Glossary · Reading the business
Discounted Cash Flow
In short
A valuation method that estimates the value of an investment based on its projected future cash flows, discounted back to their present value. It helps you understand what future earnings are worth today.
What it means in a deal
While often used by sophisticated buyers or appraisers for complex businesses, DCF can be a powerful tool to complement other valuation methods like market multiples. It forces you to think critically about future performance and the risks associated with achieving those projections, directly impacting your business valuation.
Related terms
Common questions about Discounted Cash Flow
- Can future cash flow or profits from the acquired business count as equity injection?
- How can an SBA 7(a) loan help with ongoing cash flow for my business?
- What is the primary factor a lender considers when evaluating the cash flow from an acquired business?
- Are there any restrictions on the use of cash flow projections for an SBA 7(a) acquisition loan?
- Can I use an SBA 7(a) loan for my business's daily operating expenses or cash flow?
- How does a lender evaluate the reasonableness of a borrower's projections for future revenue and cash flow?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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