Valuation: Measuring and Managing the Value of Companies, 3rd Edition [Hardcover]

McKinsey & Company Inc. (Author), Tom Copeland (Author), Tim Koller (Author), Jack Murrin (Author)

Book Description

Series: Frontiers in Finance Series | Publication Date: July 28, 2000

Completely Updated, Over 200,000 Copies Sold!

"A 'how-to' guide for corporate executives who want to get at the unrealized shareholder values trapped in public companies."
—New York Times

THE #1 guide TO CORPORATE VALUATION IS NOW BETTER THAN EVER!

"The book's clarity and comprehensive coverage make it one ofthe best practitioners' guides to valuation."
—Financial Times

"Should serve very well the professional manager who wants to do some serious thinking about what really does contribute value to his or her firm and why."
—The Journal of Finance

"Valuation is like a Swiss army knife . . . you will be prepared for just about any contingency."
—Martin H. Dubilier, Chairman of the Board, Clayton & Dubilier, Inc.

"This book on valuation represents fresh new thinking. The writing is clear and direct, combining the best academic principles with actual experience to arrive at value-increasing solutions."
—J. Fred Weston, cordner Professor of Money and Financial Markets, Graduate School of Management, UCLA

System Requirements:
Pentium II PC or greater
Windows 98 or later
128MB RAM
20MB Hard Disk Space
Excel 97 / 2000 (Alone or part of Office 97 / 2000) w/Report Manager & Analysis ToolPak installed and enabled.
(Note: Formulas & Computations are not guaranteed in later versions of Excel)
Video Display: 800 x 600 recommended

Editorial Reviews

Review

"Information in the book is clearly presented. A good read which will enable you to approach corporate valuation with confidence." (Lloyd's List, 4th November 2000)

From the Inside Flap

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 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.

McKinsey & Company, inc. is an international top management consulting firm. Founded in 1926, McKinsey & Company, Inc. advises leading companies around the world on issues of strategy, organization, and operations, and in specialized areas such as finance, information technology and the Internet, research and development, sales, marketing, manufacturing, and distribution.

Please visit us at www.WileyValuation.com

WileyValuation.com 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 links to key valuation sites
* Valuation message boards and chats
* Downloadable valuation spreadsheets

See all Editorial Reviews

Product Details

• Hardcover: 492 pages
• Publisher: John Wiley & Sons, Inc.; 3 edition (July 28, 2000)
• Language: English
• ISBN-10: 0471361909
• ISBN-13: 978-0471361909
• Product Dimensions: 10.2 x 7.3 x 1.6 inches
• Shipping Weight: 2.4 pounds
• Average Customer Review: 3.3 out of 5 stars  See all reviews (37 customer reviews)
• Amazon Best Sellers Rank: #979,002 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

251 of 253 people found the following review helpful:

2.0 out of 5 stars A lot of Fluff with some big names on the cover, May 24, 2001

By 

"cued" (San Diego, CA) - See all my reviews

This review is from: Valuation: Measuring and Managing the Value of Companies, 3rd Edition (Hardcover)

This was the text book for an advanced seminar on Valuation that I took in my MBA program, and I have a feeling the professor will not use this text book ever again. The problem is, as another reviewer observed, these McKinsey guys take great care not to reveal any trade secrets in their text. Therefore you will notice that there is an unusual amount of prose, and a conspicuous lack of financial formulae in this text book. Our professor had to prepare supplemental lecture notes chock full of formulae, exercises, and examples because she realized that much of what is really needed to learn Valuation is not covered, but only mentioned or alluded to in this book. For example, everyone accepts that a controlling interest in a firm is worth more than a minority interest in a firm, and Copeland et. al. mention that discounts and premiums may be necessary to accomodate for this situation, but they give no guidance in calculating such premiums. Further, this book is all about discounted cash flow analysis, which is really only one of several valuation methods. No space is given to relative valuation or the interpretation of multiples such as P/E. The authors' reason for shunning relative valuation is flimsy at best (they argue that relative valuation doesn't help you if you are investing in an industry in which ALL firms are over-valued by the Market).

There are two different groups who might be interested in valuation: investors who want to use valuation techniques to make passive investments in public companies, like Warren Buffett; and entrepreneurs / managers who are charged with the job of buying or selling business assets for their firms. To the first group, I recommend the Valuation books of Aswath Damodaran (my favorite is "The Dark Side of Valuation"). Not only is Damodaran's treatment of the subject matter more complete, but he is much clearer in his explanations because he is not afraid to use an occasional formula (the rule of thumb is that for every formula omitted a writer will have to add an additional two pages of prose just to explain the concepts). Plus, readers get access to Damodaran's web page, which is an amazing supplement full of downloadable excel spreadsheets, PDF files, examples, problem sets, etc., all free to purchasers of his books.

To the second group, I recommend the works of Shannon Pratt et. al., especially Valuing a Business, Valuing Intangible Assets, etc. Pratt is a professional Valuation expert, who is often hired by lawyers, accountants, and business owners to appraise businesses, projects, and assets. Pratt's books represent the state of the art, and cover all techniques in encyclopedic fashion. For my MBA class a Valuation expert from a Big 5 firm came to speak to us one day about her work, and much of the techniques she uses are consistent with Pratt's own writing.

The only reason to read this book is as a bathtub refresher book after you have already studied the techniques of valuation and just want to read what someone else has written about the subject. Remember, though, reading a descriptive book about the French language is not the same as learning to speak it yourself!

54 of 58 people found the following review helpful:

2.0 out of 5 stars Superficial and lacking in depth, July 3, 2001

By 

P. Bhatt "baysailor2000" (San Jose, CA United States) - See all my reviews
(REAL NAME)   

This review is from: Valuation: Measuring and Managing the Value of Companies, Third Edition (University Edition) (Paperback)

The first part of the book covers very basic material that may be found anywhere on the Internet or in a beginner's finance text book. This portion will be valuable only to introductory students of the subject.

The second two parts, which deal with actual valuation techniques, are very verbose, but lacking in organization and depth. This half assumes that you are already familiar with concepts such as WACC, Free Cash Flows, and other accounting and valuation terms. Although several valuation techniques are indeed discussed, by no means is the list comprehensive. Furthermore, no systematic approach to deriving or explaining the formulas is available, and often, terms not introduced earlier are used.

On the positive side, however, the book makes easy reading and focuses on a more practical, rather than academic or theoretical, discussion of valuation.

This book may not provide much value to a serious student of valuation. Furthermore, I do not believe it will make an ideal reference for the experienced professional either. At best, it will make a good second reference for a graduate level course in valuation.

41 of 43 people found the following review helpful:

4.0 out of 5 stars An excellent resource for DCF applications, but..., October 12, 1998

By 

Paul A. Broni - See all my reviews

This review is from: Valuation: Measuring and Managing the Value of Companies, 2nd Edition (Hardcover)

This book provides excellent information about the DCF Valuation process. The reader will learn how to develop the model and where to input the various data, as well as understand how to justify some of the assumptions such as cost of equity. The disk that accompanies the hardcover addition will be very useful to some practitioners, although analysts with strong modeling skills will likely want to create their own spreadsheet. The book, however, is not a comprehensive guide to valuation, as it does not discuss other methods such as the peer group comparison. Nonetheless, it is an excellent reference book on the topic of DCF Valuation, and it belongs on every financial analyst's desk.