Modeling your business plan


Your business plan

A reliable business plan is based on a thorough understanding of past financial data, company’s means, market, competitive environment and potential synergies.

Which questions to ask first?

  • Which role will the business plan have in the negotiation with each party involved in your transaction?
  • How to use it to increase your transaction’s chance of success?
  • How to review it with a critical eye? For example:
  • How predictable are sales?
  • How much do you depend upon certain clients and/or suppliers?
  • What are your fixed costs? What is your break-even point?
  • What is your capitalistic intensity?
  • What is your bearable level of debts?

How to answer these questions?

  • Through a collegial and in-depth effort involving each of the company’s key departments.
  • By using business plan assumptions consistent with the historical financial review …
  • … The historical review consisting in analyzing the main financial indicators, their relation and variation, and in restating them so as to establish a reliable economic presentation of the company.
  • By reviewing key performance indicators, income and expense items, capital expenditure, fixed assets, working capital, net financial debt and cash flows.
  • By knowing that the current trading is intermediary between the budget forecast and the business plan, and may become crucial in the negotiation, …
  • … that the quality of the business plan prepared by the seller determines the buyer’s ability to analyze synergies,
  • … that business plans are usually subject to in depth investigations during the due diligence investigations, …
  • … that they are frequently adjusted by financial investors and banks, …
  • … and that before evaluating a transaction, buyers need to have prepared their own stand-alone business plan.
  • By using the take-over business plan to monitor the post-merger integration.