Valuation E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Finance Editions
• Sprache: Englisch

Seitenzahl: 1262

Veröffentlichungsjahr: 2015

Beschreibung

McKinsey & Company's #1 best-selling guide to corporate valuation, now in its sixth edition Valuation is the single best guide of its kind, helping financial professionals worldwide excel at measuring, managing, and maximizing shareholder and company value. This new sixth edition provides insights on the strategic advantages of value-based management, complete detailed instruction, and nuances managers should know about valuation and valuation techniques as applied to different industries, emerging markets, and other special situations. Valuation lies at the crossroads of corporate strategy and finance. In today's economy, it has become an essential role -- and one that requires excellence at all points. This guide shows you everything you need to know, and gives you the understanding you need to be effective. * Estimate the value of business strategies to drive better decision making * Understand which business units a corporate parent is best positioned to own * Assess major transactions, including acquisitions, divestitures, and restructurings * Design a capital structure that supports strategy and minimizes risk As the valuation function becomes ever more central to long- and short-term strategy, analysts and managers need an authoritative reference to turn to for answers to challenging situations. Valuation stands ahead of the field for its reputation, quality, and prestige, putting the solutions you need right at your fingertips.

Leseprobe

The Wiley Finance series contains books written specifically for finance and investment professionals as well as sophisticated individual investors and their financial advisors. Book topics range from portfolio management to e-commerce, risk management, financial engineering, valuation and financial instrument analysis, as well as much more. For a list of available titles, visit our Web site at www.WileyFinance.com.

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VALUATION

MEASURING AND MANAGING THE VALUE OF COMPANIES

SIXTH EDITION

McKinsey & Company

Tim Koller

Marc Goedhart

David Wessels

Cover image: ©iStock.com/alzajac Cover design: Wiley

Copyright © 1990, 1994, 2000, 2005, 2010, 2015 by McKinsey & Company. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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Cloth edition: ISBN 978-1-118-87370-0 Cloth edition with DCF Model Download: ISBN 978-1-118-87368-7 University edition: ISBN 978-1-118-87373-1 Workbook: ISBN 978-1-118-87387-8 DCF Model Download: ISBN 978-1-118-87366-3

CONTENTS

About the Authors

Preface

Why This Book

Structure of the Book

Valuation Spreadsheet

Acknowledgments

Part One: Foundations of Value

1: Why Value Value?

What Does It Mean to Create Shareholder Value?

Can Stakeholder Interests Be Reconciled?

Shareholder Capitalism Cannot Solve All Social Issues

Consequences of Forgetting Value-Creation Principles

Short-Termism Runs Deep

This Book

Notes

2: Fundamental Principles of Value Creation

The Relationship of Growth, ROIC, and Cash Flow

Balancing ROIC and Growth to Create Value

Real-World Examples

Managerial Implications

Economic Profit Combines ROIC and Size

The Math of Value Creation

Summary

Notes

3: Conservation of Value and the Role of Risk

Conservation of Value

Risk and Value Creation

Summary

Notes

4: The Alchemy of Stock Market Performance

Why Shareholder Expectations Become a Treadmill

Real-World Effects of the Expectations Treadmill

Decomposing TRS

Understanding Expectations

Managerial Implications

Notes

5: The Stock Market Is Smarter Than You Think

Markets and Fundamentals: A Model

Markets and Fundamentals: The Evidence

What about Earnings?

Earnings Management

Diversification and the Conglomerate Discount

Size and Value

Market Mechanics Don't Matter

Value Creation Is More Important than Value Distribution

Summary

Notes

6: Return on Invested Capital

What Drives ROIC?

Competitive Advantage

Sustainability of Return on Invested Capital

An Empirical Analysis of Returns on Invested Capital

Summary

Notes

7: Growth

Drivers of Revenue Growth

Growth and Value Creation

Why Sustaining Growth Is Hard

Empirical Analysis of Corporate Growth

Summary

Notes

Part Two: Core Valuation Techniques

8: Frameworks for Valuation

Enterprise Discounted Cash Flow Model

Economic-Profit-Based Valuation Models

Adjusted Present Value Model

Capital Cash Flow Model

Cash-Flow-to-Equity Valuation Model

Other Approaches to Discounted Cash Flow

Alternatives to Discounted Cash Flow

Summary

Notes

9: Reorganizing the Financial Statements

Reorganizing the Accounting Statements: Key Concepts

Reorganizing the Accounting Statements: In Practice

Advanced Issues

Notes

10: Analyzing Performance

Analyzing Returns on Invested Capital

Analyzing Revenue Growth

Credit Health and Capital Structure

General Considerations

Notes

11: Forecasting Performance

Determine the Forecast's Length and Detail

Components of a Good Model

Mechanics of Forecasting

Additional Issues

Notes

12: Estimating Continuing Value

Recommended Formula for DCF Valuation

Continuing Value Using Economic Profit

Subtleties of Continuing Value

Common Pitfalls

Evaluating Other Approaches to Continuing Value

Advanced Formulas for Continuing Value

Closing Thoughts

Notes

13: Estimating the Cost of Capital

Weighted Average Cost of Capital

Estimating the Cost of Equity

Estimating the After-Tax Cost of Debt

Using Target Weights to Determine the Cost of Capital

Complex Capital Structures

Closing Thoughts

Notes

14: Moving from Enterprise Value to Value per Share

Valuing Nonoperating Assets

Valuing Debt and Debt Equivalents

Valuing Hybrid Securities and Noncontrolling Interests

Estimating Value per Share

Notes

15: Analyzing the Results

Validating the Model

Sensitivity Analysis

Creating Scenarios

The Art of Valuation

Notes

16: Using Multiples

Value Multibusiness Companies as a Sum of Their Parts

Use Forward Earnings Estimates

Use Net Enterprise Value Divided by Adjusted EBITA or NOPLAT

Adjust for Nonoperating Items

Use the Right Peer Group

Alternative Multiples

Summary

Notes

17: Valuation by Parts

Valuing by Parts: Mechanics and Insights

Building Business Unit Financial Statements

Cost of Capital

Testing the Value Based on Multiples of Peers

Summary

Notes

Part Three: Advanced Valuation Techniques

18: Taxes

Operating Taxes on the Reorganized Income Statement

Converting Operating Taxes to Operating Cash Taxes

Deferred Taxes on the Reorganized Balance Sheet

Valuing Deferred Taxes

Closing Thoughts

Notes

19: Nonoperating Items, Provisions, and Reserves

Nonoperating Expenses and One-Time Charges

Provisions and Their Corresponding Reserves

Closing Thoughts

Notes

20: Leases and Retirement Obligations

Operating Leases

Securitized Receivables

Pensions and Other Retirement Benefits

Closing Thoughts

Notes

21: Alternative Ways to Measure Return on Capital

Value-Based Returns on Capital: ROIC and CFROI

Capitalizing Expensed Investments

When Businesses Need Little or No Capital

Summary

Notes

22: Inflation

Inflation Leads to Lower Value Creation

Historical Analysis in Times of High Inflation

Financial Projections in Real and Nominal Terms

Summary

Notes

23: Cross-Border Valuation

Forecasting Cash Flows

Estimating the Cost of Capital

Incorporating Foreign-Currency Risk in the Valuation

Using Translated Foreign-Currency Financial Statements

Summary

Notes

24: Case Study: Heineken

Reorganizing Financial Statements

Analyzing Historical Performance

Forecasting Performance

Estimating Cost of Capital

Estimating Continuing Value

Calculating and Interpreting Results

Notes

Part Four: Managing for Value

25: Corporate Portfolio Strategy

What Makes an Owner the Best

The Best-Owner Life Cycle

Dynamic Portfolio Management

The Myth of Diversification

Constructing the Portfolio

Summary

Notes

26: Performance Management

Adopting a Granular Perspective

Choosing the Right Metrics

Organizational Support

Summary

Notes

27: Mergers and Acquisitions

Value Creation Framework

Empirical Results

Archetypes for Value-Creating Acquisitions

More Difficult Strategies for Creating Value from Acquisitions

Estimating Operating Improvements

How to Pay: In Cash or in Stock?

Focus on Value Creation, Not Accounting

Characteristics of Better Acquirers

Summary

Notes

28: Divestitures

Value Creation from Divestitures

Why Executives Shy Away from Divestitures

Assessing Potential Value from Divestitures

Deciding on Transaction Type

Summary

Notes

29: Capital Structure, Dividends, and Share Repurchases

A Practical Framework

Setting a Target Capital Structure

Deciding on Payout and Financing

Creating Value from Financial Engineering

A Comprehensive Case Example

Summary

Notes

30: Investor Communications

Objectives of Investor Communications

Intrinsic Value vs. Market Value

Which Investors Matter?

Communicating with Intrinsic Investors

Listening to Investors

Earnings Guidance

Meeting Consensus Earnings Forecasts

Summary

Notes

Part Five: Special Situations

31: Emerging Markets

Historical Analysis

Forecasting Cash Flows

Incorporating Country Risk in Scenario DCF Valuation

Estimating Cost of Capital in Emerging Markets

Calculating and Interpreting Results

Summary

Notes

32: Valuing High-Growth Companies

A Valuation Process for High-Growth Companies

Uncertainty Is Here to Stay

Summary

Notes

33: Cyclical Companies

Share Price Behavior

An Approach to Valuing Cyclical Companies

Implications for Managing Cyclical Companies

Summary

Notes

34: Banks

Economics of Banking

Principles of Bank Valuation

Complications in Bank Valuations

Summary

Notes

35: Flexibility

Uncertainty, Flexibility, and Value

Managing Flexibility

Methods for Valuing Flexibility

Four Steps to Valuing Flexibility

Real-Option Valuation and Decision Tree Analysis: A Numerical Example

Summary

Notes

Appendix A: Discounted Economic Profit Equals Discounted Free Cash Flow

Proof Using Perpetuities

Generalized Proof

Note

Appendix B: Derivation of Free Cash Flow, Weighted Average Cost of Capital, and Adjusted Present Value

Enterprise Discounted Cash Flow

Adjusted Present Value

Notes

Appendix C: Levering and Unlevering the Cost of Equity

Unlevered Cost of Equity

Levered Cost of Equity

Levered Beta

Appendix D: Leverage and the Price-to-Earnings Multiple

Step 1: Defining Unlevered P/E

Step 2: Linking Net Income to NOPLAT

Step 3: Deriving Levered P/E

Appendix E: Other Capital Structure Issues

Pecking-Order Theory

Market-Based Rating Approach

Leverage, Coverage, and Solvency

Notes

Appendix F: Technical Issues in Estimating the Market Risk Premium

Notes

Index

Advert

EULA

Guide

Cover

Table of Contents

Preface

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About the Authors

The authors are all current or former consultants of McKinsey & Company's corporate-finance practice. Collectively they have more than 70 years of experience in consulting and financial education.

Tim Koller is a partner in McKinsey's New York office, where he leads a global team of corporate-finance expert consultants. In his 30 years in consulting, Tim has served clients globally on corporate strategy and capital markets, mergers and acquisitions (M&A) transactions, and value-based management. He leads the firm's research activities in valuation and capital markets. Before joining McKinsey, he worked with Stern Stewart & Company and with Mobil Corporation. He received his MBA from the University of Chicago.

Marc Goedhart is a senior expert in McKinsey's Amsterdam office and leads the firm's Corporate Performance Center in Europe. Over the past 20 years, 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 Bloomberg Businessweek as one of America's top business school instructors, he teaches courses on corporate valuation and private equity 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. A former consultant with McKinsey, he received his PhD from the University of California at Los Angeles.

McKinsey & Company is a global management-consulting firm that serves leading businesses, governments, nongovernmental organizations, and not-for-profits across a wide range of industries and functions, helping them make distinctive, lasting, and substantial improvements in performance and realize their most important goals. McKinsey consultants serve clients in every region from a network of over 100 offices in more than 60 countries, advising on topics including strategy, finance, operations, organization, technology, marketing and sales, risk, and sustainability and resource productivity.

Preface

The first edition of this book appeared in 1990, and we are encouraged that it continues to attract readers around the world. We believe the book appeals to readers everywhere because the approach it advocates is grounded in universal economic principles. While we continue to improve, update, and expand the text as our experience grows and as business and finance continue to evolve, those universal principles do not change.

The 25 years since that first edition have been a remarkable period in business history, and managers and investors continue to face opportunities and challenges emerging from it. The events of the economic crisis that began in 2007, as well as the Internet boom and its fallout almost a decade earlier, have strengthened our conviction that the core principles of value creation are general economic rules that continue to apply in all market circumstances. Thus, the extraordinarily high anticipated profits represented by stock prices during the Internet bubble never materialized, because there was no “new economy.” Similarly, the extraordinarily high profits seen in the financial sector for the two years preceding the start of the 2007–2009 financial crisis were overstated, as subsequent losses demonstrated. The laws of competition should have alerted investors that those extraordinary profits couldn't last and might not be real.

Over time we have also seen confirmed that for some companies, some of the time, the stock market may not be a reliable indicator of value. Knowing that value signals from the stock market may occasionally be unreliable makes us even more certain that managers need at all times to understand the underlying, intrinsic value of their company and how it can create more value. In our view, clear thinking about valuation and skill in using valuation to guide business decisions are prerequisites for company success.

Today, after six years of sluggish recovery in the United States and stagnation in Europe, calls mount for changes in the nature of shareholder capitalism. We find that the blame for a poorly performing economy should not be placed on the pursuit of shareholder value creation, but on a misguided focus on short-term performance that is inconsistent with the value-creation principles we describe in this book. Creating value for shareholders does not mean pumping up today's share price. It means creating value for the collective of current and future shareholders by applying the techniques explained in this book.

Why This Book

Not all CEOs, business managers, and financial managers possess a deep understanding of value, although they need to understand it fully if they are to do their jobs well and fulfill their responsibilities. This book offers them the necessary understanding, and its practical intent reflects its origin as a handbook for McKinsey consultants. We publish it for the benefit of current and future managers who want their companies to create value, and also for their investors. It aims to demystify the field of valuation and to clarify the linkages between strategy and finance. So while it draws on leading-edge academic thinking, it is primarily a how-to book and one we hope you will use again and again. This is no coffee-table tome: if we have done our job well, it will soon be full of underlining, margin notations, and highlighting.

The book's messages are simple: Companies thrive when they create real economic value for their shareholders. Companies create value by investing capital at rates of return that exceed their cost of capital. These two truths apply across time and geography. The book explains why these core principles of value creation are genuine and how companies can increase value by applying them.

The technical chapters of the book aim to explain, step-by-step, how to do valuation well. We spell out valuation frameworks that we use in our consulting work, and we illustrate them with detailed case studies that highlight the practical judgments involved in developing and using valuations. Just as important, the management chapters discuss how to use valuation to make good decisions about courses of action for a company. Specifically, they will help business managers understand how to:

Decide among alternative business strategies by estimating the value of each strategic choice.

Develop a corporate portfolio strategy, based on understanding which business units a corporate parent is best positioned to own and which might perform better under someone else's ownership.

Assess major transactions, including acquisitions, divestitures, and restructurings.

Improve a company's performance management systems to align the organization's various parts to create value.

Communicate effectively with investors, including whom to talk with and listen to, and how.

Design an effective capital structure to support the corporation's strategy and minimize the risk of financial distress.

Structure of the Book

In this sixth edition, we continue to expand the practical application of finance to real business problems, reflecting the economic events of the past decade, new developments in academic finance, and the authors' own experiences. The edition is organized in six parts, each with a distinct focus.

Part One, “Foundations of Value,” provides an overview of value creation. We make the case that managers should focus on long-term value creation for current and future shareholders, not just some of today's shareholders looking for an immediate pop in the share price. We explain the two core principles of value creation: (1) the idea that return on invested capital and growth drive cash flow, which in turn drives value, and (2) the conservation of value principle, which says that anything that doesn't increase cash flow doesn't create value (unless it reduces risk). We devote a chapter each to return on invested capital and to growth, including strategic principles and empirical insights.

Part Two, “Core Valuation Techniques,” is a self-contained handbook for using discounted cash flow (DCF) to value a company. The reader will learn how to analyze historical performance, forecast free cash flows, estimate the appropriate opportunity cost of capital, identify sources of value, and interpret results. We also show how to use multiples of comparable companies to supplement DCF valuations.

Part Three, “Advanced Valuation Techniques,” explains how to analyze and incorporate in your valuation such complex issues as taxes, pensions, reserves, inflation, and foreign currency. Part Three also includes a comprehensive case valuing Heineken N.V., the Dutch brewer, illustrating how to apply both the core and advanced valuation techniques.

Part Four, “Managing for Value,” applies the value-creation principles to practical decisions that managers face. It explains how to design a portfolio of businesses; how to create value through mergers, acquisitions, and divestitures; how to construct an appropriate capital structure; and how companies can improve their communications with the financial markets.

Part Five, “Special Situations,” is devoted to valuation in more complex contexts. It explores the challenges of valuing high-growth companies, companies in emerging markets, cyclical companies, and banks. In addition, it shows how uncertainty and flexibility affect value, and how to apply option-pricing theory and decision trees in valuations.

Valuation Spreadsheet

An Excel spreadsheet valuation model is available via Web download. This valuation model is similar to the model we use in practice. Practitioners will find the model easy to use in a variety of situations: mergers and acquisitions, valuing business units for restructuring or value-based management, or testing the implications of major strategic decisions on the value of your company. We accept no responsibility for any decisions based on your inputs to the model. If you would like to purchase the model (ISBN 978-1-118-87366-3 or ISBN 978-1-118-87374-8), please call [phone], or visit www.wileyvaluation.com.

Acknowledgments

No book is solely the effort of its authors. This book is certainly no exception, especially since it grew out of the collective work of McKinsey's corporate-finance practice and the experiences of its consultants throughout the world.