AN1- assigned responsibility for full operating model?
Basically title. I am currently a first-year in a coverage group at a top MM (HL/JEFF/Blair). This deal (typical sellside) has the following junior deal team - one associate and myself + another 1st year.
Long story short, we met recently and my VP basically is having me drive the operating model build + related analyses (she instructed the other analyst to “support” me). The associate said she will “review” lol. I have not been staffed on a full model before (only been staffed on deals when op model is already done so far), although I’ve done some good LBO, etc modeling for pitches. I figured this was an AN2 / AS1 job lol. Trying to take this as a good sign of trust but was just wondering if this is standard at other MMs / BBs?
Bump. Also would love to know what advice people have for analysts being given additional responsibility and how to not disappoint on big assignments.
Yeah, building an operating model isn’t hard. It’s good that you get this opportunity.
If you’re at an MM, you guys probably churn out sponsor sell sides. Look for precedent models that are in the same industry, and also look for precedent models that were used on prior deals that your VP or MD has worked on previously, as they are likely to approve of however those are built.
Next, recreate the structure from scratch, and work with your Associate to lay out a skeleton of how it’s gonna be driven, which then gives you an idea of what info you need from management.
This is a great opportunity. You will know where all the bodies are buried, and you’ll know exactly why something is or isn’t working, instead of working off someone else’s secondhand shyte. That being said, you need to be the first to speak up when your dipshit VP says “can we fold this [extremely non-straightforward concept] into the model tonight?” That’s your time to explain why you can/can’t, and come up with a suggestion.
Helpful. Thanks
Standard at Jef
Seems like a great opportunity. Curious about your own assessment of whether you think you’ve been performing better than the other AN1 / average AN1 or if this came out of left field?
Wouldn’t say totally out of left field. I was just under the assumption from reading this forum and everything that op model was an associate task. I’ve been holding the pen on most of the valuation sections for pitches I’ve been on (but TBF those are mostly templated LBOs, etc.). I got good mid year reviews, was told informally that I was performing “above average”, but no crazy glowing reviews or whatnot.
Pretty standard as as others have said, maybe a bit early but still a great learning opportunity for you to get modeling reps in early. It will pay dividends as you move up the ranks. I didn’t touch my first model until midway through second year AN. My two cents below on things to keep in mind.
Like another poster alluded to, communication is key here. While you should expect your VP / ASO to provide guidance, you will ultimately be the one in the weeds and infinitely closer to the actual model plumbing / mechanics. For example, if the sum of new revenue on the revenue build tab doesn’t tie to the output in your sales rep / bookings build because of some bust along the way, they won’t know why. You need to be able to explain clearly how line X links to Y which drives Z as an output and why. Anyone can blindly link up rows in excel so what separates the wheat from the chaff is who can explain why it is built the way it is and how the formulas actually work. Nothing more embarrassing than getting exposed for not actually knowing how your formulas are running.
Attention to detail is also paramount. Don’t worry about being the fastest modeler in the firm. Take your time and correctly link everything up. You’ll save hours on the backend trying to find where you mislinked one cell among hundreds of rows.
It might seem intimidating at first, but as you get in the weeds of one you’ll realize it’s not as hard as it looks. You likely have templates of similar companies on the drive that you can leverage as the “base” for your model. Ask your VP / ASO to point you to some similar models you could reference so that you all are aligned from the start on type of build (ie, simple P*Q vs. granular bottoms up sales rep build, etc)
Good luck sir! And just keep in mind they wouldn’t be tapping you for this task if they didn’t think you were capable of handling it.
What is sales rep build and how is it bottoms up? Usually I've built off of customer data
In my experience associates almost never built models, unless they were an analyst promoted that just wanted to own it. At both the BB and boutique I worked for we'd have analysts start building/owning the models almost immediately.
What is a full operating model? Is it a three-statement model?
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