Financial Model for Business Turnarounds

Here we are looking at a financial simulation for turning a struggling business around over the course of 12 to 24 months. The main points of view the model was made for is the GP / Operator (entity that comes in to turn the business around) and the existing owners of the business.

$75.00 USD

After purchase, the template will be immediately available to download. It is also included in the joint venture and scenario analysis template bundles as well as the Super Smart Bundle.

business turnaround

I built this financial model for a client, made some public-facing changes, and now I believe this is a useful tool for businesses to plan the finances and deal structure of a turnaround. The main users of this would likely be GP / operators that specialize in turning small to medium-size businesses into profitable going concerns.

To allow this template to work for nearly any business, I stuck to broad strokes when it comes to entering historical data (T12) and forecasting future operations. Everything runs based on a starting monthly figure, and monthly percentage changes that can be adjusted across 3 blocks of time for the first 24 months, annualized percentages are used for years 3 to 5. For direct costs, there are two sections (direct percentage of revenue and a dollar-value input). Those can also be adjusted over time.

There is a new feature I haven't included before. This is a scenario analysis with up to 10 scenarios that can be set for each line item as well as major exit / debt / capex assumptions. Once configured, the user simply toggles between scenarios to see the financial impact. I've also included data tables where the template shows the results of key financial outputs for each scenario side-by-side (sensitivity table).

Main Function of this Financial Model:

  • GP / Operator enters a 12-month contract with the owners of a company for some combination of fees over time and potential equity kickers that are based on increase in company valuation.
  • Option for company owners to exit (GP takes an optional fee to facilitate the sale) or continue operations.
  • Option for the GP to directly buy out the company from owners at some defined point in the future.
  • For the buyout, there are assumptions for seller financing (PIK), stabilized loan, and exit multiples.
One thing you should pay attention to in the model is if your entered assumptions make sense. I put a 'check' table below the loan assumptions on the 'Global' tab that shows all the main model decision points, and it will make any illogical inputs apparent (such as having the initial owners exit toggled 'yes' and having the buyout toggled to 'yes'. If you simply go through the model and think about all the data you are inputting, the flow should make sense and there is more flexibility in this type of framework.

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