I've been enjoying the discussions on this forum for the past 3 months and felt it was time to bring up some topic that i guess everyone in finance has wonder at least once in their career.
I'm a senior associate at one of LATAM's largest alternative asset manager. I'm relatively young (the youngest person on my position at my firm's history) and one of the skills that got me early promotions a couple of times was my modeling/excel abilities (hopefully among others)
Nevertheless, as i advance on my career and have the opportunity to interact more directly with MDs from my firm or other firms, with CEOs, CFOs, entrepreneurs, etc. i have been doubting about the real importance of financial modeling and what do a firm really get from it.
Don't get me wrong, i know its a great skill and a must if you want to develop a career in PE or IB but seems that some times junior people focus too much on this subject and forget to think outside the box and generate ideas that would really bring value to portfolio companies and ultimately, more money for our investors.
The most successful investors i've met and had the opportunity to work for, never gave importance to the financial model and projections. They just focus on the "3 things" that would make the investment a 3.0x (e.g. industry tendencies, management team track record, historical cash flows)
Other not that outstanding investors I've work with, always ask to see financial projections with every posible detail on revenues, COGs, expenses, considering all account policies, etc, etc... ultimately, excel would give you the IRRs you are searching for, and if you're good at modeling, it would be without any "dramatic" growth or margin increase on one year and rather YoY "minor" improvements.
When i was an analyst, i was really focus on my modeling skills, some times even forgetting the skills that now I know are more important.. Now, I see other analysts at firm on the same position.. they are experts on excel but they don't the ability to present to a investment committee.
What are your experiences regarding financial modeling and it's importance as your career advance?