Financial Viability Assessment
Financial viability assessment is vital in any tender or procurement process, but it can be used to help other commercial assessments too.
Financial viability assessment is generally associated with risk management in procurement. By evaluating a tender’s financial information, the client calling for the tender can see if the supplier is likely to remain financially viable for the life of the proposed project and how they can be replaced should they become insolvent. In other words, as a client, you want to know the level of risk a particular supplier would present to your organisation before signing a contract with them.
As financial viability assessment is inexpensive to conduct (especially when compared to full-fledged financial due diligence), savvy business leaders realise that they can use it in other commercial situations too. Here are some instances where our clients find financial viability assessment helpful:
- Procurement – you want to know if the suppliers are financially viable to carry out the contract and remain solvent throughout the life of the project.
- Before litigation – you want to know if the opponent is worth suing and if there are factors which can influence the case.
- Before negotiation – before the target company allows your team to access their accounts, you need accurate insight to gain leverage.
- Before investing – smaller investments may not warrant full financial due diligence but a quick financial assessment can certainly help.
Call Blackhawk Intelligence on +44 (0)20 8108 9317 for cost-effective financial viability assessment.
Assessing financial risks in procurement
When conducting financial viability assessment, our team typically looks at historical financial data, along with known issues from the tenderers and other sources, to help our clients screen out high-risk tenderers.
We use a range of financial ratios to assess a tenderer’s profitability, liquidity and financial stability. As every industry is different, we use benchmarks and exercise great care when applying the ratios.
Ultimately, the goal of conducting financial viability assessment is to make sure that the tenderer can indeed deliver the goods and services as specified in the contract, and can fulfil guarantees or warranties provided for in the contract.
Assessing financial risks in other commercial situations
Apart from the tender process, financial viability assessment proves to be highly effective when you need some critical financial information accurately to assess a commercial deal and make informed decisions. Here are two good examples:
Case #1: In mergers and acquisitions, the investors usually negotiate and sign a Letter of Intent first, before the other party opens up the accounts and allows financial due diligence to take place. But savvy investors look to verify financial stability and other financial-related claims made by the other party first, as it will be counterproductive to negotiate and find out that the deal is riskier than it seems much later. In this scenario, financial assessment delivers the desired level of information to investors quickly and cost-effectively, thereby helping them to gain leverage or saving them time and money.
Case #2: Before litigation, it is always worth knowing the financial strength of the other party and if there are commercial factors which can influence the case. If the other party is technically insolvent, then it may not be wise to throw good money after bad. For more information, check out our pre-litigation reports page.
Blackhawk Intelligence’s financial viability assessments can help
Among the analysis that we provide are break-even analysis, cash flow analysis, cost analysis and debt analysis. When analysing financial statements, we focus on liquidity, profitability, leverage and access to working capital.
Analyses are based on financial ratios and industry benchmarks. We seek to uncover trends from the business’s financial statements and use these as input to our recommendations for reviewing the business plan.
In addition, we may interview the executives (covertly or otherwise) to uncover a company’s strengths and weaknesses. Where interviews are not appropriate, we can perform in-depth traces on individuals to uncover background irregularities that may be of interest to you.
When financial assessments are conducted covertly
In situations where the target company must not be aware of your investigations, perhaps where litigation may be pending, or where a financial assessment of a company is required to help determine the viability or scale of litigation, our team will be highly discrete when conducting the financial assessment.
Call Blackhawk Intelligence on +44 (0)20 8108 9317 for cost-effective financial viability assessment.
- +44 (0)20 8108 9317
