{
  "docId": "019de06f-28cb-7211-8997-56898cf5fd3f",
  "docSlug": "bfc2c26a8c29fb23775a386134299cd0",
  "documentTitle": "Bear Stearns | Investment Banking Pitch Book | 36 slides",
  "authorId": "bear-stearns",
  "authorName": "Bear Stearns",
  "documentKindSlug": "consulting-deck",
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  "presentationDate": "2005-01-01 00:00:00",
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  "pageCount": 36,
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  "slideType": "appendix_methodology",
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  "density": "dense",
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  "notes": "Part of a Bear Stearns DCF Primer deck.",
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      "kind": "list",
      "text": "The forecast horizon should generally reflect the time it takes for a company to achieve stable growth, stable capital structure or an end to restructuring.\nThe forecast period should not extend beyond such time frame as the company can reasonably project.",
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      "text": "Use a realistic management case which has been thoroughly diligenced.\nForecast favorable and unfavorable scenarios as sensitivity cases, and probability weight each scenario to achieve expected value.\nIf practical, the forecast horizon should reflect the time it takes for the firm to reach a “steady state.”\nSince cash flows are generated over the course of each year (rather than at the end of each year), the cash flows during each year of the forecast should be discounted back from the mid-year to time zero for non-seasonal businesses.",
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      "text": "Assumes that cash flows occur at the mid-point of each year and, consequently, cash flows in year 1 are discounted ½ year, cash flows in year 2 are discounted 1½ years, etc.\nFor certain industries characterized by greater seasonality, an end-of-year discounting convention (or other reasonable assumption) may be more appropriate.",
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      "kind": "paragraph",
      "text": "Discounted cash flow analysis is extremely sensitive to cash flow projections.",
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      "kind": "title",
      "text": "Cash Flow Projections",
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      "evidence": "The document then delves into the advantages and disadvantages of DCF and cash flow projections, addressing potential complications.",
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