Valuation: Measuring and Managing the Value of Companies
811 pages, Wiley
This is the bible of valuation, a book that we often see on bankers' desk and a good reference guide for investment banking analysts and wanabee analysts. It was written by McKinsey consultants and a Wharton professor. While it is quite a big book (811 pages!), it is a relatively easy read and has some case studies that help understand what is exactly happening in a DCF valuation. If you work for an investment bank, you might be able to request your team to pay for it. If you are a student, that wants to go into investment banking, it is a good investment.
Damodaran on Valuation: Security Analysis for Investment and Corporate Finance
464 pages, Wiley
This is the book written by finance guru and New York University Finance professor Damodaran. Its is lighter than the McKinsey Valuation book, but nevertheless very comprehensive and go through all the key topics in valuation including synergies, cost of equity calculation, CAPM, contingent claim valuation, etc. A big positive is that you can also get additional explanations and free excel models on Damodaran's website here, which is a really fantastic resource.
Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions
304 pages, Wiley
This is another book we recommend, which is a bit more practical than the other two. It has a lot of links to online models which is quite useful. Basically this book is more about how valuation is done "in practice" at investment banks, rather than a pure theoretical book. I would say that if you do not want to bother about fully understanding the academic rationale of valuation and want to purely be ready for an investment banking job, this is the shortcut. Personally, I would recommend getting one of the books above and maybe buy this one if you want a bit of practice before starting the job -but you'll probably get the same practice during investment bank's training programmes anyway.
- previously published at AskIvy.com