HELP: Stub Period (DCF)
Can somebody explain the concept of a "stub period"?
And how would this be incorporated in a DCF model? For example, if there is a stub period Q4 of year 1 or Q3 of year 1. (I understand discount periods change, but not sure why/how)
I've read some sources that a stub period is "a period of time between the transaction closing date and the date of the next fiscal year end". Is this always the correct definition in finance, or just in the context of an LBO?
Thanks!