Our Services
01
Business Valuation
How much is my company worth?
As a business owner, you may find yourself asking this question.
Receiving an accurate company valuation is imperative should you choose to put your exit strategy into action in today’s buoyant market. When valuing a business, there are a number of things that we should take into consideration.
Once you’ve got an idea of how much you can expect from an eventual sale, our team of experts will be able to discuss the nuances of any potential transaction, covering the following:
- Strength of brand;
- Future financial performance;
- Customer base;
- Experience and skills of management team;
- Supply chain strengths;
- Synergies with the buyer.
The Valuation Process
Let’s start with the numbers. The first part of a business valuation is the objective analysis, dealing with quantifiable data drivers. These pieces are easily measurable and provable, such as profits, or the standard accounting term called Earnings Before Interest Depreciation Taxes Amortization (EBIDTA), and other quantifiable items such as the market value of physical assets. From a simplistic approach, business valuation service experts can take EBIDTA, apply the market-driven capitalization rate, and arrive with a relatively good ballpark business valuation. In this case, the conclusion is simple: the valuation expert can easily correlate the fact that the higher the EBIDTA, the higher the valuation of the business and vice versa.
The second part of the business valuation is the subjective analysis, dealing with the market-driven factors. These are much more difficult to measure and quantify. Some examples of these valuation drivers might be the fact that a business has 75% of its revenue from one customer; or that it is dependent on only one, two or three products (services). A business where the owner is the business or the business is family operated, are all examples of subjective risks that must be taken into account in a business valuation. These factors and their effects on investment risks are more difficult to predict and must take market forces into account. In some cases, they can even result in lowering the business valuation. But how can a business owner know what a negative value driver really is? The ones listed here are only a few examples.
An expert business valuation services specialist will be able to help. It is crucial to a strong, defensible valuation, to find a business valuation services specialist who is knowledgeable about market forces. Someone with in-depth knowledge of today’s market can help you evaluate the soft, subjective valuation drivers. An expert business valuation specialist will work together with you, identifying the objective, data-driven strengths of your business and educating you on the subjective drivers that could be pulling your business valuation down.
That way, your business valuation services specialist can analyze and apply the right amount of subjective forces in terms of discounts against the objective valuation drivers to arrive with an accurate and defensible business valuation.
Dazz Management offers business valuation services using an in-depth understanding of accepted valuation methodologies to produce a defensible report for appraisals and fairness opinions.
- Estate Planning
- Buy & Sell Arrangements
- Equity or Debt Financing
- Merger & Acquisition
- Investment Negotiation
02
Business Plans
A business plan is the key strategic document essential for starting and operating a successful business. It is a living document that projects the financial, operational and marketing activities of either a proposed or growing business for the next 3, 5 to 10 years.
The business plan development process forms an important element and no entrepreneur would want to fall in a haphazard situation by neglecting it. An organization that lacks a committed team for business strategic planning, may take month after month to formulate a business plan which leads to nothing but opportunities lost.
Our team provides both start-ups and existing business owners with either:
- Business Plan review and improvement of an existing business plan;
- A comprehensive business plan development.
Our business plan review identifies those areas of the existing business plan that need improvement or elaboration in key areas to showcase the business plan in a better light for investors and stakeholders. We will also ensure that the business plan is complete, soundly supported and effectively presented.
We work together with you to develop an entirely new business plan, right for your targeted investors or any other stakeholders.
Our writing style is clear, direct, and simple and ties all of the below together into a self-consistent document that serves as a roadmap for your business:
- Industry Overview;
- Market Overview, including competitive landscape and competitors overview;
- Business Overview;
- Products & Services presentation;
- Historic financial analysis;
- Assets analysis;
- A description of the Business Model;
- Marketing & Sales Plan;
- Operations;
- Human Resource;
- Financial Projections;
- SWOT (Strengths / Weaknesses / Opportunities / Threats) Analysis.
If you are starting a business, a business plan can help you:
- Turn your ideas and capital into a viable business;
- Secure financing from lenders and investors;
- Identify strengths, weaknesses, opportunities, and threats.
If you are managing an existing business, a business plan can help you:
- Communicate your vision to your employees and external parties;
- Develop accurate financial forecasts;
- Compare planned versus actual performance.
If you are planning to expand your business, a business plan can help you:
- Raise the necessary capital for expansion;
- Create a strategy to manage growth;
- Take advantage of opportunities and mitigate risks.
If you are exiting your business, a business plan can help you:
- Assess the right value of your business;
- Develop a plan to transfer ownership, sell your business, or close your business;
- Establish a timeline for the transition process;
- Identify financial and regulatory requirements.
- Business Plan Review
- Business Plan Development
03
Financial Controlling
“What’s behind you doesn’t matter.”
– Enzo Ferrari –
Financial controlling, also known as financial management or controlling, plays a pivotal role in ensuring that a company’s financial resources are utilized optimally, risks are mitigated, and strategic decisions are supported by accurate and timely financial information.
With a proven track record of delivering tangible results for our clients, we understand the challenges businesses face in managing their finances effectively.
Our team of experienced professionals brings a wealth of expertise in controlling, financial analysis, and risk management to the table. We work closely with our clients to tailor solutions that align with their unique needs and goals.
Some of the key activities we cover include:
1. Budgeting and Forecasting: Developing comprehensive budgets and financial forecasts to guide the allocation of resources and support strategic planning. This involves analyzing historical data, market trends, and business objectives to create realistic financial plans.
2. Financial Analysis and Reporting: Conducting in-depth financial analysis to assess the company’s performance, identify trends, and provide insights for decision-making. This includes preparing regular financial reports, variance analysis, and key performance indicator (KPI) tracking.
3. Cost Control and Management: Monitoring and controlling costs across various business functions to optimize spending, improve efficiency, and maximize profitability. This involves identifying cost-saving opportunities, implementing cost control measures, and analyzing cost structures.
4. Cash Flow Management: Managing the company’s cash flow to ensure sufficient liquidity for day-to-day operations, investment opportunities, and debt service. This includes cash flow forecasting, working capital management, and optimizing cash conversion cycles.
5. Risk Management: Identifying, assessing, and mitigating financial risks that could impact the company’s performance and stability. This involves developing risk management strategies, implementing internal controls, and ensuring compliance with regulatory requirements.
6. Performance Measurement: Establishing key performance indicators (KPIs) and metrics to measure the financial performance of the company and its various business units. This includes analyzing profitability, return on investment (ROI), and other financial metrics to evaluate performance.
7. Strategic Financial Planning: Collaborating with senior management to align financial strategies with overall business objectives. This involves providing financial insights and recommendations to support strategic decision-making and long-term planning.
8. Compliance and Governance: Ensuring compliance with financial regulations, accounting standards, and internal policies. This includes maintaining accurate financial records, conducting internal audits, and adhering to reporting requirements.
9. Investment Analysis: Evaluating potential investments, capital projects, and strategic initiatives to assess their financial viability and potential return on investment. This involves conducting financial modeling, risk analysis, and scenario planning.
10. Process Improvement: Continuously evaluating and improving financial processes and systems to enhance efficiency, accuracy, and transparency. This includes implementing best practices, leveraging technology, and streamlining financial workflows.
By partnering with us, you can expect to gain a competitive edge through improved financial transparency, enhanced cost control, and better resource allocation. Our services are designed to deliver measurable ROI, empowering you to make informed decisions that drive sustainable growth.
Case Studies:
COMPANY
BEFORE IMPLEMENTING FINANCIAL CONTROLLING
AFTER IMPLEMENTING FINANCIAL CONTROLLING
COMPANY
Service
Company
BEFORE IMPLEMENTING FINANCIAL CONTROLLING
- Annual revenue: €20 million
- EBITDA margin: 12%
- Project cost overruns and inconsistent profitability across projects
- Limited visibility into project-level financial performance
- Inefficient resource allocation and utilization
AFTER IMPLEMENTING FINANCIAL CONTROLLING
- Annual revenue: Increased to €25 million through improved project bidding and client acquisition strategies
- EBITDA margin: Improved to 15% through better cost control and project profitability analysis
- Reduced project cost overruns by 20% through improved project budgeting and monitoring
- Detailed project-level financial performance analysis leading to better resource allocation and improved project profitability
- Improved cash flow management through better invoicing and payment tracking, reducing days sales outstanding (DSO) by 15%
COMPANY
Real Estate Company
BEFORE IMPLEMENTING FINANCIAL CONTROLLING
- Annual revenue: €50 million
- Profit margin: 20%
- Project cost overruns and inconsistent profitability across projects
- Limited visibility into project-level financial performance
- Inefficient resource allocation and utilization
AFTER IMPLEMENTING FINANCIAL CONTROLLING
- Annual revenue: €55 million
- Impact on Annual Revenues:
◌ 10% cost savings on €50 million = €5 million in cost reduction
- Impact on Annual Profits:
◌ 15% profit margin improvement on €50 million = €7.5 million increase in profits
◌ 5% reduction in financial impacts = €2.5 million reduction in potential losses
◌ 10% cost savings on €50 million = €5 million in cost reduction
◌ 15% profit margin improvement on €50 million = €7.5 million increase in profits
◌ 5% reduction in financial impacts = €2.5 million reduction in potential losses
COMPANY
Retail Chain
BEFORE IMPLEMENTING FINANCIAL CONTROLLING
- Annual revenue: €50 million
- Gross margin: 25%
- Operating expenses: 20% of revenue
- Limited visibility into store-level performance and cost drivers
- Inconsistent pricing strategies across locations
AFTER IMPLEMENTING FINANCIAL CONTROLLING
- Annual revenue: Increased to €60 million through improved pricing strategies and product mix optimization
- Gross margin: Improved to 28% through better cost control and vendor negotiations
- Operating expenses: Reduced to 18% of revenue through efficiency improvements and better expense tracking
- Detailed store-level performance analysis leading to the closure of underperforming locations and expansion of successful ones
- Consistent pricing strategies implemented across all locations, leading to improved customer satisfaction and increased sales
COMPANY
Manufacturing Company
BEFORE IMPLEMENTING FINANCIAL CONTROLLING
- Annual operating costs: €10 million
- Profit margin: 8%
- Inventory turnover: 4 times per year
- Cash flow variability: High, leading to occasional liquidity challenges
- Limited visibility into production costs and profitability by product line
AFTER IMPLEMENTING FINANCIAL CONTROLLING
- Annual operating costs: Reduced to €9 million through cost optimization initiatives
- Profit margin: Increased to 10% through better cost control and pricing strategies
- Inventory turnover: Improved to 6 times per year, reducing carrying costs and improving cash flow
- Cash flow variability: Reduced through better cash flow forecasting and working capital management
- Detailed product line profitability analysis leading to the discontinuation of low-margin products and increased focus on high-margin lines
These examples illustrate the potential impact of implementing financial controlling in companies, leading to improved financial performance, cost control, profitability, and overall business success.
Regardless of the stage in which your business is or the service you need, our mission is clear and simple!
We offer you confidence, total control over costs, transparency over financial flows and simple tools to measure your business performance so that you can make informed decisions at any time.
All this is done by our team of certified consultants, applying our proven financial control models, developed over time, that have brought measurable results for our clients.
- Financial Analysis and Reporting
- Cost Control and Management
- Cash Flow Management
- Risk Management
- Performance Measurement
- Strategic Financial Planning
- Compliance and Governance
- Process Improvement
04
Financial Modeling Services
Financial modeling allows companies to quickly grasp the key drivers behind their cashflow and value. A good model allows you to quickly change assumptions behind the model and to see what effect it makes.
Surprisingly, quite often people tend to be too optimistic about their plans. Putting numbers into a financial model brings you down to earth. Some of our clients have saved important amounts of money by adjusting their development plans in advance.
One of the most common mistakes is underestimation of cash requirements for development projects of a business. Every time you get cost overruns or delays in delivery – all of this adds up and significantly worsens the pressure on the company’s cash reserves.
Putting the numbers down to a financial model and setting these to the worst-case scenario, would allow you to know your cash needs well in advance. It would also give you time to negotiate a stand-by line of credit for these needs.
If you are looking to:
- Employ financial modeling services to put together an abstract representation of your real-world financial situation;
- Employ financial modeling to forecast your business outcomes and think-through your financial strategies including assessing the maximum potential of an investment based on testing several scenarios;
- Outsource financial modeling services to a reliable financial modeling service provider to help you summarize events and provide effective direction for future decisions or actions.
then, you are at the right place.
Our financial models can help you assess new business opportunities, raise capital, and analyze other highly important aspects related to investments.
A new business opportunity needs a good financial feasibility study. Our experts are here to analyze your opportunities and help you make an informed business decision, by testing several scenarios taking into consideration all the current and future factors which might have an impact upon the investment result.
Our model comes to complete your existing financial statements ( balance sheet, cash flow statement, and income statement) into a single financial model, which can be adjusted at any time according to the strategic objectives.
Whether it is balance sheets, income statements or even cash flow statements, at Dazz Management we can help you with any of your financial projections.
We have expert valuation techniques, and you can be sure that you will always obtain an accurate value of your investments based on cash flows in the future. We use accurate discount rates to provide precise investment values obtained from a robust cash-flow model.
Also, we base our projections on market research aimed at keeping up with the latest changes in the market and analyzing how newer developments can impact your business.
- Abstract representation of your real-world financial situation
- Forecast your business outcomes and think-through your financial strategies
- Summarize events and provide effective direction for future decisions or actions
- Investment scenarios modeling
- Modeling for simulating the assumptions changing impact on financial results
05
Budgeting and Forecasting Services
Budgeting and forecasting are tools that assist us in meeting our financial goals. Companies can use budgeting to establish a plan regarding what the company expects to achieve for a specific period. Financial forecasting assists a company in establishing future outcomes based on historical data and trends as well as estimated sales.
Although the creation and implementation of a comprehensive budget and forecast for your business or personal finances can seem overwhelming, it is the most effective way to set financial expectations and achieve success in your financial affairs.
A budget:
- Provides a benchmark for the business;
- Is often required for finance applications and;
- Can be used as an indicator of future cash-flow of the business.
However, due to time constraints or other reasons, business owners may overlook these essential reports. We can assist businesses in drafting monthly/quarterly/annual budgets and also provide reports that compare the budget with actual results.
By recognising areas where the actual results vary from the budget, businesses can identify underperforming components and put strategies in place to improve or mitigate the effects of the underperformance.
Cashflow Forecasting
It is important to understand that a business’ profit does not necessarily equate to its cashflow. Factors such as debtors, creditors, accruals, prepayments, depreciation and other non-cash transactions can result in these figures being quiet different. By understanding and forecasting a business’ cashflow we can:
- Identify how much cash will be available at specific points throughout the year;
- Analyse the timing and effects of major outgoings;
- Identify minimum monthly incomings required to cover off on regular expenditure etc.
At Dazz Management we assist in producing these reports and we work with businesses to identify areas of potential improvement and provide cashflow strategies the business can implement going forward.
Management Accounts – our focus at Dazz Management is to assist our clients in growing their businesses. An important part of this process is the continual monitoring of financial performance. Management accounts, whether they be monthly or quarterly, provide businesses with this information. Our team of experienced professionals work with clients and produce reports that identify and analyse:
- Accounting profit
- Comparison with prior periods
- Comparisons with budget (if applicable)
- Profitability trends
- Risk areas
- KPI performance
These reports are accompanied with detailed comments recognising where the business has gone well and where it needs to improve. By meeting to discuss these results on a regular basis or team can provide a service that ensures your business is meeting its full potential.
- Develop and Monitor comprehensive budgets
- Cash Flow Forecasting
- Monitor and Analyse Financial Statements
06
Financial Analysis Services
Financial analysis refers to examining and analyzing of financial information of the company in order to reach a business decision. A financial analysis looks at various aspects of a company such as – profitability solvency, liquidity, and stability. Financial analysis is usually carried out by synthesizing information from various financial statements such as – income statements, balance statements, and cash flow statements of a company. It is used for evaluating economic trends, setting financial policies, building long-term plans for the business, and identifying projects or companies for investment.
Importance of Financial Analysis
Financial analysis is important for a business for several reasons given below:
- Identifying the Company’s Assets and Liabilities – It helps in examining all the assets and liabilities a company owns, assess their value and potential to generate future outcomes;
- Measuring a Company’s Overall Financial Strength – Financial Analysis helps to understand the current financial strength of the company. The analysis helps to study whether the business is making profits or losses. It also helps in understanding various other financial aspects of the company such as its ability to pay off debt or dividends;
- Analyzing the Operational Efficiency of a Company – Certain ratios in a financial analysis help in analyzing the degree of efficiency of the company. It helps in examining if the company manages its resources in an effective way.
- Assistance in Strategic Decision Making – Financial Analysis helps in providing an understanding of how efficiently the company resources are utilized, operations are conducted, and debt is managed. It helps in analyzing the overall health and stability of the company and thereby helps the management to make much more informed business decisions.
- Helps in Spotting Trends – Financial Analysis helps in comparing various key numbers for a company over several years. This helps in identifying key trends over a period of time. The ratios can be compared and help to analyze whether progress has been made by the company
- Future Budget Estimation – A number of future budget decisions and corrective actions rely majorly on Financial Analysis. The analysis can help a company to plan ahead and make informed budget decisions and achieve various business goals.
- Making Better Investment Decisions – Financial analysis is highly beneficial for investors. Appraisal of a company’s profitability and financial position is important before any investment decision. With the help of financial analysis, investors can make various key investment decisions.
- Identifying the Company’s Assets and Liabilities
- Measuring a Company’s Overall Financial Strength
- Analyzing the Operational Efficiency of a Company
- Assistance in Strategic Decision
- Support in Spotting Trends
- Future Budget Estimation
- Making Better Investment Decisions
07
Cash Flow Management Services
Without access to cash, you will not be able to achieve your business objectives. Dazz Management helps you build a strong discipline around cash flow management. Our team will monitor, analyse and help you to optimise your cash management processes and ensure that you have timely, accurate data at your fingertips when you are making business decisions.
Our Cash Flow Management Services Include:
- Risk analysis;
- Sales pipeline / income monitoring;
- Expenditure monitoring;
- Projections;
- Business planning;
- Working capital management.
Benefits of Outsourcing Cash Flow Management
There can be various reasons why businesses need to outsource their cashflow management. It may be that a business is growing but doesn’t yet have the resources to hire a financial controller, or it could be that its finance team lack the skills needed.
The advantages you gain when you outsource your cash management to Dazz Management, include:
- Accurate information: We will help you anticipate when cash will be needed so that you can prepare to have resources in place on time.
- Working capital: We will help you identify opportunities to improve your working capital which in turn can help improve your resilience and provide capital for future development and growth.
- Credit Control: We will help ensure your invoices are raised promptly and that late payments are followed up.
- Decision making: We will help you improve decision making by enhancing your short and long-term cash forecasting;
- Cash management procedures: We will provide advice for your team on how to improve your internal cash management procedures.
- Risk Analysis
- Sales Pipeline / income monitoring
- Expenditure Monitoring
- Projections
- Business Planning
- Working Capital Management
08
Assistance for Obtaining Financing/Refinancing
We provide assistance to our clients in order to choose the best option for financing/refinancing the business, either by accessing bank loans or by attracting capital investors.
Our financing assistance services include:
- Financial due diligence;
- Capital structure management and risk management;
- Solvency analysis
- Integrated financial modeling and sensitivity analysis;
- Preparing the business plan;
- Cost-benefit analysis;
- Business/ company, real estate, fixed assets valuation (ANEVAR);
- Assistance in the negotiation with financing institutions;
- Consulting in cash flow management.
Assistance to finance the current activity
Our consultants offer you professional assistance in identifying the best financing option:
- Determining the financing need of the company;
- Establishing the best financing option;
- Elaboration of the business plan and cash flow;
- Assistance for the preparation of the set of documents requested by the bank;
- Negotiation of terms and conditions of credit contracts and guarantees;
- Monitoring the credit and making the reports required by the bank, until full repayment.
Assistance for obtaining investment financing
Any investment project requires a detailed analysis of costs, expected benefits, but also associated risks. Also, securing an optimal funding source, which ensures the financial support of the project, is a challenge for any investor. Securing the right source of funding is essential to the success of the investment.
Our services include:
- Evaluation of the investment opportunity and related risks;
- Elaboration of the case study (quick financial analysis) related to the investment opportunity;
- Preparation of the business plan and cash flow, including sensitivity analysis to risk factors;
- Determining the ability of the company to repay current and long-term debts;
- Negotiation of terms and conditions of credit contracts and guarantees;
- Credit monitoring and making the reports required by the bank, until the full repayment.
- Financial assistance during the implementation of the investment project (costs, revenues, financial expenses, cash flow, etc.)
- Assistance for accessing Bank Financing
- Assistance for attracting Capital Investors (investment funds, strategic partners)
- Valuation of Companies, Real Estate, fixed assets (ANEVAR)
- Preparing the Business Plan
- Assistance in Due Diligence procedures
- Integrated Financial Modeling
- Capital Structure and Risk Management
09
Management Consulting
Our professionals include experienced industry executives, senior analysts from different industries like energy, utilities, oil & gas and technology. This experience, combined with seamless access to the company’s professional engineering, procurement, construction and operations capabilities, experienced senior executives and economists, makes our services qualified to assist clients with their most complex challenges.
Our solutions span financial, process, and technology solutions, and many of our experienced professionals possess cross-functional skills including asset management, cost of service/rate design, business process, analysis and implementation services.
Our management consulting services include:
- Assistance in developing business strategy and strategic objectives;
- Assistance regarding the organization and management of the company (organizational charts, structures, job definitions);
- Operational analysis – analysis of functions and functions within the company;
- Analysis and redesign of business processes;
- Cost optimization;
- Determining the necessary human resources;
- Analysis and organization of information flow (communication between departments);
- Elaboration of internal procedures and working norms regarding the development of the company’s activities.
- Business Strategy
- Operational Analysis
- Organisational Planning
- Business Processes Analysis & Redesign
- Cost Optimisation
- Human Resources Capacity Planning
10
Merger and Acquisition Assistance
Mergers and acquisitions (M&A) are complex and require a significant amount of a company’s time and resources to execute successfully. The corporate teams charged with strategic M&A are often managing multiple work streams in the execution stage and, in some cases, investigating several potential deals at any given time. Our team can help you to identify, address, and provide options relating to risk and insurance issues that can affect negotiations and the success of the transaction.
Our Services:
An important part of any due diligence investigation is to examine the strategic fit. What’s the target company’s market like? Competitive position? Potential to affect the value of your overall enterprise? The answers to these and other questions demand primary qualitative and quantitative research into the business under consideration.
We can help you with any part of your due diligence strategy. For example, we can:
- Evaluate the attractiveness of the target market, including in these areas:
◌ Market development;
◌ Product mix, pricing and distribution channels;
◌ The regulatory environment;
◌ Customer perceptions and demand.
- Analyze the target company’s competitive position in areas such as these:
◌ Entry and exit barriers;
◌ Competitive dynamics;
◌ Product innovation and performance;
◌ Marketing and sales performance;
◌ Identify key opportunities for revenue enhancement and cost reduction;
◌ Validate the target company’s business plan, including top-line revenue and operational margin.
- Forecast opportunities using a series of market scenarios to quantify how market changes could impact a deal’s value
- Assess risks and rewards to deepen the understanding of market variables
- Provide relevant research before completing any transaction
- Insight into the perspectives of key customers, suppliers and competitors;
- Advance knowledge of key issues with the target company;
- Assumptions and variables that have been tested and quantified.
Exit Support
Divestiture, separation, carve-out, spinoff, liquidation. Whatever form it takes, selling a business asset has its pros and cons. On the one hand, it can help your business refocus on what it does best. It can also be a source of much-needed cash. And it might simply be time. Plenty of firms make acquisitions with an eye toward an exit when profitable. On the other hand, selling can remove the chance to participate in future gains. (Even a faltering business might have some ways to turn around.) It can also disrupt overall cash flow. What’s more, the transactions themselves tend to be complicated — involving decisions about deal structure, costs, ongoing operations and more. We help clients lay the groundwork for separating a business. As part of this, we work with you to:
- Assess the sales value you can expect to achieve;
- Anticipate the operational challenges of closing the deal
- Look ahead at market changes that might drive the need to divest;
- Set up a purposeful framework for future divestitures — including regular evaluations of potential candidates and organized responses to unsolicited offers;
- Conduct due diligence on potential buyers.
- Manage the risk of a sales transaction;
- Position the business to flourish after a sale;
- Realize the highest possible value from divestiture.
A methodical approach to target identification, based on the principles of corporate strategy, can put you on the path to a successful expansion of your business portfolio. Among other things or team can help you with:
- Evaluate market and geographic segments for untapped business opportunities;
- Review and screen relevant markets in detail;
- Identify potential targets for acquisition based on existing strategic objectives;
- Make initial deal introductions and support early-phase activities.
Your benefits
- A larger spectre of potential M&A candidates;
- Target companies that may not be on the radar of any other acquirer;
- Impartial guidance on the profile of an optimal target for your business.
- Financial Due Diligence
- EBITDA Calculation
- Financial Modeling
- Business Valuation
- Deal Structuring
- Negotiation Assistance
11
Transfer Pricing
The transfer pricing (“TP”) environment has become more challenging, especially when regulations are changing to enhance transparency. Growing businesses are not only required to develop a tax efficient and viable transfer pricing policy to enhance competitiveness, but also need to manage potential TP risk in a cost-effective manner.
Transfer pricing documentation is, therefore, not only a compliance requirement, but also represents the first line for audit defense.
Our specialists can assist to assess your compliance and strategic needs holistically, and re-imagine the future businesses operational model.
Our transfer pricing services include:
- Transfer pricing planning: design practical and efficient transfer pricing policies and procedures;
- Transfer pricing compliance: Prepare transfer pricing documentation;
- Operational transfer pricing: implement and review transfer pricing processes and controls;
- Supply chain planning: consider strategic policy design and tax planning;
- Transfer pricing benchmarking: benchmark royalty rates, interest rates, and entity profitability;
- Advance pricing agreements: unilateral and multilateral transfer pricing agreements with tax authorities.
Appropriate attention to transfer pricing helps your business:
- Identify possible opportunities and implement transfer pricing policies for improved tax efficiencies;
- Be compliant with national and global transfer pricing regulations reducing the chance of transfer pricing adjustments by tax authorities;
- Be protected against transfer pricing penalties;
- Reduce long-run tax compliance costs by establishing efficient policies, procedures, and documentation;
- Reduce risks associated with uncertain tax positions.
What is Transfer Pricing?
The term Transfer Pricing (usually referred to as TP) refers to how related parties price goods, services, intangible assets, loans and other transactions between them. TP Rules/ Regulations are established in various countries to ensure that related party prices are reasonable and fair. Romanian tax authority expects related party transactions to be carried out at arm’s length.
What is Transfer Pricing Documentation?
Many countries around the world have transfer pricing documentation requirements. Transfer Pricing documentation refer to the records prepared as evidence that the pricing is at arm’s length.
Transfer Pricing Documentation requires the analysis of the company, industry and functions (including assets and risks) to be able to “characterise” the entity and transactions. Once “characterised” for transfer pricing purposes a transfer pricing method is selected and applied using an economic analysis (often called a comparable search). This comparable search is compared to the financial information of the entity being reviewed to evaluate whether the international related party transactions have been conducted at arms-length.
When is Transfer Pricing Documentation required to be prepared?
In accordance with Art. 108 para. (2) of the Fiscal Procedure Code, to document the observance of the market value principle, the taxpayer/ payer who carries out transactions with affiliated parties has the obligation to prepare the transfer pricing file.
At the request of the fiscal body, the taxpayer has the obligation to present the transfer pricing file. The amount of transactions for which the taxpayer/ payer has the obligation to prepare the transfer pricing file, the deadlines for its preparation, the content of the transfer pricing file, as well as the conditions under which it is requested are approved by order of the ANAF president.
Thus, OPANAF no. 442/2016 issued based on the provisions mentioned above establishes that in the case of companies that are not large taxpayers or have this quality but do not reach any of the thresholds of significance provided in par. (2) in art. 2 of the order, the fulfillment of one of the significance thresholds established at par. (4) calculated annually for all operations with affiliates, namely:
- 50.000 euro in case of interest received / paid for financial services;
- 50.000 euro, in case of transactions regarding the provision of services received/ provided;
- 100.000 euro, in the case of transactions regarding the acquisition/ sale of tangible or intangible assets.
If one of the thresholds is met, the preparation of the transfer pricing file is mandatory for any of the affiliates involved in the transaction, but only in the case of the fiscal inspection and only at the request of the control body.
If none of the thresholds is met, the company will not be obliged to prepare the transfer pricing file, justifying the observance of the market value principle in case of operations between affiliates to be performed by other means based on the general rules of financial legislation. accounting is the case, for example, of an evaluation report prepared by an authorized evaluator.
Thus, art. 4 para. (4) of OPANAF no. 442/2016 expressly states that for taxpayers in the category of large taxpayers, who do not fall within the criteria established according to the provisions of par. (1), as well as taxpayers from the categories of small and medium taxpayers, who carry out transactions with affiliates with a total annual value, calculated by summing the value of transactions with all affiliates, excluding VAT, greater than or equal to any of the significance thresholds , provided in this paragraph, there is the obligation to prepare and present the transfer pricing file only at the request of the fiscal body, within a fiscal inspection action.
The obligation to prepare an annual report falls only on large taxpayers who meet any of the following significant requirements:
- 200.000 euro, in case of interest collected / paid for financial services, calculated at the exchange rate communicated by the National Bank of Romania valid for the last day of the fiscal year;
- 250.000 euro, in the case of transactions regarding the provision of services received / provided, calculated at the exchange rate communicated by the National Bank of Romania valid for the last day of the fiscal year;
- 350.000 euro, in the case of transactions regarding the acquisition / sale of tangible or intangible assets, calculated at the exchange rate communicated by the National Bank of Romania valid for the last day of the fiscal year.
Are there fines for not complying with Transfer Pricing Documentation requirements?
Failure to present the transfer pricing file at the first request made by the competent tax authority is sanctioned by a fine of up to 27,000 (legal entities – large taxpayers), between 12,000 and 14,000 lei (legal entities – medium and large taxpayers), respectively 2,000 – 3,500 lei (legal entities – small taxpayers and individuals physical).
1. Administrative penalties/ fines
- up to RON 27,000 (approximately EUR 5,600) for large taxpayers who carry out intra-group material transactions and who are required to transfer transfer pricing in addition to a substantive tax inspection;
- up to RON 14,000 (approximately EUR 2,900) for medium and large taxpayers who are required to transfer the transfer pricing file during a substantive tax inspection;
- up to RON 3,500 (approximately EUR 700) for small taxpayers who are required to transfer the transfer pricing file during a substantive tax inspection.
2. Penalties derived directly from transfer pricing adjustments
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additional revenues/ additional income tax (i.e. 16% of the additional profits / income established by the tax inspection team);
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calculable penalties on income tax / additional income (calculated for the period from the time when they should have been paid until the time when the tax decision is issued by the tax authorities and the principal is paid):
◌ late payment interest (0.02%/ due day); and
◌ delay penalties (0.01%/ due day); or
◌ non-declaration penalties (0.08%/ due day).
Most important, however, is that the non-presentation/ incomplete presentation of the file entitles the tax authorities to estimate the market value of the transfer prices used by the taxpayer in intra-group transactions: the inspector will choose three similar transactions and make the arithmetic mean, without considering the particularities of the analyzed transaction or the functional and risk profile of the company.
This “forced” estimate may lead to a sharp adjustment of the transfer prices charged by the affiliates and, consequently, to the payment of significant additional taxes. Moreover, it will be an adjustment that the taxpayer can no longer dispute, no longer having the opportunity to exercise this right.
- Transfer Pricing Policies
- Transfer Pricing Documentation
- Review Transfer Pricing Processes & Controls
- Tax Planning
- Transfer Pricing Benchmarking
- Transfer Pricing Arrangements
- Assistance in the relationship with the authorities
12
Portfolio Analysis Services
Customer Portfolio Analysis
Customer relationship management is increasingly important in current marketing research and practice. The customer portfolio models represent one of the few concrete tools proposed for relationship management in business-to-business markets.
Customer portfolio is a tool used mainly by B2B companies to help organize and develop a valuable communication/relationship with customers. It’s usually associated with some kind of technology, such as an ERP, CRM or a database that stores all of the information below:
- Name of the company;
- Contacts and associates;
- Business and segment;
- Products or services acquired;
- Billing information, as well as average ticket and total revenue.
You can also have other information on their profile, such as Customer Service Needs, Profitability, type of relationship, and potential additional sales. These information will be, during the customer portfolio management, your criteria for evaluating the relationship and prioritize certain accounts over others.
Why it is important to do customer portfolio management? Dormant databases (meaning they are not properly managed) have an average 50% of inactive customers. That’s because companies, especially big ones or with more than 5 years on the market, have not changed how they do things. This means that millions of potential revenue are just sitting there, waiting to go to other companies.
Customer portfolio management prevents that. By knowing the companies that you have or had a relationship with, you can prioritize contact and customize service in order to keep everyone happy while extracting the most revenue out of these business opportunities. You can also discard companies that don’t have the right fit or that are not bringing the expected return, giving the space to new ones.
Customer portfolio management is not only a tool for organization, but is strategic in knowing your customers and what type of account you should be targeting. It might also help you think of new sales strategies, such as upselling, in order to increase revenue per client. All of these benefits will allow your business to grow even more, and actually be able to profit from your entire customer portfolio.
And by paying attention to your customers’ behavior, it’s easier to detect pre-churn.
Once you know which clients are in danger and which present an opportunity for a bigger ticket, it’s time to build a retention flow and choose the perfect automation platform.
Supplier Portfolio Analysis
Businesses are constantly seeking new insights, thought leadership and resources from the supplier community to help them win in today’s competitive market. Nowadays, suppliers have several distribution options including their own direct-to-consumer channel. As such, leading businesses recognize the need to form strategic relationships with the appropriate suppliers. The challenge often lies in the criteria related to selecting the right supplier partners:
- How do I determine the value of suppliers today and in the future?
- How should I measure their contribution to my business considering their loyalty, objectivity, exclusive offers, discretionary funding, talent, insights, tools, ideas, brands, values, etc.?
- How do I measure their alignment with my strategy?
Our supplier segmentation model insures that our clients are properly assessing and selecting the optimal partners to support their strategy and success.
A partial list of our consulting services includes:
- Supplier Segmentation Criteria – Identification and definition of the critical comparative components to fuel the supplier segmentation.
- Segmentation Model & Analytics – Development and execution of the underlying quantitative and qualitative analysis that will create the foundation of comparison among the array of suppliers. Identification of segmenting factors.
- Segmentation Objectives & Expectations – The objectives and expectations of the retailer-supplier relationship, roles and responsibilities for both parties by supplier segment.
- Segmentation Communication – The development of an internal and external communication plan to initiate and solidify the newly desired retailer-supplier relationships.
Products/ Services Portfolio Analysis
To be successful, a company should have a portfolio of products with different growth rates and different market shares. The portfolio composition is a function of the balance between cash flows. High growth products require cash inputs to grow. Low growth products should generate excess cash. Both kinds are needed simultaneously.
The business portfolio is one of the most crucial factors for any organization. Why? Because it is about what the organization plans, sells, and stops to sell.
The business portfolio must be based on the company’s mission, objectives and strategy, in order to fit the company’s strengths and weaknesses, philosophy and competencies to opportunities in the market environment.
To stay in business, a healthy and balanced, innovation-driven portfolio is absolutely crucial! Designing the business portfolio involves analysing the company’s current portfolio by a portfolio analysis, before strategies for growth and downsizing can be developed.
The business portfolio is the complete collection of products and businesses that make up a company. Designing and maintaining a healthy portfolio involves thorough understanding of the firm’s objectives and the markets it wants to serve.
- Products/ Services Portfolio Analysis And Segmentation
- Customers Portfolio Analysis And Segmentation
- Suppliers Portfolio Analysis And Segmentation
