Financial modelling and valuation

Analysys Mason, due to our highly-valued methods, is frequently sought to support merger and acquisition discussions, strategic decision making and policy formulation through the modelling of business outcomes, financial implications and expected value gains. During the past 5 years we have completed more than 100 projects globally advising our clients on financial modelling and valuation matters.

We create long-term financial plans, forecast cash flows, define scenarios by relevance and perform sensitivity analyses for businesses effectively through our detailed understanding of the economics involved in the underlying asset. Irrespective of whether this is for a large incumbent telecoms operator, or a start-up’s early funding rounds, we create financial models that are easy to understand and use without reducing the necessary complexity involved in calculation. 

Typical examples of the type of work we do includes:

• financial modelling for strategic decision making (business combinations, carve-outs, synergies and implementation costs)
• business planning and valuation support for investment theses (fair price for asset acquisitions and disposals, expected returns for new business ventures, strategy for spectrum bids)
• bid book support (profit and loss, balance sheet, cash flow statement)
• policy support (cost modelling, economic impact modelling).

Due to our perspective gained from working with operators, financial institutions and policy makers, we can distil commercial, financial and regulatory considerations into a single plan that makes business sense, can support an investment thesis and is compliant to regulatory obligations. 

Our model development methodology follows a four-step approach:

• design based on client requirements and the best industry practice to reflect expected granularity and meaningful performance indicators
• implementation based on strict guidelines to ensure readability, auditability and flexibility
• testing to guarantee reasonableness of assumptions and error-free operation
• iteration to capture additional client requirements and updated assumptions.

When it comes to determining a valuation range, we employ a plethora of approaches to ensure a multidimensional picture such as:

• Discounted cash flow analysis: typically integrated with the business model and used as a primary tool for testing scenarios and sensitivities.
• Relative valuation: including multiples (e.g. EV/EBITDA) and comparable operational metrics (adjusted value per subscriber, per tower, per premises passed), informed by our extensive experience of involvement in transactions across the globe.
• Balance sheet valuation: including net book value and asset replacement value, informed by our deep technical expertise of relevant industry benchmarks.

Our outputs and tools are continually used by industry stakeholders to communicate business models, facilitate transactions and allocate capital in meaningful ways.