Discounted Cash Flow Valuation Builder
Build institutional-grade DCF models with normalized financials, rigorous forecasts, and stress t...
What You Can Do
You'll work with Claude to systematically normalize historical financials, establish explicit forecast drivers tied to business fundamentals, calculate weighted average cost of capital components, and stress-test valuations across bear/base/bull scenarios. Claude identifies hidden assumptions, flags unrealistic projections, and ensures methodological consistency—transforming subjective modeling into auditable, defensible valuations that withstand institutional scrutiny.
Features
adjust for one-time items, working capital changes, and capex timing to establish true run-rate earnings baseline
establish driver-based revenue, EBITDA, and free cash flow projections grounded in specific business assumptions
systematically determine cost of equity (CAPM), after-tax cost of debt, and optimal capital structure for your target valuation date
compare perpetuity growth vs. exit multiple approaches and validate long-term assumptions against GDP/inflation benchmarks
build three-case models (bear/base/bull) and sensitivity tables across growth rates, margins, and discount rates
Claude flags unrealistic projections, inconsistent drivers, and missing justifications before you present to investors
track from EBIT through unlevered FCF with transparent add-backs for D&A, capex, and working capital
validate DCF outputs against trading multiples and transaction precedents for reasonableness testing
Example Output
Historical Normalization Summary:
- FY2023 Reported EBITDA: $45M → Adjusted EBITDA: $52M (adds back $7M one-time restructuring, removes discontinued ops)
- Normalized capex: 4.5% of revenue (vs. elevated 6.2% in FY2023 due to facility expansion)
5-Year Base Case Forecast:
- Revenue CAGR: 6.5% (reflects market growth 3% + market share gain 2% + pricing 1.5%)
- EBITDA margin: 18.5% (from 17.2% baseline, improving via operational leverage)
- Unlevered FCF growth: 8.2% (outpaces revenue due to capex normalization)
WACC Calculation (9.2%):
- Cost of equity: 10.8% (risk-free 4.5% + equity risk premium 6% × beta 1.05)
- After-tax cost of debt: 4.2% (5.8% coupon × (1 - 25% tax rate))
- Target structure: 70% equity / 30% debt
DCF Output Across Scenarios:
- Bear case (5% growth, 16% margin): Enterprise value $285M
- Base case (6.5% growth, 18.5% margin): Enterprise value $420M
- Bull case (8% growth, 20% margin): Enterprise value $590M
- Implied equity value range: $245M–$515M (accounting for net debt)
What's Included
- SKILL.md: complete DCF methodology, normalization framework, and assumption-setting guidance
- Historical Normalization Template: structured worksheet for identifying and quantifying one-time items, capex timing, and working capital adjustments
- Forecast Driver Checklist: revenue growth decomposition (market/share/price), margin progression, and capex/NWC assumptions by year
- WACC Calculation Framework: systematic worksheets for cost of equity (CAPM), cost of debt, and capital structure determination
- Sensitivity & Scenario Matrix: three-case model structure (bear/base/bull) with sensitivity tables across discount rate and terminal growth rate
Who It's For
- M&A advisors and investment bankers — building acquisition pricing models and fairness opinions
- Equity research analysts — establishing intrinsic value benchmarks and target prices
- Corporate development teams — evaluating strategic acquisitions and organic investment returns
- Private equity professionals — assessing acquisition targets and modeling levered returns
- Institutional investors — conducting detailed due diligence and valuation-driven investment decisions
Best For
- Business acquisition valuations where defensible pricing and institutional credibility are essential
- Multi-scenario stress testing across macroeconomic, operational, and market-driven cases
- Regulatory fairness opinions requiring transparent assumption documentation and methodology rigor
- Investment committee presentations where assumption clarity and sensitivity analysis drive decision-making
- Comparable valuation validation ensuring DCF outputs align with market trading and transaction precedents
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