> For the complete documentation index, see [llms.txt](https://help.modelreef.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.modelreef.io/how-tos/core-modelling/build-a-multi-entity-group-model.md).

# Build a Multi Entity Group Model

This guide explains how to model a corporate group consisting of multiple legal entities, each with its own financials, but with consolidated group reporting.

## Before you start

You should know:

* Which legal entities exist in the group.
* Whether they are in the same tax group or separate tax groups.
* Which entities own assets, take on debt and employ staff.

If you have historical data per entity (from PDFs, Excel or accounting systems), have those ready.

## What you will build

* One branch per legal entity.
* Optional sub branches for divisions within each entity.
* Entity specific variables and drivers.
* Group level tax and financing, if required.
* Group level consolidated statements and valuation.

## Steps

{% stepper %}
{% step %}

### Create the group and entity branches

* Create a **Group** branch as the root.
* Under Group, add one branch for each entity, for example:
  * `Entity A`
  * `Entity B`
  * `Entity C`
* If entities are complex, create child branches inside each entity for divisions or projects.
  {% endstep %}

{% step %}

### Populate each entity with variables

Within each entity branch:

* Add **Revenue variables** for that entity’s activities.
* Add **COGS, Opex and Staff variables** for entity specific costs.
* Add **Assets and Liabilities**:
  * Capex and asset balances.
  * Loans and other borrowings.
* Enter **Opening balances** for assets, liabilities and equity where required.

Keep entity names in variable labels to avoid confusion, for example:

* `Revenue - Entity A - Subscriptions`
* `Opex - Entity B - Marketing`
  {% endstep %}

{% step %}

### Configure entity level tax and working capital

For each entity:

* Set its **effective tax rate** if tax is calculated per entity.
* Set tax payment frequency where relevant.
* For working capital:
  * Ensure delays for revenue and expenses reflect entity specific customer and supplier terms.
  * This will create AR and AP per entity.

If the group uses consolidated tax:

* You can model entity tax at group level using variables that aggregate EBT across entities.
  {% endstep %}

{% step %}

### Add group level financing and adjustments

At the **Group** branch:

* Add **Debt variables** that represent group level borrowings.
* Add **Equity variables** for group capital injections.
* Add any group level adjustments:
  * Management fees.
  * Group service charges.
  * Intercompany eliminations (if modelled explicitly).

Document the logic for any group level adjustments in variable notes.
{% endstep %}

{% step %}

### Review entity level statements

For each entity:

* Filter reports to that entity branch.
* Confirm:
  * P\&L matches expectations for that legal entity.
  * Balance Sheet balances and reflects entity specific assets, liabilities and equity.
  * Cashflow and Cash Waterfall show an intuitive cash pattern.

Fix all entity level issues before worrying about the group.
{% endstep %}

{% step %}

### Validate group consolidation

At the Group branch:

* Open **P\&L**:
  * Check that group Revenue equals total of all entities plus any group specific items.
  * Check that group EBITDA, EBIT and NPAT behave logically.
* Open **Balance Sheet**:
  * Confirm that Assets = Liabilities + Equity.
  * Check that loans, AR, AP and other balances roll up correctly.
* Open **Cashflow Statement** and **Cash Waterfall**:
  * Review group level operating, investing and financing cashflows.
  * Confirm that cash reconciles with Balance Sheet cash.
    {% endstep %}

{% step %}

### Model group level valuation

* Open valuation settings at group level.
* Set:
  * Group WACC and equity discount rates.
  * Terminal value assumptions.
* Review:
  * FCFF and FCFE series.
  * Group NPV, IRR, Money Multiple and Payback.
* Optionally compare valuations for:
  * Different group structures.
  * Different entity level scenarios.
    {% endstep %}
    {% endstepper %}

## Check your work

* Entity branches correctly reflect legal entities.
* Entities with their own tax treatment behave correctly at P\&L and cash level.
* Group level financing and adjustments are not double counted.
* Group Balance Sheet balances in all periods.
* Cash Waterfall reconciles with the Cashflow Statement.

## Troubleshooting

<details>

<summary>Entities look right but group is wrong</summary>

Confirm that all relevant entity branches are enabled when looking at group results.

</details>

<details>

<summary>Tax seems too high or low at group level</summary>

Check whether you are modelling tax per entity or per group, and avoid double counting.

</details>

<details>

<summary>Intercompany flows distort results</summary>

Consider explicit elimination variables in the group branch to cancel intercompany transactions.

</details>

## Related guides

* [Multi-Entity Consolidation (QBO/Xero)](/use-cases/accounting-firms-and-advisors/multi-entity-consolidation-qbo-xero.md)
* [Excel Import](/help/importing-and-data-inputs/excel-import.md)
* [FCFE Calculation](/help/financial-outputs-and-valuation/fcfe-calculation.md)
* [How Input Fields Work](/syntax/how-input-fields-work.md)