Strategic finance
Models that tell you which option is better, and by how much
When a business needs to change direction, the argument is rarely about the destination. It is about which path is worth taking and what it costs to be wrong. We build the model that puts the options side by side, with the assumptions visible and the downside priced. We advise on the numbers and the options. We do not run the programme and we do not run the PMO, so nothing we recommend is shaped by wanting the delivery work afterwards. If a programme is already running, we can feed into it or join it as the finance workstream.
What this usually sounds like when you call
- “We know the current model is finished. We do not know what replaces it.”
- “The board has three proposals and no way to compare them.”
- “Our five-year plan is last year’s plan with a growth rate on top.”
- “We are looking at an acquisition and the vendor’s numbers are the only numbers we have.”
- “The facility matures next year and we do not know what we can support.”
In each case the business has a model. What it does not have is a model that can hold two futures at once and show the difference between them in cash, in profit and in risk.
What we build
A long-term financial model tied to the actual strategy. Three statements, driver based, running three to five years. The drivers are the things your executives argue about, such as volume, price, churn, headcount and site count, not a single revenue growth percentage typed into row four.
Scenario and option models. Each real option built as its own case: keep going, exit, invest, sell, consolidate, renegotiate. Same structure, same drivers, so the comparison is fair. Each case shows cash, earnings, funding requirement and the point at which it stops working.
Sensitivity analysis on the assumptions that matter. We find which two or three inputs actually move the answer, then show how far each can move before the decision flips. That number is usually more useful than the base case itself.
| Year 1 benefits | Year 2 benefits | Year 3 benefits | Year 4 benefits | No benefits | |
|---|---|---|---|---|---|
| 6.0x price | 620 | 560 | 490 | 410 | 320 |
| 6.5x price | 560 | 490 | 410 | 330 | 230 |
| 7.0x price | 490 | 410 | 330 | 240 | 130 |
| 7.5x price | 410 | 330 | 240 | 140 | 20 |
| 8.0x price | 330 | 240 | 140 | 30 | -90 |
Scroll to see the full grid.
Acquisition models. Purchase price, funding structure, integration cost, integration benefit phasing and what happens if the integration benefits arrive a year late. We build the model that lets you set a walk-away price and hold to it.
Refinancing models. The funding requirement under each scenario, headroom against covenants, the amortisation profile, and what the business can service under a downside case. Lenders ask the same questions every time, and the model should answer them before they are asked.
A decision pack. One page per option, with the numbers, the assumptions and the risks. Written so it can go into a board pack without a translation layer.
How it is built with your team
The model is only as good as what your operators know. We build it with the people who understand the drivers, which usually means the finance team, plus whoever runs operations or sales.
If you want, your analyst builds sections of the model with us. Your executives stress the assumptions in working sessions rather than receiving a finished answer they had no part in shaping. That does two things. The model gets better, because people who know the business correct us early. And the board conversation is easier, because your executives can defend the assumptions themselves.
What you are left with
- The full model, unlocked, documented, with the assumptions on their own clearly labelled sheet.
- Every scenario built in the one file, so you can add a new one without rebuilding.
- The decision pack, in your template, ready to present.
- A written record of every assumption and where it came from, which matters when someone asks in six months why the number was 4% and not 6%.
- A walkthrough session with your team, recorded.
You can update the model yourself when the world changes, which it will.
When to call us
The board has asked for options and nobody has costed them. Options without numbers turn into a debate about who is most confident.
A funding facility matures inside 18 months. Early modelling gives you something to negotiate with. Late modelling gives you whatever the lender offers.
You are buying something. Either the vendor’s model is the only model in the room, or your own model has not been stress-tested against a bad year.
Performance has dropped and the usual fixes are not working. That is normally a sign the operating model needs to change, and the first step is knowing which changes pay.
What we do not do
We advise on the numbers and the options. We do not run the transformation, we do not staff a programme management office and we do not take implementation roles.
This is deliberate. A model built by someone hoping to win the delivery work is a model with a thumb on the scale.
Where a programme already exists, we can feed into it or join it as the finance and modelling workstream. If you need delivery capacity after a decision, we will say so and can point you to people who do that work.
Common questions about strategic finance modelling
What is a scenario model and how is it different from a forecast?
A forecast is one view of the future, usually the one management expects. A scenario model holds several futures in the same structure so they can be compared. Each scenario uses the same drivers with different values, which means the difference between them comes from assumptions rather than from someone building two models differently. You compare cash, earnings, funding need and risk across all of them.
How many scenarios should we model?
Three to five, and each one has to be a real choice somebody could make. Base, downside and one or two strategic options is a common set. Beyond five, executives stop comparing and start skimming. It is better to model four options properly, with sensitivities on each, than to produce ten cases nobody can hold in their head.
How do you model a refinancing?
Start with the funding requirement over the term, taken from the cash flow forecast under each scenario. Layer in the proposed facility structure, drawdown and amortisation profile, pricing and fees. Then test covenant headroom, usually gearing and interest cover, month by month under the downside case. The output lenders want is simple: what the business can service, and when it gets tight.
Can you model an acquisition if the target will not give us detailed data?
Yes, and that is the usual situation. We build the model on what is available, mark every estimated input clearly, and run sensitivities wide enough to cover the uncertainty. That gives you a defensible price range and a list of the specific questions that need answering in due diligence, ranked by how much they move the valuation.
Do you do the due diligence itself?
No. We build the model and the analysis around a transaction, including valuation sensitivity and funding structure. We do not perform financial due diligence, and we do not provide a formal valuation opinion or any advice requiring an Australian financial services licence. Where that is needed, you will need an appropriately licensed firm, and we work alongside them.
Who needs to be involved from our side?
One finance person who can get us data and build with us, plus access to the executives who own the drivers. For a four to six week engagement, expect a few hours a week from the executives and a couple of days a week from the finance person. Less involvement is possible and produces a worse model.
How long does a strategic finance engagement take?
Usually four to eight weeks from start to a decision pack, depending on how many options are in scope and how clean the historical data is. Reconstructing history takes longer than building the forward model. If a board date is fixed, tell us at the start and we will scope backwards from it rather than discover the problem in week five.
Tell us the decision and the date
Send the choice you are trying to make and when it needs to be made. We will tell you what we would build and roughly how long it takes.
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