How many tabs do your typical pro forma financial models end up being?
Work for a group that has a tendency to suffer from a lot of Analysis Paralysis. We tend to end up with ~30 tabs in a model for the absolute shortest and simplest deals and up to 60 tabs with a few hundred rows each for a normal deal, but I just started in IB in Q4 of '22 so I have no reference point for this.
Is this normal and banking really blows this much everywhere or are my bosses specifically obtuse? We are sell-side M&A generalists that work across industries and there isn't a clear correlation between the industry / complexity of transaction and how wonky our models end up. Typically that's more a function of how many separate MDs are giving input on the model, which is why I feel we may just be inefficient because I've heard at similar MM M&A groups there tends to be one main MD running point on the deal / giving instructions and the preparing materials phase after signing EL but before going to market lasts more like 4-8 weeks than 12-16. Can anyone provide any context on this? Size of financial models you end up with (in terms of number of tabs excluding dividers) and time spent between signing EL and launching the deal?
I'm really just trying to figure out if a less grueling M&A gig exists or if 100+ versions of 50 tab models is the norm in this world.
Currently work in an M&A group. The breadth of the model depends on what the client wants. I have done models with as little as 3 tabs to models with 50 tabs. Average is probably 10 tabs. Usually have a tab for each revenue to contribution business unit and then one tab for overhead expenses. Signed EL to market timing is probably 8-12 weeks. My firm has industry groups and M&A separate so there is an MD from both groups running the deal. Usually the industry MD is running point on the marketing materials.
can confirm this. ultimately, it's what the client wants and the purpose of the model/analysis
I work in MM IB, and agree generally with guy above. Most models I’ve built are around 10 tabs, sometimes a bit more other times less.
Keep it simple.
Sounds like you may have inexperienced MDs. When you're well experienced in a certain market and with certain buyers you know what they're focused on and it typically wont take 100 tabs to address the key points in a spreadsheet model. This is for the better, the buy-side Associate & VP don't want to have to sort through a 50 tab monstrosity anymore than you want to build one.
When you're stabbing in the dark is when the 100 tab modeling marathons start because you don't actually know what people will focus on or what the key value drivers are so you have to cover every piece of ground conceivable.
This is kind of what I was wondering. We really seem to struggle with figuring out how we want to look at things, when covering a client in an industry we don't have much experience in, and often end up trying to cover every angle as a result. Pain in the ass for everyone involved, especially the investors who have to go through it lol.
Have worked with Public clients who had the most obtuse and ridiculous "models" with 30-40 tabs that are literally impossible to follow, thats the worst I've seen. Even the more technical Oil and Gas NAV models with a bunch of type curves and development wedges were under 20. wtf are you doing with 50 tab models lmao that sounds like hell.
For example we had a super long two tab section in our last model attempting to project out global inflation and interest rates (instead of just using Chatham Forward Curve) so we can make sure we're projecting out the interest income earned on excess cash correctly down to the penny. For a logistics company lol.
The crazy part is we will literally get to the point where all of us struggle like hell to interpret, retain, edit, summarize or draw conclusions from these long-winded models, but it never occurs to us that if something is so complex that it makes our lives more difficult it's going to be even worse for our counterparties, who it's really meant for.
Well, I guess on the bright side whatever I do next will be gloriously simple by comparison /:
That is insane lmao, yeah your bosses are obtuse af - just rip the forwards from bloomberg and call it a day homie. But yeah wherever you go next should be cake lol.
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