A financial model is a valuable aid to decision-making
Decisions are a basis component of your everyday business. Whether you are tackling:
- the future strategic or operational direction of your business or part of your business (incl. entering new fields of business),
- designing your financial structure,
- assessing a corporate transaction (as a whole or a part) as the buyer or seller or,
- evaluating other investment and financing plans,
all these decisions have one thing in common – they are more or less bound up with great uncertainty because they all relate to the future.
A financial model renders support with presenting the potential effects of an uncertain decision, taking into account various relevant parameters. This look ahead allows opportunities and risks to be identified, the degree of uncertainty to be reduced and thus costly bad decisions to be avoided.
Flexible assumptions concerning the main parameters for decisions and the associated ability to analyse scenarios also make a contribution here. Because analyses like these allow the effect of any deviating developments and any opportunities and risks resulting from them to be quantified. This is how you too can be prepared when it “doesn’t go according to plan” and at least plan out a scenario to match it.
Our financial model
In close coordination with you or your teams, we’ll develop a model (in Microsoft Excel or other systems as required) that focuses on being flexible, appropriate, structured, logical, and last but not least user-friendly. We take a practical approach in which we combine the specific technical know-how with experience and dedicated business knowledge.
By coordinating closely during the process we make sure that the model’s structure and functioning meet your expectations (and reporting structures) and that all the parameters relevant to the case are taken into account in the model. Furthermore, in this way we can ensure that the model is handed over efficiently and that you can then use it (if desired).
Scope
Besides the above situations in which decisions have to be made, financial models also contribute to the success of the project in other situations. Potential fields of application include:
Models to qualify or quantify the value drivers and the risks and opportunities and thus ultimately to support discussion and decisions on value and price.
Models to evaluate and discuss strategic options (e.g. including when things are generally more uncertain all the way to crisis situations).
Models to evaluate the liquidity situation or to regain the trust of stakeholders.
Models to present the interconnecting effects and financial benefits of potential infrastructure projects or when taking part in (public) tenders.
Models, incl. to present the capacity to repay lending, that can serve as a reliable basis for talks with potential financing partners and to monitor potential covenants.
Models to generate your annual (medium-term) planning, including the templates necessary for supplies, such as from subsidiaries, departments and responsible individuals.
Alongside generating financial models, when you are audited we’ll also support you with models you have already used and thus reduce the risk of value loss.
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