Many companies win their business by bidding to an awarding authority. This is often, but not exclusively a government body and the requirements sometimes include a financial model to be included with the bid. Even when this is not the case, the most rational way of pricing a bid or tender is often to build a financial model to calculate a price that gives an acceptable return on all the costs and potential risks. Without a model you risk bidding too much and losing the contract, or too little and making a loss. We have worked on countless bid models, either building the model to enable options to be tested and calculate a defensible price or reviewing the model to identify and correct errors before the bid is submitted.

Whether buying or selling, you will only be able to negotiate confidently if you can assess the future potential of a business under changing assumptions and by trying to anticipate the value to the counterparty. Businesses rarely continue unchanged after a merger or acquisition and the true value to a purchaser needs to consider the impact of such changes. For example, if an acquirer has a similar operation and can generate incremental revenue from wider coverage or reduce overhead cost through removing duplication, this can make a business more valuable. Modelling such scenarios arms you with greater knowledge of the potential value to you and to the other party. It can greatly assist negotiations as you can assess the impact of terms of a deal and decide whether offers and counter offers are beneficial.