Financial Modeling Services Mcg

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Financial Modeling Services

Financial Modeling Services

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  • 1. The Financial Model as a tool for management decision-making and attracting external investors You Ask – We Answer© 2010
  • 2. Why On Earth Do I Need a Financial Model? Whether you are seeking funding from investors or compiling a business plan to serve as a blueprint for managing and monitoring your business, it is imperative to make financial projections (a.k.a., a Financial Model). Such financial projections attract investors and serve as a guide to your future business decisions.
  • 3. So.. Is It All About Numbers on a Spreadsheet? Creating financial projections for your start-up or an existing venture is both an art and a science. Investors want to see cold, hard numbers such as Internal Rate of Return (IRR), Earnings Before Interest, Tax Depreciation and Amortization (EBITDA). Yet, it is inherently difficult to predict your financial performance 3 or 5 years down the road particularly if you are attempting to raise seed capital in today’s economy. Regardless, short- and medium-term financial projections are required parts of your business plan if you want serious investors’ attention.
  • 4. But I have a Great Idea – Still They Want Me To Crunch Some Numbers?We feel your pain - financial projections can be intimidating. However,they are less a matter of mathematical aptitude and more a matter ofyour knowledge of your business, the industry, and the market. Pleaseremember, there is a big difference between a Dream and a Business Idea.In another words – investors want to be sure you know exactly what youare doing and are fully capable of backing up your strategy with realisticprojections and market expectations. The sad truth – nobody is in aposition to finance your dream these days. On the bright side – we arefully capable of transforming your dream into a business idea andpresent it in the language accepted by the investment community toincrease your chances of a successful transaction.
  • 5. How Do You Do It? Profits equals Sales minus Costs is an example of a very simple model for deriving projected profits from assumptions about future sales and costs. In practice, financial planning models are much more complex as they must accommodate multiple time periods (months, quarters and years) and handle hundreds of variables relating to sales, costs etc. The volume of data mounts up very quickly when each variable is multiplied by the time horizon, for example, by twelve months. By structuring key revenues and cost drivers and developing mathematical formulas, we are able to forecast Accounts Receivable (ARs) and Accounts Payable (APs) at any given period and ultimately calculate the bottom line and key investment metrics.
  • 6. What Do I Get? A Hands-on tool with fully integrated monthly income statement, balance sheet, and cash flow statements for up to 3-5 years which is exclusively build for your unique business model and enables you to: A) independently evaluate different scenarios of your cash flows and analyze your bottom line at any given period (even if you are “not a numbers person”) B) attract interest from the investment community and speak their language
  • 7. What are the Key Steps of Your Modeling Process? STEP I STEP II STEP III Gathering the Building the Projections Output Information and Building Revenue page, Perform Sensitivity Analysis Data Expenses page, Profit and Loss Charts Interviews with the projections, Balance Sheet, founders, CEO and CFO Cash Flow projections Summary Page: Annualized to discuss the business Results and Key Investment Building Working Capital Metrics strategy and gather key projections and Financing page model assumptions Tax liability calculations Identification of key revenue’ and cost drivers Developing Scenarios: Base/Best/Worst Review of historical financial data (if any) Building the Assumption PageBase Model typically achieved within a 40-hour minimum engagement
  • 8. What Does Our Financial Model Typically Contain? Assumptions Page (Key Revenues and Costs Drivers) Key Financial Indicators Scenarios: ‘What-If’ Statements (Base/Best/Worst) Investment Criteria Such as Valuation and IRR Income Statement (P&L) Balance Sheet Cash Flow Sheet Revenue Structure Considerations Financing Structure Considerations Charts
  • 9. What Are The Key Numbers Investors Will BeLooking At In My Financial Model? Investors usually have several investment opportunities on their plate (especially these days) and in order to make the investment decision they have to size the current or potential financial strength of your company. The key numbers they would look at: EBITDA (Percentage) Revenue Growth Minimum and Maximum cash balances Equity/Debt needs to fund company Break-Even Point Net Working Capital Valuation as multiple of EBITDA IRR
  • 10. EXAMPLE: ABC Inc - P&L Projections
  • 11. EXAMPLE: ABC Inc - Cash Flow Projections
  • 12. EXAMPLE: ABC Inc - Balance Sheet
  • 13. EXAMPLE: ABC - Key Investment Indicators
  • 14. … and YES, you are in a good hands.We consistently deliver Financial Models that are: Built from scratch (no templates) specifically for your business needs Scenario-based in order to provide Key Investment Metrics by use of ‘what-if statements’ Able to quantify significant changeable financial assumptions for the present and future. Example: “If I change Revenue Growth by X%, what is the impact on EBITDA and Cash Flow & IRR?” Flexible, sophisticated and dynamic yet simple enough to use in-house by non-financial mangers. Change the assumptions and see how the change affects your bottom line See the cash flows’ dynamics and trendsAs Financial Strategists and Consultants, we provideassistance with implementation of any business idea.
  • 15. Metropole Capital Group specializes in providing strategicconsulting and financial advisory services to small and medium-sizedbusinesses around the world at every stage of their businessdevelopment. MCG has established a captivating framework ofservices helping client companies develop innovative businessstrategies, assess their capital needs, determine financing options,and successfully acquire start-up, working or growth capital. Ourcore product is the Investment Solicitation Package which includesa set of the documents necessary to present to the investmentcommunity and includes: Business Plan, Financial Model,Investment Power-Point Presentation and Investment/OfferingMemorandum. THANK YOU!