Financial Modelling & Analysis

WHAT DOES FINANCIAL MODELING MEAN?

We have been working as modeling partners to more than 300 clients that includes fund managers with over £1.5bn assets under management collectively.
Often people ask us about our financial modeling service and usually say to us “oh so you guys do financial statements and stuff?” but the ‘stuff’ here is actually way more advanced than people realise.
Our company was formed by a team of finance experts eight years ago and since then we have helped our clients from everything to automating manual calculation processes to forecasting project returns.

WHAT FINANCIAL MODELS DO WE HELP WITH?

We are the best financial modelers in the UK and USA and sky's the limit for us. Every solution we have developed so far has been unique and custom as per our clients’ requirements and hence it is very difficult to bullet-list our capabilities. Nevertheless, following are some of the standard and very commonly known models that have been acing for years

THREE STATEMENT MODEL

This is one of the most basic financial models and as the name suggests this centres around the three financial statements of a business - balance sheet, cash flow statement and income statement. We use our modeling expertise and compile these three statements in a single dynamic financial model.

DISCOUNTED CASH FLOW MODEL (DCF)

The DCF valuation model is one of the most common and widely used financial models for company valuation. It builds on the three financial statements and used Net Present Value (NPV) approach to value a business by calculating an intrinsic value. It is a forward looking model and bases its estimates on a company’s projected cash flows.

MERGER & ACQUISITION MODEL (M&A)

Very commonly used by investment bankers and M&A advisors, these models are relatively complex in nature and the degree of complexity usually varies from one company to another. These models focus on the ‘Accretion/Dilution Analysis’. The objective of these models is to calculate the revenue, expenses, and most importantly the EPS of the combined company post-merger (or acquisition) to ascertain the effect of synergy and the effects of financing the deal

LEVERAGED BUYOUT MODEL (LBO)

LBOs are advanced financial models most commonly used by Private Equity (PE) firms and Investment Banks to evaluate the purchase of a target company. As the name suggests these models use leverage (debt) to finance most or a very large part of the deal and thus require modeling complicated debt schedules.

SUM OF PARTS OR CONSOLIDATION MODEL

These models are commonly used for companies with multiple departments, divisions or even entities. Each ‘part’ gets its own tab or model which are then consolidated into a single ‘parent’ model.

FORECASTING MODELS

A typical model used in Financial Planning & Analysis (FP&A), these models are used to forecast performance or budgets of, say, capital projects, startups or even established businesses looking to track current performance in order to achieve a set future target.

ASSET VALUATION MODELS

These models are typically used to estimate the value of securities including equities, bonds, and derivatives. Active portfolio managers often try to identify securities that are over or undervalued and take short or long positions in order to make a profit. These investment strategies require financial models that estimate the true value of these assets. We work with portfolio managers including hedge funds, PE firms, and other asset management firms and offer real-world financial modeling solutions

ASSET PRICING MODELS

Unless asset valuation models that attempt to predict the true value of a security, pricing models aim to decipher a price for a security. These could be fixed-income securities like bonds or derivatives like calls or puts. The most commonly used model to price a call (or put) is the Black-Scholes model.

OUR CAPABILITIES

We are champions when it comes to modeling. Just tell us what you want your model to do, name the inputs, name the outputs and we make it all work for you. Some of our models include over 15,000 calculations and we challenge all our clients that if they find even a single mistake in our models after we have delivered them we will REFUND the entire fee they paid us. We are not overconfident. We just know our capabilities and will never deliver something that does not work.

We can build models using different platforms and techniques including:

  • Stochastic/Probabilistic Modeling
  • Excel-based Modeling with VBA
  • Modeling using Python, C, C++, R and MATLAB
  • Monte-Carlo Modeling
  • Lévy Finance Modeling
  • Power BI (Business Intelligence) & KPI Dashboards

OUR EXPERTISE

Some of the most popular products we offer include

OUR PROCESS

1

FINANCIAL MODEL REQUEST RECEIVED

The process starts when you fill one of our contact forms or email/call us with your requirements. At this stage, all we ask for is basic details like your name, email address, company name, industry, service (financial model) and a brief description of your requirement along with any attachments you might want to send. You then directly book an initial consultation with us here.
2

INITIAL CONSULTATION

The purpose of this call is to understand your current situation, story, background and requirements. The agenda is very high-level, and the primary objective is to ascertain project scope, timeline, milestones and budget.
3

SUBMISSION OF FIRST DRAFT

Based on our initial discussions around timelines and milestones, we deliver a first draft of the financial model explained with underlying assumptions. We walk you through the model and discuss feedback, if any.
4

FOLLOW-UP/INFORMATION GATHERING

Post initial-consultation, we move on to gathering relevant information from you about the business. This can be in the form of a questionnaire or interview(s) with relevant stakeholders - whichever is more appropriate. We will also need to request for confidential financial documents.
5

FINAL FINANCIAL MODEL

Post revisions and iterations based on our discussions with you and your team, we deliver the final product to you which will be built in MS Excel. We also include an ‘Instructions’ page with an explanation on how to navigate and use the model.

DOWNLOAD A FREE STANDARD FINANCIAL FORECASTING MODEL

Download

WHAT IS REAL-ESTATE FINANCIAL MODELING?

WHAT IS REAL-ESTATE FINANCIAL MODELING?

Real estate is a very different investment class in comparison to other investment classes. Investors want to know their return on a real estate investment but the modeling skills and methodology adopted here is quite different. The properties in question are usually commercially let out and owned by a single or a group of investors. The assumptions made in these models are quite different to other models. Some of these unique features include:

Rental Yield

The rental yield is essentially the starting point of a real estate investment model. It is defined as the amount of rent that a property is expected to generate over the investment horizon expressed as a percentage of the property value. It is almost like the revenue numbers we see in the top line in traditional financial models. Other expenses like maintenance, management fee, legal fees etc are deducted from the rental amount to arrive at the Net Operating Income (NOI)

Vacancy Factor/Costs

Any rational financial modeller would know that it is impractical to assume that a property will stay rented for the entirety of the investment horizon. Thus, it is prudent to account for certain vacant months. These are usually expressed as a percentage of the rent amount and deducted from the rental income

Loan to Value (LTV) Ratio

A popular measure of leverage, the LTV ratio is usually used by banks to decide on the amount of loan to be given on a property based on its value. A financial modeler uses this metric to calculate the debt taken on the project.

Loan to Cost (LTC) Ratio

There are cases where instead of buying a particular property an investor may choose to buy a piece of land and then build a property. In these cases, no market value is available and instead there is a project cost. The LTC ratio in such a scenario is replaced by the LTV ratio

Amortization Cost

The amortisation cost determines how quickly (or slowly) the loan amount is paid up. The higher the amortisation, the higher the individual payments made per period. For example, if the entire loan is amortised in 5 years, then the interest is not payable after 5 years. The more the amortisation cost, the lesser the total interest paid over time.

THERE ARE TWO WAYS AN INVESTOR CAN INVEST IN REAL ESTATE

Acquisition of a property

Development of property on acquired raw land

REAL ESTATE PROPERTY TYPES

Real estate is a very different investment class in comparison to other investment classes. Investors want to know their return on a real estate investment but the modeling skills and methodology adopted here is quite different. The properties in question are usually commercially let out and owned by a single or a group of investors. The assumptions made in these models are quite different to other models. Some of these unique features include:

Residential Real Estate

Residential properties are virtually any properties where individuals decide to live or stay and include anything from single-family homes, vacation homes or condos. Investors in these properties earn a return via rental income collected and an appreciation in the value of the property over time

Commercial Real Estate

Commercial real estate is a space that is rented out for commercial use. The include properties that are let out as office spaces and earn a rental income. Not just office spaces but these can be rented out to cafes, restaurants, gyms and virtually anyone who uses it for commercial purposes and not to live in. Industrial and retail outlets are also included in this category and so are hotels. Modelling for hotel properties is another complex category that requires knowledge of the industry and the required level of financial modeling expertise.

Raw Land

Instead of acquiring existing properties, investors find it more feasible to buy a piece of land and build a property from scratch - either residential or commercial. This type of investment usually requires a lot of market research.

HOW CAN ONS HELP?

We have been working with real estate investors - funds as well as individual investors - for more than 10 years and building complex financial models for acquisition and development investments of mix-use properties.

BESPOKE MODELS

Our models are tailor-built as per the investor’s requirements and portfolio. No two investment opportunities are the same and we build models keeping the target property in mind

MULTIPURPOSE

Once we have built a model for a particular type of property our clients can reuse the model for similar investments in the future by making minor edits

MODEL MAINTENANCE & AUDITING

Once we have built a model, we also maintain it on an ongoing basis to make sure its integrity is intact and can be reused for similar properties by the investor. We also audit the investors’ own models and provide guidance on how they can be improved

SEE HOW WE CAN HELP YOU


Case Study 1:

Acquisition of a five-star hotel in Niagra Falls


Case Study 2:

Acquisition of a mix-use property in West London

LEVERAGED BUYOUTS

A leveraged buyout is the acquisition of a public or private company using debt as the major source of funding. A private equity firm acquires a company using debt as the majority of the purchase price. During the ownership of the company, the company’s cash flow is used to service and pay down the outstanding debt. The overall return realized by the investors in an LBO is determined by the exit cash flow of the company (EBIT or EBITDA), the exit multiple (of EBIT or EBITDA), and the amount of debt that has been paid off over the time horizon of the investment.

WHO USES PRIVATE EQUITY MODELS?

Independent Sponsors

Search Funds

Investment Bankers

Hedge Fund Analysts

M&A Lawyers

Financial Consultants

CFO / COO

Professors & Students

Sell side Equity Research Analysts

Corporate Development / Finance Executives

Buy Side Portfolio Managers

Private Equity Professionals

GET A FREE INITIAL CONSULTATION

BOOK NOW

FAQ

How much time does it take to deliver a complete financial model?
The time taken varies from project to project. Most of the time spent on a project is driven by the groundwork we have to do which includes information gathering from company stakeholders, the complexity of business structure and the type of financial model requested. For instance, a simple forecasting model for a startup company with one product/service can be delivered as early as 5-7 days.
How much does a financial model cost?
Our pricing mechanism isn’t one-size-fits-all and we review each project’s scope individually to quote a price. Some models, like the Three Statement Model, are simple and straightforward whereas others like the Merger Models are more complex and expensive.
Do you provide a report with the model as well?
We are here to serve our customers and deliver on their requirements. Our process is very agile and can accommodate any requirements you may have. We can deliver reports with models if required and also detailed user guides
Do you provide ongoing financial advisory services?
Most of the clients we work with have been with us for years. We believe in building long-lasting partnerships and that’s one of the biggest motivations for us to give our best to each client. We can come onboard as your go-to advisors and provide real-world modeling solutions
Copyright © 2021. ONS. All Rights Reserved
Design and developed by IndustryDesigns
hello world!
apartmentpencildropsundatabasestarstar-emptyprinterpie-chartchart-barschevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram