definitive book on EVA® with Joel called, “The EVA® Challenge,” published in 2001. 


South African Breweries (now SABMiller), one of the giant firms of South Africa, implements the Value-Based Management System under the guidance of its chief executive, Mr. Meyer Kahn .


FORTUNE Magazine highlights SVM’s EVA® and value-based principles in a cover story in the September 20 issue: “The Real Key to Creating Wealth”. 


Singapore Technologies implements the Value-Based Management System as the first company in Asia to do so under the guidance of its chief executive, Madam Ho Ching. Later in the 1990s she became chief executive of Temasek, the sovereign fund of Singapore, and encouraged the implementation of Value-Based Management in other state-owned enterprises, and other firms in the Temasek portfolio of investments, which were in countries closely neighboring Singapore. 


United States Postal Service, losing $200 million a month, implements the SVM Value-Based Management System for performance measurement, screening capital expenditures, and providing incentives at all levels of the organization. More than 300,000 people are put onto the Value-Based Management System, and within 20 months all losses are eliminated.


Brahma implemented the Value-Based Management System in Brazil. This firm is now known as AB InBev, the largest beer company in the world.


The first firm in India implements the Value-Based Management System, Tata Consultancy Services, followed in 2002 by the Godrej Group, under the guidance of its chief executive, Mr. Adi Godrej. 


The Chinese government launches its efforts to improve the governance of all of its state-owned enterprises by requiring them to measure and report EVA®. 


Stern Stewart & Co. becomes Stern Value Management (SVM). 

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