CLIENT: Fintech Company

A large Canada-based fintech company approached Sapling to build a customized M&A model for the acquisition of three smaller UK-based fintech entities. The model includes various revenue and cost factors, unique to each target entity. The requirement was to build an integrated model, having GBP and CAD values, with 5-year forecasts to analyze the exit valuations and NPVs for each of the entities, as well as a consolidated valuations for the client.

3 Key Insights:

We built a dynamic model with multiple customizable options, which provides flexibility for the client’s investment and exit analysis. The model includes options such as computing SG&A in growth terms or an estimated figure, treating one-time expenses either as capital investments or charge to Income Statement, and annual raises in case of salaries and computation of severance pays on resignations/ terminations.

A key feature of the model is the determination of NPV for each of the three target entities, based on distinct discounting factors and proxies. Further, an option is included to compute terminal values for NPV, either based on growth factor or EBITDA multiple.

Key outputs of the model include NPV and detailed EBITDA workings for each of the target entities and consolidated, shareholder return metrics, sources and uses detail, financial ratios, and many other critical metrics and outputs relevant for the client’s use.

EXAMPLE: Key Deal Parameters and NPV Calculations

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