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 Strategy & Corporate Finance Practice and the experiences of its consultants throughout the world.

Most important, we would like to thank the late Tom Copeland and Jack Murrin, two of the coauthors of the first three editions of this book. We are deeply indebted to them for establishing the book's early success, for mentoring the current authors, and for their hard work in providing the foundations on which this edition builds.

Ennius Bergsma deserves our special thanks. Ennius initiated the development of McKinsey's Strategy & Corporate Finance Practice in the mid-1980s. He inspired the original internal McKinsey valuation handbook and mustered the support and sponsorship to turn that handbook into a real book for an external audience.

Connor Guy, our lead editor, ensured that our ideas were expressed clearly and concisely. Jonathon Berlin and his team edited and oversaw the production of more than 400 exhibits, ensuring that they were carefully aligned with the text. Karen Schenkenfelder provided careful editing and feedback throughout the process. We are indebted to her excellent eye for detail.

The intellectual origins of this book lie in the present-value method of capital budgeting and in the valuation approach developed by Nobel laureates Merton Miller and Franco Modigliani in their 1961 Journal of Business article titled "Dividend Policy, Growth, and the Valuation of Shares." Others have gone far to popularize their approach. In particular, Professor Alfred Rappaport (Northwestern University, professor emeritus) and the late Joel Stern (Stern Stewart & Co.) were among the first to extend the Miller-Modigliani enterprise valuation formula to real-world applications.

We would like to acknowledge those who have personally shaped our careers and knowledge of valuation, corporate finance, and strategy. For their support, teachings, and inspiration, we thank Buford Alexander, Tony Bernardo, Chris Bradley, Richard Dobbs, the late Mikel Dodd, Bernie Ferrari, Dick Foster, Martin Hirt, Bob Holthausen, Bill Huyett, Rob Kazanjian, John Kelleher, Dan Lovallo, Michael Gibbons, Ofer Nemirovsky, Eduardo Schwartz, Chandan Sengupta, Sven Smit, the late Jaap Spronk, the late Joel Stern, Bennett Stewart, Robert Uhlaner, Sunil Wahal, Ivo Welch, and Loek Zonnenberg.

Tim and Marc are founders of McKinsey's Strategy & Corporate Finance Insights team, a group of dedicated corporate-finance experts who influence our thinking every day. A special thank-you to Bernie Ferrari, who initiated the group and nurtured its development, and to the earliest members of the team who stuck with it and became its leaders, including Susan Nolen Foushee, Jean-Hugues Monier, and Werner Rehm. Other leaders we are indebted to include Haripreet Batra, Alok Bothra, Josue Calderon, Marc de Jong, Dago Diedrich, Prateek Gakhar, Abhishek Goel, Anuj Gupta, Chetan Gupta, Peeyush Karnani, Tarun Khurana, David Kohn, Ankit Mittal, Chris Mulligan, Siddharth Periwal, Abhishek Saxena, and Zane Williams.

We wish to thank the following colleagues, who coauthored or provided analytical support to individual chapters:

• Chapter 1, "Why Value Value?": Michael Birshan and Andy West
• Chapter 5, "The Alchemy of Stock Market Performance": Rosen Kotsev
• Chapter 6, "The Stock Market and Economic Fundamentals": Vartika Gupta and Peter Stumpner
• Chapter 7, "The Stock Market Is Smarter Than You Think": Marc Silberstein
• Chapter 8, "Return on Invested Capital": Susan Nolen Foushee
• Chapter 9, "Growth": Rebecca Doherty and Laura Laberge
• Chapter 28, "Corporate Portfolio Strategy": Jamie Koenig, Paul Morgan, and Justin Sanders
• Chapter 30, "Strategic Management: Governance, Processes, and Decision Making": Aaron de Smet, Zuzanna Kraszewska, and Derek Schatz
• Chapter 31, "Acquisitions," Patrick McCurdy and Liz Wol, with support from Riccardo Andreola
• Chapter 32, "Divestitures": Jamie Koenig and Anna Mattsson, with support from Raghav Kapur and Mariola Ndrio
• Chapter 34, "Sustainability": Robin Nuttall, Werner Rehm, and Claudia Rexhausen, with support from Alex Harman
• Chapter 36, "Investor Communications": John Evers and Werner Rehm
• Chapter 37, "Leveraged Buyouts": Caleb Carter
• Chapter 41, "Emerging Markets": Anuj Gupta
• Chapter 42, "Cyclical Companies": Marco de Heer, whose dissertation formed the basis for this chapter
• Chapter 43, "Banks": Alok Bothra and Zane Williams

We extend thanks also to the Capabilities and Insights team, led by Rosen Kotsev. The team, which helped significantly in preparing analyses for us, includes Rafael Araya, Roerich Bansal, Satvik Bansal, Martin Barboza, Aya Benlakhder, Margarida Carrasqueira, Pedro Catarino, Abhranil Das, Carlo Eyzaguirre, Igor Ferreira, Jyotsna Goel, Gaukhar Janburshina, Raghav Kapur, Dilpreet Kaur, Kumari Monika, Carolina Oreamuno, Victor Rojas, Sapna Sharma, José Afonso Silva, Isaac Silvestre, and Ricardo Solis Arley. Other consultants who contributed include Andre Gaeta, Paulo Guimaraes, Daniel Guzman, and Martin Perez.

We've made extensive use of McKinsey Value Intelligence (MVI), led by Peter Stumpner and Vartika Gupta, which provided data and analyses in this book. MVI is a large curated database of company financial information, which includes both raw data and synthesized insights. Dick Foster, a former McKinsey colleague and mentor, inspired the development of McKinsey Value Intelligence.

Michael Cichello, professor of finance at the Smith School of Business at the University of Maryland, expertly prepared the teaching materials that accompany this book, including the syllabus, end-of-chapter problems and answers for the university edition, and exam questions and answers. These teaching materials are an essential supplement for professors and students using this book for finance courses. Thank you to our Capabilities and Insights team for their help in preparing and answering questions for these materials.

Of course, we could not have devoted the time and energy to this book without the support and encouragement of McKinsey's Strategy & Corporate Finance Practice leadership, particularly Michael Birshan and Andy West. Also, Raju Narisetti and Lucia Rahilly ensured that we received superior editorial support from McKinsey's external publishing team. Thanks also to Sneha Vats, Ramya DRozario, and their team, who facilitated the approvals process for mentions of specific company names.

We would like to thank again all those who contributed to the first seven editions. We owe a special debt to Dave Furer for help and late nights developing the original drafts of this book more than 35 years ago. Bill Javetski was our rigorous thought partner and editor for the fourth through seventh editions, honing our writing skills. Dennis Swinford edited and managed the more than 300 exhibits in those editions. The first seven editions and this edition drew upon work, ideas, and analyses from Carlos Abad, Paul Adam, Ashish Kumar Agarwal, Buford Alexander, Petri Allas, Alexandre Amson, André Annema, the late Pat Anslinger, Vladimir Antikarov, Ali Asghar, Bill Barnett, Dan Bergman, Olivier Berlage, Peter Bisson, the late Joel Bleeke, Bing Cao, Nidhi Chadda, Carrie Chen, Steve Coley, Kevin Coyne, Bas Deelder, Marco de Heer, Johan Depraetere, Marijn de Wit, Pieter de Wit, the late Mikel Dodd, Lee Dranikoff, Will Draper, David Ernst, Bill Fallon, George Fenn, Susan Nolen Foushee, Russ Fradin, Gabriel Garcia, Richard Gerards, Alo Ghosh, Irina Grigorenko, Fredrik Gustavsson, Keiko Honda, Alice Hu, Régis Huc, Ritesh Jain, Mimi James, Mauricio Jaramillo, Bin Jiang, Chris Jones, William Jones, Mary Beth Joyce, Phil Keenan, Phil Kholos, David Krieger, Shyanjaw Kuo, Michael Kuritzky, Bill Lewis, Kurt Losert, Harry Markl, Yuri Maslov, Perry Moilinoff, Fabienne Moimaux, Jean-Hugues Monier, Mike Murray, Terence Nahar, Rafic Naja, Juan Ocampo, Martijn Olthof, Neha Patel, Vijen Patel, John Patience, Bill Pursche, Rishi Raj, S. R. Rajan, Werner Rehm, Frank Richter, Eileen Kelly Rinaudo, David Rothschild, Michael Rudolf, Yasser Salem, Antoon Schneider, Ram Sekar, Meg Smoot, Silvia Stefini, Konrad Stiglbrunner, Saravanan Subramanian, Ahmed Taha, Bill Trent, David Twiddy, Valerie Udale, Sandeep Vaswani, Kim Vogel, Christian von Drathen, Jon Weiner, Jack Welch, Gustavo Wigman, David Willensky, Zane Williams, Jonathan Witter, David Wright, Yan Yang, and Angela Zhang.

For help in coordinating the flow of Zoom meetings, e-mail, and phone calls, we owe our thanks to our assistants, Kate Anderson and Zofia Wisniewska.

We also extend thanks to the team at John Wiley & Sons, including Bill Falloon, Susan Cerra, Katherine Cording, Steve Kyritz, Jean-Karl Martin, and Tom Nery.

Finally, thank you to Melissa Koller, Monique Donders, Kate Wessels, and our children: Katherine, Emily, and Juliana Koller; Max, Julia, and Sarah Goedhart; and Adin, Aurora, Jacob, Lillia, and Nathaniel Wessels. Our wives and families are our true inspirations. This book would not have been possible without...