Inside the Strategy Room 257. The new and timeless truths of valuation
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Jun 25, 2025 
Tim Koller, a partner at McKinsey with over 40 years of experience in corporate finance, and Marc Goedhart, a professor of corporate valuation at Erasmus University, share their insights on the latest edition of their valuation book. They discuss the evolution of valuation concepts amid market uncertainties, emphasizing long-term value creation over short-term gains. The duo explores the differences between private and public company valuations, the impact of market bubbles, and the importance of data-driven decision-making for sustainable growth.
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Prioritize a Strong Fact Base
- Use a strong fact base to simplify management decisions and reduce endless debates.
- Lack of facts leads to philosophy and opinions, making decisions harder.
Timeless Focus on Long-Term Value
- Long-term value creation remains the consistent key message for valuation.
- Satisfying stakeholders like customers and regulators is essential for sustainable cash flow and growth.
Value Through Cash Flow Drivers
- Focus valuation on cash flows driven by long-term revenue growth and return on capital.
- Avoid myths like focusing mainly on accounting earnings per share which mislead true value.
