I want to be clear from the start, this is not a question regarding the differences between unlevered / levered FCF, I am aware of the differences and there are plenty of threads on this site for people who want in-depth explanations of the two.
My question is more toward the people working in the AM / HF space already - specifically on the equity investing side! In your DCF models, which FCF do you use?
I understand theoretically that you should arrive at the same equity value in the end regardless, though is it not easier to just use unlevered FCF in a DCF to get an EV and then just make the usual adjustments (net debt, pensions etc) to get an Equity value vs using a levered FCF where you presumably have to do a bit of debt modelling, which could potentially be a headache and just unnecessary work?
Currently working toward making the move over from IBD to HF / AM and when I am doing my DCF models for stock pitches / valuations, I am doing it the usual IBD way with unlevered FCF > EV > adjustments > equity value...... I would very much appreciate some insight from guys in the industry on this. Thanks!
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