Financial Modelling
We create Financial Models that are essentially multi-year in-depth
account of a business
based on your inputs
Financial Modelling is like writing a story. You provide us the story line, the content, the incidents and we weave them all together into something that showcases the inherent beauty and also take care of the technical aspects. In true professional spirit, we also advise you on what may be possible and what may not be possible, what may be a good strategy and what may not be a good strategy, and what are the choices and alternatives that you may have. To take a call on what should be part of the story and what not, is ultimately your decision.
Types of Financial Models
Financial Models are built for many different situations as enumerated below. While most of the Financial Models are 3-statement models, there could be other type of models as well, for example models where the output is either a valuation estimate or a set of KPIs that need to be analysed for a specific purpose. Each type of model has its own unique purpose and characteristics. We build such models as per requirements.
Projection of Business
Most essential type of Financial Models are built for projecting a business. These models are for something as straightforward as Business Forecasting or Ratio Analysis. More involved use is for Financial Planning, Goal Setting and Budgeting. Models for Performance Measurement use KPIs or other regular parameters for assessing performance.
Capital Structuring
Such Financial Models are built when the primary purpose pertains to capital structure or investments. They could be used for Raising Capital where the future expansion of business may be the primary focus. Debt is an important ingredient in funding, but knowing how much is too much is important - such models are built to understand Sustainable Debt or evolve an Efficient Capital Structure.
Corporate Structuring
Businesses undergo corporate structuring in nearly all phases of growth. Understanding synergies and share swaps are important in models dealing with Mergers & Acquisitions while Joint Ventures are more about who brings what to the table. Understanding how a business will perform is critical in both Spin-offs or Divestments and Buy-outs where shareholders place bet on the future potential of the business. A comprehensive exercise such as Financial or Operational
Restructuring involves detailed modelling of every aspect and unit of the business.
Project Analysis
Projects are mostly long-term but finite lifed. Understanding how a debt may be repaid over the life of a project through its cash flows is an important aspect of Capital Allocation or Project Finance. Effectiveness assessment post-completion or during the life of a project may be done through Project Evaluation.
Strategic Decision Making
Businesses are constantly faced with decisions that affect their future. Expanding your business through Organic vs Inorganic Growth is about analysing whether you would perform better solo or by acquiring existing businesses. Consolidating Diverse Businesses is an important choice from a valuation perspective. Corporates also have to make Diversification choices to enter related or unrelated businesses and such models are sometimes challenging for existing management on account of projecting an unknown territory.
Valuing Businesses
Business Valuation is akin to evaluating oneself in a mirror. Valuations may be done for a Standalone Business or a Swap Ratio Analysis can be done where two or more businesses are involved. Valuation of Simple and Exotic Instruments may be required for direct evaluation of derivatives, valuing contracts or just analysing exotic options.