I was thinking if modeling would be more difficult or complex in certain sectors versus others. Ex: would tech be more on the easier side if companies are not profitable versus say oil and gas which has difficult metrics? If yes, would everyone want to join the easier-to-model groups?
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O&G is extremely complex modeling as you have to do both a financial/cash flow model and an asset model. Same thing for Infra, ridiculous granularity there. Banks also have weird reporting mechanisms and a ton of regulatory stuff you have to steer the boat around, so I'd throw that on the list too.
Outside of those asset-heavy areas I think the other groups are all roughly the same "difficulty" of modeling. Most models are roughly the same setup and just add in different industry metrics / line items as needed. It's not that difficult to learn to model and "easy" model groups aren't really a priority - there are some bank-specific groups that don't do fulsome modeling if you're really not interested in doing it (M&A holds pen at some banks; also DCM/ECM won't be doing a ton of modeling)
People tend to choose groups based on personal interest in an area and quality of exits.
Which coverage sectors have the best quality exits?
How does Real Estate compare? Being also an asset-heavy area.
Real estate modeling is a joke. Simple cash flow.
RE, in about every way, is numbingly simple
SB'd - Infra modeling took years off my life lol
Metals and mining seems pretty bad, got to do asset specific models like O&G and also account for the different types of specific metals being mined + overall firm
I mean.....is that really any different than modeling out an E&P or E&P + midstream / refining / storage business that generates CF off of all three O&G streams?
Multiple different grades of crude.....and even more basis diffs you need to account for and price update
Nat gas - ditto, except waaaaaay more physical settlement locations than the crude futures market. And (generally) much more complicated midstream modelling if you're forecasting based on every G&P agreement the client has signed + intends to sign in the near future
NGLs - which fortunately have 1 (I guess 2 if you include propane and ethane futures settled in Conway, AR) physical settlement locations......but across six fucking streams of wet gas with varying degrees of trading liquidity on their prompt month contracts
Yea not saying its more complex just similar with different nuances.
Gotta love 100 year metals and mining DCFs lol
Any regulated infrastructure asset will require a fairly more complicated model. For example, with a utility, you have your normal operating model for financial purposes (ie - your normal financial statement results) and then you will also have the regulatory model (basically you’ll have a section of the model running the rate case math every year along side the actual financial results). You basically have to create two detailed models
On a renewables deal in China, I had to model out solar power returns generated based on every 30 minutes for 30 years, using 8 different variables (battery, panels, etc) with ~ 6 options for each.
Had to use some quality macros for that bad boy, and I’m pretty sure the Titanic moved faster than it.
wtf why did you use excel for that? like hammering a nail with a screwdriver...
As opposed to what?
Out of curiosity, why every 30 minutes? Are the generation forecast variables that granular that it makes enough of a difference to forecast by 30 minute blocks? How big did this model get?
Lol there’s no chance that’s real. You do get some variability on a sub hourly basis but at least in the states you get an hourly production profile from your transmission consultant which you then roll up into monthly for the actual model. There’s no real reason for solar to be any more frequent than an hour. It would be assinine for anyone to build a forecast model on a 30 minute basis - that’d be ~17,500 periods a year for 30 years and you’d be well on your way to breaking excel. It’d be really stupid to bother to build a daily model.
But if you’re going to do 30 minutes, why stop there? Why not model it on a 30 minute basis - or why not a 20 minute basis or maybe even a 10 minute basis? Really should probably just do it on a 1 minute basis.
And this person says they’re flexing inputs AND cases. Impossible. The model quite literally would take a day to run a single levered scenario of which there would be at least 48 based on their math. Did. Not. Happen.
Can anyone comment on the difficulty, or lack thereof, in modeling for healthcare companies? Specifically pharma & biotech companies
The modeling itself is pretty straight forward. Coming up with the assumptions is the tricky part particularly for pre-launch/approval assets.
Deal terms can get a bit creative. That’s usually the complexity.
Revenue models are textbook consulting case studies.
In software M&A and pretty simple across the board, since we deal almost exclusively with SAAS/enterprise software. Subscription based, limited product offerings, relatively predictable churn/turnover rate.
What about A&D?
Does anyone have any insight on Speciality Finance (FIG) modeling trying to understand more about the sub-vertical.
Probably one of the hardest sectors to model within FIG.
Why do you say that I heard insurance was the hardest?
Consumer models with 100 locations aren't hard but they are a bitch to build.Industrial Services can get confusing depending on how deep you get into PoC accounting and if there are rebates involved on the purchasing of materials
I came here exclusively to say FIG fucking SUCKS
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