Valuation method
DCF valuation
A strong method for forward-looking businesses.
What it is
DCF (discounted cash flow) values a business based on future free cash flows, discounted to today at a risk-adjusted rate. The method projects cash flows over 5 to 7 years and adds a terminal value for the residual value after the projection period.
When to use it
The preferred method for growth companies, buy-and-build strategies, and businesses whose future cash flows significantly differ from historical results. Particularly valuable when you want to incorporate investment plans or market expansion into the valuation. For advisors, DCF is the default answer when buyers and lenders expect a forward-looking story. It goes beyond a multiple on the latest fiscal year.
How Upswitch applies this method
Upswitch helps you structure forward-looking scenarios based on normalized financial data. You can adjust assumptions around growth and profitability and see the impact on valuation immediately. Everything stays clearly documented in the audit trail.
Data and benchmarks
Sector multiples and transaction benchmarks are calibrated against the Upswitch Index, our continuously updated European SME reference dataset (per-country filter).
Explore the Upswitch SME Index→Sectors where this method is the headline
Live Upswitch Index data per sector. Click through to the multiples band that applies to your case.
Energy, installations & cleantech
Long-term subsidy contracts give DCF stable forecast horizons that EBITDA-multiple can't.
See multiples on Index →
Capital-intensive manufacturing
Heavy capex + long asset lives need explicit cash-flow modelling, not a single multiple.
See multiples on Index →
High-growth B2B services
When growth differs sharply from sector average, DCF captures it; multiples flatten it.
See multiples on Index →
Transport & logistics
Multi-year contracts + fleet capex cycles fit DCF's explicit-period structure.
See multiples on Index →
In your professional report
Each method appears as a dedicated section in your branded PDF, with a full audit trail for every normalisation and adjustment.
| Section | Included |
|---|---|
| DCF | Value and method summary |
| Audit trail | Per adjustment, fully traceable |
How it compares
| Method | Best for | Data needed |
|---|---|---|
| EBITDA multiple | Stable, profitable SMEs | Normalized EBITDA + sector |
| ARR multiple | SaaS / recurring revenue | ARR + retention metrics |
| Upswitch adaptive market approach | Complex / mixed businesses | Full financials |
| Startup valuation | Pre-revenue startups (no DCF) | Milestones + exit hypothesis |
Related comparisons
EBITDA multiple vs. DCF
Two strong methods for advisors. The right choice depends on stability, growth trajectory, and the story you need to defend.
See comparison→
Upswitch adaptive market approach vs. DCF
One method for a forward-looking scenario. One recommended headline that blends signals from the full dossier.
See comparison→
Frequently asked questions
On the Free plan you can run up to three valuations per year using the methods enabled for your workspace. Starter unlocks all ten valuation methods, unlimited valuations, downloadable branded reports without watermark, and live European SME multiples from the Upswitch Index.
Apply DCF to your sector
Real-world examples of DCF in action. Sector-specific multiples, normalisations and worked examples on the Upswitch Index.
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