BOP Developed an M & A Model Including Multiple Decision-making Options for a US-based Firm

About the Client

Our client is an investment and advisory firm in New York with over 20 years of experience. They asked us to create a Mergers & Acquisitions model covering a multitude of outcomes for a private venture concerned with the gas station industry. These gas stations would include restaurants, retail outlets, and ATM availability which broadened the scope of the M&A model planning.

Project Requirement

The client contacted our sales team seeking a trusted outsourcing partner to create detailed estimates of the three financial statements, along with various possible scenarios for each acquisition. Additionally, they requested plans for raising and making use of funds while retaining a respectable capital structure that adheres to the bank’s LTV rules.

Project Challenges

The primary challenge was the client’s penchant for continually changing the list of proposed acquisitions. As a result, the BOP team had to restructure many of the scenarios they had previously prepared, to remain focused on the appropriateness and feasibility of the capital structure. The extremely limited timeline for the completion of the project proved to be another challenge, especially in light of the regular change to the requirements.

Exceptional Care

As the client’s focus is on the O&G industry, we sourced subject matter experts from various teams within BOP. We engaged in extensive dialogue with the client and fluid communication enabling a deeper understanding of the client and the requirements. The team took care to include a cash sweep feature, which the client found to be of great value.

Solutions from Back Office Pro

Our team got to work by following BOP’s step-wise process at each stage of the project’s lifecycle, from request to completion. We assigned a dedicated analyst to the project, which began the process of analyzing the client’s financial details and projecting the three financial statements. These were prepared alongside a new business structure splitting the businesses into two divisions: a Holding Company and an Operating Company.

The next critical task was to analyze where capital would be sourced from, and how it would best be used to maximize growth. An appropriate capital structure was devised, one which includes strategies for repaying loans over five years. Our team’s approach was twofold, setting a realistic LTV, and dividing the available funding of loan repayments and share acquisition.

The client was in constant contact with analyst, offering insights as necessary. The process the team followed included:

Identifying and curating a list of potential businesses to acquire, using a model created by the team making use of multiple possible scenarios including:

  • Purchase prices for each acquisition.
  • How the deal will be financed, the stock requirements, and cash flow.
  • Financing service fees.
  • Analysis of extra sales potential, any synergies present in the rent repayment, as well as administrative costs.
  • Sources of funding and the strategic division of funds.
  • Income statements, cash flow statements, and balance sheets for the post-merger climate.
  • The potential for the automatic round up of extraneous funds to pay loans back faster.

Testimonials

Project Takeaways

The client was satisfied with the work we completed and found immense value in our deliverables. The team’s additional attention to detail provided a useful mechanism to speed up loan repayments. BOP benefitted from the successful completion of yet another time-sensitive, highly specific project, adding another success story to our extensive portfolio.