LearnGrokNothing here is financial advice, and none of it replaces your own checks.
Use one controlled input pack and a fixed memo structure. This gives the transaction committee a valuation range it can trace back to management forecasts, comparable-company data and stated deal assumptions.
This process is for corporate finance teams preparing an acquisition or disposal paper. Nothing here is financial advice, and none of it replaces your own checks.
1. Assemble the input pack
Create one folder or workspace for the memo. Do not ask the model to reconcile several versions of the forecast or a mixture of published and working assumptions.
Include these documents or tables:
- The approved management forecast, with income statement, cash flow statement and balance sheet where available.
- The comparable-company table supplied by the team, including source date, operating metrics, enterprise values and selected trading multiples.
- Transaction assumptions: stake acquired or sold, cash, debt, leases, minority interests, tax assumptions, fees and expected timing.
- The prior committee paper or board pack, if it establishes terminology, reporting currency or valuation conventions.
- A short assumptions log showing who owns each input and when it was last checked.
Name the files clearly, for example Management forecast - approved, Comps set - team supplied, and Transaction assumptions - current. State the valuation date at the top of the assumptions log.
Watch out
Keep supplied data separate from generated analysis
The model can organise and draft from your materials. It cannot establish that a forecast, a comparable set or a transaction assumption is correct.
Before you share material, follow your firm's data-handling rules. Check the settings and current capabilities for the model you are using in the xAI documentation. These can be version-dependent.
2. Give the model a constrained drafting brief
Paste the input tables or attach the approved documents, then give one instruction that sets the memo boundary. Ask for a draft, not an investment conclusion.
Use a brief in this form:
Draft a valuation memo for a transaction committee using only the supplied materials.
Use these sections: purpose and scope; inputs and valuation date; business and forecast summary; trading comparables; valuation methodologies; valuation range; sensitivities; committee questions; limitations.
Separate facts from assumptions. Label every calculated figure with its source inputs. Do not add companies, market data, transaction precedents, discount rates or assumptions that are not supplied. Where an input is missing or inconsistent, write [OPEN POINT] and explain what is needed.
Show enterprise value and equity value separately. State currency, units, valuation date and whether each multiple is historical, current-year or forward. Produce a concise committee-paper draft in British English.
If the team wants more than one method, specify them. A common controlled set is:
- Comparable-company valuation using the supplied selected multiple range.
- Discounted cash flow valuation, only where the team has supplied the necessary cash flow and discount-rate assumptions.
- A cross-check against any transaction-specific reference value supplied by the team.
Key point
Make absence visible
An [OPEN POINT] is more useful than a plausible invented input. It tells the deal team what must be resolved before committee review.
3. Build the memo around an audit trail
Ask for the first draft in the following order. Do not start with prose about the market. The committee needs to know what is being valued, on what date, and using which inputs.
- Purpose and scope: identify the asset, stake, transaction stage and intended use of the paper. State that the memo is an internal draft and not financial advice.
- Inputs and valuation date: list the supplied forecast, comparables table and transaction assumptions. Record each document date.
- Forecast summary: present the revenue, EBITDA, cash flow and net debt measures that drive valuation. Explain material forecast movements only if the supplied materials explain them.
- Comparable-company analysis: show the selected peer group, relevant operating metrics and supplied valuation multiples. Explain exclusions only where the team has documented them.
- Valuation methodologies: show the calculation path from operating metric to enterprise value, then from enterprise value to equity value.
- Valuation range: place the low, central and high cases in one table. State which method or assumption drives each point.
- Sensitivities and committee questions: isolate the few assumptions most likely to change the range.
Use a table for the valuation bridge. It prevents enterprise value, debt and equity value from being mixed together.
| Item | Low case | Central case | High case |
|---|---|---|---|
| Selected valuation metric | [input] | [input] | [input] |
| Applied multiple or method output | [input] | [input] | [input] |
| Enterprise value | [calculation] | [calculation] | [calculation] |
| Less: net debt and debt-like items | [input] | [input] | [input] |
| Add or less: other agreed adjustments | [input] | [input] | [input] |
| Equity value | [calculation] | [calculation] | [calculation] |
Check
Trace every headline number
A committee member should be able to move from the stated equity-value range to the selected multiple, forecast metric and debt adjustment without reading narrative text.
4. Force a proper sensitivity discussion
Do not produce a long list of generic risks. Ask the model to rank sensitivities by effect on equity value, using only inputs the team has provided.
Typical headings are:
- Selected comparable multiple.
- Forecast revenue growth or margin delivery.
- Discount rate and terminal assumptions, where a discounted cash flow has been supplied.
- Net debt, lease treatment or other debt-like items.
- Timing assumptions and the valuation date.
For each sensitivity, state three things: the input changed, the direction of the impact, and the unresolved evidence needed. For example, do not write “execution risk”. Write that the central case depends on the supplied margin forecast, and identify the forecast line or management assumption that needs challenge.
End with no more than five committee questions. Make them decisions or evidence requests, such as whether the selected peer set remains appropriate, whether debt-like items are complete, or whether the central case should rely on a forecast not yet independently reviewed.
5. Check where the draft is wrong
Read the memo against the source pack before sending it on. The most serious errors are usually quiet ones: a currency changes between tables, an enterprise-value multiple is applied to equity earnings, a forward multiple uses the wrong forecast year, or net debt is counted twice.
Use this check list:
- Compare every headline figure with the approved source table.
- Recalculate the enterprise-value-to-equity-value bridge independently.
- Check that units are consistent, for example thousands or millions.
- Confirm the valuation date and source dates are visible.
- Search for
[OPEN POINT], unsupported claims and blank cells. - Check that the low, central and high cases use internally consistent assumptions.
Stop
Do not remove caveats to make the range look cleaner
If the forecast, comparable set or debt adjustment is uncertain, show the uncertainty and put it in the committee questions.
When the draft does not work
If the output blends sources, stop and reduce the input pack to the approved forecast, the approved comparables table and the assumptions log. Ask for the valuation bridge first, then add narrative only after the figures reconcile.
If the output introduces facts not in the pack, repeat the drafting brief and require [OPEN POINT] for missing information. If the valuation range cannot be reconciled, do not circulate it as a committee conclusion. Return the relevant input, calculation or assumption to its named owner, correct the source pack, then regenerate and repeat the checks.
