I've been delving into some fairly complex modeling work since I've started work, and I was curious to hear some stories on other people's work with high end models and to hear about just how complex a model can get.
So, what's the most hardcore model you've ever built and what made it so complex?
Complex Modeling Examples
While WSO users aren't going to post their most complex models to the site (pretty sure that would violate some part of their employment agreements), they shared their input on which roles and situations often require complex modeling:
- Private Equity models often get very complex
- With PE models it's about the projections, ex: you can have models that have triggers for dozens of scenarios, such as contract renewals or patent extensions or drug approvals. Some firms even assign probability values to these scenarios and use expected values.
- Trading models, even basic option pricing models that any salesperson, trader, or structurer can build in their sleep are more complex than most banking models I've seen
Certified Private Equity Professional @sk8247365 provided a little more detail on a model he worked on:
Looking at a hospitality-sorta (think vrbo but with a portfolio) company, built a property by property occupancy model that you could use their data dump and it would tell you, on a daily, monthly, and yearly view:
- Everything booked
- How much was paid
- Percentage discount to market
- % discount to their pricing
- Holiday occupancy
- Holds by employees
- Holds by members
- 24 hour holds
- Interest (web clicks) per property
All of this rolled up revs to be matched with expenses on a YE, rolling 12 months, and next FY view. Finally, it created a daily calendar that highlight trouble occupancy areas, and matched current revs and potential future revs with business model projections.
The end result was to answer pretty much any revenue and performance related question. It was about 25 megs. Maybe not insanely difficult but i thought it was cool to just dump the data, change the named range, and watch the thing unfold and dissect.
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