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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 terminalvalues. This sensitivity can lead to the “garbage in, garbage out” problem if assumptions are unrealistic or manipulated.
On the flip side, weak or vague valuation terms can lead to disputes, erode confidence, and even affect governance if LPs feel the General Partner (GP) has too much leeway in marking up (or not marking down) investments. With a yearly cadence, there’s a risk that big changes (up or down) in a startup’s fortune go unreported for months.
When I started offering financial modeling training , I never expected to get questions about a methodology like the Dividend Discount Model (DDM). It can be useful for certain companies, such as power and utility firms and midstream (pipeline) operators in oil & gas … …but it’s also much harder to set up and use than a standard DCF.
The good news is that if you work in mining IB, and your clients produce the cobalt, copper, or lithium that ends up in EV batteries, you can feel good about saving the world. For example, Capital IQ splits up the sector by metal type (aluminum, diversified, copper, gold, precious metals, silver, and steel).
These ratios, like the EBITDA multiple, compare a company’s financial performance (EBITDA, revenue, etc.) to its market value. These multiples are applied to target company’s latest financials such as revenue, earnings and book value of equity to arrive at an estimate of enterprise value or equity value.
But before delving into the exit opportunities and the long-term outlook, let’s start with the fundamentals: Oil & Gas Investment Banking Defined. Because the risk of searching for new energy sources and experimentally drilling is so high, many E&P firms set up joint ventures to distribute the risk.
4] , [3] , [5] Unlike mature, publicly listed companies which are easier to compare using multiples of current earnings (like EBITDA) [3] , startups must be valued based on their projected future; moats, margins and the perceived strength of their future growth trajectory. [3] in 3-7 years).
1] Unlike valuing established public companies with long track records and stable earnings, startup valuation operates in a realm of high uncertainty. [2] 1] Unlike valuing established public companies with long track records and stable earnings, startup valuation operates in a realm of high uncertainty. [2]
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