When do UK courts accept a DCF valuation?

Courts accept DCF where forecasts are reliable and the expert can justify growth, margin, capex, and discount rate assumptions with evidence. DCF is less favoured for mature SMEs with volatile or owner-dependent earnings unless projections are well supported.

What drives disagreement between DCF experts?

Common disputes include revenue growth rates, EBITDA margins, terminal growth or exit multiples, WACC components, and the bridge from enterprise value to equity. Joint expert meetings under CPR PD35 often focus on these inputs.

Discounted Cash Flow (DCF) - Business Valuation Method

Discounted cash flow (DCF) values a business by projecting future cash flows and discounting them to present value using a risk-adjusted discount rate, typically the weighted average cost of capital (WACC).

UK expert witnesses use DCF for growing, profitable companies with reliable forecasts - particularly technology, professional services, and SaaS businesses. The method is forward-looking and captures growth potential, but it is highly sensitive to assumptions and is frequently contested between experts in litigation.

Common questions

When do UK courts accept a DCF valuation?: Courts accept DCF where forecasts are reliable and the expert can justify growth, margin, capex, and discount rate assumptions with evidence. DCF is less favoured for mature SMEs with volatile or owner-dependent earnings unless projections are well supported.
What drives disagreement between DCF experts?: Common disputes include revenue growth rates, EBITDA margins, terminal growth or exit multiples, WACC components, and the bridge from enterprise value to equity. Joint expert meetings under CPR PD35 often focus on these inputs.

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