I am in the middle of trying to revise my firm's LBO model and am really trying to gauge how others approach their own model.
How appropriate do you feel it is to share models across firms? Have you guys ever done this in the past, or is it completely taboo?
Having worked at a couple of banks, I know my colleagues bring their models from previous firms with them to their new banks, however I have never heard of analysts/associates sending each other models across banks while still on the job. Obviously there are some issues with this and all confidential information should be changed and dummy numbers used, but any thoughts would be appreciated.
i guess u never seen the GS LBO model floating around the forum
is this a joke?
I created my own LBO model and my own accretion/dilution model. Basically I try to make my models as simple as possible while still getting across the major points that will impact the outcome.
Some people disagree with this and try to put in lots of switches, macros, etc. etc. and while this is fine for the person using it, you want models to be re-used by others. And they should be easy to figure out if that's the case.
For an LBO model, what's important? Purchase price, leverage, exit multiple, cash flow. Yes, I know there are 500 other variables that also contribute, but in the end those move the needle the most. Yes, purchase price allocation will have an effect and should be in there, but don't spend hours making that part of it. Base your model around what's most important.
I would not share models across firms and I never send anyone my own models unless they are a close personal friend. Although you can get away with it, the risk probably isn't worth it.
Don't share models across firms. Especially LBO models. When sending models outside of the firm most banks and PE shops paste values into their models before sending them. This makes it more difficult to determine how they are driving their models.
A model built by a PE shop can be incredibly useful to competing bidders since it may give some insight into how much the PE shop is willing to bid.
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