What is this?

Sometimes a deal will call for a large and complex financial model to understand the inner-workings of a business and all the interconnected variables. But a lot of times the most important thing you can do is what some people refer to as "back-of-the-envelope" math. What has to be true for this to be a great outcome?

Example

You're evaluating an early stage business that builds software for contact centers. The closest comparable company in the public markets is Five9 ($FIVN). You need to build a model to "dream the dream" in terms of what is reasonable for how big this early stage business could become.

"Dream the Dream" Model:

"Dream the Dream" Model

"Dream the Dream" Model 2020E,2021E,2022E,2023E,2024E,2025E,2026E,Dream TAM Total US Agents (000s), 13,000 , 13,000 , 13,000 , 13,000 , 13,000 , 13,000 , 13,000 x Revenue per Agent ($ per Month),$175 ,$176 ,$177 ,$178 ,$179 ,$179 ,$180 = TAM ($M),$27,300 ,$27,437 ,$27,574 ,$27,712 ,$27...

docs.google.com

Key Drivers