Excel hasn't been around nearly as long as investment banking and investing in general. Anyone know what took place prior to the excel financial model?
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they had a big roulette wheel of numbers, then they cut off a chicken's head and tossed it in the wheel. whichever number the chicken head landed on was the valuation for the company
where do you think the term spreadsheets comes from? long before there was excel, there were sheets of paper...sheets "spread" across a binding, in book form.
You can do financial models on paper. Sure, can't run the sensitivity analysis as easily, but it can easily be done. Takes longer, but definitely something you can do.
I don't know what they used in banking before Excel, but I remember a partner at a consulting firm I interned at being very nostalgic about something called "Lotus 1-2-3." Evidently that was the first really powerful spreadsheet program for PCs. Came out in the early 80s.
Ahhh, Lotus. It has gone the way of WordPerfect and DOS. So simple, so elegant, and so.....obsolete.
Is it true that at one point in history, M&A and other such functions were a free / cheap service offered by banks to their clients? I was just talking to someone who's been bouncing around the industry for a while, and they said that decades ago, advisory work was not a large part of banks' business. I am only now beginning to learn the history of banking, so if I'm way off mark, my apologies.
some senior guy told me they used lotus back when he was an analyst.
And he said that clients would just say, yeah just pay a 30% premium over share price, naw don't bother with the valuation that's not neccessary.
dream days imho
And given that back then all companies were publicly listed, that worked splendidly.
http://www.amazon.com/Titans-Pioneers-Streets-Acquisitions-Industry/dp/… This book covers how M&A became the centerpiece of IBD.
http://www.amazon.com/Big-Deal-Beyond-Bruce-Wasserstein/dp/0446526428/ref=sr_1_2?s=books&ie=UTF8&qid=1305037753&sr=1-2 More of the same but in more detail, written by Bruce Wasserstein himself.
How did investment banking analysts create financial models before the invention of excel? (Originally Posted: 09/14/2011)
Just out of curiosity
spreadsheets
They did it by hand.
Lotus 123
.
they are called "spreadsheets" because you used to have to spread out a long piece of paper and do calculations by hand... they would have the roll up paper, like butcher paper, and roll it out as needed.
Aren't you happy we live in a digital age?
oh, and the calculations were done using a slide rule...
At least back in the day, when you went on vacation, you actually got to take a vacation cause no one could reach you. While technology has sped up communication and facilitated deal making, it has certainly created an "always accessible, suck the life out of you" lifestyle.
VisiCalc was the first computer spreadsheet. An MIT CS major was watching an HBS professor do a spreadsheet on a chalkboard- it took an hour b/c whenever a computation was wrong, everything had to be erased and you'd have to start from the beginning. Hence visicalc was born and computers became a business tool instead of a nerd plaything.
Before Excel, CapIQ, Thomson, Bloomberg, etc. (Originally Posted: 03/27/2008)
I was sitting at my desk today, doing a wonderful transaction comp on CapIQ, and was wondering what the hell did analysts use before these programs? For my own education, anyone out there work at an I-bank in the early 90's before programs like this existed? What about pre-Excel, was your model essentially a legal pad with handwritten financial statements?
Thanks.
When information didn't flow so easily, bankers were much more valuable than they are currently.
Obviously I didn't work in i-banking in the early 90s, but yes, before Excel people either used more primitive programs (Lotus 1-2-3 anyone?) or actual spreadsheets with pencil and paper.
Hard to imagine now...
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