MCKINSEY & COMPANY is a global management-consulting firm that serves leading global organizations across a wide range of industries and functions, helping them create change that matters.
TIM KOLLER is a partner in McKinsey's Stamford, Connecticut office, where he leads a global team of corporate-finance consultants. Tim has served clients globally on corporate strategy and capital markets, mergers, acquisitions and other transactions, and strategic planning and resource allocation.
MARC GOEDHART is a senior expert in McKinsey's Amsterdam office and endowed professor of corporate valuation at Rotterdam School of Management, Erasmus University (RSM).
DAVID WESSELS is an adjunct professor of finance at the Wharton School of the University of Pennsylvania. He was named by Bloomberg Businessweek as one of America's top business school instructors.
MICHAEL CICHELLO is a teaching professor at the McDonough School of Business at Georgetown University.

About the Authors ix
Introduction xi
Part One Questions
1 Why Value Value? 3
2 Finance in a Nutshell 5
3 Fundamental Principles of Value Creation 7
4 Risk and the Cost of Capital 11
5 The Alchemy of Stock Market Performance 15
6 Valuation of ESG and Digital Initiatives 19
7 The Stock Market is Smarter Than You Think 21
8 Return on Invested Capital 27
9 Growth 31
10 Frameworks for Valuation 35
11 Reorganizing the Financial Statements 39
12 Analyzing Performance 43
13 Forecasting Performance 47
14 Estimating Continuing Value 51
15 Estimating the Cost of Capital 55
16 Moving from Enterprise Value to Value per Share 59
17 Analyzing the Results 63
18 Using Multiples 67
19 Valuation by Parts 71
20 Taxes 75
21 Nonoperating Items, Provisions, and Reserves 77
22 Leases 81
23 Retirement Obligations 83
24 Measuring Performance in Capital-Light Businesses 85
25 Alternative Ways to Measure Return on Capital 89
26 Inflation 91
27 Cross-Border Valuation 95
28 Corporate Portfolio Strategy 99
29 Strategic Management: Analytics 103
30 Strategic Management: Mindsets and Behaviors 107
31 Mergers and Acquisitions 111
32 Divestitures 115
33 Capital Structure, Dividends, and Share Repurchases 119
34 Investor Communications 123
35 Emerging Markets 127
36 High-Growth Companies 129
37 Cyclical Companies 131
38 Banks 135
39 Flexibility 139
Part Two Solutions
1 Why Value Value? 145
2 Finance in a Nutshell 147
3 Fundamental Principles of Value Creation 149
4 Risk and the Cost of Capital 151
5 The Alchemy of Stock Market Performance 153
6 Valuation of ESG and Digital Initiatives 155
7 The Stock Market is Smarter Than You Think 157
8 Return on Invested Capital 159
9 Growth 161
10 Frameworks for Valuation 163
11 Reorganizing the Financial Statements 165
12 Analyzing Performance 167
13 Forecasting Performance 169
14 Estimating Continuing Value 173
15 Estimating the Cost of Capital 175
16 Moving from Enterprise Value to Value per Share 177
17 Analyzing the Results 179
18 Using Multiples 181
19 Valuation by Parts 183
20 Taxes 185
21 Nonoperating Items, Provisions, and Reserves 187
22 Leases 189
23 Retirement Obligations 193
24 Measuring Performance in Capital-Light Businesses 195
25 Alternative Ways to Measure Return on Capital 197
26 Inflation 199
27 Cross-Border Valuation 203
28 Corporate Portfolio Strategy 207
29 Strategic Management: Analytics 209
30 Strategic Management: Mindsets and Behaviors 211
31 Mergers and Acquisitions 213
32 Divestitures 215
33 Capital Structure, Dividends, and Share Repurchases 217
34 Investor Communications 219
35 Emerging Markets 223
36 High-Growth Companies 225
37 Cyclical Companies 227
38 Banks 229
39 Flexibility 231
Index 233