When raising capital or approaching the sale of an asset or business, a DCF model or discounted cash flow model is essential in determining your project or asset’s true worth. Using a discounted cash flow model will allow you to determine the current value of your asset or business based on projections of how much the business stands to make in the future.
Valuation calculators are prevalent in online searches. Type in the term and you’ll receive a long list of search engine results. A valuation calculator is popular because it gives a quick snapshot of a big picture…which is great to use during the early screening phase of a project.
But when you get to the negotiation or raising-capital stage, depending on the high-level financial snapshot of your project or asset isn’t just not good business sense – it’s highly risky. Projects tend to be complex, and not understanding key factors of your project – like tax laws – leaves your project or asset vulnerable and unprotected and at risk of losing investment or leaving money at the table.
You’ve developed your financial model, you’re confident in your investment opportunity, and you’re ready to present the opportunity to investors. But what should you include in your pitch book? Another way to think about this is, what do investors look for in your pitch book?
After twenty-plus years of working with investors and boards in the oil and energy industry, we’ve fine-tuned what to include in pitch books to get you to the next level of interest.
Recently, an oil and gas company approached Darby Finance about a customized financial model while already in negotiations with a partner company. These negotiations would expand the company’s footprint into in a new geographic region, which would bring about a significant change in tax considerations and profitability. However, the oil and gas company’s decision-making had been hindered by a complex financial model that was not easy for the partner company to use or understand.
When should you use a customized financial model versus an off-the-shelf valuation tool? Each valuation tool has strengths that should be utilized at different points of the valuation process.
The Offshore Energy Industry’s premier, global event, OTC 2018, is less than a month away. Darby Finance makes a point of attending OTC every year. Why? This post will explain why OTC is one of the best places to network, explore new business opportunities, and broaden your knowledge about offshore technology.
Darby Finance’s client, a growing boutique investment bank, was given the mandate from an offshore E&P company to raise up to $150 million of equity for a Gulf of Mexico development project. The client did not have the internal resources to develop a dynamic, Excel-based financial model needed to value the multi-block project or the creative resources to develop a professional pitch book.
A financial model is essential when presenting your investment case to key stakeholders. Without a clear and compelling financial model, your pitch lacks the necessary detail to sway investors in your venture’s favor. Here are some tips to creating a compelling financial model that will help start successful conversations with potential investors.