How to make assumptions?
Ignore title but associate 1 at pe shop. Building a model for a company based on their data room (no external dd right now) and just wondering how people make defendable assumptions? E.g. management say that they will make 1,000 new contracts in 2 years. I think this is too bullish but what do I put? What would I research to create a plausible number? Is it all adjusted once external dd is involved?
Following
What have they done historically? Are there public comps in the market? If so, how many can they do in a year? How many employees does it take to accomplish that? If they need a bunch of additional employees to realistically execute, are they located in a market that will allow them to scale the employee base that quickly? What other constraints are there that would prevent them from accomplishing that goal, and what can you learn about their ability to overcome those constraints?
Following
Two paths:
=GOALSEEK(20% IRR)
Most accurate
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