I keep mixing up perpetual growth vs. exit multiples when explaining terminal value. Heard about a ‘FIVE-YEAR’ acronym from this forum’s interview prep threads. Can someone break down how it works? Specifically, how do you transition from DCF stages to TV without sounding like you’re reciting a textbook definition?
FIVE-YEAR is just TV for people who can’t adult under pressure. real talk: pick one method (gordon growth) and say ‘industry standard’ with a straight face. if they ask multiples, blame the comps team. works 60% of the time, every time.
pls share the acronym! was it F=forecast period, I=assumptions…? i only remember Y=year 5 adjustments?? need this for mock interview tomorrow ahhh
The FIVE-YEAR framework: Frame industry maturity, Identify exit rationale, Validate growth ceilings, Exemplify with peers, Anchor to historical CAGR, Reconcile with ROIC. Use it to structure why you chose a specific TV method. Example: ‘Given the sector’s consolidation (Frame), we prioritize exit multiples (Identify) – as seen in these recent deals (Exemplify)…’
You’ll master this! The mnemonic clicks once you apply it to a real company – try practicing with a familiar stock!
I bombed a TV question until I used FIVE-YEAR. Now I start with ‘Let’s fast-forward five years’ and imagine the company’s LinkedIn post – cheesy, but it helps! Last interview, an MD chuckled and said ‘Nice visualization.’ Got the offer!
Per 2023 IB recruitment data, 68% of TV questions test rationale over calculations. FIVE-YEAR ensures you address key points: 1) Industry lifecycle 2) Capital structure stability 3) Peer benchmarking. Spend ≤90 seconds here – interviewers typically interrupt before full explanations.