People Take Excel and Modeling Way Too Seriously (rant)

Nothing worse than being on a sell side deal team that wants to run 10 different cases( with 3 sub cases, for a total of 30 cases), and have them all output at once. Model ends up looking like chit and becomes completely opaque to someone not spending 100 hr weeks looking at it exclusively. With all the offset / choose / and self referencing ifs functions it becomes a total chit show and the excel crashes like crazy (not too mention the chance of error is high)

People take modeling way too serious. Most of these "cases" have so many stupid assumptions the odds of any of them even being remotely accurate is next to none. Plus, most people don't even care what your model says anyways. (Buy side certainly doesn't)

Many bankers (especially juniors) basically worship modeling and think its the most intellectual and amazing thing they do. If you want to suck off modeling so much, you should have majored in CS and went FAANG (higher pay and better hours/culture) where you can actually MODEL and run millions of scenarios at your leisure.

The only reason bankers use excel is because it easily outputs to powerpoint and the resident boomer MD can use it without having a stress attack(actually, that last part isn't even true). At the end of the day we are just Powerpoint baby back biatches whether you admit it or not.

 
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Gonna add some more thoughts:

No one that matters REALLY cares about modeling.

Every deal I've done no one above associate even opened up the model or cared enough to check. On the corporate client side same thing. Its usually just bunch of juniors on both end monkeying around, while the senior stake holders glance at some outputs and move on to real discussion.

The only time anyone really looks at the model is when shareholders try and sue the company and their advisors for the bullchit merger they just got swindled into and dig into all details only to find out the analyst subtracted a negative number accidentally. But usually by then the analyst has already escaped out of banking so he never gets in trouble anyways.

 
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I agree, to an extent. On the banking side, yes, the complex models are pretty much useless since (i) management has their own (assuming you work with even remotely capable teams) and (ii) buy side will discount your model even if it's "conservative" and not use much of it.

However, on the PE side, I've found it to be useful. I'm not talking about running 30 scenarios, but it's nice to show monthly cash burn rate and flex cost structure in case of a downturn. Recession happens in 12 months? If revenue goes to 50%, what are the easy levers to pull and what does that look like for our cash position? It's pretty important to know if we'll be drawing on the revolver, have remotely enough cash for acquisitions, need to put more equity in and the list goes on. Granted, this type of analysis isn't complex but it is informative and senior folks do care about it. What do they care about most? Returns. Can they do some quick math and estimate returns? Sure, but a LP/co-invest is not going to accept "uhh yeah great deal. I think it'll be 3x".

 

Everyone above is missing the whole point while there has always been a stereotype for "modeling" and it's "value". IB at junior level is most often considered a conduit into buy-side. Buy-side recruiting focuses heavily on your deal expereince, particularly if it involves modeling and has modeling case studies of their own.

THIS is why juniors go "hardo" for models etc. Nobody who actually understands how the sausage is made thinks a F500 CEO agrees on an M&A deal because an excel model told him / her so. Model assumptions are often fed and adjusted by seniors to reverse engineer a value they already have a ballpark figure of in their head. The sensitivity analysis during a deal as mentioned above is for liability reasons and also to some extent to justify fee's and made a deck look more "thorough"

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