Valuation & Fairness Opinion
 Analysis of long-term contracts
Your challenges
Within the framework of a transaction, a dispute or day-to-day business, you want a clear vision of the operational, legal or financing-related risks which impact the global profitability of projects.
Our solutions
We provide you with proven technical expertise and extensive experience of this type of operation in such areas as aerospace, nuclear industry, construction and public works, engineering, logistics, heavy equipment or computer engineering.
The added value we provide stems from our ability to link commercial, technical and financial information together. Depending on the issues at hand (acquisition, dispute, internal control, etc), we provide you with the most appropriate assistance, covering the following areas:
Analysis of contract and budget provisions
-
Methods for setting prices (hourly rate, fixed price, cost plus, etc), conditions and payment schedules, operating currency, and potential amendments,
-
Realisation schedules, important phases, late delivery/payment penalties,
-
Warranties given and received,
-
Budget (volume and nature of costs, risks and contingencies, margin forecasts, expenditure schedules, resorting to subcontracting, direct/indirect expenses ...),
-
Financing methods and hedging implemented,
-
Cash flow forecasts.
Analysis of internal control methods and policies
-
Internal operating rules (delegation, authorisation, etc),
-
Process for gathering and interpreting information,
-
Instruments for measuring performance,
-
Methods for responding to calls for tenders and for fixing estimates,
-
Company history in terms of risk management.
Analysis of revenue and income recognition methods, particularly with regard to changes in IFRS principles.
The three steps above, combined with knowledge of the industry sector and of the business, enable us to draw up a risk profile of the contract and guide our work through the next phases.
Analysis of elements to date (for outstanding contracts)
-
Overall review of stage of completion of contract as well as of difficulties encountered or foreseen, comparisons with budget, investigation of potential financial consequences,
-
Analysis of delays incurred and review of financial impacts (penalties, operating costs),
-
Review of turnover and profit or loss, comparisons with contract and budget, critical review of updated estimates at completion,
-
Analysis of how contingencies and risks are considered in the income statement and balance sheet, rationalisation with budget at completion,
-
Analysis of current assets and liabilities, comparison and rationalisation with income statement and cash-related elements,
-
Analysis of the cash position and rationalisation with other balance sheet and income statement elements, including financial income (effects of exchange and interest rates).
Analysis of budget at completion (for outstanding contracts)
-
Rationalisation of revenue at completion with elements from the contract,
-
Critical analysis of costs to complete estimates, consideration of risks and contingencies,
-
Analysis of cash estimates at completion and estimated total financial income.
Analysis of off-balance sheet elements
-
Inventory, analysis and assessment of all off-balance sheet elements concerning the contract (guarantees, securities, hedges, etc) rationalisation with contract clauses and budget items,
-
Critical review of the conditions for reneging on a commitment (withdrawal, calling guarantees, etc) and the related estimated funds flows.
Furthermore, we can call in Aon Corporation experts where risk analysis or taking out guarantees or insurance coverage is concerned.
|
|
