What is valuation modeling?

Valuation modeling is the process of creating financial models to estimate the value of a business, asset, or investment. These models typically use various assumptions and projections about future cash flows, financial performance, and market conditions to arrive at a valuation. Professionals use valuation modeling for purposes such as mergers and acquisitions, investment analysis, financial reporting, and strategic planning. Common valuation methodologies include discounted cash flow (DCF), comparable company analysis, and precedent transactions.