Why do firms emphasize the DCF approach so much during interviews when precedents are the ones used most in practice?

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We use DCF exclusively in our practice (ER).

Why? DCF is way too theoretical / academic

Mainly because DCFs provide a good framework to discuss / quiz core financial concepts - capital structure / cost of capital, business value drivers, FCF, etc. are all important to understand and are embedded within the DCF. While a DCF in aggregate is generally too theoretical to be of practical value, talking about it in an interview can give a sense of how well the candidate understands the fundamentals of finance

There’s one right answer to this: investment banks and other advisors use DCFs because it’s the preferred valuation method of the Delaware courts.

In practice, DCFs are heavily emphasized in litigation/fairness, though I’d agree that precedents are probably what principals most think about.

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