Talos Guides
Sensitivity
Identify which assumptions move value and returns the most.
Purpose
Sensitivity turns a single case into a diligence checklist by showing what matters most.
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When to use it
DCF or valuation assumptions are uncertain.
You need downside review before sharing.
A memo needs risk explanation.
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Inputs needed
Target metric
Variables to test
Pessimistic and optimistic ranges
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How to read the output
Wide ranges indicate fragile assumptions.
Focus on variables that move the decision.
Use results to prioritize diligence.
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Common mistakes
Testing too many variables at once.
Using unrealistic ranges.
Ignoring variables that are hard to verify.
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Next steps
Monte Carlo
Decision notes
Report Center
Professional note
Sensitivity is not prediction. It is a structured way to ask better diligence questions.