Case Studies

Developing forecasts to raise funds for an automotive engineer

Introduced to an engineering and design business

A former client of FD Solutions, the ex-CEO of an AIM-quoted technology company contacted us following his purchase of a stake in a Surrey-based engineering and design company.

FD Solutions have experience in most sectors

The company has experience in industries including aircraft, motor sport and low-emission vehicle design. As well as having expertise in a wide range of mechanical engineering disciplines, they provide measurement and control systems along with bespoke electronic and software solutions.

Improving cash flow underpins everything we do at FD Solutions

The company had appointed brokers to assist in raising £300,000 of expansion capital and asked us to provide three-year projections in support of this. The forecasts would confirm whether £300,000 would be adequate in this funding round and would form the basis of the pricing for the new shares.

Understanding the business model is crucial to preparing robust fund raising documents

We spent time with the company’s directors, getting to understand the business and its income streams. For example, it produces test equipment for the aircraft industry and propulsion and control systems for hybrid buses. Some customers paid an up-front deposit; most paid in instalments over the timespan of the contract. It was essential for us to understand the cycle of a project in order to accurately forecast its finances.

Our cash flow forecasts always integrate with the profit and loss account and balance sheet

To prepare meaningful figures, we needed to sensibly model for the company’s projected growth plans – new staff joining over the forecast period, new projects coming through, the cost of sales assumptions underlying each new revenue stream – and so on.

Our forecasts are fully integrated, with projections of P&L account, balance sheet and cashflow all feeding off the same assumptions, including corporation tax calculations and interest receivable on in-hand balances. A funds flow statement showed the effect of new equity raised, drawdowns of that money at different times, and investment in new capital equipment.

Successfully raised the cash

Our client was able to raise the full sum sought and, based on calculations supported by our model, brought in new shareholders at a price which recognised the value already attained by this well established company yet left incoming investors poised to benefit from uplifts in value if and when subsequent funding rounds are required.

Our forecasts are sophisticated enough to be flexed for any variables that need to be modelled, yet simple enough for clients to undertake that flexing if they wish. Having subsequently secured an impressive new long-term project, our clients have indicated that they’d soon like us to undertake an all-new set of forecasts; the initial project will mean that it is easy for us to spring into action.