Cash Stress Testing – GBP 25,000 

A periodic cash stress test is critical to understanding what the tail risk to cash flow may be. As we have seen through many historical crisis events, the recursive nature of crisis can mean corporations often underestimate how quickly things can turn for the worse. A cash stress test considers, but is not limited to, exploring the following questions:

  • What have been the underlying drivers of the industry for the past two decades?
  • How does industry cyclicality affect your business?
  • How volatile has operating cash flow been historically across the industry?
  • What have been the causes of major working capital drawn downs?
  • How have your peers performed during previous stress events?
  • If a historical stress event were to occur again, what would cash flow look like for a business starting in it’s current state?
  • What would be the consequences for shareholder policies and debt servicing?

Asset Portfolio Optimisation – GBP 35,000 

Each segment, service line or class of product within a business has it’s own expected return and expected return. This has implications for upcoming acquisitions and divestments:

  • How correlated are your existing segments?
  • What is the long term volatility and expected return of each segment?
  • Is there an underlying driver that may be reaching an inflection point on the S-curve thereby affecting the expected segment returns?
  • How do expected growth rates of different segments affect the overall expected return (EBIT or EBITDA) for the Group?
  • How can M&A be utilised to effectively diversify a portfolio of segments or increase risk adjusted returns? What are the implications for M&A targets?

Optimal Capital Structure Review – GBP 65,000

  • What is the optimal leverage at this point in the economic cycle? What is the optimal Debt/EBITDA target? What funding sources should be utilised to generate the optimal leverage level?
  • What is the appropriate debt maturity structure for the business given the industry backdrop?
  • Given the state of the market and regions the business is exposed to, what is the optimal mix of fixed and floating rate debt
  • What is the optimal hedging strategy given the geographic mix of assets, liabilities and cashflows? How may this need to evolve over time for upcoming changes in the business?
  • How does the commodity or inflation exposure of the business affect the optimal capital structure? What natural hedges may already exist and how static are they?

Optimal Capital Structure Review + Asset Portfolio Optimisation +  Cash Stress Testing  GBP 95,000

For a bespoke request or review get in touch:

Highly bespoke requests are charged at GBP 1,500/day. Illustrative examples of bespoke changes may be:

  • Assessing the affecting of regulatory change on an industry and the implications for capital structure
  • Exploring the price elasticity of a segment or class of products and how this may affect hedging policies
  • Understanding the potential impact of disruptive change and pre-empting change with a flexible capital structure

Note: All prices are exclusive of VAT

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