How we helped a private equity firm in updating a fund budget model

March 17, 2023

The Context

The client, a Private Equity firm, wanted the TresVista Team to prepare a 5-year Fund Budget Model as a part of the client’s annual budget approval plan, to track the current and future performance of the fund. The client asked the team to build revenue flows for new funds and update the revenue recognition for the closed and present funds. Additionally, the client wanted the team to model the recycling of company assets from older funds to newer funds. The team was also asked to enable scenario testing for fund extension, fund close dates, fund size, etc.

The Objective

To update the client’s annual fund budget model to track the current and future performance of the fund.

The Approach

The TresVista Team followed the following process:

  • Built templates for future funds and updated the present funds
  • Modeled different revenue recognitions specific to the fund
  • Added flexibility to alter assumptions such as fund size, exit dates of companies, fund extension, etc.
  • Prepared detailed P&L, Balance Sheet, and Cash Flow for the current business alongside the given scenarios
    • Enabled asset details to flow from the previous fund to the next after a fund is closed

The Challenges We Overcame

The major hurdles faced by the TresVista Team were:

  • The evolving nature of the model structure coupled with decision on assumptions and additional grounds to be covered
  • To model scenario testing and enable various combinations of scenarios related to the addition of new funds, portfolio companies, fund life extensions, etc.

The TresVista Team overcame these hurdles by conducting frequent meetings with the client to understand the problem and identify the client’s goal for each section.

Final Product (Sanitized)

The Value Add – Catalyzing the Client’s Impact

The TresVista Team provided the client with a budget model which was automated, allowed for flexibility to run for different combinations of scenarios, and provided summaries for better presentation and analysis for the client.