Pro forma revenue assumptions

January 05, 2026

by a searcher from University of Miami in Indianapolis, IN, USA

When building a pro forma to include downside case, base case, and better case, what is the standard assumption for monthly revenue growth/decline? For example, when modeling a 10% revenue decline in Y1, one can model .83% decline for 12 months, a 10% decline in one month with all other months remaining flat, etc. Likely it is neither scenario, so I'm curious how others approach this.

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Reply by a searcher
from University of Wisconsin in Orange County, CA, USA

I'd personally keep it simple and just apply a 0.83% decline or increase each month. Of course the actuals won't turn out exactly that way, but it's a projection and everyone knows that it's just a best guess. That said, if you're looking to model a downside case, a 10% decrease really isn't that much - should you be stress testing the business with a bigger decline? Depending on your customer concentration, it may not be too far fetched that downside revenue could be much lower.

Reply by a searcher
from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) in Monterrey, Nuevo Leon, Mexico

I may get booed for saying this but, does it really change the outcome of the model? I would argue to go with a simplification and be upfront about it. Now, if the deal doesn't pencil anymore by changing this assumption, there may be other, more relevant issues with the deal. Then again, I put my search in indefinite pause, so take my opinion with a huge grain of salt.

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