Corp dev and PE - do you ever truly consider forward projections

From (my) PE perspective:

Forecasts can never take the place of historical data or struggles and at the end of the day, there has to be an underwritable business. When doing my own modeling, I use forecasts as a rough guide (coupled with my own observations, predictions), depending on the most important part of getting the forecasts: talking through them with management / bankers. I would note, that I spend most of my time in mature businesses in mature industries - so most of the companies I look at aren't highly growth dependent regardless.

1. Forecasts serve as talking points - detailed, intelligent forecasts allow for some really interesting conversations with the banker and with management; if either can support their projections- pointing to incoming regulations or specific product lines being launched or an expiring contract - it allows for both a better understanding of the business as well as growing more comfortable with what (and who) you're underwriting.

Although my team is quite risk averse, and thus paying forward multiple is unlikely to be honest, one situation in which I could see this coming to play is the following: If the business has 5 mature locations (with proven ramp, etc) and has 2 locations that have just opened and haven't reached maturity, then perhaps you might be paying off of growth as well as historical figures. Note that earnouts are also quite common in the space as well.

Forecasts that are wildly optimistic are also just really funny sometimes, and man have I seen some wild shit.