Who we are
Our team of global finance experts, strategists, and analysts at the Corporate Performance Center (CPC) addresses clients’ questions about valuation and value creation. The Center combines the best of McKinsey’s financial analysis capabilities, proprietary tools and insights, broad industry knowledge, and practical application perspectives. Tim Koller, a world-class expert in the field and the coauthor of Value and Valuation, leads the CPC and works closely with our team of 50 CPC professionals in three hubs.
What we do
We help clients better understand their capital market performance and identify strategic actions to increase shareholder value. Working with McKinsey consulting teams, the CPC helps companies understand market expectations, identify primary sources of value, and develop strategic initiatives to further value creation. Our deep knowledge of finance topics and extensive library of tools and models uniquely positions us to support clients in two areas:
Capital Market Diagnostics (CMDs)
We perform diagnostics on both companies and industries. CMDs provide clients with a holistic perspective on past performance and strategies for improving future performance. They typically include three core analytical components:
- Historical capital market performance: By analyzing the total returns to shareholders (TRS) for a company, its competitors, and the industry, as well as valuation multiples, we help clients understand the key drivers of performance difference (such as growth, profitability, and investor expectations).
- Historical operational performance/benchmarking: We analyze profitability and returns on capital for both the company and its industry segment. This analysis helps clients understand potential improvement areas and the value of addressing performance gaps. We also analyze historical sources of growth, such as portfolio differences and M&A activity, and their impact on overall corporate performance.
- Future performance expectations: We use proprietary models to determine market expectations for growth and profitability for our clients and their competitors. We advise clients on how these expectations differ from their own existing strategies and identify potential initiatives to increase long-term value.
Valuation and Discounted Cash Flow Modeling
We use our in-depth sector knowledge to inform modeling scenarios, understand any gaps between market value and intrinsic value, and shape recommendations for action.
In addition, the CPC provides analytical capabilities and insights on the following topics:
- Investor relations: We help clients better understand their existing investor base and strategically shape future investor communications. We advise clients on who to talk to (i.e., investor segmentation), what to talk about (i.e., disclosure best practices), and how to talk about it (i.e., channel strategy).
- Capital structure: We provide expertise on capital structure questions, such as whether a company would benefit from changes in leverage, dividend level, or share buybacks.
- M&A: Often in collaboration with the M&A/Transactions service line, we conduct a variety of M&A analyses, such as target screening and synergy assessment. We also create pro forma statements to assess the financial impact of M&A and measure the impact of a proposed transaction structure on value distribution.
Proprietary tools and solutions
The CPC has a number of proprietary models that support our Capital Markets Diagnostics. In addition, we developed and maintain the Corporate Performance Analysis Tool (CPAT). This proprietary tool analyzes more than 700 pre-calculated financial items, drawing on consistent data sources and utilizing a clear methodology. It enables McKinsey teams to perform “big data” financial analysis on a large number of companies over a period of up to 50 years. CPAT also includes an interactive tool for instant visual representation of up to 15 years of company financial performance.