Financial modelling to support decision making

Financial models are critical components of many business decisions. This means that it is essential to have confidence in your model. Even though some big companies are capable of preparing and documenting a comprehensive and robust operational plan of their company, most companies lack the resources for building an extensive and versatile tool that would support long term strategic and operational plans.  

From a deals perspective, a financial or a business model is an essential tool that makes an M&A transaction quantifiable. It also supplies extensive information of management’s assumptions for the future of the business. Even though the managements of companies prepare the long term plans of an investment or a business case in a “to the point manner”, they mostly lack the expertise to incorporate the key financial,  mercantile and regulatory (i.e. GAAP, tax) terms of the case to a unique and simple tool in form a financial model. 

The tools for financial modelling

We use modern technology within the services provided. Nevertheless, the fact is evident that MS Excel will still be used for a while as it holds most of the benefits. Few to count, the dynamic nature of the flexibility, the fact that it can be used for multiple purposes and that it can be found in almost every laptop in the world, the fact that it requires minimum effort to audit and understand the basis of calculations. Considering these advantages, MS Excel will still be one of the key tools for financial models.

A few energy and infra cases

Financial models are one of the most important elements during an M&A transaction. Energy and infra deals are one of the areas in which the financial models are a must due to high capital expenditure and complex financing structure of the deals. 

Since the industries and investors are looking for greener energy-based investments and organisations, we have seen an increase in the demand by the clients regarding the financial modelling and financial model review exercise of in particular wind farm investments. Our Corporate Finance team has experts who are focusing on only energy and infra deals. 

To count a few important wind farm transactions that we have worked on:

• buy-side M&A advisory for Helen Oy on their purchase of the majority of 100MW ready to build wind farm project from CPC Finland Oy

• sell-side advisor to ST1 in the sale of 315 MW wind production capacity spread across several wind farms as well as development project totaling 475 MW. 

Our Corporate Finance team has also been involved in many important financial model review cases. A large recent one would be the review of Mutkalampi wind farm financial model. Mutkalampi is the largest wind farm investment in Finland (404 MW capacity) to date.  

Every modelling exercise has its own dynamics and might differ extensively from case to case. Hence, we are here to help you for the best outcome. Please contact us and we can talk about your modelling needs! 

How we can help:

We at PwC help companies analyse the operational and financial structure of their organisation. We also  advise how to build financial model which would fit best for the purpose and to get the required outputs, which are generally profit and loss statement, balance sheet and cash flows. Our industry specific experts always contribute to client projects with deep technical expertise in building and reviewing business models.