Pro formas and financial narrative
A model is an argument. We build the argument first, then make the spreadsheet prove it.
Investors do not read a model to learn your numbers. They read it to find out whether you understand your own business. A model that cannot explain why revenue moves the way it does is worse than no model, because it invites exactly the question you cannot answer.
Mr. Sheehan finished top of his class in finance at East Carolina University and worked at Merrill Lynch and a private capital group before law school. This is the part of the practice where that background does the work.
What the engagement covers
Three-statement operating model
Income statement, balance sheet and cash flow built as one linked model, so net income lands in retained earnings and the cash flow reconciles to closing cash without a plug. Revenue is driven by volume and price rather than a growth rate typed into a cell. Circularity in the debt schedule and hard-coded figures in working capital are where errors usually sit.
Scenario sets
Base, upside and downside cases are separated by named assumptions held in one input block, never by rewriting formulas. Each answers a different question: what the plan assumes, what happens if conversion improves, and what breaks first if it does not. Downside work is the part usually skipped — cash runway, covenant headroom, and the point at which the business would have to act.
Unit economics and cohort analysis
Contribution margin is calculated for the actual unit — one customer, one location, one clinician — after fully loaded cost rather than after cost of goods alone. Cohorts are then tracked by start month, because a blended average conceals a recent cohort retaining worse than the older ones. Scale usually changes the answer, and the model has to show in which direction.
Debt versus dilution analysis
Two structures are priced against the same forecast: what debt costs in interest, covenants and personal guarantees, against what equity costs in ownership given up permanently. A lender perfects most business collateral by filing a financing statement; under G.S. 25-9-501 that filing goes to the Secretary of State, while fixture filings and timber go to the register of deeds. Priority runs to the first to file or perfect.
Use of proceeds
The amount is assembled from what the money buys, each element tied to a milestone, not set as a round number. Once a use-of-proceeds statement enters offering materials it becomes a representation, and G.S. 78A-8 makes it unlawful, in connection with the offer, sale or purchase of a security, to state an untrue material fact or to omit one necessary to make the statements made, in the circumstances, not misleading.
Exit and returns analysis
The realistic buyer list comes first — strategic acquirers, private equity platforms, sponsor-backed groups already consolidating the sector — because who buys determines the basis on which a multiple is set. Comparable transactions are then tested against the company's own adjusted earnings, with attention to which add-backs survive diligence. Net proceeds are the number that matters: debt repaid, escrow held back, working capital peg settled.
Written narrative
A memorandum in prose, written for the reader who forms a view before opening the spreadsheet. It sets out what the business does, why the drivers behave as they do, and which assumptions carry the case. The memorandum, the deck and the model are then reconciled line by line, because a discrepancy between the three is the sort of thing diligence asks about.
How the engagement runs
- 01
Historicals normalizedClean up what happened before forecasting what will.
- 02
Driver interviewsSitting with the people who actually move the numbers.
- 03
Model and scenariosBuilt, stress-tested, and made legible.
- 04
Narrative and reviewWritten up, then walked through with you until you can run it yourself.
Common questions
Is this legal work?
No. Financial modeling is consulting, engaged and documented separately from legal representation. It sits in the same firm because the two questions are usually the same question, but they are not the same engagement.
We have a bookkeeper and an accountant already. Why this?
They tell you what happened. This is about what happens next, and about whether the forward case survives contact with someone whose job is to find the hole in it. Where tax or audit work is needed, the firm brings in a CPA and coordinates.
How detailed does the model need to be?
Detailed enough to defend, simple enough to explain. Over-built models are a common tell — they usually signal that nobody has decided what actually drives the business.
Can you help if the historicals are a mess?
Yes, and that is often where it starts. Normalizing the history is the first step and sometimes the most valuable one.
Companies whose historical numbers are sound but whose forward case has never been written down, and owners weighing debt against dilution.
Consulting engagement, scoped and fixed. Documented separately from any legal representation.
A scoped call on what this actually needs, before anything is drafted.
Book a consultation or call (704) 222-4752