The CEO as an Investor: The Capital Allocation Officer

José Antonio Marco Izquierdo

doi:10.3926/hdbr.80

Authors

José Antonio Marco Izquierdo Magnum Capital

DOI:

https://doi.org/10.3926/hdbr.80

Keywords:

capital allocation officer; CEO; return on capital employed; investor, capital allocation officer, CEO, return on capital employed, investor

Abstract

A CEO may have never tackled a capital allocation job in previous jobs, while now, on his top position, he is responsible for the capital deployment of 50% of the firm market cap over a 3 to 5 year period. CEOs' experiences usually come from the industry and not from capital allocation. Furthermore, boards focus more on loyalty and prudence than on value creation, the laser-focus of private equities and value investors. The Capital Allocation Officer role has also had limited coverage in media and corporations. CEOs need to recognize that proper capital allocation is a strong value driver, that need to be involved in such process regardless of their preferences and knowledge, and even learn from or hire excellent capital allocators. CEOs need to design an investor-based capital allocation framework that guides their decisions and facilitates board's long term value creation.

Downloads

Download data is not yet available.

Author Biography

José Antonio Marco Izquierdo, Magnum Capital

José Antonio Marco is a Partner with Magnum Capital, the largest independent buy-out fund in Spain and Portugal. He serves as a Director of Iberwind, the leading wind energy renewable player, Iberchem, a leading flavour and fragances player in emerging markets and Grupo Nace, one of global educational groups in primary and secondary education.

Prior to joining Magnum, Mr. Marco worked for McKinsey & Co. in Spain, Portugal and UK since 1999, where he served as a consultant for the Corporate Finance & Strategy Practice and Financial Institutions Practice. Earlier in his career, Mr. Marco worked for the Investment Banking Division of Merrill Lynch and the Private Equity of Lehman Brothers in London.

Mr. Marco is a graduate of the General Management Program at Harvard Business School, holds an MBA from the MIT (Goldman Sachs Finance Award) and a MSc in Business Administration from Universidad Comercial de Deusto, where he graduated first in class.

He is a frequent author (Harvard Deusto Contabilidad y Finanzas, The MIT Press, Harvard Business Review, Boletín de Estudios Económicos) and speaker (Capital and Corporate, MergerMarket, Harvard) on issues related to corporate finance, private equity, education and corporate governance, and has served as a professor of M&A at ICADE and participated in corporate finance classes at the MBA Program of IESE and ESADE.