Value: The Four Cornerstones of Corporate Finance - Hardcover

by McKinsey & Company Inc (Author), Tim Koller (Author), Richard Dobbs (Author)

An accessible guide to the essential issues of corporate finance

While you can find numerous books focused on the topic of corporate finance, few offer the type of information managers need to help them make important decisions day in and day out.

Value explores the core of corporate finance without getting bogged down in numbers and is intended to give managers an accessible guide to both the foundations and applications of corporate finance. Filled with in-depth insights from experts at McKinsey & Company, this reliable resource takes a much more qualitative approach to what the authors consider a lost art.

• Discusses the four foundational principles of corporate finance
• Effectively applies the theory of value creation to our economy
• Examines ways to maintain and grow value through mergers, acquisitions, and portfolio management
• Addresses how to ensure your company has the right governance, performance measurement, and internal discussions to encourage value-creating decisions

A perfect companion to the Fifth Edition of Valuation, this book will put the various issues associated with corporate finance in perspective.

Front Jacket

From the team behind Valuation--the #1 bestselling reference on corporate finance--comes a decision-making guide for all executives to use as they create, manage, and sustain shareholder value.

Corporate leaders are regularly confronted with conventional wisdom and half-truths about value creation. They're given conflicting advice about what will or won't appeal to investors, often contradicting their own judgment about what builds lasting worth in their companies and the economy.

In Value: The Four Cornerstones of Corporate Finance, partners from the management consulting firm of McKinsey & Company describe the basic principles of value creation and their relevance. Internalizing these principles--or cornerstones--gives decision makers the independence and courage they need to challenge conventional wisdom, defy half-truths, and build thriving businesses.

The four cornerstones are:

• The Core of Value: a business's value is driven by its growth and return on capital, and resulting cash flows
• The Conservation of Value: value is created when companies generate higher cash flows, not by simply rearranging investors' claims on cash flows
• The Expectations Treadmill: movements in company share prices reflect changes in the stock market's expectations, not just underlying performance
• The Best Owner: the value of a business is not an absolute but, rather, depends on who is managing it and the strategy pursued

While there are many books that cover selected topics within corporate finance--often for specialized practitioners--it's the rare book that offers leaders a unifying viewpoint of business. Value is that book.

Back Jacket

Praise for VALUE

"Value will help senior leaders and their boards act on bold ideas for creating value in the businesses they lead. The four principles of value creation are a concise guide to growing and shaping companies."
-- Ed Breen, Chairman and Chief Executive Officer, Tyco International Ltd.

"In a complex business world, we shouldn't overlook the relatively simple financial principles that underlie the creation of long-term shareholder value. This book gives corporate leaders a clear base of knowledge for creating and sustaining value under any economic, industry, or company circumstances."
-- Dominic J. Caruso, Chief Financial Officer, Johnson & Johnson

"More than a handbook, this is the bible of value creation. It should be read by corporate leaders across the entire spectrum. It also reminds us not to ignore the abiding financial principles that guide companies to long-term value creation."
-- Stefan Krause, Chief Financial Officer, Member of the Management Board, Deutsche Bank AG

"A valuable source of guidance for business leaders who are focused on creating real, lasting value."
-- Mark Loughridge, Senior Vice President and Chief Financial Officer, Finance and Enterprise Transformation, IBM Corporation

"A very useful, no-nonsense guide for creating shareholder value. Competition, capital structure, acquisitions, buybacks, dividends, and more--it's all here with straightforward principles and examples."
-- Keith S. Sherin, Vice Chairman and Chief Financial Officer, General Electric Company

"If more owners and executives had the overriding objective of long-term value creation--and enough knowledge about how to create it--then our financial world would be a more stable one."
-- Rajiv Singh, Vice Chairman, DLF Limited

"Value cuts through clutter and myopia to provide a sound foundation for leaders who are building enterprises that thrive and serve society."
-- Daniel Vasella, MD, Chairman, Novartis AG

Author Biography

McKINSEY & COMPANY is a global management consulting firm that helps leading private, public, and social-sector organizations make distinctive, lasting, and substantial performance improvements. With consultants deployed from more than ninety offices in over fifty countries, McKinsey advises companies on strategic, operational, organizational, financial, and technological issues.

TIM KOLLER leads the firm's research activities in valuation and capital market issues. He advises clients globally on corporate strategy, capital markets, M&A, and value-based management. Tim is a coauthor of Valuation: Measuring and Managing the Value of Companies.

RICHARD DOBBS is a director of the McKinsey Global Institute, the firm's business and economics research arm. He advises Korean and other Asian companies and governments on strategy, economics, and M&A issues. Richard is an associate fellow of University of Oxford's Saïd Business School.

BILL HUYETT advises clients in healthcare and other technology-intensive industries on corporate strategy, M&A, product development and commercialization, and corporate leadership. Bill is active on several not-for-profit boards in basic life sciences research.