LSTNED and Consulted
Recently, I completed a phase of a client engagement involving updating a financial acquisition model. While I was able to perform to the level required by the manager in the finance department to streamline their model to evaluate acquisitions by applying “modular design” and a few other principles, I found the work fascinating in that the client taught me how they decide on acquisitions, as far as the financial metrics that include discounted cash flow, net present value, internal rate of return and numerous metrics which draw on limited financial history to “backfill” missing financial statement elements and estimate future financial elements.
So, I “LSTNED” (Learned SomeThing New Every Day - I hope you’re not yet tired of my cutesy acronym, since I plan on exploiting it ad nauseam.) and benefitted from the exchange on some finance topics while they gained some much-needed flexibility and efficiency in the decision-making process, since the target data and the financing mix (debt, equity, seller-financing, etc.) can change at a moment’s notice. There were also a couple technical challenges (getting two-variable data tables to work correctly) that helped me for future engagements that require multiple scenarios. Data tables in Excel are pretty resource-intense, but they are fairly easy to understand, once they work right.
This opportunity came to me strictly through my role as a finance and accounting consultant. I did not employ Big Data, Cloud or 3D printing but did feel like I moved the client in the right direction with the tool they had (Excel), which is actually decently suited for this analytical purpose, and took them toward a “safer space” of having some more controls over their “user-developed application,” sorely lacking in too many Excel workbook solutions. Another piece of advice I have for model-builders in Excel – DOCUMENT the input sources and the process. Microsoft’s Visio program is part of the toolbox I used to do so and I am pleased with the progress in being more user-friendly in recent versions.
I would love to hear your experiences in building models (as in projecting into the future). #financialmodeling #Excel #models