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Ludhiana, Punjab, India Strategy
5 years experience
  • Capital Budgeting
  • Financial Modeling
  • Business Strategy
  • Corporate Finance
  • +21
Strategy, Private Equity
18 years experience
  • Capital Budgeting
  • Business Strategy
  • Competitive Analaysis
Hire Giovanni
20 years experience
  • Capital Budgeting
  • Sustainability
  • ESG
  • Sustainability Strategy
  • +2
Hire Paula
Florence, Metropolitan City of Florence, Italy Strategy, M&A
20 years experience
  • Capital Budgeting
  • Financial Modeling
  • Business Strategy
  • M&A
  • +8
Hire Francisco
Tel Aviv, Israel Strategy, Venture Capital
5 years experience
  • Capital Budgeting
  • Business Strategy
  • Due Diligence
  • Project Management
  • +8
Hire Tal
Gurgaon, Haryana, India Strategy
5 years experience
  • Capital Budgeting
  • Business Strategy
  • Business Development
  • Competitive Analaysis
  • +1
Hire Anurup
United States of America Strategy, M&A
4 years experience
  • Capital Budgeting
  • Financial Modeling
  • Business Strategy
  • M&A
  • +8
Hire Nikhil
London, UK M&A, Private Equity
4 years experience
  • Capital Budgeting
  • Financial Modeling
  • M&A
  • Corporate Finance
  • +4
Hire Derya
Capital budgeting is one of the most important challenges faced by businesses. It is also a key factor in determining the success or failure of a business especially in the aftermath of a merger or acquisition. It is therefore paramount that firms engage a professional that is knowledgeable enough to handle this delicate aspect of business management. Fintalent offers hiring managers a vast pool of expert Capital Budgeting consultants that are readily available to offer professional and expert capital budgeting services to hiring firms.

Fintalent is the fastest way to get hyper-specialized M&A talent

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Frequently asked questions

What clients usually engage your Capital Budgeting Consultants?

We work with clients from all over the world. Our clients range from enterprise and corporate clients to companies that are backed by Private Equity or Venture Capital funds. Furthermore, we work directly with Family Offices, Private Equity firms, and Asset Managers. Most of our enterprise clients have dedicated Corporate Development, M&A, and Strategy divisions which are utilizing our pool of Capital Budgeting talent to add on-demand and flexible resources, expertise, or staff to their in-house team.

How is Fintalent different?

Fintalent is not a staffing agency. We are a community of best-in-class Capital Budgeting professionals, highly specialized within their domains. We have streamlined the process of engaging the best Capital Budgeting talent and are able to provide clients with Capital Budgeting professionals within 48 hours of first engaging them. We believe that our platform provides more value for Corporates, Ventures, Private Equity and Venture Capital firms, and Family Offices.

Our Hiring Process – What do ‘Community-Approach’ and ‘Invite-to-Apply’ mean?

‘Invite-to-Apply’ is the process by which we shortlist candidates for the majority of projects on our platform. Often, due to the confidential nature of our clients’ projects, we do not release projects to our whole platform but using the matching technology and expertise of our internal team we select candidates who are the best fit for our clients’ needs. This approach also ensures engagement with our community of professionals on the Fintalent platform, and is a benefit both to our clients and independent professionals, as our freelancers have direct access to the roles best suited to their skills and are more likely to take an interest in a project if they have been sought out directly. In addition, if a member of our community is unavailable for a project but knows someone whose skill set perfectly fits the brief, they are able to invite them to apply for the role, utilizing the personal networks of each talent on our platform.

Which skills and expertise do your Fintalents have?

The Fintalents are hand-picked and vetted Capital Budgeting professionals, speak over 55 languages, and have professional experience in all geographical markets. Our Capital Budgeting consultants’ experience ranges from 3+ years as analysts at top investment banks and Strategy consultancies, to later career C-level executives. The average working experience is 6.9 years and 80% of all Fintalents range from 3-12 years into their careers.

Our Capital Budgeting consultants have experience in leading firms as well as interfacing with clients and wider corporate structures and management. What makes our Capital Budgeting talent pool stand out is the fact that they have technical backgrounds in over 2,900 industries.

How does the screening and onboarding of your Capital Budgeting talent work?

Fintalent.io is an invite-only platform and we believe in the power of referrals and a closed-loop community. Members of our community are able to invite a small number of professionals onto the platform. In addition, our team actively scouts for the best talent who have experience in investment banking or have worked at a global top management consultancy. All of our community-referred talent and scouted talent are subject to a rigorous screening process. As such, over the last 18 months totaling more than 750 hours of onboarding calls, of which only 40% have received an invite-link after the call.

What happens if I am not satisfied with my Capital Budgeting consultant’s work?

During your initial engagement with a member of our Fintalent talent pool with no risk. If you are not satisfied with the quality of your hire for any reason then we are able to find a replacement at short notice. There is no minimum commitment per project, but generally projects last at least 5 days and can last 12+ months.

We are a community-based M&A staffing platform.

With our platform, you can fill full-time M&A roles, or staff your team with a Capital Budgeting expert when you need an extra hand.

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Everything you need to know about Capital Budgeting

What is capital budgeting?

Capital budgeting is, “the process of establishing the amounts necessary to finance the activities of a business over a period of time, based on the expected return on investments in an economic cycle.” The theoretical basis for capital budgeting is provided by the neoclassical economic theory. It states that “there exists an optimal rate of investment and then that investment, net of taxes and depreciation, is equal to a level equal to total savings in the economy (this is equivalent to net investment).”

Fintalent’s Capital Budgeting Consultants define it as the process of projecting a company’s expected financial future and then deciding how much capital the company should maintain in order to maximize its value. The figure estimated by management which indicates how much capital the company needs to maintain is called the target capital structure.

Capital budgeting in M&A

In merger and acquisition (M&A), it serves as a basis for negotiations because different types of businesses use differing levels of debt. This can be due to differences in circumstances, such as one being more leveraged than another, or just personal tastes that are different from firm to firm. This can be a problem because it may cause a discrepancy between the expected future cash flows and the financing needed to obtain that cash.

When considering capital budgeting, there are two major elements: where to hold the company’s capital and what return on investment (ROI) will be needed. The process is also closely related to internal rate-of-return calculations for projects.

Capital is held in different financial instruments such as bonds, stocks and preferred stock. Managers must decide which ones are appropriate at any point in time, based on factors such as interest rates and expected capital payouts. The bonuses paid out over time to the executives of firms is another element of capital budgeting which influences how much equity they need to hold.

Capital budgeting for strategic decisions

Capital budgeting is also used by firms to make strategic decisions, such as whether to expand or buy other firms. The process can be used in mergers and acquisitions (M&A) for companies that both want to grow, but have different capital needs. It can also be used when a company wants to buy an already-existing company, otherwise known as a leveraged buyout (LBO).

In the simplest case in which each firm uses the same level of equity capital and debt, management can use their estimates of future revenue (or cash flows) relative to net fixed expenses (that is costs that do not vary with sales revenues) as a proxy for ROI. For example, if a firm has $50 million of net fixed expenses, revenues of $500 million and net profit of $200 million, then the ROI is 20% ($200/$50).

If the expected ROI for each firm is less than the target capital structure (TCS) for its industry, then it means that each company should adjust its capital structure by lowering debt or increasing equity capital. If management does this, it will increase the value of the firm because better-than-expected sales and profits will cause changes in asset prices which increase book value.

In this case, management must consider whether to issue stock or bonds to finance any additional capital expenditures. The amount of money that the company needs to raise is called the gross cash outflow. The expected ROI must be adjusted for the costs of financing. If the companies are merging, this adjustment can be based on their existing capital structures and interest rates.

The gross cash outflow is then compared with the gross cash inflow over time. This should be equal to the new firm’s excess cash flow after investment in order to have no change in value. However, management might have made mistakes in its estimations of future values or some other unexpected event may have occurred. This sets a range for how much return on investment (ROI) is acceptable for investors in each period (but future periods are generally more important than current ones). The bank will then lend the sum of cash inflow less cash outflow over time.

The entire process is calculated at the beginning of the period or before each period. The capital structure has to be adjusted if any assumptions change, such as changes in interest rates or projections for future sales. This is also true for earnings and cash flows for any new operations.

A capital budget should be created for long-term investment and should be based on the expected return on investment for that particular type of investment. Although capital budgeting can be performed for every type of investment, it does not apply to sales, purchasing, or financial expenditures. For example, a company would not budget for future sales in the year at hand but would make investments based on projected future sales. The difference between capital budgeting and cash flow is that the latter is more pertinent to short-term activities while the former is more relevant to long-term items such as purchases, investments, and depreciation. “The Capital Budgeting process is essentially two parts:

1) determining the amount of funds to be invested in each quarter over a period of time; and

2) deciding how to invest these funds.”

There are three basic decision points to be addressed by Capital Budgeting. They are

1) determining amounts to be invested in business activities;

2) Establishing investment policies with respect to different risk categories; and

3) Making decisions about borrowing.

Types of Capital Budgeting

a) Constant investment,

b) Periodic investment (seasonal),

c) Fixed (gearing),

d) Variable investment,

e) High-risk fixed,

f) High-risk variable,

g) Low-risk (hit and run),

h) Mixed asset and liability vehicles,

i) Mixed income and expense vehicles.

The most important element of capital budgeting is the calculation of the discount rate. The discount rate is used to determine the value of an investment based on the period in which it will be made. There are many ways to calculate the discount rate, but they all depend on three factors:

1) risk

2) opportunity cost; and

3) liquidity.

Each method of calculating a discount rate has its own benefits and disadvantages. Different companies will use different methods to calculate the discount rate. It is always recommended that companies consider a variety of discount rate calculation methods before settling on just one for their budgeting purposes.

“Most capital budgets include a riskier element called “gearing” (or leverage) and are referred to as variable-rate budgets. The use of gearing involves borrowing money at a lower interest rate (say prime lending rates) with higher debt or equity ratios. A company may determine that it would be cheaper to make purchases with borrowed money than by going into debt.”

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»I have worked with Fintalent.io both as a talent and as a recruiter. It helped me find a full-time position and supported the recruitment process to expand my new team. The experience and engagement of Fintalent.io and their team have always been incredible.«

Piotr Sliwa, EPAM Systems
Piotr Sliwa
Head of M&A | Europe, EPAM Systems

As a founder CEO, I’ve been evaluating our exit readiness and other options. Fintalent.io provided me with an expert who helped me to understand the value of our business. He took a closer look at our internal KPI and structures, to make sure we’re set up in the most professional way possible.

Bernd Bube
Bernd Bube
Founder & CEO, Advendio

»Fintalent was able to provide consulting advice in very little time for one of our latest M&A projects. The support was hands-on, pragmatic and of high quality and was as a result critical to advance the project we were not able to properly address in the classical way.«

Dr. Fabian Kley
Dr. Fabian Kley
Head of Group Strategy and M&A at MAN Energy Solutions SE