Module II· Football Field & SensitivitiesIntermediate
Question
Why do you show a range instead of a point value in a valuation?
Answer
Mechanics
A range approach reflects real valuation uncertainty. A point estimate is pseudo-precision — it suggests more clarity than the methodology delivers. A range shows:
- Method differences (DCF intrinsic vs. comps market-based).
- Assumption sensitivities.
- Buyer-type differences (strategic premium vs. financial floor). Standard range: ±10–20% around the mid-point for a mature asset, ±25–40% for growth companies.
Deep diveShow more details
Pitch tip
An 'EV range of $900–1,150m' is more defensible than 'EV $1,025m' — it gives negotiating room and reduces the risk of being wrong later.