A sensitivity analysis is a grid that recalculates a company's valuation while 2 assumptions move up and down around their base values, so you can see which inputs change the result most. In Equidam it is a dashboard module with 2 tables of up to 5 rows by 5 columns: Revenue Growth vs EBITDA Margin and Discount Rate vs Exit Multiple. The second table moves the discount rate (WACC) and the exit multiple. Every cell is a pre-money valuation (the company's value before new investment) recalculated from your own data. On the dashboard and in the PDF report, the full tables need benchmarks access on the company.
What does each sensitivity analysis table vary?
The first table varies revenue growth across the columns and EBITDA margin down the rows. EBITDA means earnings before interest, taxes, depreciation and amortisation.
Revenue growth is the compound annual growth rate (CAGR) of your revenue: CAGR = (last-year revenue / first-year revenue) ^ (1 / number of years between them) - 1. It uses the first and last years in your financial projections that have revenue above zero.
EBITDA margin is (revenue - cost of goods - salaries - operating expenses) / revenue, taken from that same last year with revenue.
The second table varies the discount rate (WACC, the weighted average cost of capital) across the columns and the exit multiple down the rows. The discount rate is the yearly return used to bring future cash flows back to today. The exit multiple is the EBITDA multiple used to estimate what the company is worth at the end of the forecast.
The base values come from your valuation as it stands, including any changes you made in Advanced Settings.
How big is each step in the grid?
Steps are relative changes to the base value, not percentage points.
Revenue Growth vs EBITDA Margin: each step is 20%. The 5 columns and rows are the base value multiplied by 0.6, 0.8, 1, 1.2 and 1.4, labelled -40%, -20%, base, +20% and +40%. A 50% base CAGR gives 30%, 40%, 50%, 60% and 70%.
Discount Rate vs Exit Multiple: each step is 10%. The values are the base multiplied by 0.8, 0.9, 1, 1.1 and 1.2. A 15% discount rate gives 12%, 13.5%, 15%, 16.5% and 18%; a 5.0x multiple gives 4.0x to 6.0x.
How is each cell's valuation calculated?
Each cell recalculates the 3 financial methods with the changed inputs: VC method (venture capital), DCF with long-term growth and DCF with multiples. It then returns the weighted pre-money valuation, using your current method weights.
Revenue growth: your first year of revenue stays fixed. The last year is reset to reach the target CAGR, and the years in between are scaled along the same curve.
EBITDA margin: cost of goods is adjusted in every year with revenue so that year reaches the target margin. Salaries and operating expenses do not change. Cost of goods never goes below 0, so a very high target margin is not always reached.
Discount rate: the risk premium inside the discount rate (WACC) is adjusted to reach the target rate. It changes the 2 DCF (discounted cash flow) methods.
Exit multiple: the target replaces the EBITDA multiple used for the exit value in the DCF with multiples and VC method calculations. See Limits for when this has no effect.
The Scorecard method and Checklist method results are held at their base values in every cell, because they come from the questionnaire, not the financials. When a scenario produces a valuation of zero or below, the cell shows Negative.
How do I read the colours and the base cell?
The base cell sits where both base values meet. On the dashboard it has a dark outline and bold text. Cells are coloured in 5 shades, ranked within each table, from Lower Valuation to Higher Valuation as shown in the legend.
On the dashboard, hover over a cell to see the full valuation, the change in amount and percentage against your pre-money valuation, the 2 input values, and a label: Below forecast assumptions, Above forecast assumptions or Mixed scenario. The base cell shows Base case.
Where does the sensitivity analysis appear?
On the dashboard, as the Sensitivity Analysis module. It is hidden on phone-sized screens.
In the PDF valuation report, as a Sensitivity Analysis chapter with the same 2 tables, short definitions of each axis, and no hover detail. The 2 highest shades are based on your report's primary colour.
In an interactive report link, as a Sensitivity Analysis section calculated when you create the link.
Limits
Dashboard: without benchmarks access on the company, the module shows a locked preview with masked values and an Upgrade to unlock button.
PDF valuation report: without benchmarks access, the Sensitivity Analysis chapter is left out.
Interactive report link: the section depends only on a complete valuation, not on benchmarks access.
Prerequisites: the questionnaire and financial projections must be complete and the valuation must be positive. Otherwise the module shows Complete the questionnaire to see sensitivity analysis.
Missing first table: the Revenue Growth vs EBITDA Margin table needs revenue above zero in at least 2 years. Without it, or when the base EBITDA margin is above 100%, only the Discount Rate vs Exit Multiple table appears.
Fewer than 5 rows or columns: rows with a margin above 100% are dropped, and columns that would push last-year revenue below 1 are dropped.
Other errors show Unable to load sensitivity analysis.
Exit multiple rows: no effect when your Advanced Multiples source gives only a revenue multiple (no EBITDA multiple), because those methods then use the revenue multiple.
You cannot change the step sizes or choose other variables.
Common questions
Why are the steps 10% in one table when the info text says 20%?
The dashboard info text and the report introduction say 20%, which applies to the Revenue Growth vs EBITDA Margin table only. In the Discount Rate vs Exit Multiple table each step is 10%.
Why does the -40% row show a higher margin than the base row?
If your base EBITDA margin is negative, for example -50%, the -40% step gives -30%, which is closer to zero.
Does the base cell always match my dashboard valuation?
Not always in the first table. Its base cell sets every year to the last year's margin, so if your margins differ by year, the cell can differ from your pre-money valuation. Compare the cell with the pre-money valuation on your dashboard to see the gap.
Do questionnaire answers change the sensitivity analysis?
Yes, through the Scorecard and Checklist methods, which add the same amount to every cell. The grids themselves only vary the 4 financial inputs.