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Valuation: Measuring and Managing the Value of Companies, 4th Edition, University Edition

ISBN: 978-0-470-89361-6
768 pages
May 2010
Valuation: Measuring and Managing the Value of Companies, 4th Edition, University Edition (0470893613) cover image
The University Edition of Valuation 4e offers students and professors up-to-date information on valuing companies. It contains all the revisions of the main edition, plus end of chapter questions for the needs of the classroom.
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Part One: Foundations of Value.

1. Why Maximize Value?

2. The Value Manager.

3. Fundamental Principles of Value Creation.

4. Do Fundamentals Really Drive the Stock Market?

Part Two: Core Valuation Techniques.

5. Frameworks for Valuation.

6. Thinking about Return on Invested Capital and Growth.

7. Analyzing Historical Performance.

8. Forecasting Performance.

9. Estimating Continuing Value.

10. Estimating the Cost of Capital.

11. Calculating and Interpreting Results.

12. Using Multiples for Valuation.

Part Three: Making Value Happen.

13. Performance Measurement.

14. Performance Management.

15. Creating Value through Mergers and Acquisitions.

16. Creating Value through Divestitures.

17. Capital Structure.

18. Investor Communications.

Part Four: Advanced Valuation Issues.

19. Valuing Multibusiness Companies.

20. Valuing Flexibility.

21. Cross-Border Valuation.

22. Valuation in Emerging Markets.

23. Valuing High-Growth Companies.

24. Valuing Cyclical Companies.

25. Valuing Financial Institutions.

Appendix A: Economic Profit and the Key Value Driver Formula.

Appendix B: Discounted Economic Profit Equals Discounted Free Cash Flow.

Appendix C: Adjusted Present Value Equals Discounted Free Cash Flow.

Appendix D: Levering and Unlevering the Cost of Equity.

Appendix E: Leverage and the Price-Earnings Multiple.

Index.

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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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INCLUDES ALL UPDATED INFORMATION FROM VALUATION 4E. This long-awaited new edition of the best-selling book on valuation provides new information on the strategic advantages of value-based management amidst changing business conditions.

OFFERS STUDENTS AND PROFESSORS TAILORED INFORMATION FOR USE IN THE CLASSROOM including end of chapter questions, an Instructor's Manual for professors, and complimentary use of excel spreadsheets.

PROVIDES DETAILED INSTRUCTION FOR LEARNING AND APPLICATION. Valuation 4e has case studies showing how techniques and principles are applied, and gives instructions on real options valuation.

PROVIDES RELIABLE VALUATION STRATEGIES: Gives strategies for multi-business valuation, and valuation for corporate restructuring, mergers, acquisitions. International comparisons of the cost of capital, differences in accounting procedures, and how valuation works in different countries.

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  • Valuation, Fourth Edition is filled with expert guidance that students have come to trust.
  • 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. 
  • 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").
  • Complementary chapter advises managers how to run companies to create long-term value, and a new chapter explores ways to improve communication with financial markets.
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