Inside the Strategy Room 290. Tim Koller reflects on three decades of Valuation at McKinsey
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Feb 12, 2026 
Tim Koller, longtime McKinsey partner and co-author of Valuation, reflects on three decades shaping corporate finance thinking. He traces the book’s rise from an internal binder to a global reference. Listens to how core ideas like discounted cash flows, growth, and return on capital stayed central. Covers additions for sustainability, digital, AI, and lessons from market bubbles and practice.
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Humble Origins As A Three‑Ring Binder
- Valuation began as an internal three-ring binder at McKinsey to standardize analysis across the firm.
- Publishers later turned that handbook into the first edition of Valuation when no competing book existed.
Return On Capital And Growth Drive Value
- The book's core, unchanged idea is valuing companies by discounted cash flows driven by return on capital and growth.
- Practical valuation focuses first on analyzing return on capital and realistic growth, not accounting headlines.
Dot‑Com Criticism And Vindication
- During the dot‑com bubble Tim was criticized for insisting value must translate into cash flows.
- He says the bubble proved cash‑flow fundamentals ultimately determine long‑term value.
