Due Diligence: Cultivation facility financial model

We conducted comprehensive due diligence on behalf of a large group, evaluating their subsidiary's request for capital to invest in a significant hydroponic farm expansion project. Our role was to scrutinize the proposed financial model, suggest improvements, and provide informed adjustments to support the decision-making process.

Key Aspects of Our Due Diligence

1. **In-depth Model Analysis**: We thoroughly examined the subsidiary's financial model, assessing its assumptions, methodologies, and projections.
2. **Market Research Validation**: We verified the market trends and revenue projections against independent industry data and forecasts.
3. **Cost Structure Review**: We scrutinized the proposed expansion costs, including capital expenditures and projected operational expenses.
4. **Sensitivity Analysis**: We performed various sensitivity analyses to test the model's robustness under different scenarios.

Improvements and Adjustments

Based on our due diligence, we recommended several key improvements to the financial model:
- Adjustment of capital expenditure timelines to optimize cash flow
- Enhancement of the operational expense model to account for greater management requirements
- Optionality around certain input and consumable costs
- Inclusion of alternative scenarios and crops to provide a broader view of potential outcomes

Outcome

- Facilitation of informed decision-making, enabling the head group to make a well-grounded choice regarding the capital investment
- Strengthened investment proposal, incorporating our suggested improvements and adjustments
- Enhanced confidence in the subsidiary's expansion plans and their alignment with the group's overall strategic objectives