Our initial review of the target’s forecasts highlighted a number of deal-critical issues of which the Investor had not previously been aware. As a first step towards developing our own model we unravelled the detailed assumptions inherent in the existing forecast. We then worked with the target company FD and his staff to develop an assumptions-driven, integrated financial model to more reliably forecast the business post transaction.

The model helped the team of advisors (Corporate Finance and Debt Advisory specialists) to understand the impact of changes in highly volatile chemical commodity prices. This further confirmed the dependence on prices of a few key products. The model was used to understand the potential funding levels for the deal, and was flexible in allowing the team to evaluate a number of funding scenarios.

As part of the finalisation of a deal to outsource Local Authority services, we clarified the risk of error in the bidder’s model, detailing any potential problems. Our work incorporated a high level risk assessment of the model integrity. We performed a detailed impact analysis, identifying and presenting, in clear graphical form, changes in key outputs.

Our report summarised the analysis in an intuitive and meaningful way. The review identified a number of coding or logic errors in the model and our analysis
enabled the client to identify additional costs in the model which had not been agreed in negotiations.

This Private Equity client made a series of acquisitions in the renewable energy market. For each one Numeritas reviewed the model, reporting to our client and to the arranging and syndicating banks. A total of five banks have accepted Numeritas’ assessment of the models as satisfactory assurance on the model as part of their due diligence performed in advance of lending.