Top financial modeling services for private equity and corporate finance

The first thing you think of when starting out in private equity and corporate finance is usually the same thing: financial modeling.

You can’t really get far without it, and many times, a financial modeling service will allow businesses to build a financial model to forecast future performance, understand the benefits and risks of investment opportunities, and really get precision on financial metrics and financial analysis.

Financial models are the building blocks of strategic planning in these industries.

Financial Modeling at Aquinoxadvisors

At Acquinoxadvisors, you can build out a financial modeling service to suit your business needs.

Private equity firms and corporate finance divisions need data-driven projections to serve their clients to the best of their ability. A financial modeling partner can help do exactly that. Visit Aquinoxadvisors.com to learn more about how they can help with your financial modelling and decision-making.

Financial modeling in private equity

Private equity often uses a financial model heavily in their business. It’s a requirement, not an option. When you’re trying to understand the viability of private investments, you have to run a financial model to see what sort of pricing you should be offering to acquire their equity or otherwise for your company.

Because of this, private equity firms often rely on more sophisticated financial modeling services or financial advisory firms to understand target companies, assess cash flow projections, and see if the potential returns will be worth the investment.

The stakes are high, with capital amounts often extremely large, and financial modeling can help with the process immensely.

Private Equity Unique Needs

A unique need in private equity is the amount of granularity needed in a financial model and forecasting. Private equity firms often have a long timeframe, often holding investments for longer than 5 or 10 years before exiting.

That’s why forecasts are so important; if you’re holding an investment for this long, the more you’ll need to understand the future and what it means for valuation, including various financial and general market factors.

Financial models can detail many scenarios, make them more sensitive or less to certain inputs, and help private equity companies understand how changes in revenue, costs, and market conditions will impact their investments.

Profitability and Investment Strategy

Financial models can also help with profitability and investment strategy assessment.

Cash flow is a huge factor for target company acquisitions to figure out how viable the company really is. A financial forecasting and modeling expert team or firm can bridge this gap for private equity firms.

Sometimes, you really need a professional to step in if you don’t have the in-house expertise. They can build a better scenario analysis, or look at a discounted cash flow (DCF) model, or use other more sophisticated valuation models and methods to get the full outlook on a company a private equity firm is trying to acquire or sell.

Financial modeling services are for optimization and proper evaluation; if your private equity firm wants long-term success, it should use a financial modeling consultant.

Financial modeling in corporate finance

Corporate finance is another major financial division that needs financial modeling and financial modeling solutions. A good corporate finance division can mean the difference between a company’s long-term survival or short-term demise.

They use financial modelling services or advisory services to project a company’s future performance, look for capital investment opportunities, and even optimise where resources should go. Not to mention the need to understand decisions about mergers, acquisitions, or expansion.

Types of Analysis

Many models will use discounted cash flow (DCF) analysis to estimate the value of an asset or company target. Corporate finance uses this type of analysis often.

Another common type of model is scenario analysis, which simply means you look at different market conditions or strategy optionalities to let you assess the risk of a financial decision. You want to know the potential to the upside as well as downside risk, in addition to the most profitable course of action.

Financial Modeling Consulting

Financial modeling consulting can help you tailor your financial modelling services or build models to your specific needs. It sometimes help to hire an expert in most things in life.

And while you might have some financial modeling prowess within your team, getting an expert can put you several steps ahead without falling any behind. Financial modeling experts can fine-tune your forecasting, and make sure they’re accurate and within the industry standards required.

Accuracy is the name of the game here when it comes to capital management and strategic planning.

The Fee Decision

Of course, a financial modeling partner means that there will be fees involved. Financial modelling fees vary widely, but the most important factor is transparency.

Sometimes, selecting the cheapest financial modeling partner means you get the cheapest forecasts, cheapest team, and not optimal output. You should get yourself a consulting firm that offers transparency in their pricing, and watch how they deliver value through their expert services.

At Acquinoxadvisors.com there is expert financial modeling consulting to help corporate finance divisions get tailored financial models with precision, plan effectively, and get that long-term financial stability they need.

Choosing the right financial modeling partner

The main two things to look at when choosing the right financial modeling partner are their experience and their experience in your industry. You want to see a strong track record first and foremost.

A firm with a strong track record in your specific industry will be better equipped to handle your needs. You can even request some samples to review their portfolio ahead of time in most cases.

Provider Scope

You want to understand the scope of the provider’s services ahead of time. Some firms specialise in certain types of financial modeling, while others are less niche, offering a broader range of services.

Really, you just want them to be able to handle your requests.

Provider Fees

And finally, one of the most important factors is the financial modelling fees. As noted above, find a partner that doesn’t give you the runaround when you ask about fees - get them to lay it out clear for you before proceeding with any agreement.

At Aquinoxadvisors, there is a competitive fee structure that will deliver top-tier robust financial models and support informed business decisions without having you overextend your budget.

Some challenges in financial modeling

There are some challenges in financial modeling to watch out for. A few of the main ones are:

Incomplete or Unreliable Data:

Financial modeling must be built on accurate data. If you have poor inputs, it’s impossible to get strong outputs that you can rely on.

Reliable Data Sources:

This is similar to point one but with a distinction. Models require input data sources, and if you have poor sources, it will be impossible to build out a proper model. Also, models need to be updated regularly to stay current.

When market conditions change or internal financial realities are different than expected, you want your models to represent this data properly. Working with a financial forecasting and modeling expert can really help get you on the right foot here.

Complexity Issues:

Financial models can become increasingly complex as you add to them.

Not to mention, when your business grows, so too can the complexity of your financial models. Try to keep the model user-friendly and easy to understand where possible, or use experts that really know what they’re doing.

Regular Updates:

It’s important to keep robust financial models updated. Your financial models are not static, they are dynamic, and without updates the projections will fall behind and soon become irrelevant. Update them regularly to stay ahead.

Conclusion

Financial modeling is at the core of private equity and corporate finance.

Without it, both will falter and with it, both can flourish. If you want to make better informed business decisions with data, optimise corporate growth strategies, or build a case for an investment opportunity, you must use financial modeling to present your case.

For expert financial modeling services, look at Acquinoxadvisors.com to achieve your financial goals, whatever they are.