OpCo: banker DCF conventions
An operating company discounted cash flow built to standard banking conventions, from revenue through unlevered free cash flow to enterprise value.
Every number below is checked against an independent reference implementation on every commit — period by period, and on each metric, inside a declared tolerance. See benchmark methodology.
The case
A sell-side banker's discounted cash flow valuation of an enterprise-software business. The difficulty is entirely in the timing. The valuation date is 30 September and the fiscal year ends 30 June, so the first forecast period is a nine-month stub and the full years that follow sit at 1.25, 2.25, 3.25 and 4.25 years out rather than at whole numbers. Cash flows are discounted mid-period; the terminal value is not.
The reference
Banker's discussion materials filed as an exhibit to a merger document. It gives the unlevered free cash flow build-up line by line, the discount rate range, the terminal method and multiple, the discounting convention, the dilution assumption, and a 3x3 grid of implied enterprise values — more than most fairness opinions, which disclose a value range and little else.
Not redistributable. The filer retains copyright, so figures are asserted against and the document is not vendored. The exhibit uses code names for the parties, so the case describes the analysis rather than the company.
What it exercises
| Pack | opco |
| Declared | six native streams |
| Language features | native streams placed on specific dates to carry a convention |
| Conventions | mid-period discounting, a stub period at its own midpoint, full years on quarter-year boundaries, a terminal value discounted whole, cumulative dilution |
The result
model.npv = 15,764 against the filing's published 15,764, at the center of
the disclosed grid — 10.375% discount rate, 25.0x terminal multiple.
All nine cells of the grid reconcile; the worst is +1.17 on $19bn. The other eight need a different rate or multiple per run, so the asserted cell is the center one.
The delta
±1 is the floor the source can support: the filing rounds to whole millions and its build-up lines round the same way. The engine's own agreement on the asserted cell is +0.16.
The convention is asymmetric: flows are discounted mid-period and the terminal value whole, a terminal value being a price struck at a point in time. The filing's own figures confirm it.
Run configuration
{
"deterministic": {
"annual_discount_rate": 0.10375
}
}Verified results
Checked period by period: 6 series across 8 periods — 48 values in all, each within ±0.001 of the reference.
opco.ufcf.stub_fy25opco.ufcf.fy26opco.ufcf.fy27opco.ufcf.fy28opco.ufcf.fy29opco.exit.value
Summary metrics for the base run:
| Metric | Value | Tolerance |
|---|---|---|
model.npv | 15,764 | ±1 |