Praise for Previous Editions

The #1 guide to corporate valuation is back . . . and better than ever!

"The best valuation book 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, retired Chief Financial Officer, Novartis AG

"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

Also available from McKinsey's suite of Valuation, Sixth Edition products:

Valuation Workbook, Sixth Edition: Part of McKinsey's esteemed Valuation approach, this companion workbook (978-1-118-87387-8) is a must-have guide to reviewing and applying the valuation concepts and techniques discussed in Valuation, Sixth Edition.

Value: The Four Cornerstones of Corporate Finance (978-0-470-42460-5) offers an executive overview of the core concepts of corporate finance and their ties to value. Intended for managers and students, this accessible guide offers a solid foundation to valuation.

Not all CEOs, business managers, and financial managers possess a deep understanding of value, although it is essential knowledge to creating value for companies and shareholders.

McKinsey's Valuation: Measuring and Managing the Value of Companies, Sixth Edition, with its companion DCF Model Download, 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 + DCF Model Download, Sixth Edition provides up-to-date insights and practical advice on how to create, manage, and measure the value of an organization.

The Sixth Edition provides:

• An overview of the two core principles of valuation: the idea that return on invested capital and growth drive cash flow, and a conversation principle that anything that doesn't increase cash flow doesn't create value (unless it reduces risk).
• Guidance for using discounted cash flow (DCF) to value a company, with an emphasis on how to analyze historical performance, forecast free cash flows, estimate the appropriate opportunity cost of capital, identify sources of value, and interpret results.
• An explanation of how to analyze and incorporate in your valuation such complex issues as taxes, pensions, reserves, inflation, and foreign currency, complete with a case-study example.
• A framework for value creation built upon designing a portfolio of businesses, executing strategic M&A decisions and divestitures, and aligning appropriate capital structure and proper communication of business strategy with the financial markets.
• An exploration of special situations in which valuation is complex, such as the multi-dimensional challenges of valuing higher growth companies, emerging markets, cyclical companies, and banks; or in the use of option-pricing theory and decision trees in valuations.

Acclaimed for 25 years by corporate finance experts as the best guide in its class, Valuation, Sixth Edition explains, step-by-step, how to do valuation well. Business managers will learn how to decide among alternative business strategies by estimating the value of each strategic choice; how to assess major transactions such as acquisitions, divestitures, and restructurings; how to design an effective capital structure to support the corporation's strategy and minimize the risk of financial distress; and how to create value and improve corporate performance.