A private equity firm was contemplating the purchaseof a major insurance entity. Palisade Business Consulting constructed a financial model to analyse the acquisition.The work involved identifying the drivers of risk, their impact on the business, and the developmentof an Excel-based model. The outputs included the funding requirements and cash generation profiles under different scenarios. After Palisade’s analysis, the client was able to answer questions such as “How much money do we need to buy this company?” and “How much could this acquisition contribute to our bottom line?” Furthermore, Palisade performed an analysis of the risks associated with different classes of debt in the event that theclient borrowed money to purchase the company. In the end, many differentscenarios were taken into account, so the client was able to make a very well-informed decision.
For another private equity firm, Palisade conducted a due diligence on the business plan of a potential investment, and worked with the management team to revise the plan and its implications for managing the business.
A major fund manager was presented with a multi-million euro investment opportunity in the telecommunications industry. Palisade approached the problem by analysing the competitive position of a particular player in the market. Then, an assessment was made of whether a revised strategy was likely to produce a substantial turnaround in financial performance. Armed with this information, the client was able to make the best decision about the investment.
A large European manufacturer of foods and beverages was considering constructing a large new plant in Central Europe. The plant represented a major investment for the company, and required detailed assessment of financial and nonfinancial risks.
Palisade Business Consulting developed a financial model to analyse the core business case, as well as a detailed assessment of all key risks in the project and their financial implications. One of the key risks considered was the possibility of industrial action at various affected sites. Labour strikes or walk-outs were a distinct possibility given the reallocation of company resources that the new plant would require. Another important risk category was the risks in project execution and facility start-up. For instance, if the facility opened and began operations behind schedule, that would impact hundreds of processes necessary for the transition to the new plant. Finally, the potential deviations in the forecasted exchange rates and labour rates applicable to the new facility were considered. For each of these risks, Palisade presented analyses of the likelihood of occurrence and potential impact on other aspects of the project or the company. With this information, senior management were able to make the most appropriate decision on how to proceed with the project.
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