Hello experienced monkeys, I've a question - how do you project the sales and margins of a company? I notice that in my group (M & A), we usually use projections from research reports or by company management (and then build sensitivities around it), so building a model is a pretty mechanical process, without much thought put into the projections.
So let's just say that there are no research reports/access to management, how do you build projections? I would like to move into the buyside after my analyst program and I think that knowing how to build projections is pretty important.
As far as the buyside goes...financial projections are based on industry knowledge and management projections. For example, when working with our portfolio companies we will generally build off management's "plan" and revise as necessary. Several of the partners of my firm come directly from industry (i.e. retail, real estate, etc) Sales growth, SG&A and EBITDA margins are pretty standard across certain industries and we generally use those assumptions for our base case and will build an upside and downside case and any other iteration that we deem necessary at the time.
In the absence of RR and management insight you would have to use conservative assumptions based on industry comps
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