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The #1 guide to corporate valuation is back . . . and better than ever!
This textbook stands alone in this field with its reputation of quality and consistency. If you want to hone your valuation skills today and improve them for years to come, look no further than this textbook.
"The best valuation textbook just got better. This edition's greater emphasis on what drives value and how to measure it will improve the way practitioners conduct financial analysis and, ultimately, make strategic decisions. It is required reading for all executives." -Professor Benjamin C. Esty, Harvard Business School, author of Modern Project Finance: A Casebook.
"The bible in its field. Anyone wanting to understand what drives corporate value should read this latest edition." -Dr. Raymund Breu, former chief financial officer, Novartis AG.
"Valuation gets to the heart of how to measure and manage value in a company. Whether you are evaluating an acquisition, restructuring a corporation, or formulating strategy, this textbook will help you do it well." -John A. Manzoni, Chief Executive Officer, Talisman Energy Inc.
"A 'how-to' guide for corporate executives who want to get at the unrealized shareholder values trapped in public companies." -New York Times.
"The book's clarity and comprehensive coverage make it one of the best practitioners' guides to valuation." -Financial Times.
The Fifth University Edition of Valuation: Measuring and Managing the Value of Companies continues the tradition of its bestselling predecessors by providing up-to-date insights and practical advice on how to create, manage, and measure the value of an organization. This textbook is filled with expert guidance that managers at all levels, investors, and students have come to trust.
New chapters are dedicated to finding the real engines behind value creation, whether it be key management decisions or mergers and acquisitions. The authors have also written a new chapter on corporate finance fundamentals that they feel are missing from everyday business decisions. The university edition contains the same text as the cloth edition, but is well-suited for the college market with its suite of ancillary tools for professors to use in the classroom.
Valuation, University Edition, Fifth Edition remains true to its roots with an extensive discussion on the complexity of measuring corporate performance to assess historical financial results properly and to gain insight into a company's ability to create value in the future (its corporate "health").
TIM KOLLER is a partner in McKinsey's New York office. Tim has served clients in North America and Europe on corporate strategy and issues concerning capital markets, M&A transactions, and value-based management. He leads the firm's research activities in valuation and capital markets issues. He received his MBA from the University of Chicago.
MARC GOEDHART is an associate principal in McKinsey's Amsterdam office. Marc has served clients across Europe on portfolio restructuring, issues concerning capital markets, and M&A transactions. He received a PhD in finance from Erasmus University Rotterdam.
DAVID WESSELS is an adjunct professor of finance and director of executive education at the Wharton School of the University of Pennsylvania. Named by BusinessWeek as one of America's top business school instructors, he teaches corporate valuation at the MBA and Executive MBA levels. David received his PhD from the University of California at Los Angeles.
Table of Contents
Part One Foundations of Value.
2 Fundamental Principles of Value Creation.
3 The Expectations Treadmill.
4 Return on Invested Capital.
Part Two Core Valuation Techniques.
6 Frameworks for Valuation.
7 Reorganizing the Financial Statements.
8 Analyzing Performance and Competitive Position.
9 Forecasting Performance.
10 Estimating Continuing Value.
11 Estimating the Cost of Capital.
12 Moving from Enterprise Value to Value per Share.
13 Calculating and Interpreting Results.
14 Using Multiples to Triangulate Results.
Part Three Intrinsic Value and the Stock Market.
15 Market Value Tracks Return on Invested Capital and Growth.
16 Markets Value Substance, Not Form.
17 Emotions and Mispricing in the Market.
18 Investors and Managers in Efficient Markets.
Part Four Managing for Value.
19 Corporate Portfolio Strategy.
20 Performance Management.
21 Mergers and Acquisitions.
22 Creating Value through Divestitures.
23 Capital Structure.
24 Investor Communications.
Part Five Advanced Valuation Issues.
26 Nonoperating Expenses, One-Time Charges, Reserves, and Provisions.
27 Leases, Pensions, and Other Obligations.
28 Capitalized Expenses.
30 Foreign Currency.
31 Case Study: Heineken.
Part Six Special Situations.
32 Valuing Flexibility.
33 Valuation in Emerging Markets.
34 Valuing High-Growth Companies.
35 Valuing Cyclical Companies.
36 Valuing Banks.
Appendix A Economic Profit and the Key Value Driver Formula.
Appendix B Discounted Economic Profit Equals Discounted Free Cash Flow.
Appendix C Derivation of Free Cash Flow,Weighted Average Cost of Capital, and Adjusted Present Value.
Appendix D Levering and Unlevering the Cost of Equity.
Appendix E Leverage and the Price-to-Earnings Multiple.