Financial modelling
Our team of Financial Advisory experts specialise in financial modelling and work collaboratively with our clients to deliver tailored, integrated models that distil large and complex datasets into simple outputs.
Financial modelling can be broadly defined as the building of a software- based toolkit to represent a specific real-world or hypothetical financial situation. Financial models have a wide variety of use cases and are often developed or commissioned by finance teams to enhance understanding of a business or situation or to support strategic decision making. ‘Financial model’ is a catch-all term that is colloquially used to cover anything from a simple piece of single- spreadsheet financial analysis to a dynamic tool that generates a suite of outputs and scenarios from a complex, interconnected set of mechanics based on the operational, accounting and investment structures of a subject asset or business. The use of financial models to enhance analysis and inform key decisions is central to maximizing the effectiveness and efficiency of finance functions, and their utility to the wider business.
2. Financial planning and reporting: Modelling to support business forecasting, scenario analysis and business case preparation – includes providing solutions to enhance management information and to increase the efficiency of financial reporting. 3. Bespoke decision support: Tailored financial models to support understanding and decision making in respect of a unique or specific situation. Who builds financial models? The information analysed and presented by finance teams plays a vital role in the decision-making processes that enable strategic development within businesses and underpins risk management and compliance. Whilst many finance professionals have the capability to conduct detailed financial analysis in tools such as Microsoft Excel, few have the skillset and experience to build robust and dynamic financial models that can reliably deal with complexity and produce genuinely informative, tailored and trusted outputs. A key discipline for finance teams – as with any profession – is knowing the boundaries of one’s own expertise, and understanding when a situation would be best served by utilising the skillset of professionals with pure focus on a niche discipline.
Use cases
Whilst the use cases are broad, most financial models fall into one of three categories: 1. Transaction and valuation modelling: Provision of financial models to support a range of activities including deal modelling, fair value assessment, investment appraisal and re-financing.
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