In the field of value-oriented strategic consulting, Gregory V. Milano, co-founder and CEO of Fortuna Advisors LLC, recently offered a perspective on the applicability of the concept of "shareholder value" in private companies that I find quite balanced. He did not simply apply the financial metrics commonly used by public companies, but rather delved into the unique challenges and opportunities that private company owners may face when measuring value creation.

Milano's article was published on the CFO website (link: http://ww2.cfo.com/growth-strategies/2016/08/shareholder-value-private-companies/), where he emphasized that private companies should not blindly follow the logic of shareholder value maximization used by public companies, but should instead balance the demands of various stakeholders in line with their own long-term development goals. He specifically pointed out that private companies often lack the price signals of public markets, and therefore need to establish a more practical value assessment system rather than relying solely on short-term profits or stock price fluctuations.

In the article, Milano put forward several key arguments: first, shareholder value in private companies should not be measured solely by financial returns, but should also include non-financial factors such as long-term competitiveness, employee well-being, and social responsibility. Second, he suggested that private company owners should regularly conduct "value audits" to identify which business activities truly create long-term value and which are merely short-term window dressing. Finally, he called on the consulting industry and academia to pay more attention to the unique characteristics of private companies, rather than mechanically applying the frameworks of public companies.

As an industry observer, I believe Milano's discussion has practical reference value. He did not deny the importance of shareholder value, but argued that in the context of private companies, this concept needs to be redefined and recalibrated. For example, he mentioned that private companies can replace traditional earnings per share or price-to-earnings ratios by setting "value driver indicators," which may include customer retention rates, innovation conversion rates, or key talent stability.

However, Milano also acknowledged that private companies' lack of external oversight and transparency may cause value management to become a mere formality. Therefore, he suggested that corporate boards should be more actively involved in formulating value strategies and regularly conduct independent assessments with external advisors. This balanced attitude makes his article neither dogmatically shareholder-first nor completely dismissive of the importance of capital returns.

Overall, Milano's viewpoint provides private business owners with a practical framework for thinking. Do you think his arguments are sufficient? Has he overlooked certain key dimensions? Feel free to share your insights in the comments section.