Value an ecommerce business by discounting its projected free cash flows to present value.
The projection period is a geometric series that can be summed in closed form, and the terminal value capitalises the final year at the Gordon growth formula. Terminal value usually accounts for well over half the total, which is why the terminal assumptions matter more than the near-term forecast. Small changes in the discount and terminal growth rates move a DCF valuation enormously, so the implied multiple is the sanity check that keeps the answer honest.
Discounted Cash Flow Ecommerce
Value = Σ FCF_t ÷ (1+r)^t + terminal value ÷ (1+r)^n, with terminal value = FCF × (1+g) ÷ (r − g)
Value = Σ FCF_t ÷ (1+r)^t + terminal value ÷ (1+r)^n, with terminal value = FCF × (1+g) ÷ (r − g) The projection period is a geometric series that can be summed in closed form, and the terminal value capitalises the final year at the Gordon growth formula. Terminal value usually accounts for well over half the total, which is why the terminal assumptions matter more than the near-term forecast.
Small changes in the discount and terminal growth rates move a DCF valuation enormously, so the implied multiple is the sanity check that keeps the answer honest.
This calculator takes 5 inputs: Current annual free cash flow, Annual growth in cash flow, Discount rate, Projection period, Terminal growth rate. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.