Why some companies belong to grade AAA.

Fact: Only 9 out of 1,077 (less than 1%) large global companies outperformed their competitors on both revenue growth and profitability over a decade, a McKinsey study finds—confirming that such strong performance is rare.

Characteristics that made the 9 companies outperform:

First, the top nine performers strongly preferred organic growth: they made few acquisitions and divestitures when compared with other companies in their industries. Further, none of the deals these companies made were transformational; that is, no divestiture or acquisition had a value exceeding 30 percent of their market capitalization in the year before the deal.

Second, it was found that all nine companies had higher market-to-book ratios than their competitors did. (The M/B ratio is a measure of corporate performance that compares a company’s market cap with its book value.) In fact, these top performers logged M/B ratios more than two times higher than those of poor and average performers, as well as 25 percent or more higher than those of companies that excelled at either revenue growth or profitability, but not both. These findings indicate that the nine companies rely on intangible assets more than the rest do. Their ability to generate value from knowledge-intensive intangibles (such as copyrights, trade secrets, or strong brands) represents a good starting point for further exploration of their superior performance.