DCF Valuation Builder for M&A Analysis
Build institutional-grade DCF models with WACC, scenarios, and audit-ready assumptions
What You Can Do
You'll build comprehensive DCF models that automate explicit forecast periods, terminal value calculations, and weighted average cost of capital derivation. The skill produces audit-ready assumption documentation, multi-scenario sensitivity tables, and valuation ranges across bear/base/bull cases—all formatted for board presentations and fairness opinions. You'll stress-test equity value assumptions and compare DCF outputs to trading multiples and M&A precedent data.
Features
derives risk-free rate, equity risk premium, beta, and blended cost of debt to establish discount rates
builds bear, base, and bull case projections with distinct revenue growth, margin, and exit assumptions
stress-tests equity value across revenue growth, EBITDA margin, and terminal growth rate ranges
calculates perpetuity growth and exit multiple methods with clear assumption documentation
generates assumption documentation with source citations for each input (comparables, historical, market data)
delivers low/mid/high equity value estimates with confidence intervals for IC review
bridges DCF valuation to trading multiples and M&A precedent comparisons
Example Output
DCF Model Summary (Target: Tech Acme Inc.)
Base Case Valuation: $450M
- Bear Case: $380M (conservative margins, higher WACC)
- Bull Case: $520M (market share gains, lower terminal rate)
WACC Calculation:
- Risk-free rate: 4.5% | Equity risk premium: 6.2% | Beta: 1.1 | Cost of equity: 11.2%
- After-tax cost of debt: 3.8% | Weight equity/debt: 80%/20% | WACC: 9.4%
Sensitivity Table (Equity Value $M):
| Revenue CAGR | 3% WACC | 4% WACC | 5% WACC |
|---|---|---|---|
| 8% | $485 | $450 | $420 |
| 10% | $540 | $502 | $468 |
| 12% | $595 | $555 | $515 |
Key Assumptions (Auditable):
- Explicit forecast: 5 years | Terminal growth: 2.5% | Exit multiple: 12.5x EBITDA (median precedent)
- Revenue CAGR assumptions tied to 3-yr historical trend + market growth analysis
What's Included
- SKILL.md: complete DCF model framework and workflow instructions
- DCF Model Template: pre-structured Excel/spreadsheet skeleton with formula scaffolding
- WACC Calculation Worksheet: input guide for cost of equity, cost of debt, and capital structure derivation
- Sensitivity Analysis Grid: two-way sensitivity table templates (revenue growth × WACC, margin × terminal rate)
- Assumption Documentation Checklist: audit trail template mapping each input to source (comparables, financials, market data)
- Scenario Case Builder: bear/base/bull case setup guide with margin and growth variance logic
Who It's For
- M&A Analysts — valuation professionals building DCF models for acquisition targets and fairness opinions
- Investment Bankers — advisors preparing pitch books and valuation support for client presentations
- Private Equity Associates — deal teams stress-testing acquisition economics and LBO entry assumptions
- Corporate Development Managers — in-house teams evaluating strategic acquisition targets and synergy scenarios
- Equity Research Analysts — sell-side professionals producing intrinsic value estimates and target price updates
Best For
- Acquisition target valuation and fairness opinion preparation
- Multi-scenario DCF modeling with sensitivity stress-testing across 3–5 year explicit forecast periods
- WACC derivation and discount rate benchmarking for institutional credibility
- Assumption documentation and audit trail creation for investment committee and board review
- Valuation range anchoring (DCF vs. trading multiples vs. M&A precedent comparison)
- Deal economic analysis with bear/base/bull case equity value reconciliation
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