Feasibility studies by OBERAUER

You have a positive market study on the table and want to know whether you can actually leverage the potential it shows within the framework of your corporate strategy and with the resources available? Then a feasibility study is the instrument of choice.

With a feasibility study, we at Oberauer provide you with a decision-making aid that allows you to say yes or no to the project under consideration on the basis of figures, data and facts. If you decide in favour, you will also have a plan and can go straight into implementation.

In the course of the preparation, we define the exact objectives together with you. These are questions about the desired success of the project, such as:

• What market share should be achieved in what time?
• Are you aiming for the largest possible market share, or is profitability the priority?
• Which competitors do you need to keep an eye on and, if necessary, displace?
• Are you aiming for a certain minimum turnover, and when should this be achieved?
• Are you aiming for a certain minimum profit or margin and when should it be achieved?
• Is there a maximum period within which positive results should be generated (on an annual basis or overall)?

What a feasibility study covers can best be shown in an exemplary table of contents.

1. Executive Summary

This section summarises the result of the study on 1-4 pages and allows the reader a time-saving overview. All results are referenced to the corresponding pages in the study.

2. Disclaimer

Although a feasibility study already represents a comprehensive battle plan for your project, it is - like any forecast - fraught with uncertainty, as the underlying assumptions may not materialise or not to the full extent. It is therefore necessary to define the scope of liability we assume and to define disclaimers.

3. Business Plan

This section is the core of the feasibility study and is divided into several chapters.

3.1. Economy, legal/regulatory and fiscal environment

In this chapter, we look at macroeconomic forecasts of the overall economy and your industry, the legal requirements for your project (such as necessary licences or permits), and the tax structuring options.

3.2. Market analysis

If we have prepared a market study for you in advance, this chapter is largely identical to it or we refer to this study.

3.3. Product offering

This chapter defines which products or services you want to go to market with and which prices and production costs will be applied. If relevant, this part also includes a detailed comparison with the competitor's offer.

3.4. Critical success factors

In this part of the study you will get a deep insight into the factors that are crucial for the success of your project. The analysis of success factors is a particular strength of our approach, because practice regularly shows that identifying these factors allows for a particularly efficient allocation of resources and thus not only ensures higher profitability, but can also significantly accelerate your project.

What these factors are varies greatly from project to project. However, the following are regularly found:

• Evidence-based go-to-market strategy and sales organisation
• Cost- and deadline-congruent refinancing of operating resources and equipment
• Maximum digitalisation and automation of all resource-intensive processes
• Success-oriented controlling and corporate governance

3.5. Resources

The resource requirements of a new project are regularly underestimated. This is because a project not only requires new personnel, infrastructure and financial resources, but also demands the resources of the existing organisation, where costs arise in the form of working time of the responsible persons, consultancy costs, etc. These capacities and costs must be planned accordingly and also used for the assessment of feasibility. These capacities and costs must be planned accordingly and also taken into account when assessing feasibility.

3.6. Time Schedule

Each project can be divided into different phases and has certain milestones to be reached. The schedule visualises these phases and milestones and their interdependencies.

4. Financial plan

In this section, the financial impact of the business plan is determined in an integrated forecast calculation. Oberauer can draw on many years of international experience in corporate and project finance and has several integrated calculation models at its disposal. These are characterised by the fact that the change of individual assumptions or planning parameters leads to an automated recalculation of the results over the entire forecast period. This makes it very easy to calculate scenarios and test sensitivities. Typically, a financial plan is divided into the following chapters:

4.1. Assumptions and scenarios

In this chapter, quantitative assumptions are made, such as:

• Market size and annual growth or contraction rates.
• market shares
• Prices and volumes
• Raw material and manufacturing costs per unit of output
• inflation rates
• Personnel costs and expected wage settlements (by function group)
• Productivity advances
• Interest rate development

Where relevant, development scenarios are also defined here, such as:

• Regulatory change in year X
• Market entry of a global player in year Y
• Technological disruption in year Z

If scenarios are used, assumptions must be carefully made and justified for each one. This makes it possible to assess the success of the project for each scenario.

4.2. Business volumes per segment and product

Here, the sales per market segment and / or product are essentially planned over time using a price-quantity function. In particular, product life cycles and the expected behaviour of the competition must be taken into account.

4.3. Profit and loss statement

A feasibility study shows what a business report on your project might look like in a few years. Like a business report, the profit and loss statement over the forecast period is therefore the important evaluation of a financial plan. It shows how the project will develop financially, when the break-even point is expected to be reached and what profitability is expected.

4.4. Projected balance sheet and cash flow statement

Our integrated calculation models naturally also show how the fixed assets, the operating assets, the debts and ultimately the equity of your project will develop under the assumptions made. These variables are mapped in a budgeted balance sheet. The cash flow statement in turn shows how the project liquidity will develop. It is broken down per period whether liquidity is generated or consumed in the provision of services, whether investments have to be paid for or, on the contrary, income is expected from asset sales, and which financial resources are to be made available in the form of debt or equity.

4.5. Ratio analysis and summary

From the profit and loss account, the budgeted balance sheet and the cash flow statement, key figures are determined that allow you to measure the success of the project and compare it with other market participants. In addition to standard key figures such as the EBIT margin or the equity ratio, key figures are used that are important in your company or that result from the critical success factors.

This chapter summarises the financial plan and makes statements about the economic feasibility of your project. In most cases, the decision to implement is based on the findings of this chapter.

5. References

Similar to scientific papers, we disclose which sources we have used in the preparation of the study. These can be scientific literature, media reports or expert interviews. In any case, this gives you the opportunity to check the quality of our work against these sources if necessary.