Thanks Jim for this - I feel like I've gleaned a lot from the thought process and example of developing a value estimate you've shared.

It seems like using an approach like above would be a good first step/filter for identifying potential investment candidates.

What do you think should be the second step? Evaluating risk factors per your last paragraph, perhaps with something like a common checklist of business/industry risks to assess a candidate against?

And is there a third (or additional) step you'd take before investing in a company that has passed the hurdles above?

Also, do you think having deep knowledge of the company and industry is necessary or critical to using an approach like this to select strong investment candidates, or do you think that's more icing on the cake?