Investor Return Metrics and Sensitivities

CLIENT: Private Equity Firm

A private equity firm specializing in food companies and the agricultural sector approached Sapling for assistance on a few ongoing projects. The client had existing detailed operational based models for a few potential companies they were looking to invest in and were looking for Sapling to layer in cash flow calculations, IRR and return metrics, and various scenarios and sensitivity analysis to assess the deal without creating a brand-new model.

3 Key Insights:

For these projects, the first piece of Sapling’s work involved building out a detailed set of cash flow assumptions, and subsequent IRR metrics, from the client’s perspective of their investment. On a monthly level, Sapling calculated the initial outflows, forecasted distributions during the period, and terminal value estimation to do this

The second required step was for Sapling to build in different scenarios around base, low, high, and historical cases, which can be flipped at a switch, and captures the major inputs around entry and exit multiples, product pricing, timing of major builds, and other key variables

The final piece of Sapling’s work was to generate various outputs, which includes multiple single variable and two variable sensitivity analyses, and other visuals

EXAMPLE: IRR Sensitivity Analysis of Pricing

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