TIP725: First Principles of Valuation w/ Tim Koller
On today’s episode, Clay is joined by Tim Koller to discuss all things valuation.
Tim is the lead author of Valuation: Measuring and Managing the Value of Companies which is the #1 best-selling guide to business valuation. This book—now in its eighth edition—has sold more than one million copies, and is used as a textbook at top business schools such as Wharton School, University of Chicago, MIT, INSEAD, Tuck School of Business, and Northwestern University.
As a Partner at McKinsey & Company, Tim combines broad cross-sector experience with decades of service to clients in value creation, corporate strategy, capital-markets issues, and M&A transactions.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro
01:45 - How companies create shareholder value.
05:13 - The common misconceptions related to creating shareholder value.
13:54 - How managers should think about return on invested capital.
28:08 - Why it’s so common for managers to not take a long-term approach.
33:16 - How return on invested capital impacts a company’s valuation.
46:30 - How Tim thinks about the vast differences in returns we’ve seen in the US relative to Europe.
And so much more!
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
- Join Clay and a select group of passionate value investors for a retreat in Big Sky, Montana. Learn more here.
- Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
- Tim’s book: Valuation.
- McKinsey’s website.
- McKinsey’s insights: McKinsey on Finance.
- Related Episode: TIP577: Valuation Masterclass w/ Aswath Damodaran.
- Follow Tim on LinkedIn.
- Follow Clay on LinkedIn & X.
- Check out all the books mentioned and discussed in our podcast episodes here.
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