financial modeling, review and audit services

comprehensive financial models

Comprehensive financial models (CFM) are revenue cash flow models of companies and enterprises related to projects, assets and businesses.   A CFM is a primary decision making, management and negotiation tool, where a wide array of model inputs can be changed and the impacts on outputs (operational and financial performance) can be observed.  Over the course of any advisory mandate, we will utilize the CFM extensively for the purpose of running a wide variety of "scenarios" and "sensitivities".  In particular, when we are engaged as a transaction advisor, developing, maintaining and operating the CFM will an essential component of our advisory work.  In a transaction advisory role, the analyses provided by the CFM is used for such purposes to demonstrate to a potential equity investors that there is sufficient equity up-side potential (the probability of achieving a certain minimum level of return) given realistic and defensible operational, financing and market development scenarios developed in the model.  Similarly, we may also use a CFM to convince prospective lenders that if they should lend into a company, that the companies net revenues will be sufficient to achieve sufficient minimum debt service coverage ratios over the term of a loan, given realistic and defensible operational, financing and market development scenarios developed in the model.  In many cases, we will build a CFM that is taken over by our client and used for many years for the purpose of making management decisions with respect to operations & maintenance, financing, pricing policies and many other aspects of their business.  A CFM is really a key modeling tool both for our work as advisors and our client's ongoing management responsibilities with respect to its projects, businesses and assets.

We offer state-of-the-art CFM modeling services to our public and private sector clients in the sectoral areas that we cover, including infrastructure, energy & utilities, oil & gas, industrials and real estate.  Developing a CFM is always advisable step for all parties engaged in transactions in these sectors.  Transaction participants including sponsor governments/government agencies, equity sponsors / developers, companies, utilities, contractors, vendors and contractors, buyers and sellers of companies and assets, investors, lenders, multilaterals and regulators can all benefit from independently developing a CFM.

Each time we are mandated to develop a CFM on behalf of a client, prior to beginning to develop a model, we will always schedule one or more meetings with our client in order to fully understand all necessary details of their business, project or asset and the client's specific modeling needs.  We custom-build each and every CFM around the specific requirements of our client's project, business, enterprise or assets.  However, in simplified terms a CFM is always structured as a revenue cash flow model with the following common model architectural components:

• Model inputs.  Each of our CFMs is designed so that there is only one worksheet in the model where model inputs and assumptions can be entered by the user (all other worksheets are for calculation purposes).  The model inputs worksheet also contains user a user feedback "dashboard" including a limited number of key output metrics, model status and model error and integrity check status.  Our CFMs are also accompanied by a detailed user manual and the inputs worksheet provide in-model user instructions.

• Model inputs and outputs summary.  Each CFM contains a worksheet where a detailed summary of the current scenario modeled inputs and outputs results and metrics are provided.  Depending on the specific needs under our advisory mandate and requests of the client, we custom-build a series of tables, graphs and charts that are tailored and formatted to be integrated into presentations, reports and studies where model outputs will be utilized.
  

• Scenario and sensitivity manager.  Our CFMs provide a worksheet where both the current scenario's key model inputs and output results and metrics are summarized as well as the summaries of a large number of alternative scenarios and sensitivities, which have been run and stored in the scenario manager.   This allows the user to quickly and easily review and compare scenarios and sensitivities analyzed.

• Financial statements.  Each CFM will contain a financial statements section of the model where the historical (if applicable) and pro forma balance sheets, income statements and cash flow statements are provided.

• Revenue development.   Every CFM will contain one or more worksheet(s) that develop(s) historical (if applicable) and pro forma revenue projections over the modeled period.  Revenue may be categorized into multiple different categories (for example there may be various categories of operating revenues, lease revenue, interest income, etc.)  In most cases, the revenue development section is derived from demand and pricing assumptions (e.g. sales revenues).  In some cases forecasted demand and pricing will be sourced from our economic and market models (in cases where we are mandated to do this work) or sourced from other defensible third-party models, analyses and studies or other internal sources arranged or provided by our client.  Revenues projections also need to take into consideration elements including pricing structures, inflation, foreign currency conversion rates (if applicable) and potentially price elasticity  of demand.

• Operational period expense development.  Every CFM will contain one or more worksheet(s) that develop(s) historical (if applicable) and pro forma operating period expense projections over the modeled period.  Fixed and variable operating period may be categorized into multiple different categories (for example there may be various categories of operating expenses, working capital, maintenance expenses, interest expenses, taxes and duties, etc.)  In most cases, the operating period expense development section is derived from both historical trends (if applicable), contractual agreements as well as defensible assumptions from technical models, analyses and studies and internal data provided by our client.  Certain types of operating period expense projections also may need to take into consideration elements including inflation, foreign currency conversion rates (if applicable).

• Capital expense development.  Every CFM will contain one or more worksheet(s) that develop(s) historical (if applicable) and pro forma up-front (if applicable in the case of a new-build or rehabilitation/retrofit project), ongoing and periodic/cyclical capital expenses and costs (capex).  Fixed and variable capex expenses may be categorized into multiple different categories (for example, development costs, engineering and design, construction expenses, equipment acquisitions, construction management, interest during construction, etc.)  In most cases, the capex development section is derived from contractual agreements or defensible assumptions from technical models, analyses and studies and internal data provided by our client.  Certain types of expense projections also may need to take into consideration elements including inflation, foreign currency conversion rates (if applicable).

• Capital structure development.  The CFM will contain one or more worksheet(s) that develop(s) historical (if applicable) and pro forma capital structures, including all relevant tranches of equity and debt capital (and any quasi-equity/quasi-debt structures).  The capital structure development section of the model will include the ranking of all debt tranches (senior to subordinated) and equity classes (preferred/mezzanine to common) as relevant.  This section of the model will also build-out the draws/injections of committed equity and debt, amortization of debt, accruals and payment of periodic interest and fees, declarations and payment of equity distribution and redemption of share capital.

We individually custom-build each and every one of our CFMs using standard Microsoft® Excel® software in a the most user-friendly manner possible.  We provide a user manual and in-model user instructions for our CFMs which are handed over to our clients.  Our objective is to create a model that can be handed over to the client and operated proficiently by the client's own staff (in some cases for many years).  After our model is in our client's hands we can provide ongoing services such as model training & capacity building workshops for client staff, model maintenance and update services and support and specific modeling analysis utilizing the client's model, as may be requested by the client.

In addition to developing, updating and maintaining our own CFMs for our client advisory mandates, we also provide model review and audit services of financial models produced by our clients or by another third-party model developer on behalf of our client.  Model review and auditing services are often required by our clients (as an independent review or audit) in other transactions that DCS is not otherwise a party to.

DCS advisors are able to provide CFM modeling services on a stand-alone basis on behalf of public and private sector clients who have mandated us to provide transaction advisory, workout & restructuring, project feasibility advisory or strategic planning services.  In most cases, as CFM modeling services will be only one element of a larger project delivery program, DCS will also be providing other complementary analytical services in relation to other transaction elements.  Our preference is always to provide such comprehensive advisory services and coordinate all elements of the transaction, including CFM modeling services on behalf of our clients.

Under any CFM modeling services mandate, DCS will draw from our vast global network of veteran industry expert advisor affiliates and our relationship consultants in order to assemble the most appropriate team to match the specific needs of the transaction at hand.  This will always include leadership of DCS affiliate experts who possess decades of global transactional experience related to the specific sector and transaction type.  In any economic and market modeling services mandate, our preferred role is always to serve as the lead project/program manager.  Within this role we are also able to assist in the selection and procurement (or subcontracting) and management of other advisors, including local and international legal, technical, economics, commercial/operational and other specialized advisors or other specialized advisors, as the specific transaction may require.  To the extent that other third-party advisors are required, there are many value added advantages of allowing DCS to assist in the procurement of these advisors.  First, DCS expert affiliates themselves possess many of required legal, technical, economics and managerial skill sets and we are best positioned to determine which additional outside third-party skill sets are required and which firms or individuals should be hired in these roles.  Secondly, financial modeling is a very complex undertaking, requiring the management and coordination of many simultaneous workstreams.  DCS advisors are experts inproject and program management services and are ideally suited to manage and coordinate a multi-dimensional advisory team most efficiently and effectively.

Complementing our CFM modeling services, DCS advisors offer the following complementary advisory services that may be applicable, dependent on the specific needs of our client.

• Economic and Market Models
• Sponsor and Lender Case Models
• Bid Evaluation Models
• Business & Asset Valuation Models
• Training & Capacity Building Models
  
• Transaction Advisory
  
• Capital Fundraising Services
  
• Tender Management: RFEI/RFQ/RFP
• Mergers & Acquisitions Advisory
• Project/Program Management
• Contract Drafting & Negotiation
• Strategic Planning
• Feasibility Studies
• Business and Asset Valuation
• Workouts and Restructuring
• Corporate Governance
• Training and Capacity Building Workshops

DCS experts provide CFM modeling services in the following sectors that we specialize in.  Please click on the below links to learn more about the sectors that we cover:

• Infrastructure
  • Transportation
  • Water & Wastewater
  • ​​​Solid Waste
  • Social Infrastructure
  • Telecommunications

• Energy & Utilities
  • Generation
  • Sales & Supply and Trading​

• Industrials
  • Engineering & Construction
  • Technology
  • Logistics, Cargo & Freight
  • Heavy Industries

• Oil & Gas
  • Upstream
  • Downstream
  • Midstream

• Real Estate
  • Warehousing and Logistical
  • Commercial and Mixed-Use

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DCS experts provide CFM modeling services to the following categories of clients:

• Developers/Sponsors/Concessionaires
• Investors
• Corporations
• Governments/Governmental Entities
• Contractors/Vendors
• Lenders
• Utilities
• Regulators
• Investment Banks
• International Financing Institutions
• International Agencies

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