Remove Comps Remove Risk-free Rate Remove Terminal Value
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9 Startup Valuation Methods: 5 to Use, 4 to Avoid

Equidam

Furthermore, any quantitative valuation method, particularly the Discounted Cash Flow (DCF) approach, is highly sensitive to the underlying assumptions about growth rates, discount rates, and terminal values. We calculate the cost of equity using the Capital Asset Pricing Model (CAPM). we use a range of 0.1%

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Discounted-Cash-Flow-Analysis: Your Complete Guide with Examples

Valutico

the multiple based or ‘ comps ’ (comparable company analysis) approach. Well, the short answer is after that forecast period where we estimate each year’s cash flows then discount them, we add a single number at the end to account for all the theoretical years in the future, called the Terminal Value (TV). The first is 1.

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Startup Valuation: The Ultimate Guide

Equidam

10] , [23] , [2] Discount Rate: The rate used to discount future cash flows is typically the cost of equity, calculated via the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium. [23] 29] TV = (Final Year EBITDA * Industry Multiple * Final Year Survival Rate).

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Startup Valuation: The Ultimate Guide for Founders

Equidam

” [1] [2] [4] [15] [19] It estimates a future exit value (often based on projected earnings and industry multiples) and works backward, using the high ROI targets VCs require (due to portfolio risk), to determine what the company could be worth today to justify that future return. [15] 2] [15] [17].