How do you value something? It seems simple enough. Since the beginning of commerce thousands of years ago, people have been asserting the value of enterprises. Yet, the math and specific logic of that exercise is only about a century old.

For thirty of those years, Tim Koller and his colleagues at McKinsey, the consultancy, have been in the forefront of how to think about value and how to measure it. The first edition of Valuation: Measuring and Managing the Value of Companies (Wiley) came out in 1990; this is the seventh iteration, so Koller has been through numerous ups and downs.

His calm and cool reasoning should be required reading for all business managers and investors. 

Daniel Peris is Senior Vice President at Federated Investors in Pittsburgh. Trained as a historian of modern Russia, he is the author most recently of Getting Back to Business: Why Modern Portfolio Theory Fails Investors. You can follow him on Twitter @HistoryInvestor or at http://www.strategicdividendinvestor.com

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