Is DCF model bs? I have never it values anything with a bit of accuracy. Mathematically it doesn’t make it possible to value something accurate. Then why do you use it?

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For marketing purposes during sell side M&A processes to highlight how much the company could grow, from what I understand. It’s not a pure science

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It’s not pure BS it values things pretty accurately imo just as long as projections are realistic and you use a conservative discount rate.

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LMM/MM is where you see that often… at least with the deals I’ve been on and the deals my PE friends seen

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Model should work. Assumptions are what drive the results. Your ability to use the right assumptions is what determines who makes money and who takes a bath

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IMO it’s an art not a science. The more you know about a company/industry the better and more realistic the result. So there are use cases in deals. But let’s be real, there are too many factors (constantly changing) for the DCF output to always be reality outside of providing a useful range/sensitivity.

But let’s say you’re a trader/investor, the smartest person in the market, and create a perfect DCF? Well guess what, because you’re too smart how could the rest of the market realize that value i.e. move the price up or down in short - medium term? And in the long term, assumptions don’t = reality… that’s why there will always be gap between “intrinsic” value and market value. So for sake of trading I think there’s no practicality. For value investing maybe, but your “value” is entirely based on assumptions coming true

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It’s an estimate based on certain assumptions- and we all know what assumptions do!

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It’s accurate if the inputs are accurate. Use sensible projections and an honest discount rate and you’ll get a reasonable value estimate. The issue is if you’re pitching a company, a reasonable value estimate probably won’t win you the mandate

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