Sensitivity and Scenario Analysis

During any transaction there is a requirement to form a view of the likely prospects of the business. Typically a range of sensitivities and scenarios are prepared to better understand the potential risks to the business.

Our financial and operational models are designed to enable review of the impact of sensitivities and scenarios in real time with an automatic bridge by line, by month for each of the P&L, Balance Sheet and Cash flow as well as KPIs. This enables management to better understand the projections.

Typically, as a minimum in addition to the base case as contained within the model, we will identify a likely best case and potential downside case. We can also consider timing issues of major events such as acquisitions, disposals, new products, synergies etc. and adjust their ‘go live’ timing to understand the impact on the P&L, Balance Sheet and Cash flow.

This functionality can also be used to compare various cases e.g. budget to actual as well as identifying beneficial covenant thresholds when considering a refinancing.