Hi guys:
For those of you who have worked in private equity - how does your real, on-the-job modeling experience compare to advanced lessons offered by Breaking Into Wall Street? Is your real-work modeling significantly more complex/more difficult than the advanced courses offered there? Just trying to get a sense. Thanks!
are you asking about modelling (laying out matrices in excel) or financial concepts taught
I also want to know about concepts
daddylaurier I’m asking about modeling. Thanks
As an incoming PE analyst, I'm also curious about this.
excel has always been and will be in preference, I don't even know if it has any decent alternatives
I’m curious if models in real pe jobs are layed out in similar ways/of similar level of complexity. Mostly worried if the biws models are too simple for real jobs. Would appreciate your insights!
IMO, revenue builds become increasingly complex with multiple drivers & variables for accuracy. However, the rest of the modeling process, is fairly straightforward. Also, a surprise to me, was just how much of the process is templated - we just have so much to do, that a model can't take up your life for too extended period a time, and templating helps cut down significantly.
In fact, having seen LMM models as well as massive MF-level buyout models, typically everything is fairly straight forward. Generally, I've seen try-hard associates in IB push out absurdly complex models more than I have in-house for DD purposes.
Others results may vary.
For most regular way buyout deals, the meat of the modeling work really comes down to creation of the revenue/cost builds and sensitizing key inputs to understand how sensitive returns are to various drivers of the business model. This is the most important part of the model because it informs your cases/scenarios and the probabilities you assign to them based on perceived likelihood of various outcomes. Those builds then typically feed a templated three statement model and returns waterfall. Reason those are parts of the model are typically templated is bc theyre the same for almost every deal (asssuming template model is flexible for most/all txn/financing structures) and you’re always in a time crunch on a live deal so recreating something that’s already been built (assuming it’s built well) is time wasted.
As far as comparison to the biws models, I would say the biws models rev/cost builds are prob a little light relative to what’s used in practice (eg I’ve seen many of them apply % growth and % of sales drivers instead of operational KPIs, fixed/variable analyses, etc.), but the actual LBO itself is pretty comparable to what’s typically used in practice (although it’s a bit unwieldy and more structured for instruction/teaching rather than functionality/application).
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