DCF Investment Committee Submission Checklist
Executive Summary
Key Takeaways
- ✓ An investment committee submission is judged on whether the package gives the committee what it needs to interrogate the DCF conclusion, not solely on the model's internal correctness.
- ✓ A DCF conclusion should never be presented to committee in isolation — it belongs alongside a triangulated cross-check, most commonly comparable company multiples or precedent transactions.
- ✓ Sensitivity and scenario tables are a minimum disclosure requirement for any material DCF-based submission, not an optional appendix.
- ✓ Terminal value's share of enterprise value and the full discount rate build should be visible in the submission itself, not held back for a follow-up question.
Purpose¶
This checklist sets out what a DCF-based valuation submission to an investment committee should include, from the perspective of giving the committee what it needs to interrogate the conclusion rather than simply accept it. It complements the DCF Model Review Checklist and DCF Model Audit Checklist, which address the underlying model's construction and structural soundness; this checklist addresses the submission package itself.
1. Triangulation Against Other Methods¶
- [ ] The DCF conclusion is presented alongside, not instead of, a relative valuation cross-check — comparable company multiples, precedent transactions, or both — consistent with the triangulation discipline on DCF vs. Comparable Company Analysis
- [ ] Where more than one valuation method has been calculated, a football field summary presents the range from each method side by side
- [ ] Any material divergence between the DCF and other methods is explicitly addressed in the submission narrative, not left for the committee to notice unprompted
2. Sensitivity and Scenario Disclosure¶
- [ ] A two-way sensitivity table of enterprise or equity value against the discount rate and the terminal growth rate or exit multiple is included, consistent with DCF Sensitivity Analysis
- [ ] A base/upside/downside scenario summary is included, with each scenario's assumption combination internally coherent, consistent with DCF Scenario Analysis
- [ ] Where the submission's materiality warrants it, the key value drivers are ranked by individual impact to focus the committee's diligence questions
3. Terminal Value Disclosure¶
- [ ] Terminal value's share of total enterprise value is stated explicitly in the submission
- [ ] The terminal value method used (perpetuity growth, exit multiple, or both) is stated, along with the resulting figure from each where both were calculated
- [ ] The basis for the terminal growth rate or exit multiple is summarized in the submission, not only available in the underlying model
4. Discount Rate Build Documentation¶
- [ ] The full discount rate build — risk-free rate, beta source, equity risk premium, cost of debt, tax rate, and capital structure weights — is visible within the submission itself
- [ ] The source and as-of date for the market-derived inputs behind the discount rate are disclosed
- [ ] Whether WACC or the cost of equity was used, and why, is stated explicitly where the choice is not self-evident from the business type
5. Presentation Clarity¶
- [ ] The submission clearly distinguishes enterprise value, equity value, and value per share, with the bridge between them shown
- [ ] Key assumptions and their sources are summarized on a single page or slide, rather than requiring the committee to locate them across a lengthy model
- [ ] Charts and tables use consistent units and scales throughout the submission, avoiding ambiguity between, for example, millions and thousands
6. Sign-Off and Version Documentation¶
- [ ] The submission states who built the model, who reviewed it, and on what date
- [ ] Whether an independent structural review or audit has been performed on the underlying model is disclosed, and if not yet performed, this is flagged rather than left implicit
- [ ] The model version and date referenced in the submission match the version actually reviewed, with no unreconciled discrepancy between the submission and the underlying file
Continue Reading¶
Prerequisites¶
- Discounted Cash Flow (DCF) Valuation — the parent pillar
Related Checklists¶
Related Comparisons¶
Related Glossary¶
Related Technical Guides¶
How OXXON tests thisRun a free structural check with FMAE
Frequently Asked Questions
What is the single most common gap in a DCF-based IC submission?
Presenting the DCF's output as a standalone conclusion without a triangulated cross-check — typically comparable company multiples or precedent transactions — alongside it, leaving the committee with no independent basis to sanity-check the number.
Does this checklist replace a structural audit of the underlying model?
No. This checklist addresses what the submission package should contain and how it should be presented to a committee. The underlying model's structural soundness is addressed separately by the [DCF Model Audit Checklist](/fmae-knowledge-centre/checklists/dcf-model-audit-checklist/) and the [DCF Model Review Checklist](/fmae-knowledge-centre/checklists/dcf-model-review-checklist/).
Is a sensitivity table always required in an IC submission?
For any submission material enough to reach an investment committee, yes. A two-way sensitivity table on the discount rate and terminal growth rate or exit multiple is treated as a minimum disclosure requirement, not an optional extra.
What should be disclosed about the discount rate in the submission itself?
The full build — risk-free rate, beta source, equity risk premium, cost of debt, and capital structure weights — should be visible in the submission, not held back for a follow-up question. A committee should not need to request the discount rate build separately from the base submission.
Related Articles
Discounted Cash Flow (DCF) Valuation
Discounted cash flow (DCF) valuation values a business, project, or asset as the present value of the cash flows it is expected to generate in the future. It is the most theoretically grounded of the major valuation methodologies, resting directly on the principle that a dollar of cash flow is worth more today than the same dollar received in the future, and that value is created when future cash flows exceed what capital providers require as compensation for the time value of money and risk. This page is the hub for the Knowledge Centre's DCF content: what DCF is and why it works, how free cash flow and discount rates are built, how terminal value is calculated and stress-tested, the method variants practitioners choose between, and — distinctively — how DCF failure modes map onto FMAE's existing structural audit rule taxonomy, since no generic valuation resource ties DCF mechanics to a named, testable audit standard.
DCF Model Review Checklist
This checklist is a general-purpose self-review tool for a model builder or reviewer to work through before a DCF model is submitted for investment committee review, lender due diligence, or independent audit. It covers construction quality, terminal value and discount rate reasonableness, sensitivity and scenario disclosure, and triangulation against other valuation methods. It complements, and is distinct from, the DCF Model Audit Checklist, which maps specific structural checks onto FMAE's testable R001-R026 rule taxonomy for independent audit purposes.
DCF vs. Comparable Company Analysis
Discounted cash flow (DCF) valuation and comparable company analysis (comps) are the two most widely used valuation methodologies, and they derive value in fundamentally different ways. DCF is an intrinsic method, deriving value directly from a company's own forecast cash flows and an independently built discount rate. Comps is a relative method, deriving value by applying multiples observed from similar, publicly traded companies. Neither is a substitute for the other, and institutional valuation practice typically triangulates across both, alongside precedent transactions.