We prepare two types of models, both of which model cash flow and assets: Personal Models and Corporate Models
Personal Models
The purpose of the Personal Financial Model is to help our client determine what he or she needs financially to meet his or her personal financial objectives. Too often, plans are developed without this component, which illustrates the impact of each potential transition method on the owner. Our approach gives the owner the information necessary to compare strategic choices and determine which one is the most desirable.
Detailed information on cash flow, assets, expenses and net-worth reflect the owner’s current situation. We then project those values and the relationships between them on a year-by-year basis over a defined time horizon, taking into account predictable milestones such as retirement of debt or a planned sale of property. By changing variables in the model that correspond to various strategic alternatives, we can help owners examine and compare the outcome of different courses of action in similar detail
Corporate Models
We use Corporate Models to consider the financial impact of strategic choices on business profitability and cash flow. Corporate models are used to:
- Project changes in ownership equity under various growth assumptions.
- Evaluate company debt structures and develop priorities for debt repayment.
- Measure the impact of transition alternatives on cash flow and future growth.
- Model the impact of employee incentive plans.
The Personal Models and the Corporate Models are linked together, creating a dynamic analytical tool that is used to explore the financial result of various business strategies on your personal finances. We use this technique to model the effects of changing the corporate structure (Sub-S election, reorganization), as well as capitalization rates, sale of a division, real estate structure, and the transition itself.
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