Chessboard Group has experience supporting businesses to make strategic decisions, supported by robust financial analysis & forecasting. Our financial models are designed to provide operational insights, assist with business planning and strategy.
Scenario
The client was a listed animal health company, undertaking growth via increasing product sales through its existing geographic footprint & acquisition of other practices.
Brief
The client required a strategic model to analyse their forecast growth over the next 5-years. Some specific acquisitions targets were already identified (with target completion dates & actual financials to be used as a basis), whereas other acquisitions were required to be added on a templated basis (with the ability to switch on/off).
As acquisitions were funded through a combination of debt and issuing of shares, the inclusion of an annual re-pricing fo the business was essential to understand the potential ownership dilution to current shareholders.
Solution
A financial model was constructed which allowed the client to:
- Forecast organic growth through additional product lines introduced to its existing footprint;
- Dynamically add in the acquisition of multiple new businesses with key criteria such as acquisition date, revenue, margins and synergies to see the effect on the overall business’ profitability cash and debt position. Consideration used could be adjusted to be a mixture of cash/debt and issue of new shares.
Acquisition costs were also forecast on each acquisition, with benefits (such as margin improvement) scaled in over the first few years of ownership.
A key output was the assessment of capital requirements (both debt & new equity) and the effect of acquisitions on available cash to the organisation & compliance with debt covenants. Forecast breaches of set covenants were designed to be flagged to the model user.