Financial Model Builder & Business Valuation
Builds a three-statement financial model and values a company using DCF and comparable methods.
// prompt
# Financial Model Builder & Business Valuation Expert
Act as a senior investment banking analyst. Build a three-statement financial model and a defensible valuation for **{{company_or_project_name}}**, a business in **{{industry_sector}}**. Work in **{{currency}}** over a **{{projection_period}}** horizon.
## Inputs
Use only the data I provide below. Where a figure is missing, state a clearly labelled assumption with its rationale — never invent specific historical numbers.
```
{{historical_financials_revenue_margins_debt_key_drivers}}
```
## Step 1 — Three-Statement Model
Build linked projections:
- **Income Statement:** revenue by driver, COGS, OpEx, EBITDA, EBIT, net income, with margin trends.
- **Balance Sheet:** working capital (AR, inventory, AP), CapEx, depreciation, debt, equity.
- **Cash Flow:** operating, investing, and financing flows leading to **free cash flow**.
Model three scenarios — **base, optimistic, pessimistic** — and list the key assumption behind each.
## Step 2 — DCF Valuation
- Build up **WACC** showing each input (cost of equity, cost of debt, weights).
- Discount projected FCF; compute **terminal value** via both perpetuity-growth and exit-multiple methods.
- Run a **sensitivity table** on WACC vs. terminal growth.
## Step 3 — Comparable Valuation
- Apply trading multiples (**EV/EBITDA, P/E, EV/Sales**) from peers: **{{comparable_peers}}**.
- Cross-check against recent transaction multiples where relevant.
## Deliver
1. **Valuation range** — DCF vs. comps, reconciled with a football-field summary.
2. **Key assumptions** — the 5 drivers the value is most sensitive to.
3. **Investment view** — risk/return read, with the main upside and downside.
4. **Assumptions log** — every estimate flagged so I can adjust it.
Present results as **{{output_format_eg_markdown_tables}}**. Show your formulas, not just outputs, so the model is auditable.
Fill in the variables
Example run
Generated by Claude Opus 5.5 on September 23, 2026
Inputs used
- Company or project name
- Cascade Roasters Inc.
- Industry / sector
- Specialty coffee retail / multi-unit food & beverage chains
- Currency
- USD
- Projection period
- FY2026E–FY2031E (6-year explicit forecast, terminal year FY2031)
- Historical financials, revenue, margins, debt, key drivers
- Cascade Roasters Inc. is a privately held specialty coffee retailer headquartered in Seattle, WA, operating 85 company-owned cafés across the Pacific Northwest and Mountain West as of FY2025 year-end (fiscal year = calendar year). Management is preparing for a Series D recap / potential IPO and needs a model to support the valuation discussion. Store count: FY2023 = 68 stores, FY2024 = 76 stores, FY2025 = 85 stores. Net new units: +8 (2023), +8 (2024), +9 (2025). Average unit volume (AUV) ~$1.75M/store in FY2025. Income statement (actuals, $M): - FY2023: Revenue 118.4 | COGS 38.5 (32.5% of rev) | Gross profit 79.9 | SG&A (labor, occupancy, corporate) 61.2 | D&A 6.8 | EBITDA 25.5 | EBIT 18.7 | Interest expense 3.1 | Pre-tax income 15.6 | Tax (24%) 3.7 | Net income 11.9 - FY2024: Revenue 132.7 | COGS 42.7 (32.2%) | Gross profit 90.0 | SG&A 67.9 | D&A 7.6 | EBITDA 29.7 | EBIT 22.1 | Interest expense 3.4 | Pre-tax income 18.7 | Tax (24%) 4.5 | Net income 14.2 - FY2025: Revenue 149.2 | COGS 47.3 (31.7%) | Gross profit 101.9 | SG&A 75.8 | D&A 8.4 | EBITDA 34.5 | EBIT 26.1 | Interest expense 3.6 | Pre-tax income 22.5 | Tax (24%) 5.4 | Net income 17.1 Revenue drivers: blended same-store sales (comp) growth of +6.1% (FY2024) and +5.4% (FY2025), plus new-unit contribution. Ticket average ~$7.40, transactions/store/day ~410. Balance sheet (FY2025 year-end, $M): Cash 9.1 | Accounts receivable 2.0 (≈5 days, mostly wholesale/catering) | Inventory 3.6 (≈28 days COGS) | PP&E net 58.3 | Total assets 78.5 | Accounts payable 4.5 (≈35 days COGS) | Term loan 42.0 (fixed 7.25%, 7-year amortizing, originated 2022, matures 2029, $4.0M scheduled annual amortization) | Other long-term liabilities 6.0 | Total equity 26.0 Capex & unit economics: New-store buildout cost ≈$1.05M per unit (leasehold improvements + equipment), payback ~3.5 years. FY2025 total capex $9.8M (9 new stores + maintenance capex ~$0.8M/store/year across mature base). Maintenance capex assumed at 4% of revenue going forward. Cash flow notes: Working capital has historically consumed ~2% of incremental revenue annually. No dividends paid to date; all FCF reinvested in unit growth. No off-balance-sheet leases disclosed beyond standard operating leases for store premises (not capitalized in the historicals above — treat as operating expense within SG&A occupancy line, consistent with ASC 840-style treatment used internally; flag as an assumption if IFRS 16/ASC 842 capitalization is preferred). Tax rate: blended 24% federal + state, assumed constant unless stated otherwise. Key strategic drivers for the plan: (1) unit growth accelerating from 9/year to 12/year by FY2028 as the company enters California and Colorado; (2) comp sales growth decelerating from ~5.5% toward a long-run ~2.5% as the base matures; (3) COGS ratio expected to improve modestly (bean cost hedging program) toward 31.0% by FY2028; (4) SG&A leverage from corporate overhead scaling slower than revenue; (5) term loan refinancing assumed in FY2029 at maturity — assume refinanced at then-current market rate (flag as assumption, suggest 6.5%–8.0% range depending on rate environment).
- Comparable peers
- Starbucks Corporation (NASDAQ: SBUX), Dutch Bros Inc. (NYSE: BROS), BRC Inc. / Black Rifle Coffee Company (NYSE: BRCC), Krispy Kreme Inc. (NASDAQ: DNUT)
- Output format, e.g. markdown tables
- Markdown tables for all three statements, WACC build-up, DCF, sensitivity grid, and comps, with formulas shown in Excel-style notation (e.g., =EBITDA*(1-Tax)+D&A-CapEx-ΔNWC) beneath or beside each table, plus short narrative sections for the investment view and assumptions log
Cascade Roasters Inc. — Three-Statement Model & Valuation
Valuation date: 31-Dec-2025, the date of the last balance sheet provided | Currency: USD $M | Forecast: FY2026E–FY2031E | Convention: mid-year discounting
Before you rely on this: I calculated every figure by hand from the inputs you gave. Peer market data (betas, multiples) and precedent-deal multiples are approximate figures from my training data, not live quotes. They are flagged throughout. Refresh them from CapIQ, Bloomberg or PitchBook before any client use. Today is Sept-2026, so FY2026E should also be replaced with year-to-date actuals plus a Q4 forecast.
0. Data Integrity Flags
I found these issues while tying out your inputs. Each one is handled explicitly in the model.
| # | Issue | Evidence | Treatment |
|---|---|---|---|
| F1 | Reported SG&A includes D&A | FY25: GP 101.9 − SG&A 75.8 = 26.1 = EBIT (not EBITDA). Same in FY23 and FY24. | Split out Cash SG&A = SG&A − D&A (FY25: 67.4, or 45.2% of revenue). EBITDA = GP − Cash SG&A. |
| F2 | Ticket × traffic does not reconcile to AUV | $7.40 × 410 × 365 = $1.11M/store, versus the stated $1.75M AUV. The gap is about $0.64M. | I did not use ticket/traffic as a driver. The gap may be wholesale, catering or packaged beans, or a definitional difference. This is a diligence item. |
| F3 | "Maintenance capex ~$0.8M/store/yr" is inconsistent | FY25 capex 9.8 − (9 × 1.05) = $0.35M total maintenance, about $4.6K per store. | Followed your instruction to use 4% of revenue. That is a large step-up ($6.7M in FY26) and is conservative. |
| F4 | Interest rises while the term loan amortizes | 7.25% × average balance of $44M = $3.19M, versus $3.6M reported. | The model adds $0.4M/yr of fees/other interest, calibrated to FY25. |
| F5 | Balance-sheet plug | Cash + AR + Inventory + PP&E = 73.0, versus total assets of 78.5. | Created a $5.5M "Other assets" line (prepaids, deposits, other). |
| F6 | Lease accounting | ASC 842, which private companies adopted from FY2022, would put ROU assets and lease liabilities on the balance sheet. They are absent here. | Under ASC 842 operating leases, rent stays in opex, so EBITDA is post-rent and comparable to US GAAP peers. Enterprise value therefore excludes lease liabilities. Under IFRS 16, both EBITDA and EV would need restating together. |
| F7 | Formula in your brief | =EBITDA*(1-Tax)+D&A-CapEx-ΔNWC double-counts D&A. |
The model uses =EBIT*(1-Tax)+D&A-CapEx-ΔNWC, which is equivalent to =EBITDA*(1-Tax)+D&A*Tax-CapEx-ΔNWC. |
| F8 | High EBITDA margin | 23.1%, versus roughly 15–19% at SBUX and BROS. | Confirm whether EBITDA is "adjusted" (for example, excluding pre-opening costs or stock-based compensation). |
1. Three-Statement Model — Base Case
1a. Revenue Build
The new-unit productivity driver (NUV) is calibrated to FY2025 history:
NUV_2025 = (149.2 − 132.7×1.054) / (0.5×9 + 0.5×8) = 9.33 / 8.5 = $1.10M per new-store-year. This is about 63% of mature AUV, which reflects the ramp period for new stores.
| $M | FY23A | FY24A | FY25A | FY26E | FY27E | FY28E | FY29E | FY30E | FY31E |
|---|---|---|---|---|---|---|---|---|---|
| Net new units | 8 | 8 | 9 | 10 | 11 | 12 | 12 | 12 | 12 |
| Stores (EoP) | 68 | 76 | 85 | 95 | 106 | 118 | 130 | 142 | 154 |
| Comp growth | — | 6.1% | 5.4% | 5.0% | 4.5% | 4.0% | 3.5% | 3.0% | 2.5% |
| NUV ($M/store-yr) | — | — | 1.10 | 1.155 | 1.207 | 1.255 | 1.299 | 1.338 | 1.372 |
| Comp-base revenue | — | — | — | 156.7 | 175.2 | 195.4 | 217.1 | 239.7 | 262.2 |
| New-unit revenue | — | — | — | 11.0 | 12.7 | 14.4 | 15.6 | 16.1 | 16.5 |
| Revenue | 118.4 | 132.7 | 149.2 | 167.6 | 187.8 | 209.8 | 232.7 | 255.8 | 278.6 |
| Growth | — | 12.1% | 12.4% | 12.4% | 12.1% | 11.7% | 10.9% | 9.9% | 8.9% |
Stores[t] = Stores[t-1] + NNU[t]
NUV[t] = NUV[t-1]*(1+Comp[t])
CompBaseRev[t] = Revenue[t-1]*(1+Comp[t])
NewUnitRev[t] = (0.5*NNU[t] + 0.5*NNU[t-1]) * NUV[t] 'half-year convention for openings
Revenue[t] = CompBaseRev[t] + NewUnitRev[t]
1b. Income Statement
| $M | FY23A | FY24A | FY25A | FY26E | FY27E | FY28E | FY29E | FY30E | FY31E |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 118.4 | 132.7 | 149.2 | 167.6 | 187.8 | 209.8 | 232.7 | 255.8 | 278.6 |
| COGS | 38.5 | 42.7 | 47.3 | 52.8 | 58.6 | 65.0 | 72.1 | 79.3 | 86.4 |
| COGS % | 32.5% | 32.2% | 31.7% | 31.5% | 31.2% | 31.0% | 31.0% | 31.0% | 31.0% |
| Gross profit | 79.9 | 90.0 | 101.9 | 114.8 | 129.2 | 144.8 | 160.6 | 176.5 | 192.3 |
| Cash SG&A (ex-D&A) | 54.4 | 60.3 | 67.4 | 75.4 | 84.2 | 93.6 | 103.3 | 113.3 | 123.2 |
| Cash SG&A % | 45.9% | 45.4% | 45.2% | 45.0% | 44.8% | 44.6% | 44.4% | 44.3% | 44.2% |
| EBITDA | 25.5 | 29.7 | 34.5 | 39.4 | 45.1 | 51.2 | 57.3 | 63.2 | 69.1 |
| EBITDA margin | 21.5% | 22.4% | 23.1% | 23.5% | 24.0% | 24.4% | 24.6% | 24.7% | 24.8% |
| D&A | 6.8 | 7.6 | 8.4 | 9.0 | 10.3 | 11.7 | 13.2 | 14.6 | 16.0 |
| EBIT | 18.7 | 22.1 | 26.1 | 30.4 | 34.8 | 39.5 | 44.1 | 48.6 | 53.1 |
| EBIT margin | 15.8% | 16.7% | 17.5% | 18.1% | 18.5% | 18.8% | 18.9% | 19.0% | 19.0% |
| Interest expense | 3.1 | 3.4 | 3.6 | 3.3 | 3.0 | 2.7 | 2.4 | 2.1 | 1.9 |
| Pre-tax income | 15.6 | 18.7 | 22.5 | 27.1 | 31.8 | 36.8 | 41.7 | 46.4 | 51.2 |
| Tax @ 24% | 3.7 | 4.5 | 5.4 | 6.5 | 7.6 | 8.8 | 10.0 | 11.1 | 12.3 |
| Net income | 11.9 | 14.2 | 17.1 | 20.6 | 24.2 | 28.0 | 31.7 | 35.3 | 38.9 |
| Net margin | 10.1% | 10.7% | 11.5% | 12.3% | 12.9% | 13.3% | 13.6% | 13.8% | 14.0% |
COGS = Revenue*COGS_pct
GrossProfit = Revenue-COGS
CashSGA = Revenue*SGA_pct 'reported SG&A = CashSGA + D&A (Flag F1)
EBITDA = GrossProfit-CashSGA
EBIT = EBITDA-DA 'DA from PP&E schedule
Interest = AVERAGE(Debt[t-1],Debt[t])*7.25% + 0.4
PreTax = EBIT-Interest
Tax = PreTax*24%
NetIncome = PreTax-Tax
1c. Supporting Schedules
Capex and PP&E
| $M | FY25A | FY26E | FY27E | FY28E | FY29E | FY30E | FY31E |
|---|---|---|---|---|---|---|---|
| Build cost/unit | 1.05 | 1.050 | 1.082 | 1.114 | 1.147 | 1.182 | 1.217 |
| Growth capex | 9.45 | 10.5 | 11.9 | 13.4 | 13.8 | 14.2 | 14.6 |
| Maintenance capex (4%) | 0.35 | 6.7 | 7.5 | 8.4 | 9.3 | 10.2 | 11.1 |
| Total capex | 9.8 | 17.2 | 19.4 | 21.8 | 23.1 | 24.4 | 25.8 |
| Opening PP&E | 56.9 | 58.3 | 66.5 | 75.6 | 85.7 | 95.6 | 105.4 |
| – D&A | 8.4 | 9.0 | 10.3 | 11.7 | 13.2 | 14.6 | 16.0 |
| Closing PP&E | 58.3 | 66.5 | 75.6 | 85.7 | 95.6 | 105.4 | 115.1 |
BuildCost[t] = BuildCost[t-1]*(1+3%) 'from FY27; CA/CO cost premium + inflation
GrowthCapex = NNU*BuildCost
MaintCapex = Revenue*4%
DA = 14%*OpeningPPE + 5%*Capex[t] 'calibrated: 0.14*56.9+0.05*9.8 = 8.46 ≈ 8.4 actual
ClosingPPE = OpeningPPE + Capex - DA
Debt
| $M | FY26E | FY27E | FY28E | FY29E | FY30E | FY31E |
|---|---|---|---|---|---|---|
| Opening term loan | 42.0 | 38.0 | 34.0 | 30.0 | 26.0 | 22.0 |
| Scheduled amortization | (4.0) | (4.0) | (4.0) | (4.0) | (4.0) | (4.0) |
| Balloon repaid / refinanced | — | — | — | (26.0) / +26.0 | — | — |
| Closing debt | 38.0 | 34.0 | 30.0 | 26.0 | 22.0 | 18.0 |
| Interest (7.25% on average) + $0.4M fees | 3.30 | 3.01 | 2.72 | 2.43 | 2.14 | 1.85 |
Refi_Rate = 7.25% (base; range 6.5%–8.0%) 'the refi facility keeps $4.0M/yr amortization
The refinancing rate barely matters to value. Each 75bp move changes interest by about $0.17M a year, and the DCF is unlevered anyway.
1d. Balance Sheet
| $M | FY25A | FY26E | FY27E | FY28E | FY29E | FY30E | FY31E |
|---|---|---|---|---|---|---|---|
| Cash | 9.1 | 17.1 | 27.8 | 41.2 | 58.5 | 79.5 | 104.3 |
| Accounts receivable | 2.0 | 2.2 | 2.5 | 2.8 | 3.1 | 3.4 | 3.7 |
| Inventory | 3.6 | 4.0 | 4.5 | 5.0 | 5.5 | 6.0 | 6.6 |
| Other assets (incl. other op. WC) | 5.5 | 5.7 | 6.0 | 6.2 | 6.5 | 6.8 | 7.1 |
| PP&E, net | 58.3 | 66.5 | 75.6 | 85.7 | 95.6 | 105.4 | 115.1 |
| Total assets | 78.5 | 95.6 | 116.3 | 140.9 | 169.2 | 201.2 | 236.8 |
| Accounts payable | 4.5 | 5.0 | 5.6 | 6.2 | 6.9 | 7.5 | 8.2 |
| Term loan | 42.0 | 38.0 | 34.0 | 30.0 | 26.0 | 22.0 | 18.0 |
| Other LT liabilities | 6.0 | 6.0 | 6.0 | 6.0 | 6.0 | 6.0 | 6.0 |
| Total liabilities | 52.5 | 49.0 | 45.6 | 42.2 | 38.9 | 35.5 | 32.2 |
| Total equity | 26.0 | 46.6 | 70.7 | 98.7 | 130.4 | 165.7 | 204.6 |
| Total L + E | 78.5 | 95.6 | 116.3 | 140.9 | 169.2 | 201.2 | 236.8 |
| Check (A − L − E) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net debt / (net cash) | 32.9 | 20.9 | 6.2 | (11.2) | (32.5) | (57.5) | (86.3) |
| Net debt / EBITDA | 0.95x | 0.53x | 0.14x | net cash | — | — | — |
AR = Revenue*4.89/365 'FY25: 2.0/149.2*365
Inventory = COGS*27.8/365 'FY25: 3.6/47.3*365
AP = COGS*34.7/365 'FY25: 4.5/47.3*365
ΔNWC_total = 2%*(Revenue[t]-Revenue[t-1]) 'your historical rule
OtherAssets[t] = OtherAssets[t-1] + ΔNWC_total - ((AR+Inv-AP)[t]-(AR+Inv-AP)[t-1])
Equity[t] = Equity[t-1] + NetIncome[t] 'no dividends
Cash[t] = Cash[t-1] + NetChangeInCash[t] 'from CFS
Check = TotalAssets - TotalLiabilities - Equity 'must = 0
1e. Cash Flow Statement and Free Cash Flow
| $M | FY26E | FY27E | FY28E | FY29E | FY30E | FY31E |
|---|---|---|---|---|---|---|
| Net income | 20.6 | 24.2 | 28.0 | 31.7 | 35.3 | 38.9 |
| + D&A | 9.0 | 10.3 | 11.7 | 13.2 | 14.6 | 16.0 |
| – Increase in NWC | (0.4) | (0.4) | (0.4) | (0.5) | (0.5) | (0.5) |
| Cash from operations | 29.2 | 34.0 | 39.2 | 44.4 | 49.4 | 54.5 |
| Growth capex | (10.5) | (11.9) | (13.4) | (13.8) | (14.2) | (14.6) |
| Maintenance capex | (6.7) | (7.5) | (8.4) | (9.3) | (10.2) | (11.1) |
| Cash from investing | (17.2) | (19.4) | (21.8) | (23.1) | (24.4) | (25.8) |
| Scheduled amortization | (4.0) | (4.0) | (4.0) | (4.0) | (4.0) | (4.0) |
| Refi: repay / new draw | — | — | — | (26.0)/+26.0 | — | — |
| Cash from financing | (4.0) | (4.0) | (4.0) | (4.0) | (4.0) | (4.0) |
| Net change in cash | 8.0 | 10.6 | 13.4 | 17.3 | 21.0 | 24.8 |
| Ending cash | 17.1 | 27.8 | 41.2 | 58.5 | 79.5 | 104.3 |
| Levered FCF (CFO − Capex) | 12.0 | 14.6 | 17.4 | 21.3 | 25.0 | 28.8 |
| Unlevered FCF | 14.5 | 16.9 | 19.5 | 23.1 | 26.6 | 30.2 |
CFO = NetIncome + DA - ΔNWC_total
CFI = -(GrowthCapex + MaintCapex)
CFF = -Amort - Balloon + RefiDraw
LeveredFCF = CFO + CFI
UFCF = EBIT*(1-Tax) + DA - Capex - ΔNWC_total
Observation: The business self-funds 12 units a year and still builds more than $100M of cash by FY2031. I assume no interest income on that cash, which is conservative; at 3.5% it would add about $1–3.5M a year pre-tax. A real plan would either accelerate unit growth or repay the $26M balloon in FY29 from cash (about $58M on hand) instead of refinancing it.
1f. Scenarios
| Driver | Pessimistic | Base | Optimistic |
|---|---|---|---|
| Net new units FY26→31 | 8, 8, 9, 9, 9, 9 (CA entry slips) | 10, 11, 12, 12, 12, 12 | 11, 13, 14, 15, 15, 15 |
| Comps FY26→31 | 3.0, 2.5, then 2.0% flat | 5.0 → 2.5% | 6.0 → 3.5% |
| COGS % | 32.0% flat (arabica spike; hedges roll off) | 31.5 → 31.0% by FY28 | 31.2 → 30.5% by FY28 |
| Cash SG&A % | 45.5 → 45.8% (CA wage deleverage) | 45.0 → 44.2% | 44.8 → 43.0% |
| WACC / g / exit multiple / RONIC | 12.3% / 2.5% / 9.0x / 15% | 11.3% / 3.0% / 11.0x / 20% | 10.8% / 3.5% / 13.0x / 20% |
| Stores FY31 | 137 | 154 | 168 |
| Revenue FY31 | 235.9 | 278.6 | 313.3 |
| EBITDA FY31 (margin) | 52.4 (22.2%) | 69.1 (24.8%) | 83.0 (26.5%) |
| Cumulative UFCF FY26–31 | 109.3 | 130.9 | 143.2 |
| EV – perpetuity growth | 211.9 | 328.3 | 430.3 |
| EV – exit multiple | 311.6 | 492.1 | 684.4 |
| EV – midpoint | 261.7 | 410.2 | 557.4 |
| Equity (EV − 32.9 net debt) | 228.8 | 377.3 | 524.5 |
Scenario UFCF by year ($M):
| Scenario | FY26E | FY27E | FY28E | FY29E | FY30E | FY31E |
|---|---|---|---|---|---|---|
| Pessimistic | 14.9 | 16.3 | 16.8 | 18.6 | 20.5 | 22.4 |
| Base | 14.5 | 16.9 | 19.5 | 23.1 | 26.6 | 30.2 |
| Optimistic | 14.4 | 16.8 | 20.8 | 24.9 | 30.3 | 36.0 |
Early-year FCF is similar across scenarios. Faster growth consumes more capex upfront, and the value difference is mainly in the terminal year.
2. DCF Valuation
2a. WACC Build-Up
| Input | Value | Source / formula |
|---|---|---|
| Risk-free rate (10Y UST) | 4.25% | Assumption; refresh at pricing date |
| Equity risk premium | 5.50% | Kroll-style range 5.0–5.5% |
| Peer unlevered betas (illustrative) | SBUX ~0.85, BROS ~1.25, BRCC ~1.40, DNUT ~0.85 | Approximate; refresh |
| Unlevered beta (median) | 1.05 | =MEDIAN(peer βu) |
| Target D / (D+E) | 15.0% | Conservative for a post-IPO consumer growth company |
| Target D / E | 17.6% | =0.15/0.85 |
| Relevered beta | 1.19 | =βu*(1+(1-Tax)*D/E) = 1.05 × (1 + 0.76 × 0.176) |
| Size premium | 1.50% | Market cap around $0.4–0.5B |
| Company-specific premium | 0.0% | Execution risk is handled through scenarios, not the discount rate |
| Cost of equity | 12.3% | =Rf+β*ERP+Size = 4.25 + 1.19 × 5.5 + 1.5 |
| Pre-tax cost of debt | 7.25% | Existing coupon; midpoint of the 6.5–8.0% refinancing range |
| After-tax cost of debt | 5.51% | =Kd*(1-Tax) |
| WACC | 11.3% | =E/V*Ke + D/V*Kd*(1-t) = 0.85 × 12.30 + 0.15 × 5.51 |
2b. Discounted Cash Flows (Base, WACC 11.3%)
| $M | FY26E | FY27E | FY28E | FY29E | FY30E | FY31E |
|---|---|---|---|---|---|---|
| EBIT | 30.4 | 34.8 | 39.5 | 44.1 | 48.6 | 53.1 |
| – Tax on EBIT (24%) | (7.3) | (8.4) | (9.5) | (10.6) | (11.7) | (12.7) |
| NOPAT | 23.1 | 26.5 | 30.0 | 33.5 | 36.9 | 40.3 |
| + D&A | 9.0 | 10.3 | 11.7 | 13.2 | 14.6 | 16.0 |
| – Capex | (17.2) | (19.4) | (21.8) | (23.1) | (24.4) | (25.8) |
| – ΔNWC | (0.4) | (0.4) | (0.4) | (0.5) | (0.5) | (0.5) |
| UFCF | 14.5 | 16.9 | 19.5 | 23.1 | 26.6 | 30.2 |
| Period (mid-year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5.5 |
| Discount factor | 0.9479 | 0.8517 | 0.7652 | 0.6875 | 0.6177 | 0.5550 |
| PV of UFCF | 13.8 | 14.4 | 14.9 | 15.9 | 16.5 | 16.7 |
UFCF = EBIT*(1-Tax)+DA-Capex-ΔNWC
DF = 1/(1+WACC)^(Year-0.5)
Sum of PV(UFCF) = SUMPRODUCT(UFCF,DF) = 92.2
2c. Terminal Value — Both Methods
| $M | Perpetuity growth | Exit multiple |
|---|---|---|
| Base metric | NOPAT FY32 = 40.3 × 1.03 = 41.5 | EBITDA FY31 = 69.1 |
| Reinvestment / multiple | g / RONIC = 3% / 20% = 15% | 11.0x |
| Terminal FCF / value | 41.5 × 85% = 35.3 → TV = 35.3 / (11.3% − 3.0%) = 425.3 | 69.1 × 11.0 = 760.1 |
| Discount factor | 0.5550 (t = 5.5, mid-year consistent) | 0.5261 (t = 6.0, year-end sale) |
| PV of TV | 236.0 | 399.9 |
| + PV of explicit FCF | 92.2 | 92.2 |
| Enterprise value | 328.3 | 492.1 |
| – Net debt (42.0 − 9.1) | (32.9) | (32.9) |
| Equity value | 295.3 | 459.2 |
| TV as % of EV | 72% | 81% |
| Cross-check | Implied exit multiple 6.5x EBITDA | Implied perpetual growth ~6.8% |
TV_Gordon = NOPAT[FY31]*(1+g)*(1-g/RONIC)/(WACC-g) 'value-driver form: normalizes FY31 capex,
'which still funds 8% unit growth
TV_Exit = EBITDA[FY31]*ExitMultiple
PV_TV_G = TV_Gordon/(1+WACC)^5.5 ; PV_TV_X = TV_Exit/(1+WACC)^6
EV = SUM(PV_UFCF) + PV_TV
Equity = EV - (Debt - Cash)
Implied_Multiple = TV_Gordon*(1+WACC)^0.5/EBITDA[FY31]
Reading the gap. The perpetuity method assumes growth drops from about 9% in FY31 to 3% forever, even though the company would have only 154 stores and plenty of whitespace left. That is too harsh. The 11x exit multiple implies about 6.8% perpetual growth, which is too generous. I use the midpoint, $410M EV, as the DCF point estimate. A three-stage DCF with a fade period would close this gap properly and should be the next refinement.
2d. Sensitivity — Perpetuity Method EV ($M): WACC vs. Terminal Growth
| WACC \ g | 2.0% | 2.5% | 3.0% | 3.5% | 4.0% |
|---|---|---|---|---|---|
| 10.3% | 354.9 | 365.2 | 376.9 | 390.1 | 405.4 |
| 10.8% | 332.8 | 341.4 | 351.0 | 361.8 | 374.2 |
| 11.3% | 313.1 | 320.3 | 328.3 | 337.2 | 347.2 |
| 11.8% | 295.4 | 301.5 | 308.1 | 315.5 | 323.8 |
| 12.3% | 279.5 | 284.6 | 290.2 | 296.4 | 303.2 |
Cell = SUMPRODUCT(UFCF, 1/(1+w)^(Yr-0.5)) + NOPAT31*(1+g)*(1-g/0.20)/(w-g)/(1+w)^5.5
'Equity = cell - 32.9
The value moves little with g because, at RONIC = 20% against WACC ≈ 11%, higher growth requires proportionally more reinvestment.
2e. Sensitivity — Exit-Multiple EV ($M): WACC vs. Multiple
| WACC \ Exit | 9.0x | 11.0x | 13.0x |
|---|---|---|---|
| 10.3% | 440.2 | 517.0 | 593.7 |
| 11.3% | 419.4 | 492.1 | 564.8 |
| 12.3% | 399.7 | 468.6 | 537.5 |
Each 1.0x turn of exit multiple is worth about ±$36M of EV (=69.1*0.5261).
3. Comparable Valuation
3a. Trading Comparables
These are indicative NTM figures from my training data, not live quotes. Refresh before use.
| Peer | Model | NTM rev. growth | EBITDA margin | EV/Sales | EV/EBITDA | P/E | Relevance |
|---|---|---|---|---|---|---|---|
| Starbucks (SBUX) | Global, company-operated + licensed | ~3–5% | ~15% (turnaround) | ~2.9x | ~17x | ~32x | High (format), but vastly larger scale |
| Dutch Bros (BROS) | Drive-thru, unit-growth story | ~20% | ~18–19% | ~5.0x | ~27x | ~80x | High (growth analog) |
| BRC / Black Rifle (BRCC) | Mostly CPG/wholesale | ~0–5% | ~5% | ~0.7x | NM | NM | Low |
| Krispy Kreme (DNUT) | Levered, restructuring | ~flat | ~10% | ~1.0x | ~11x | NM | Low–medium |
| Median | ~2.0x | ~17x | NM / ~56x |
The raw median is distorted by BRCC and DNUT, which are poor fits. The selected ranges below are anchored between DNUT and SBUX, with Dutch Bros as a ceiling. I then apply a size, liquidity and pre-IPO discount of roughly 10–15%.
| Method | Cascade metric | Selected range | Implied EV ($M) | Midpoint EV |
|---|---|---|---|---|
| EV / NTM EBITDA | 39.4 | 12.0x – 16.0x | 472.7 – 630.3 | 551.5 |
| EV / NTM Sales | 167.6 | 2.5x – 3.5x | 419.1 – 586.7 | 502.9 |
| P / NTM Earnings | 20.6 | 22x – 28x | Equity 452.7 – 576.1 → EV 485.6 – 609.0 | 547.3 |
EV_implied = Multiple*Metric
EV_from_PE = PE*NetIncome_NTM + NetDebt
Equity_from_EV = EV_implied - NetDebt
3b. Transaction Cross-Check
These are press-reported and approximate. Verify in Mergermarket or PitchBook.
| Deal | Year | Approx. EV/EBITDA | Read-across |
|---|---|---|---|
| Keurig Dr Pepper / JDE Peet's | 2025 | ~11–12x | Scaled coffee platform; low growth |
| JAB / Panera | 2017 | ~16–17x | Branded, company-operated café chain |
| Roark / Subway | 2024 | ~low-teens | Franchised, so asset-light premium |
| Blackstone / Jersey Mike's | 2024 | ~high-teens+ | Franchised, high growth, so premium |
Cascade is company-operated and capex-heavy, so it should sit below franchised deals. The selected range is 11x–14x LTM EBITDA of $34.5M, giving $380–483M EV (midpoint $431M).
4. Deliverables
4.1 Valuation Range and Football Field
| Method | Low EV | Mid EV | High EV | Basis |
|---|---|---|---|---|
| DCF – perpetuity | 301 | 328 | 362 | WACC 10.8–11.8%, g 2.5–3.5% |
| DCF – exit multiple | 456 | 492 | 528 | 10–12x at 11.3% WACC |
| DCF – scenarios | 262 | 410 | 557 | Pessimistic / base / optimistic midpoints |
| Comps – EV/EBITDA | 473 | 552 | 630 | 12–16x NTM |
| Comps – EV/Sales | 419 | 503 | 587 | 2.5–3.5x NTM |
| Comps – P/E | 486 | 547 | 609 | 22–28x NTM |
| Precedent transactions | 380 | 431 | 483 | 11–14x LTM |
| Reconciled | 400 | 455 | 510 | Weighted |
EV ($M) 200 250 300 350 400 450 500 550 600 650 700
|-----|-----|-----|-----|-----|-----|-----|-----|-----|-----|
DCF perpetuity ██████
DCF exit multiple ███████
DCF scenarios ██████████████████████████████
Comps EV/EBITDA ████████████████
Comps EV/Sales █████████████████
Comps P/E ████████████
Precedents ██████████
RECONCILED ███████████ ◄ point $455M
Weighted EV = 50%*DCF_mid + 30%*Comps_EBITDA_mid + 20%*Precedents_mid
= 0.5*410.2 + 0.3*551.5 + 0.2*431.3 = 456.9 ≈ $455M
Equity = 455 - 32.9 = $422M (range $367–477M)
Scenario probability-weighted DCF (25/50/25) = $410M, consistent with the base case
Implied multiples at $455M EV: 13.2x LTM / 11.5x NTM EBITDA; 3.0x LTM / 2.7x NTM sales; 20.5x NTM P/E.
Timing note: The value is struck at 31-Dec-2025. For a pricing date around Q4-2026, roll it forward using the 30-Sep-2026 balance sheet. Rolling equity forward at the cost of equity is roughly +9%.
4.2 The Five Most Value-Sensitive Drivers
| # | Driver | Base | Approximate EV impact |
|---|---|---|---|
| 1 | Terminal value method / exit multiple | 11.0x, or midpoint with perpetuity | ±1.0x = ±$36M. The method choice alone accounts for a $164M gap. |
| 2 | EBITDA margin (COGS hedging, SG&A leverage, CA wages) | 23.5% → 24.8% | ±100bp in every year = ±$20–23M DCF; ±$39M on comps (1 turn of NTM EBITDA) |
| 3 | WACC | 11.3% | ±50bp = ±$18–20M (perpetuity grid) |
| 4 | Comp trajectory | 5.0% → 2.5% | ±1pt a year ≈ ±$25–35M (compounds into terminal EBITDA) |
| 5 | Unit growth and unit economics (NUV, build cost, RONIC) | 12/yr, $1.05M +3%/yr, RONIC 20% | Pessimistic vs. base unit plan ≈ −$60M to −$150M combined with comps. RONIC at 15% vs. 20% ≈ −$19M. |
Honorable mention: maintenance capex. If the true level is closer to the FY25 run-rate than to 4% of revenue (Flag F3), each 1pt of revenue adds about $10M to explicit-period PV alone.
4.3 Investment View
Read: fairly valued at about $455M EV. Returns are asymmetric only if the entry price is disciplined.
Assume entry at $455M EV ($422M equity) at the end of FY25, an exit at the end of FY31, and cash accumulated as modeled:
| Scenario | Exit EV | Exit net cash | Exit equity | MOIC | IRR |
|---|---|---|---|---|---|
| Pessimistic (9x) | 471 | 65 | 536 | 1.27x | ~4% |
| Base (11x) | 760 | 86 | 846 | 2.0x | ~12% |
| Optimistic (13x) | 1,079 | 99 | 1,178 | 2.79x | ~19% |
IRR = (ExitEquity/EntryEquity)^(1/6)-1 ; ExitEquity = EBITDA31*Multiple + (Cash31 - Debt31)
The base-case IRR roughly equals the cost of equity (12.3%). At $455M, investors are paid fairly but are not getting a bargain. Entry at $400–420M EV (about 12x LTM) would lift the base IRR to roughly 14–15% and give real margin of safety.
Main upside
- Returns on new units are strong: a 3.5-year payback implies roughly 20%+ after-tax RONIC.
- The company self-funds growth and could plausibly reach 15+ units a year.
- It is under-levered, moving to net cash by FY28. There is capacity for a dividend recap or faster expansion.
- Scarcity value: a profitable, growing specialty coffee platform could re-rate toward Dutch Bros-type multiples in an IPO.
Main downside
- California execution risk: higher wages (the $20 fast-food minimum wage), rents and build costs, plus unproven brand awareness outside the home region.
- Arabica volatility: the hedge program only defers cost pressure. A 100bp COGS miss costs about $20M of EV.
- Comp deceleration: the AUV gap in Flag F2 needs explaining. If about 35% of revenue is non-café, the revenue mix and its risk profile differ from the café story.
- Quality of earnings: the 23% EBITDA margin is well above peers (Flag F8).
4.4 Assumptions Log
"Given" means taken from your inputs; "Derived" means calculated from them; "Assumed" means my estimate, which you should review.
| ID | Assumption | Value | Type | Rationale / how to adjust |
|---|---|---|---|---|
| A1 | Net new units | 10, 11, 12, 12, 12, 12 | Assumed (per guidance) | Ramp from 9 to 12 by FY28, as you specified |
| A2 | Comp growth | 5.0, 4.5, 4.0, 3.5, 3.0, 2.5% | Assumed | Linear fade toward the 2.5% long-run level you specified |
| A3 | New-unit productivity (NUV) | $1.10M in FY25, grown at comp | Derived | Calibrated to FY25 non-comp revenue |
| A4 | Opening convention | Half-year in year opened | Assumed | Change to a quarterly phasing if you have the opening calendar |
| A5 | COGS % | 31.5 → 31.2 → 31.0% flat | Given/Assumed | Hedging program target |
| A6 | Cash SG&A % | 45.0 → 44.2% | Assumed | About 15–20bp a year of leverage, partly offset by CA wage costs |
| A7 | SG&A includes D&A | Split out | Derived | Flag F1 |
| A8 | Build cost/unit | $1.05M, +3%/yr from FY27 | Given/Assumed | Inflation plus CA/CO premium |
| A9 | Maintenance capex | 4% of revenue | Given | Conservative against the FY25 run-rate (Flag F3) |
| A10 | D&A | 14% of opening PP&E + 5% of capex | Derived | Calibrated to FY25 ($8.46M modeled vs. $8.4M actual) |
| A11 | Working capital | AR 4.9d, Inventory 27.8d, AP 34.7d; total ΔNWC = 2% of Δrevenue | Given/Derived | Difference goes to "Other assets" |
| A12 | Other assets / Other LTL | $5.5M plug / $6.0M held flat | Derived/Assumed | Flag F5. Other LTL treated as operating, not debt-like. |
| A13 | Tax rate | 24% | Given | Constant |
| A14 | Interest | 7.25% on average debt + $0.4M fees | Derived | Flag F4 |
| A15 | Refinancing | $26M at 7.25% in FY29, $4M/yr amortization | Assumed | Range 6.5–8.0%; negligible EV impact |
| A16 | Interest income on cash | 0% | Assumed | Conservative |
| A17 | Leases | ASC 842 operating; rent in opex; excluded from EV | Assumed | Flag F6; restate if IFRS 16 is used |
| A18 | Risk-free / ERP | 4.25% / 5.5% | Assumed | Refresh at pricing date |
| A19 | Unlevered beta | 1.05 (peer median) | Assumed | Illustrative peer betas; refresh |
| A20 | Target D/V | 15% | Assumed | Post-IPO capital structure |
| A21 | Size / company-specific premium | 1.5% / 0% | Assumed | Specific risks handled via scenarios |
| A22 | Terminal growth / RONIC | 3.0% / 20% | Assumed | RONIC from 3.5-year payback unit economics |
| A23 | Exit multiple | 11.0x FY31 EBITDA | Assumed | Discount to current peers as growth slows |
| A24 | Peer multiples | See §3a | Assumed (training data) | Must refresh |
| A25 | Precedent multiples | See §3b | Assumed (press-reported) | Must verify |
| A26 | Valuation date | 31-Dec-2025, mid-year convention | Assumed | Roll forward to pricing date |
| A27 | Method weights | DCF 50 / trading comps 30 / precedents 20 | Assumed | Adjust to reflect IPO vs. M&A context |
| A28 | Net debt | $32.9M (42.0 − 9.1) | Derived | No minimum-cash adjustment |
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