Case Studies

Consulting Case Studies Overview

 

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  • We advised a large taxi operation on issues linked to strategy and value creation, building a sophisticated financial model which allowed for the quantification of the effect of key strategic decisions and the use of operational (value-driver) levers to create value. We calculated investment requirements under many scenarios, reflecting the complexities of the effects of uncertainties on passenger numbers and journey times on total vehicle fleet requirements, and hence on investment and financing needs. We supported the client in a fund-raising process.
  • For a major European oil and gas company, we improved the capital-allocation process by using risk modelling and associated statistical techniques to create budget authorization processes which reduced “resource hoarding”; we laid out the associated changes required to organizational structures and processes for the techniques to be optimally implemented. This allowed for the level of new project activity (and the future growth rate of the business) to be increased by 10%.
  • We supported the negotiation process for the sale of a container-leasing business that was under insolvency procedures. We created a valuation tool that was linked to the database of container contracts and which allowed to forecast future cash flows arising from contracts, depending on changes to contract terms, leasing renewal rates, and other strategic or economic factors. This allowed the embedded value that was implicit within the business to be highlighted (beyond the immediate cash flows derived from the existing contracts) and the effect of strategic levers to be tested, so that the achieved sales price was optimized.
  • For a consulting firm operating on behalf of a major-centre financial regulator, we developed an algorithm to solve a complex set of issues in data analytics and the associated calculations that were required to calculate the compensatory redress due to a large set of individual shareholders due to the insolvency of an investment fund. We advised on the structuring of the data sets to maintain version control and the complex formulae required, whilst maintaining the requirement for auditability and transparency (the work being subject to external review by a Big 4 firm). We created insight in the way that specific aspects of the pre-defined compensatory mechanism could be exploited to simplify the data structures and algorithmic approach, whilst also solving the more complex aspects that could not be simplified further.
  • For a major European oil and gas company, we created a flexible business planning and strategic portfolio optimization tool that allowed executives to rapidly explore the effect of key strategic and operational decisions on future business metrics (e.g. investment, revenue, cash flow, financing needs, and valuation). The tool allowed for a range of possible strategic initiatives (e.g. organic growth, numerous acquisition and other business development possibilities) to be assessed in a single framework, and for the effects of strategic and operational decisions on the financing side of the business to be captured.
  • Assessed the economic value created by a potential multi-billion-dollar investment in a chemical production facility in the Middle East. Whilst seen by the Board as a key strategic initiative, some executives were sceptical as to the quality and objectivity of the internal analysis, and the extent to which the existing risk assessment process had genuinely impacted the economic modelling. We reviewed existing materials, workshop outputs and models, interviewed key stakeholders, and design a supplementary work program and set of workshops required to adequately expose key unresolved issues. The work exposed a wider set of possible strategic initiatives that could be considered, as well as suggesting improvements that could be made in the design and execution of the existing project in order to enhance value creation and reduce risk. We built a well-structured risk model which genuinely and transparently incorporated the effects of risk on the project options that were selected for evaluation. This created a revised and more realistic view of the economic cases, in a way that reflect all concerns of Board members and was used to gain consensus and to support and facilitate a decision about the way forward.
  • For an AIM-listed oil producer, we supported the development of the optimum investment/divestment strategy to increase shareholder value in the long-term, whilst meeting short-term targets and market expectations. We researched and analysed the value-creation strategies of around 50 small, medium and large oil and gas companies over a 20-year period, focusing on the role of acquisitions, disposals, and their timing in relation to the financing needs of the business and the general cycle within the equity markets. We developed a financial model that allowed for strategic options to be tested and for the effect on equity dilution and likely share price development to be captured. We worked with the client’s investor relations team to optimize and present the equity “investor story”.
  • We supported the raising of debt finance for an oil and gas company, including modelling of scenarios, valuation, and optimal debt sculpting, and aligned the model with the associated legal documentation.
  • For a private equity-owned fund-of-fund start up, which had a quantitative approach to asset (fund manager) allocation., we built an optimisation model that was driven of the data set of historic returns for each asset, including back-testing features and the ability to use and compare many optimisation approaches (e.g. Markowitz, Sharpe ratio-driven, Sortino-ratio driven, reciprocal methods, various types of constraints etc.). this was used to test and compare various approaches in terms of their performance, transparency, stability, predictability etc., and which could be updated easily and regularly.
  • We used risk assessment techniques to de-bias the valuation of Spanish real estate assets, including residential and commercial properties, as well as a leisure park. The revised approach matched well with the intuition of key decision-makers who had been uneasy with the validity of earlier valuations provided using traditional (non-risked) approaches.
  • We supported the development of a pricing algorithm for an electric scooter start-up.
  • We conducted quantitative risk modelling work in relation to assessing capital requirements for an insurance start-up.
  • We developed a flexible modelling tool to allow a medium-size bank in its business planning, focussing on issues related to incorporating the details of large individual loans and capital requirements.
  • We advised on risk modelling relating to a large investment in the Vietnamese petroleum sector.
  • For the family office of a private equity firm, developed a quantitative tool to optimally invest residual cash, given both the risk profile of the (less liquid) current private equity investments, as well as the client’s desire to consider the possibility to invest surplus cash in a wider range of assets across multiple geographies and currency zones. Asset classes including equities, commodities, hedge functions, property and other private equity opportunities (among others) were considered, and a database of the historic total return and risk profile of this wide range of assets was assembled from multiple sources (in various currencies). This was used as input into the quantitative optimisation model to assist in the optimal decisions around cash allocations.
  • Built a valuation model of a subsidiary of a large company for which an offer to purchase had been received; the model highlighted the key value drivers and scenarios and provided a guide to the seller in price negotiations, as well as demonstrating the value of the business yet more clearly to the buyer (resulted in a doubling of the original offered amount)
  • Used various valuation methods (comparables, cash flow etc.) to estimate the likely value of a processor of specialty metals. Incorporated adjustments for the possible effects of asset revaluation and one-off items for comparable businesses. Estimation of cost of capital taking into account relevant key tax issues and announced tax changes in a key geography. Final model incorporated various sensitivities and scenarios, including the option to value revenue and costs synergy effects after a trade-sale, and other general operational improvement possibilities.
  • We advised a large global media firm on the competitive environment and supported the development of an international strategy.
  • We advised the innovation team of a subsidiary of an insurer who participated in an internal competition for start-up/new product ideas, with the team subsequently winning substantially due to the modifications that had been suggested to their basic idea.
  • Audited and improved a complex model to calculate value, investment profit, partner-bonus, and long-term incentive allocations for a major investment firm; this was an essential part of the human resources strategy relating to staff retention. (included a re-build of the model from scratch to make it more robust, quicker and with a file size that was around a tenth of the original size, whilst increasing functionality).
  • Developed a human-resources database and linked model for staff compensation modelling for a multi-national company.
  • Estimated realistic ranges for the cost of capital (discount rate) for an oil company, using market benchmarks, statistical analysis of confidence intervals, and Monte Carlo Simulation of the uncertainty ranges for key parameters, and bench-marking with academic and other published research.
  • Advised an oil company in quantifying the risks, costs and trade-offs in performing regular scheduled maintenance versus unscheduled maintenance of safety equipment.
  • For a private equity firm considering whether to buy an insurance entity, we constructed a financial model of the business, conducted selected operational and market due diligence (which was linked to the financial model), so that funding requirements and the investment case could be adequately assessed.
  • We advised a range of private equity clients on issues relating to financial model integrity and validity, including for investments to be made in insurance, banking, telecommunications and real estate.
  • Worked with a large project-driven software and outsourcing company to develop consistent tools across the organisation for assessment of risks in projects; determined common risk drivers and agreed consistent approach to modelling risk.
  • For a mid-sized oil and gas company, built capabilities to understand and model risks across its portfolio, and within individual its business units; used a combination of training seminars, one-to-one sessions and modelling activities.
  • For a regulated energy utility, built and transferred capability to add risk analysis and modelling to their regulatory submissions, allowing fast-track approval of new initiatives
  • Built a model for a manufacturing company that allowed it to see the effect of exchange rate movements on all key line items of an integrated financial statement and business plan.
  • Developed an international transfer-pricing scheme for the chemicals purchasing function of a major consumer products manufacturer. The work had a particular focus on the feasibility of the scheme within the context of European national tax regulations of the client’s countries of operation and involved gaining input from tax specialists.
  • Created a flexible planning model in which project dates and level of detail, as well as more traditional sensitivities, could be changed.
  • Developed a resource planning model which rapidly allowed for schedule conflicts in a multi-project business to be identified
  • Supported the corporate-wide implementation of quantitative risk assessment techniques for a major chemical producer with global operations. Provided template models, customized training, and implementation-process advice to senior management and the appropriate risk management departments.
  • For a biotechnology company, we created a robust and auditable algorithm and tool to allocate patients to various clinical trials, given a complex set of decision/trade-off criteria.
  • For a large pharmaceutical firm, we supported a strategic decision about the extent to which back-up production facilities should be retained for high-value drugs, using quantitative optimisation techniques to address many aspects of this question, whilst integrating this into overall policy considerations
  • We developed a location-driven marketing strategy for a large pharmacy chain, supported by analytic and database consolidation tools to integrate market and competitive information.
  • For several large and medium-sized pharmaceutical and biotech companies we developed quantitative tools to improve the efficiency of selected organizational decision-making processes. These included tools to rapidly analyse, consolidate and manipulate data sets, as well as a resource planning tool which allowed for schedule conflicts in a multi-project business to be identified swiftly.
  • We built a long-term strategic forecasting model which considered the future development expenditure and possible revenues for all of a pharmaceutical company’s products, covering the costs and risks of the development phases, and the future revenue uncertainties. This supported long-term business and strategic planning by allowing executives to see the range of likely future outcomes and their timing, identify where additional projects or resources might be required, and define the nature of such activities.
  • Developed a data consolidation algorithm to create a reporting tool relating to location-based competitive analysis of a retail business.
  • Created a template model for rapid business planning incorporating uncertainty for a division of a major producer of oil-based derivatives.
  • Facilitated internal workshops to develop a customized best practice modelling framework suitable for a large manufacturing company.
  • Created a risk model for estimating aggregate capital expenditure requirements for a European oil and gas business with decentralized operations around the globe. The model took into account uncertainty on project success, on capex timing, and on underlying capex amounts. Resulted in a reduction in required contingencies compared to the previous non-risked methodology, with the result that additional investment s could be made, itself resulting in higher growth and profits.
  • Advised on structuring issues for a project planning and financial valuation model for a major –design-build-operate investment in the hotel business in the Middle East.
  • Built a credit risk model for a portfolio of bank lending to SMEs and explored the potential to insure this risk through re-insurance capital markets.
  • Advised a major Swedish bank on different approaches to correlation and time series modelling.
  • Created an integrated financial model of a reinsurance start up in the property and casualty area, with several possible business lines, and eliminating the need for explicit loss triangles by using a user-defined function.
  • Developed a valuation methodology and model for pricing innovative mine-development financing projects.
  • Helped a UK bank improve its credit models for emerging market lending.
  • Built a financial model of the underlying cost and revenue structure of a business in order to analyse of the effect of exchange rate movements on the business plan.
  • Speeded up a complex optimisation problem in a food manufacturer’s supply-chain.
  • Worked with a client to review the results of a risk model that was producing unexpected results. We demonstrated reasons why their existing approach would lead to a narrow apparent range of uncertainties, and then showed how the model could be rebuilt to correct these deficiencies.
  • Devised a framework and structure that allowed for a client’s wide range of projects to be dealt with in a common way. Working with their team, I conducted a pilot project to demonstrate the applicability and benefits of the approach and implemented this as a dynamic and flexible database. After a hand-over phase, the client implemented the approach in a full-scale project.
  • Designed a cost-estimation model for the decommissioning of a North Sea oil platform, involving workshops with key client staff to estimate ranges and dependencies, so that base plans and contingencies could be calculated.
  • Advised on the design and implementation of a cost-estimation model for a major construction project of a chemical facility in the Gulf region.
  • Constructed a risk-register for a client having a number of major engineering projects, using workshops to identify and quantity risks and to communicate the results from a quantitative model of risk exposure.
  • Developed a risk model for the performance of contingency calculations, and allocations of project contingencies to sub-projects.
  • Conducted a workshop to devise a client-specific framework for the cost modelling and risk register for the construction of a gas pipeline.
  • Built a simulation model for calculation of contingencies in a road construction project and extended it to cover issues such as optimisation of road surface thickness.
  • Showed a client how Excel add-ins could be used to create simple yet powerful models in the areas of oil reserves uncertainty estimation, modelling operational and capital expenditures, and building integrated business cases from exploration through to exploitation, and using a methodology that was readily understood by the full set of staff involved, whether geologists, engineers, or economists.
  • Built an integrated business plan and financial statement model that linked key areas of strategy formulation with financial measures. A key deliverable is a model which is as simple as possible and transparent, yet flexible to allow scenarios to be run, whilst also capturing the complexity of the business where appropriate.
  • Showed a client how to automate the processing and analysis of data in an Excel environment so that a large database could be used as an input into a model in an automated and flexible way, and which avoided the very significant manual pre-processing work that the client had been doing up to that point.
  • Devised a pricing mechanism for a spin-off unit of a business that reflected general market price levels, but – based on activity-based costing – allowed for a sophisticated pricing mechanism that applied to the simplest or the most complex projects, whilst remaining cost competitive and internally transparent in each case.
  • Helped a major food manufacturer speed up a complex non-linear optimisation problem in its supply-chain using heuristic techniques to improve the performance of their selected algorithm.
  • Helped a client speed up an optimisation problem by appropriate reformulation of the model, the objective function and the constraints.
  • Formulated and structured an Excel-based model of uncertain arrival and service times for a telecommunications company to help derive new marketing offering and to improve customer service.
  • Built an integrated business forecast and valuation model for a potential acquisition, and conducted a stand-alone, as well as a synergy-included, valuation.
  • Built a transparent and simplified model with a forecast of a complex 30-year public-private vehicle, so that this vehicle could be sold to potential acquirers in a smoother way, instilling potential buyers with a more rapid sense of confidence in the vehicle’s likely future financial performance.
  • For a private equity firm considering a further injection of capital in a loss-making business, we audited the model put together by the management team, and suggested and implemented improvements, so that more transparency was achieved with the investors about the likely future developments, risks and opportunities.
  • For a private equity firm considering whether to buy an insurance entity, we constructed a financial model of the business. This involved integrating actuarial data in the overall plan, as well as incorporating operational issues, such as sales force effectiveness. We analysed funding and refinancing requirements and cash generation profiles under different scenarios, and established the risks associated with different financial structures for the deal.
  • For a private equity firm, built a template model to integrate and consolidate key business ratios of a company’s subsidiaries, including a capability to analyse the effect of earnings uncertainty of individual business units on the aggregate picture.
  • For a fund manager considering a major investment opportunity in the telecommunications industry, I built a forecasting and valuation model which allowed for the testing of different possible market and operational scenarios.
  • For several clients, conducted the modelling of revenue forecasting, bearing in mind the uncertain nature of the market and competitive development, customer behaviour, and the internal success of product development projects. These models supported general forecasting, business planning and communication, as well as target setting and resource optimisation.
  • For the modelling team of a corporate finance boutique, we reviewed their modelling knowledge and likely applications, and devised a tailored program of learning in advanced areas of Excel modelling for them to hone their skills.
  • Reviewed a client’s model of a drug development project and suggested improvements to it, as well as clarifying issues relating to model calibration and probability assessment.
  • Built a cost model for the phased development of a new drug, covering the costs of each phase, the ramp-up, overlap and ramping down of each phase, and which also reflected the effect of the success or not of each phase, as well as other project uncertainties.
  • Designed a simulation model to assess the possible spread and damage due to fire in a major building complex. The subsequent more detailed implementation work was taken over by the client to complete.
  • Built sample risk models of credit modelling and portfolio optimisation to show how Excel add-ins could be used to support credit decisions of a major bank, as well as a building society.
  • Supported clients in the design of internal training courses in the area of decision-making under uncertainty and probabilistic modelling.
  • For a semi-conductor manufacturer, I ran training courses and built models for the analysis of project schedule risk, as well as for real options analysis.
  • For a large manufacturer of food and beverages that was considering constructing a new plant in Central Europe, I conducted a detailed risk assessment, and built a quantitative model to allow them to evaluate this decision. The model included general financial quantities, as well as the risks of project execution and start-up and the potential effect of deviations from the forecast exchange rates and future labour rates.
  • Showed a number of clients how simulation techniques can be used to model uncertainty and variability in food safety applications and veterinary contexts.
  • Advised a new entrant telecommunications company on building capabilities to manage customer relationships, including analysing world-wide best practices and creating databases and customer scoring algorithms.
  • Analysed the business economics of a potential new entrant in the residential telecommunications market. A financial model was constructed based off data about market segmentation, take-up rates, and the set-up and ongoing operational costs of the business and was used to evaluate the opportunities and risks faced by the client.
  • Reviewed the expansion plans for expansion within continental Europe for a major tissue-paper producer, including identification and quantification of the critical risks involved in the expansion. The analysis was used to further define the plans, and to develop additional measures for improvement in the areas of manufacturing, distribution and marketing.
  • Performed a business review of the German operations of a major supplier of specialist software, linking this review to a financial model. The market analysis indicated the likely rapid growth of the number of smaller, network-based applications, and the financial model of the operation indicated that the client’s sales and distribution structure would not be able to profitability serve this rapidly growing segment; indeed, the business would likely decline over the coming years. As a result, options Ire developed both to improve customer service and to restructure the business at the European level, and to form strategic partnerships.
  • Used activity-based-costing to establish the profitability of the product range of a major international food manufacturer. In conjunction with an analysis of the client’s market position and competitors’ operations, strategic options aimed at improving long-term profitability Ire developed. The product range was refocused, and re-priced, and additional investments Ire made in the areas of plant, product development, and marketing. The client’s sales increased, in a declining market, by 50% within three years from the project’s completion.
  • Conducted a strategic analysis of the cost position for a manufacturing company with facilities in UK, France, Germany. Identified cost drivers and determined the cost position relative to a major competitor. Identified steps which would lead to the client becoming the lowest cost producer in Europe. The work was extended to include a review of the cost impact of proposed changes to the layout of the client’s plants and the introduction of leading-edge technology.
  • Reviewed the strategic position of a major UK food manufacturer within a European context. The client had integrated activities from agriculture to marketing, and the work focused on comparing the cost of this business system with other (e.g. non-integrated) systems.
  • We supported the negotiation process for the sale of a container leasing business that was under insolvency procedures. We created a valuation tool that was linked to the database of container contracts and which allowed to forecast future cash flows arising from contracts, depending on changes to contract terms, leasing renewal rates, and other strategic or economic factors. This allowed the embedded value that was implicit within the business to be highlighted (beyond the immediate cash flows derived from the existing contracts) and the effect of strategic levers to be tested, so that the achieved sales price was optimized.
  • Estimated realistic ranges for the cost of capital (discount rate) for an oil company, using market benchmarks, statistical analysis of confidence intervals, and Monte Carlo Simulation of the uncertainty ranges for key parameters, and bench-marking with academic and other published research.
  • For a major European oil and gas company, we created a flexible business planning and strategic portfolio optimization tool that allowed executives to rapidly explore the effect of key strategic and operational decisions on future business metrics (e.g. investment, revenue, cash flow, and valuation). The tool allowed for a range of possible strategic initiatives (e.g. organic growth, numerous acquisition and other business development possibilities) to be assessed in a single framework, and for the effects of strategic and operational decisions on the financing side of the business to be captured.
  • For a major European oil and gas company, we improved the capital-allocation process by using risk modelling and associated statistical techniques to create budget authorization processes which reduced “resource hoarding”; we laid out the associated changes required to organizational structures and processes for the techniques to be optimally implemented. This allowed for the level of new project activity (and the future growth rate of the business) to be increased by 10%.
  • Advised an oil company in quantifying the risks, costs and trade-offs in performing regular scheduled maintenance versus unscheduled maintenance of safety equipment.
  • We supported the raising of debt finance for an oil and gas company, including modelling of scenarios, valuation, and optimal debt sculpting, and aligned the model with the associated legal documentation.
  • For an AIM-listed oil producer, we supported the development of the optimum investment/divestment strategy to increase shareholder value in the long-term, whilst meeting short-term targets and market expectations. We researched and analysed the value-creation strategies of around 50 small, medium and large oil and gas companies over a 10-20 year period, focusing on the role of acquisitions, disposals, and their timing in relation to the financing needs of the business and the general cycle within the equity markets. We developed a financial model that allowed for strategic options to be tested and for the effect on equity dilution and likely share price development to be captured. We worked with the client’s investor relations team to optimize and present the equity “investor story”.
  • For the family office of a private equity firm, developed a quantitative tool to optimally invest residual cash, given both the risk profile of the (less liquid) current private equity investments, as well as the client’s desire to consider the possibility to invest surplus cash in a wider range of assets across multiple geographies and currency zones. Asset classes including equities, commodities, hedge functions, property and other private equity opportunities (among others) were considered, and a database of the historic total return and risk profile of this wide range of assets was assembled from multiple sources (in various currencies). This was used as input into the quantitative optimisation model to assist in the optimal decisions around cash allocations.
  • For a private equity firm considering whether to buy an insurance entity, we constructed a financial model of the business, conducted selected operational and market due diligence (which was linked to the financial model), so that funding requirements and the investment case could be adequately assessed.
  • We advised a range of private equity clients on issues relating to financial model integrity and validity, including for investments to be made in insurance, banking, telecommunications and real estate.