Walking Through a Deal with Questionable Model
So I have a small buyside M&A deal on my resume that I plan to walk through for PE interviews. I completely understand the thesis, rationale, etc. as well as the operating model, which I truly did build.
However.....this was a pretty small deal for the size of our client, so the modelling process was absolutely not as detailed. Still can justify everything we did in the model, but it doesn't seem nearly as granular. We also didn't bother building a 3-statement, just decently detailed income statement, capex, and NWC.
Income statement projections were a decent level of detail but by no means a bottoms up build by SKU or something like that
Is this going to be an issue?
It's not like you're going to be opening up the model during the interview so why would this matter if you can talk about the deal?
My worry is them asking me to walk through the flimsy projections we did. Like simply saying we projected capex as just a % of revenue sounds sus, but that is indeed what we did.
I got a PE job with the only model I ever built being some tiny turd of a model that no one ever used. Any time in my interviews I had to discuss a model no one got deep into the mechanics or how we built the projections unless I wanted to go there.
Thanks - that's reassuring
I would have an answer to "why" for your projections, even if its BS. Even if the model that you actually used was basic, go through it and think of questions that could be asked about your assumptions and come up with reasonable answers.
Got it. I definitely have the assumptions down and know the why behind them, but definitely think it could have been built a bit more granularly / robustly. Truth is we were simply pressured on time and the business was small for our client, so the logic was more strategic than financial; therefore, we didn't spend too much time going into that level of granularity. Is that an acceptable answer?
If they ask a modeling question just say “we did X, but if it was up to me, I think Y would have made more sense”
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