Necessity of reaching steady state in a DCF
If I'm forecasting a company to have negative FCF in Y10, could I instead limit the DCF to 5 years (thereby increasing the accuracy of the forecast) and use an EV/EBITDA exit multiple given the company has positive EBITDA?
If it's not clear, I'm basically asking whether it's okay to use exit multiples on companies that haven't reached steady state by the end of the forecasting period. Thanks.
Hi liambdesmond, whoops, looks like nobody chimed in here.... maybe one of these discussions below is relevant:
More suggestions...
You're welcome.
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