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Football-field valuation charts

After you have built a peer-set analysis, a DCF model, and reviewed precedent transactions, you face a practical problem: these three methods give you different answers, and they have different levels of confidence. Your comps suggest $50 per share. Your DCF suggests $42. A recent precedent transaction implies $56. Which do you trust? The football-field valuation chart is not a new valuation method; it is a visual framework for integrating multiple methods and showing which valuations are supported by which approaches.

Quick definition: A football-field chart displays valuation ranges from different methodologies (comps, DCF, precedent transactions) as horizontal bars or bands, allowing you to see visually where different approaches agree and where they diverge.

Key takeaways​

  • Football-field charts force you to run multiple valuation methods and show your work, making hidden assumptions visible
  • Ranges within each method (e.g., comps using 25th-75th percentile peers, DCF using bull-base-bear scenarios) show confidence boundaries
  • Methods that converge strengthen conviction; methods that diverge signal risk and force deeper investigation
  • Football-field charts are tools for communication and decision-making, not valuation methods themselves
  • A well-constructed chart reveals which assumptions drive disagreement and where additional diligence is needed

Why visual integration matters​

A typical valuation memo might say: "Based on comps, the company is worth $48–52/share. Based on DCF, $40–48/share. Based on precedent M&A, $50–55/share. Fair value range: $44–52/share." This prose form is hard to digest. You cannot see at a glance where the methods agree, which method is most bullish, or whether the range is tight or loose. A football-field chart answers these questions instantly with visual clarity.

Beyond clarity, the football-field format forces discipline. To build it, you must:

  1. Run each valuation method (comps, DCF, precedent) and generate a range for each
  2. Decide what the range represents (e.g., 25th–75th percentile for comps, base-case to upside for DCF)
  3. Display them side-by-side so dispersion is visible
  4. Identify which valuation(s) drive your final range

This discipline reveals which assumptions are most important and which valuations you actually have conviction in.

Building a comps range​

For a peer-set analysis, your natural range is the interquartile range (IQR): the 25th percentile to 75th percentile of the peer set's multiples. This captures the "middle 50%" of the peer set, excluding outliers on both ends.

Example: You have a peer set of 10 software companies trading at EV/Revenue multiples of 3.5x, 4.2x, 5.1x, 6.0x, 6.5x, 7.2x, 8.1x, 9.0x, 9.8x, 12.0x.

  • 25th percentile (between 3rd and 4th companies) = 5.55x
  • Median (between 5th and 6th) = 6.85x
  • 75th percentile (between 7th and 8th) = 8.55x
  • IQR range: 5.55x–8.55x

Apply the range to your target company's revenue to get a price range. If the target has $500M revenue, the range is $2.78B–$4.28B enterprise value, or (after adjusting for net debt) perhaps $28–42 per share on a 100M share count.

Alternatively, you can build ranges around your best-estimate multiple:

  • Low multiple: Use the 25th percentile, representing the "conservative" comp valuation
  • Base multiple: Use the median, representing the most typical peer
  • High multiple: Use the 75th percentile, representing the premium comp valuation

This three-point approach is cleaner than displaying the full IQR range and makes the football-field chart easier to read.

Building a DCF range​

For a DCF, you should build three scenarios:

Bear case: Assume lower revenue growth (perhaps long-term growth tapers faster than in base case), lower margins (competition increases or R&D productivity declines), and higher cost of capital (company faces execution risk). Discount the cash flows at the higher WACC.

Base case: Your most likely scenario—middle-of-the-road growth, margins, and cost of capital. This becomes the central line of your football-field.

Bull case: Higher growth (company gains market share faster, new product lines accelerate), higher margins (operating leverage kicks in faster), lower cost of capital (risk declines as the company matures). Discount at the lower WACC.

The three scenarios are not meant to be 10%–50%–90% probability estimates. They are simply illustrations of the range of outcomes your model can produce depending on key assumptions. A bear case that implies a 20% lower valuation than base case is useful; a bear case 80% lower is too extreme and obscures real range.

Example DCF three-point valuation:

  • Bear case: $35/share (assuming 15% long-term growth, 12% WACC, lower margins)
  • Base case: $50/share (assuming 20% long-term growth, 10% WACC, margins as projected)
  • Bull case: $68/share (assuming 25% long-term growth, 8% WACC, margin expansion)

Building a precedent transactions range​

If your company is a similar business that might be acquired or has peers that were recently acquired, precedent M&A multiples can anchor expectations.

Screen precedent transactions from the past 3–5 years involving comparable companies. Calculate the multiples paid (EV/Revenue, EV/EBITDA, etc.). Build a range:

  • Low: 25th percentile of precedent multiples
  • Median: 50th percentile
  • High: 75th percentile

Apply these multiples to your target company's financials to get a valuation range.

Important caveat: Back out the control premium. If the company being acquired traded at 4x EV/Revenue before announcement and was bought at 5.5x, the control premium was 37.5%. For a standalone company, subtract the control premium to get the trading-equivalent multiple (roughly 5.5x / 1.375 = 4.0x). Use the trading-equivalent multiple in your football-field chart, not the deal multiple, unless you are specifically valuing the company as a takeover target.

Example precedent transactions range:

  • Low (backing out 25% average control premium): $44/share
  • Median (with control premium): $52/share (representing a buyer's price)
  • High (with control premium): $58/share

If you are valuing for a standalone perspective, use only the low-end adjusted for control premium. If you are valuing from a potential acquirer's perspective, use the full range including control premium.

Visualizing the chart​

A football-field chart typically displays three horizontal bars, one for each method:

Each bar represents a low, base, and high valuation. Looking at this chart, you immediately see:

  • Comps suggest $28–42 (conservative to fair)
  • DCF suggests $35–68 (very wide; suggests high sensitivity to assumptions)
  • Precedent M&A suggests $44–58 (control premium included)
  • Overlap zone: $42–52 (where all methods converge)

Your final valuation range is typically the overlap or the consensus zone: $42–52/share. This is the zone where at least two of the three methods agree. If your target company were trading at $35, it would be below the consensus range, suggesting upside. If trading at $65, it would be above, suggesting downside.

Interpreting dispersion and agreement​

When methods converge, you have high conviction. If comps, DCF, and precedent M&A all point to $48–55/share, you can act with confidence at a price below $48 or above $55. When methods diverge widely, you have lower conviction and need more diligence.

Wide DCF range: If your DCF shows a range of $30–80/share while comps show $45–50, the DCF is telling you that the valuation is highly sensitive to key assumptions. This is useful information—it highlights which assumptions matter most. You might then run sensitivity analysis or scenarios to understand which variables drive the wide range (is it terminal growth rate? Is it margin assumptions? Is it cost of capital?). A wide DCF range does not mean the method is bad; it means you need to validate your key assumptions more carefully.

Comps low, DCF high: This suggests the market is pessimistic about the company's growth or margin trajectory compared to your projections. This could mean (a) your DCF assumptions are too optimistic, (b) the market is undervaluing a hidden opportunity, or (c) the peer set is wrong. Dig deeper. Is there evidence that the company will outperform the peer set? Or should you lower your growth or margin expectations in the DCF?

Precedent M&A high, comps low: This is common when (a) there is a strategic buyer willing to pay a control premium to acquire the company, or (b) precedent deals are from a different market or business cycle. If you are valuing for a strategic-acquisition scenario, use the precedent range. If you are valuing as a standalone investment, weight the comps more heavily.

Real-world examples​

Salesforce acquisition of Slack (2021). Slack traded at roughly $30–35/share before acquisition rumors emerged in June 2021. Salesforce announced acquisition at $27.7/share in December 2020, later repriced to $31.50/share in July 2021. The football-field for Slack might have looked like:

  • Comps (SaaS collaboration tools): $28–36/share
  • DCF (base case, assuming slower growth post-IPO): $22–32/share
  • Precedent M&A (enterprise software acquisitions): $32–40/share (with control premium)

The overlap zone was roughly $28–36. The deal price of $31.50 fell squarely in the consensus range, suggesting it was fair value (not a bargain, not an overpayment).

Microsoft acquisition of LinkedIn (2016). LinkedIn traded at $120–130/share before Microsoft acquisition at $196/share (54% premium). The football-field would have shown:

  • Comps (social media / professional networks): $110–140/share
  • DCF (standalone case): $100–130/share
  • Precedent M&A (enterprise software acquisitions): $130–170/share

The $196 price was at the high end of precedent M&A with synergy premium included. For a standalone investor, this suggested upside was limited. For Microsoft, with strategic synergies in enterprise adoption and integration with Office, the deal was justified.

Tesla valuation (2017): A football-field for Tesla might have shown:

  • Comps (auto manufacturers): $20–40/share (using auto P/E multiples)
  • Comps (tech companies): $45–75/share (using SaaS / tech multiples)
  • DCF (base case, conservative growth assumptions): $30–55/share
  • DCF (bull case, assuming automotive dominance + energy storage): $60–120/share

The wide spread reflected genuine uncertainty about Tesla's long-term trajectory. The chart would have shown that comps to traditional auto made little sense; comparison to tech comps was more appropriate. The football-field format would have made this clear and forced better peer selection.

Building a multi-axis football-field​

For companies with multiple valuation drivers, you can expand the football-field to show ranges for different methods along different axes:

  • Y-axis: Three methods (comps, DCF, precedent M&A)
  • X-axis: Price per share, from low to high

Each method has three points (low, base, high) or a range (IQR), displayed as a horizontal bar.

Alternatively, for sensitivity analysis within a single DCF:

  • Y-axis: Different key variables (terminal growth rate, WACC, terminal margin)
  • X-axis: Valuation per share

For each key variable, show the range of valuations it produces when varied. This shows which variables matter most to the final valuation.

Common mistakes in football-field construction​

Making ranges too wide to be useful. If your DCF range is $10–100/share, you have not constrained your assumptions enough. Tighten your base-case assumptions, then sensitivity-test them more narrowly.

Using only midpoints, losing the range information. The range is the point; the midpoint is secondary. Show the range.

Not clearly labeling what each range represents. Is the DCF range base-case to bull case? Or a percentile range? Label it.

Mixing control premiums inconsistently. If the precedent M&A range includes control premium, note it. If comps should also include a control adjustment, apply it consistently.

Failing to investigate large disparities. If comps say $40 and DCF says $80, do not average them. Investigate why they diverge.

FAQ​

Should the final valuation range be the overlap or the mean of all three methods? The overlap is more informative than the mean. It shows where you have the most conviction. If methods do not overlap, the chart is telling you that you need more diligence or that you should weight one method more heavily than others.

How wide should my ranges be? A good range is ±15–25% from the midpoint. Wider ranges suggest low conviction or high sensitivity to assumptions. Tighter ranges (±10%) suggest high conviction or that you have not stress-tested enough.

Should I include acquisition scenarios in the chart for a public company? Yes, but label them clearly. Show a standalone valuation range and a separate control/acquisition range. This helps decision-making: if the stock trades below the standalone range, buy; if it trades in the control range, consider the probability of a takeout.

How many scenarios should I build for DCF? Three (bear, base, bull) is standard. More than three becomes cluttered. If you want deeper sensitivity, run a separate sensitivity table showing how valuation changes with different assumptions.

Can I update the football-field chart over time as I learn more? Absolutely. As new information emerges, update your comps, refine your DCF, and redraw the chart. Over time, your ranges should tighten as you gain conviction.

  • Comps vs DCF: when each wins — Understanding when to weight each method more heavily
  • DCF sensitivity analysis — Building scenarios and understanding which assumptions drive valuation
  • Valuation ratios — The multiples that anchor the comps range in your football-field

Summary​

The football-field valuation chart is not a new method; it is a visual framework for integrating comps, DCF, and precedent transactions into a coherent decision-making tool. Build ranges for each method using defensible boundaries (IQR for comps, bear-base-bull for DCF, percentile ranges for precedent M&A). Display them side-by-side to see where methods agree and where they diverge. Investigate large disparities—they reveal hidden assumptions and risks. The overlap zone, where multiple methods converge, is your high-conviction range. Use it to screen investments: buy when price is well below the range, sell when above. The chart forces discipline in your valuation process, makes your assumptions visible, and forces accountability for your conclusions.

Next​

Read A comps analysis checklist