Valuation: Measuring and Managing the Value of Companies / Edition 4

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The #1 guide to corporate valuation is now better than ever!

Hailed by financial professionals worldwide as the single best guide of its kind, Valuation provides crucial insights into how to measure, manage, and maximize a company's value. This long-awaited Third Edition has been updated and expanded to reflect business conditions in today's volatile global economy. In addition to all new case studies, it now includes in-depth coverage of real options and insurance companies, along with detailed instructions on how to drive value creation, and expert advice on how to manage difficult situations.

  • Describes techniques for multibusiness valuations, valuation within an international context, and valuation for restructurings and mergers and acquisitions
  • Includes a companion Web site featuring an interactive valuation-modeling application

Tom Copeland leads Monitor, Inc.'s corporate finance division. Previously, he was a partner at McKinsey & Company and a professor of finance at UCLA's Anderson School of Management. Tim Koller is a partner at McKinsey & Company specializing in restructuring, mergers and acquisitions, and corporate strategy. Jack Murrin is Senior Vice President of Travelers, Inc.

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Editorial Reviews

New York Times Book Review
THE #1 GUIDE TO CORPORATE VALUATION IS NOW BETTER THAN EVER! A 'how-to' guide for corporate executives who want to get at the unrealized shareholder values trapped in public companies.
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Product Details

  • ISBN-13: 9780471702191
  • Publisher: Wiley, John & Sons, Incorporated
  • Publication date: 5/27/2005
  • Series: Wiley Finance Series, #295
  • Edition description: Book & CD-ROM, Updated Edition
  • Edition number: 4
  • Pages: 768
  • Product dimensions: 7.34 (w) x 10.30 (h) x 1.64 (d)

Meet the Author

The authors are all current or former consultants of McKinsey & Company’s corporate finance practice. Collectively they have more than 50 years of experience in consulting and financial education.
McKinsey & Company is a management-consulting firm that helps leading corporations and organizations make distinctive, lasting, and substantial improvements in their performance. Over the past seven decades, the firm’s primary objective has remained constant: to serve as an organization’s most trusted external advisor on critical issues facing senior management. With consultants deployed from over 80 offices in more than 40 countries, McKinsey advises companies on strategic, operational, organizational, financial, and technological issues. The firm has extensive experience in all major industry sectors and primary functional areas, as well as in-depth expertise in high-priority areas for today’s business leaders.

Tim Koller is a partner in McKinsey’s New York office. He leads the firm’s Corporate Performance Center and is a member of the leadership group of the firm’s global corporate finance practice. In his 20 years in consulting Tim has served clients in North America and Europe on corporate strategy and capital markets, M&A transactions, and value-based management. He leads the firm’s research activities in valuation and capital markets. He was formerly with Stern Stewart & Company, and Mobil Corporation. He received his MBA from the University of Chicago.

Marc Goedhart is an associate principal in McKinsey’s Amsterdam office and a member of the leadership group of the firm’s corporate finance practice in Europe. Marc has served clients across Europe on portfolio restructuring, capital markets, and M&A transactions. He taught finance as an assistant professor at Erasmus University in Rotterdam, where he also earned a PhD in finance.

David Wessels is an adjunct professor of finance at the Wharton School of the University of Pennsylvania. Named by Business Week as one of America’s top business school instructors, he teaches courses on investment banking and corporate valuation at the MBA and Executive MBA levels. David is also a director in Wharton’s executive education group, serving on the executive development faculties of several Fortune 500 companies. David, a former consultant with McKinsey, received his PhD from the University of California at Los Angeles.

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Read an Excerpt

Hailed by financial professionals, professors, and students worldwide as the single best guide of its kind, Valuation provides crucial insights into how to measure, manage, and maximize a company's value. This long-awaited Third Edition has been comprehensively updated and expanded to reflect business conditions in today's volatile global economy and to provide highly effective ways for managers at every level to create value for their companies.

In addition to all new case studies, Valuation now includes in-depth coverage on valuing dot.coms, cyclical companies, and companies in emerging markets, along with detailed instructions on how to drive value creation and apply real options to corporate valuation. Here is expert guidance that management and investment professionals and students alike have come to trust, including:

  • Valuation's acclaimed chapter devoted to insights into the strategic advantages of value-based management
  • Strategies for multibusiness valuation, and valuation for corporate restructuring, mergers, and acquisitions
  • International comparisons of the cost of capital, differences in accounting procedures, and how valuation works in different countries
  • Detailed, actual case studies showing how valuation techniques and principles are applied This timeless, respected book on valuation allows you to face the crossroads where corporate strategy and finance meet with more confidence and winning strategies than ever before.

Please visit us at is a premier Web site devoted to all things valuation. At this unique online community for financial professionals, you will enjoy the following features:

  • New information on valuation topics and links to key valuation sites
  • Valuation message boards and chats
  • Downloadable valuation spreadsheets
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Table of Contents

Pt. 1 Foundations of value
1 Why maximize value? 3
2 The value manager 23
3 Fundamental principles of value creation 47
4 Do fundamentals really drive the stock market? 69
Pt. 2 Core valuation techniques
5 Frameworks for valuation 101
6 Thinking about return on invested capital and growth 133
7 Analyzing historical performance 159
8 Forecasting performance 229
9 Estimating continuing value 271
10 Estimating the cost of capital 291
11 Calculating and interpreting results 331
12 Using multiples for valuation 361
Pt. 3 Making value happen
13 Performance measurement 383
14 Performance management 405
15 Creating value through mergers and acquisitions 427
16 Creating value through divestitures 453
17 Capital structure 475
18 Investor communications 509
Pt. 4 Advanced valuation issues
19 Valuing multibusiness companies 531
20 Valuing flexibility 543
21 Cross-border valuation 575
22 Valuation in emerging markets 605
23 Valuing high-growth companies 637
24 Valuing cyclical companies 653
25 Valuing financial institutions 663
App. A Economic profit and the key value driver formula 693
App. B Discounted economic profit equals discounted free cash flow 697
App. C Adjusted present value equals discounted free cash flow 701
App. D Levering and unlevering the cost of equity 707
App. E Leverage and the price-earnings multiple 715
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