xv
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 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 develop-
ment 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.
Bill Javetski, our lead editor, ensured that our ideas were expressed clearly 
and concisely. Dennis Swinford edited and oversaw the production of more 
than 390 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.
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. The team is currently overseen by 
Werner Rehm and Chris Mulligan. Other leaders we are indebted to include 
Haripreet Batra, Matt Bereman, Alok Bothra, Josue Calderon, Susan Nolen 
Foushee, Andre Gaeta, Prateek Gakhar, Abhishek Goel, Baris Guener, Paulo 
Guimaraes, Anuj Gupta, Chetan Gupta, Peeyush Karnani, David Kohn, Tarun 
Khurana, Bharat Lakhwani, Ankit Mittal, Siddharth Periwal, Katherine Peters, 

xvi  Acknowledgments
Abhishek Saxena, João Lopes Sousa, Ram Sekar, Anurag Srivastava, and 
Zane Williams.
We’ve made extensive use of McKinsey’s Corporate Performance Ana-
lytics (CPAnalytics), led by Peter Stumpner, which provided data for the 
analyses in this book. We extend thanks also to the R+I Insights Team, 
led by Josue Calderon and Anuj Gupta. The team, which prepared much 
of the analyses for us, includes Rafael Araya, Roerich Bansal, Martin Bar-
boza, Abhranil Das, Carlo Eyzaguirre, Jyotsna Goel, Dilpreet Kaur, Kumari 
Monika, Carolina Oreamuno, Victor Rojas, and Sapna Sharma. Dick Foster, 
a former McKinsey colleague and mentor, inspired the development of 
CPAnalytics.
Michael Cichello, professor of finance at Georgetown University, expertly 
prepared many of the teaching materials that accompany this book, including 
the 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 Costa Rica research team for their help in preparing and answering ques-
tions for these materials.
Concurrent with the fifth edition, McKinsey published a shorter book, 
titled Value: The Four Cornerstones of Corporate Finance, which explains the 
principles of value and their implications for managers and investors without 
going into the technical detail of this how-to guide. We’ve greatly benefited 
from the ideas of that book’s coauthors, Richard Dobbs and Bill Huyett. 
The intellectual origins of this book lie in the present-value method of capi-
tal 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 Rap-
paport (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. In addition to these 
founders of the discipline, we would also like to acknowledge those who have 
personally shaped our knowledge of valuation, corporate finance, and strat-
egy. For their support, teachings, and inspiration, we thank Buford Alexander, 
Tony Bernardo, Richard Dobbs, the late Mikel Dodd, Bernie Ferrari, Dick Fos-
ter, Bob Holthausen, Bill Huyett, Rob Kazanjian, Ofer Nemirovsky, Eduardo 
Schwartz, Chandan Sengupta, Jaap Spronk, the late Joel Stern, Bennett Stew-
art, Sunil Wahal, and Ivo Welch.
A number of colleagues worked closely with us on the seventh edition, 
providing support that was essential to its completion. In Part One, “Founda-
tions of Value,” David Schwartz, Bill Javetski, and Allen Webb helped with the 
always-difficult task of writing the first chapter to position the book properly. 
The discussion of valuation and ESG in Chapter 6 was based on an article