6 Comments
 

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.

 
Most Helpful

Hello,

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

1: Quality / Accounting check

  • 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.

 

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