If the business is of a certain size and a family sale is not planned, the elaboration of a project file is often advised, particularly for investment funds in the case of activities of strong goodwill (telecom, biotechnology, new technologies...)

What is a project file?

A project file is the quantitative vision of the company's development. It is a descriptive document of the company and is handed to the potential buyer or to investors, who assess the risks and decide if there is opportunity to complete the transaction.

The project file must evaluate the need for equity financing within a given period.

It allows us:

- To evaluate the company (discounted cash flow)
- To evaluate the legal and financial sale structure as part of leverage operations.

The project file will notably integrate the provisional profit and loss account and the provisional in-put and out-put table.

The forecasts must be done for a time period of three to five years, showing key exploitation and highly sensitive factors.

Provisional in-put an out-put table, notably with:

Provisional investments
Financing (investments, working capital requirement…)
Change in working capital requirement.

Provisional operating statements

The provisional operating statements consist of the following elements:

Provisional sales: change by company, by product/ service;
Provisional margins by company, by product/ service;
Operating charges: payroll (evolution, recruitment plan...);
External charges etc...

Construction rules

A project file must have three essential characteristics:

To be easy to carry out, therefore must be realistic and credible.

Potential buyers can create financial terms, which depend on the success of the project file.
To be cautious.

In general we only take events, which are likely to reach full potential or which are clear to identify, into account.
But ambitious.

It is important to be aware of the confidentiality of integrated data. Some precise construction rules must be followed. Thus, it is important to pay particular attention to coherence in relation with the past (a prior diagnosis of the business is usually essential) but equally to coherence with regards to the market and competition.

Considering its importance for the next pocess, it is often necessary to get help in the development of the project file. In this respect, it is possible to call ACTORIA for help.