Partner & Managing Director, New York
This Practice Note provides information for attorneys on how experts use the discounted cash flow methodology, a subset of the income-based approach, to quantify damages. AlixPartners' Greig Taylor and Alexander Lee provide an overview of how experts use the discounted cash flow (DCF) methodology, and how courts and arbitrators react to it.
The DCF methodology is a subset of the income-based approach, which experts may apply under a going concern basis of valuation.
The expert usually applies the DCF methodology when:
DCF models are useful when a business is growing and cash flows are expected to change for several years before achieving a stable operating level.
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