Attraqt

Working Capital Model

Giving the rapidly growing digital merchandising company the ability to demonstrate adequate working capital for a proposed acquisition.

Rapid turnaround

The first working version of the model was completed in a single week, to give an initial view to management

Streamlined figures

The model merged the complex accounts of two businesses, to create a single harmonised view

Uncertainty protection

Exchange rate volatility was evaluated to cover potential downside scenarios following the Brexit vote

Challenge

Attraqt had agreed heads of terms to acquire the larger eCommerce software business Fredhopper, in a deal that would be financed by a share issue. To meet AIM requirements, the directors needed to show that the combined business would have adequate working capital. Both businesses had several entities that would need aggregating, as well as significant deferred revenue, so they needed a model that could run several scenarios to satisfy the reporting accountants.

Solution

We built a forecasting model with a focus on working capital adequacy for the combined business. This mapped the figures of both businesses to create a harmonised set of accounts, while incorporating analysis of the top 20 customers to produce an accurate unwind of their balance sheet positions. This was essential, since Fredhopper had received cash in advance for many of its contracts.

Results

The new model was designed flexibly to allow sensitivities and scenarios to be defined, and, after being examined by the reporting accountants, it was accepted as a good basis for a working capital adequacy report and resulted in a successful acquisition.

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