Steady state

The condition a terminal value assumes: constant growth, constant margins, and reinvestment consistent with that growth at a return that no longer exceeds the cost of capital by much.

The internal consistency requirement is the part most models fail. A terminal value assuming 5% perpetual growth at a 12% return on capital requires the business to reinvest 41.7% of its operating profit forever, and if the terminal cash flow does not reflect that reinvestment the model has assumed growth without paying for it.

Free growth is the single most common error in a beginner's discounted cash flow, and it can inflate a valuation by half.

Check that terminal reinvestment equals growth divided by return. Every time.