Modeling Intensity of Different Firms?
Despite PE being a growing industry, it feels like I work in a silo at times and so I'm curious how other firms operate from an analysis / modeling perspective. How "modeling-intensive" would you say your firm is? I'm currently at a growth-focused technology firm on the west coast (<$5Bn latest fund) and I'd say that although we can get granular on the revenue build, most models won't have more than 5 total tabs (LBO, Rev. Build, Summary, Equity Waterfall & Returns / Sens., Acq. Build (maybe)) and it's pretty straightforward. When talking with a friend that was previously an associate at MF in tech (i.e., Vista, Thoma, SL), this was nothing compared to the work he explained they did on the modeling side (10-15+ tabs, very granular builds, and a bevy of case assumptions). Anyone else feel like the modeling aspect of their role is easier or harder than expected?
BUMP
Usually dependent on fund strategy. MF's are very focused on financial engineering for their returns, so that requires a high degree of modeling intensity.
I'm at a LMM that's on the opposite side of the spectrum. We're more focused on the market opportunity. If the company has a pathway to continued organic growth and we think there's a consolidation opportunity to go acquire 4-5+ add-ons, and believe that we can unlock some multiple arbitrage at exit, that's a pretty good case for a successful outcome. Sensitizing our initial underwriting model to compare an 8% growth rate vs 6% isn't going to help much with underwriting the investment - but that's the type of case at a MF that could be really important.
Garbage in garbage out. Making 10000 inputs for a model is only helpful if you have diligence, insights, etc to support views on all those inputs. Sounds like your shop may be taking the right approach
If you are worrying about model intensity you have no business in IB lol. The work they do is actually really simple and boring. I work in accounting for PE owned company and those guys don’t do much at all anymore. If you can understand how the income statement, balance sheet and statement of cash flows work and interact with each other thats all that matters.
Did you even read the post?
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