Question about Models
Could someone explain to me why every deal needs a unique model made? Couldn't every possible situation be covered by a handful of templates that just need some numbers plugged into it?
Could someone explain to me why every deal needs a unique model made? Couldn't every possible situation be covered by a handful of templates that just need some numbers plugged into it?
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is this question some sort of a sick joke?
Haha, I looked at the title, and was a little intrigued. Regardless that this is a wall st forum, I thought we might have an off-topic interesting post, NOPE. No innuendo to models and bottles.
i thought that was a post about real models...
My comment was not referring to the fact that I thought this was about models (the female ones) I was implying that the question is incredibly stupid. Everyone with an ounce of banking deal knowledge knows that every deal will have different components. Eg. an airline taking buying out all shares of a feeder will obviously have a different model than a chemical company that is restructuring its debt.
Right. But if you already modeled one chem company restructure it's debt, and you want to pitch the same idea to a new company in the same situation, can't you just use the same model?
Are there that many variables that every single deal is completely unique from every other deal that's occurred in the past?
Yes there is
Each deal is structured differently depending on the circumstances.
If all you need are templates, then you can learn what you need to learn in 1 month of analyst training( just select the right template and plug in the numbers...)
Ah okay thanks. Is there anywhere I can see an example of, say, a DCF model? I'm pretty unfamiliar with the whole topic.
DCF models are secretive due to confidentiality agreements with clients and examples are held only at the top tier target schools. I suspect that you probably go to a top tier school so go to your library and use the search function that searches for empirical documents within the category of finance. I know at my school the code was DCF0010 but it could be under a different psuedonym per school. If you are having trouble i would contact the dean of your college for the pass code.
M&I provides a good overview of a DCF model. It's mostly the same. The only model that varies a lot is the LBO and M&A model where you need to take a lot things into consideration
However, DCF is mainly depending on what you think the industry is going to be and thus applying the right predictions. Unless you have a thorough understanding of the industry trend, it's usually hard to predict( or you can pull numbers from the ER guys...)
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