EVA and the Private Company

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Every company seeks the perfect measurement quantifying its performance against strategy. Historically, the corporate world has relied on an alphabet soup of acronyms—EPS, ROE, ROI, EBITDA and TSR, to cite a handful—for this guidance, employing these metrics to make key decisions on resource allocation, expense management and incentive compensation. In recent years, public companies have increasingly turned to an alternative method—Economic Value Added (EVA), prized as a more accurate measure of how companies perform for shareholders than many of its peers in the metrics game. Now private companies, as well, are finding favor with this metric.

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