DCF Valuation for M&A Due Diligence

Build discounted cash flow models for target company valuation in M&A contexts.

Unit System (Critical)

• Storage: Absolute dollars (raw financial data)
• Calculation: Millions (DCF models expect this)
• Display: Smart formatting (B/M/K based on magnitude)
• Never pass raw stored values directly into DCF calculations without unit conversion

Validation Before Calculation

1. Verify base revenue exists and is non-zero
2. Confirm WACC is between 5-25% (flag outliers with explanation)
3. Terminal growth must be less than WACC (Gordon Growth Model constraint)
4. Projection period: 5-10 years (default 5)
5. Verify EBITDA margins are within plausible industry range