M&A

Vendor Financial Model

During the M&A process in mining, the Vendor will typically release a “Vendor Financial Model”. This provides the Vendor’s view on future costs and revenue.  It is up to the Buyer to review and confirm these assumptions, setting the stage for an agreement on the transaction value. 

In our experience, the Vendor’s future cost assumptions will typically have an element of “blue sky” opportunity built into their view on costs – the outcome of business improvement initiatives, improved planning, etc.   These built-in opportunities can provide for an inflated view as to the value of the asset.

Part of the role of Due Diligence process is to identify and separate out these built-in opportunities from actual performance, to enable the Buyer to achieve better value from the transaction. 

With our deep experience in understanding of value in mining, including as mining cost estimators, MEC Advisory provides real-world expertise to help our clients achieve the greatest value from the Due Diligence process.