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Valuation: Measuring and Managing the Value of Companies, 5th Edition 5th Edition

54 customer reviews
ISBN-13: 978-0470424650
ISBN-10: 0470424656
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Editorial Reviews Review

More to Explore: See More Valuation Resources


Investment Valuation Investment Valuation Valuation Equity Asset Valuation
Tools and Techniques for Determining the Value of Any Asset
Tools and Techniques for Determining the Value of any Asset
Measuring and Managing the Value of Companies
Guide Type
Audience Level
Graduate Student
Professional and Student
List Price
McKinsey & Company / Koller
CFA / Pinto
Publication Date
April, 2012
April, 2012
July, 2010
February, 2010
Print Book
Kindle Book
Brief Description
Comprehensive book by a leading voice in valuation and one of the nation's top business school professors.
Comprehensive book by a leading voice in valuation and one of the nation's top business school professors.
Best-selling guide to corporate valuation. Comprehensive approach to standard and advanced topics.
Offers vital insights on equity valuation; has a separate companion workbook for practicing key concepts.

From the Inside Flap

Corporate finance is simpler and more intuitive than most people think. Yet, executives frequently make decisions that defy the core principles and their own intuition. They subscribe to the common wisdom of "The Street" instead of simple, common financial sense.

McKinsey's Valuation: Measuring and Managing the Value of Companies, Fifth Edition, provides the knowledge executives need to make value-creating decisions—replacing some of the myths that pervade the corporate world with proven principles of value creation.

Thoroughly revised and expanded to reflect business conditions in today's volatile global economy, Valuation, Fifth Edition provides up-to-date insights and practical advice on how to create, manage, and measure the value of an organization. Along with all new case studies that illustrate how valuation techniques and principles are applied in real-world situations, this comprehensive guide has been updated to reflect the events of the real estate bubble and its effect on stock markets, new developments in corporate finance, changes in accounting rules, and an enhanced global perspective.

Valuation, Fifth Edition is filled with expert guidance that managers at all levels, investors, and students have come to trust. It contains a solid framework for valuation:

  • Analyzing historical performance, including reorganizing a company's financial statements to reflect economic rather than accounting performance
  • Forecasting performance, with emphasis on not just the mechanics of forecasting but also how to think about a company's future economics
  • Estimating the cost of capital with practical tips that aren't found in textbooks
  • Interpreting the results of a valuation in light of a company's competitive situation
  • Linking a company's valuation multiples to the core drivers of its performance

Hailed by financial professionals worldwide as the single best guide of its kind, Valuation, 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").

At the crossroads of corporate strategy and finance lies valuation. Filled with expert guidance and reliable advice, Valuation, Fifth Edition enables everyone from the budding professional to the seasoned manager to excel at measuring, managing, and maximizing shareholder and company value.


Product Details

  • Hardcover: 840 pages
  • Publisher: Wiley; 5 edition (July 26, 2010)
  • Language: English
  • ISBN-10: 0470424656
  • ISBN-13: 978-0470424650
  • Product Dimensions: 7.4 x 1.9 x 10.3 inches
  • Shipping Weight: 3.5 pounds (View shipping rates and policies)
  • Average Customer Review: 4.5 out of 5 stars  See all reviews (54 customer reviews)
  • Amazon Best Sellers Rank: #97,031 in Books (See Top 100 in Books)

More About the Author

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.

Customer Reviews

Most Helpful Customer Reviews

175 of 181 people found the following review helpful By Aaron C. Brown TOP 1000 REVIEWERVINE VOICE on November 10, 2010
Format: Hardcover
I have to begin with a gripe. The first four reviews are implausibly quick, given the length of this book, and are all five-star. Three are from people who reviewed only one product, one is completely devioid of content. The fifth reviewer has reviewed one other product, a razor. I understand the temptation to stuff the ballot-box early by having friends review, but I think you should find real reviewers and insist on some content.

There are several great valuation books out there. Damodaran on Valuation concentrates on security valuation and is the most academic. Business Valuation is the best for small, private companies. Business Valuation on Wall Street tells you how Wall Street approaches the question. Theory of Valuation is the best on theory. Corporate Finance has the best treatment of valuation among corporate finance texts.

Earlier editions of this book were the clear leaders in big and complex public company valuation. There is extensive and detailed instruction for a big team analyzing for a big project, whether it is capital budgeting, capital structure, merger, acquisition, restructuring, bankruptcy or any other valuation topic. It is comprehensive and clear.
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12 of 14 people found the following review helpful By investingbythebooks on January 12, 2013
Format: Hardcover
On a basic level there are two competing mental models of stock values in the financial sector. The first is that the value of something is what someone is prepared to pay for that something. In the equity market this leads to statements such as "the valuation of a stock is low" if the current market pricing of the stock is historically low compared to, for example, the estimate of the near term future earnings. The other model is based on that a company has a fundamental intrinsic value that is separate from the market pricing of its equity. This book is about both how to estimate this intrinsic value and also on how to create it.

Out of all the books reviewed on this website Valuation is probably the one that sits on most shelves behind workstations of employees in the financial sector. The reason is that most of us have had it as a text book at university, but compared to all the other text books this one is also a handbook in corporate valuation that is used by practitioners. For those who use the concept of intrinsic value, cash flow valuation has become the standard methodology and Valuation is the standard source material. The book is mandatory reading for persons within corporate finance, venture capital and private equity who are slightly less close to the public stock market. It is less widely used by portfolio managers or sell side analysts who often look to shorter time horizons.

There are obviously competing text books on valuation such as Damodaran on Valuation. Where professor Aswath Damodaran's writing is academic and covers more ground with regards to different aspects of securities valuation, Valuation is a practical book that connects valuation to corporate strategy and value based management.
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14 of 17 people found the following review helpful By Jackal on November 22, 2012
Format: Hardcover Verified Purchase
This is a good book on valuation by applying the discounted cash flow methodology. The book is worth four stars, because it is in no way a perfect book. The book is now in its fifth edition so the material on DCF analysis is solid in my opinion. It covers basics as well as interesting extensions, but also has glaring gaps. For instance you do not get any information about valuing the cost of working capital requirements. The links to accounting are also weak, you would imagine the book would have a section on accounting ratios like ROA, RONA, ROCE. How can you forecast the future without having a good grasp of the past???

The book is much weaker when it discusses how to actually forecast cash flows and how the stock market functions. We get to estimate the second decimal of WACC, but hardly learn anything about market share estimation.

Instead some fairly junior consultants have read some of the academic literature and done a valiant attempt to summarize it in a traditional consulting style (i.e. with managerial implications). This is actually a bit silly. The content is interesting but the authoritative voice of the authors is a clear sign that they do not know as much as they believe they do. During the last ten years the trend in academic finance has been towards building micro-foundations based on a more realistic description of human actors. The fully rational man is long gone in cutting-edge finance research. I do not think the authors of this book has fully understand the implications of this sea change. They bravely quote research papers (that they don't really understand), but in the end conclude that the markets are so close to rational so one can proceed as if.
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