How we helped a Private Equity firm in building an operational and transaction model of a Rural Broadband Network

March 17, 2023

The Context

The client, a Private Equity firm wanted the TresVista team to build a transaction and operational model for the funding, rollout, and consolidation of a rural broadband network in the United States, which would showcase an in-depth view of the operations, capex requirements, free cash flow generation and exit returns for the various stakeholders. The client also wanted to evaluate different transaction structures, and have a model detailed and flexible enough to incorporate wide range of assumptions and minute details. The model was also to be used for the purposes of tracking the operations of the business during the first 24 months post-close.

The Objective

To build an operational and transaction model for a rural broadband investment opportunity.

The Approach

The TresVista team followed the following process:

  • Initial Research and Analysis: Analyzed financials and understood operations using management accounts and over calls
  • Build-out Operating Model/Calculator: Leveraged modelling frameworks and conventions that were developed along with the client to build the operational model for the business
  • Fine-tuning operating assumptions: The client discussed forecasts and assumptions with the operator and the team provided input and incorporated changes
  • Transaction Model/Returns Analyses: Built the transaction model, and returns profiles across structures including debt, equity and mezzanine financing
  • Pitch deck and Final Deliverable: Created the pitch deck for the proposed transaction; finalized model and prepared the final deliverable

The Challenges We Overcame

The major hurdle faced by the TresVista team was building out the model in a modular fashion, that allowed major changes to be made efficiently. This was because each deal was structured in a different manner, and there were a broad range of financing sources and terms on offer that the client needed to evaluate.

The TresVista team overcame this hurdle by ensuring that the work was carried on smoothly and developed a blueprint of the model. To avoid structural and technical errors, the team built the model in a piece meal manner and then integrated the pieces together once they were discussed, adjusted, and approved on the client’s end. Given the multiple rounds of iteration, the team documented every work and drafted client call note to have an idea about the remaining work for the next day.

Final Product (Sanitized)

The Value Add – Catalyzing the Client’s Impact

The TresVista team created dynamic models that can be used for transaction/deal execution and post-deal monitoring. Additionally, the team developed best practices through processes and documentation that enabled the client to be completely hands-off in all aspects of work.