How do you sense check your model?

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Analyst 1 in IB-M&A

Anonymous

Bump

Cost Approach Real Property

Analyst 1 in IB-M&A

Anonymous

Bump again

Associate 1 in PE - LBOs

Anonymous

Modeling is just to act like you've shown you have done work on a business / investment. Make sure numbers look decently correct and have some thought behind them (half of this job is convincing others of your idea) and you're good to go. A mini model is more than enough to actually make investment decisions but a full model is just for internal / lender purposes.

Authored by: Certified Private Equity Professional - 2nd Year AssociateCertified Private Equity Pro

Anonymous Monkey

Most Helpful

Hello,

The question could actually make a whole book chapter so I will put the biggest points here:

1: Quality / Accounting check

this includes your typical balance sheet checks

net income to equity change bridge, another check between this and both elements

if separate debt sheet, another check for the accrued / cash movements on debt (total numbers)

same for D&A

If doing pro forma: ensure consolidated BS = sum of consolidated items

2: Business analysis check

this is everything that falls into how your p&l is built

comparison of p&l/bs structures inside the same industry

comparison of D&A / accrual policies between players

3: valuation check:

mostly EV to EqV bridges, DCF assumptions

complete disconnect between several valuation outputs (exclude tech from this comment)

Many things not included…especially differences between sectors which may be one of the biggest factors.

Hope this helps.

Private Equity Associate Pay

ShooterMcGavin11

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