Top tips to avoid uncertainty during an M&A transaction

In a deal, models can amplify or dampen uncertainty. How can you mitigate against unpredictability?

Here are 10 key considerations.


1. Strong foundations – develop a robust model using best practice techniques and principles before the transaction process.

2. Business clarity – the financial model is a shop window for the business. Its accuracy reflects on the perception of the business and the management team. The business story must be clear.

3. Just complex enough – the model should be comprehensive, have sufficient detail – but not too much – and not
Be so abstract as to be useless.

4. Consistency – modelling must be consistent with historic and current data, and where it diverges, must be clear and explicable.

5. Manage data – carefully manage any information put into the data room.

6. Layers and forecasts – do not layer overly conservative contingencies on already conservative forecasts.

7. KPI alignment – line up business model KPIs with drivers and risks.

8. In sync – keep the model in sync with the evolving business performance and the unfolding transaction to manage the impact of crystallising uncertainties.

9. Fully support – document the model, its key calculations, its assumptions, and how it bridges into information provided in the
Data room.

10. Impartial review – make sure the model has been subject to independent review, whether by a third party or
Someone within the business.

For more information on how financial models play a role in mitigating risk, please read our models for uncertain times article, or get in touch with Alistair Hynd.