You need the value of debt and equity to build a DCF valuation model. Why and when is there a need to iterate on the value of debt and equity in a DCF valuation?

When valuing a private company, you do not know the value of its debt and equity. So you may start with a value for debt and equity to get the WACC and value the firm and it’s equity. You must use this value of equity to recompute the weights of debt and equity and again arrive at the firm value/equity. You can iterate a few times to settle on the value of debt and equity of a private company. This iterative method of valuing debt and equity is also appropriate for an IPO valuation.