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
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 - SubscriptionsOpex - Entity B - Marketing
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.
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.
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.
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.
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
Entities look right but group is wrong
Confirm that all relevant entity branches are enabled when looking at group results.
Tax seems too high or low at group level
Check whether you are modelling tax per entity or per group, and avoid double counting.
Intercompany flows distort results
Consider explicit elimination variables in the group branch to cancel intercompany transactions.
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