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Theory is great until someone sends you 17 blurry PDFs and says "hey what's our business worth?"

This is the wake-up call that happens in the real world.

Businesses still need cash to operate, and they need profit if they eventually want to sell, but 9 times out of 10 the underlying data is a mess, and the "finance team" isn't sophisticated enough to build a forecast.

That's where YOU come in, right?  Just jump in and "stand up the model."

It's easy enough to understand on paper, but when you open that blank spreadsheet, suddenly, you can just freeze up.

Having spent over 15 years in Private Equity & FP&A, I know exactly how that feels.

When it's just you, some incomplete data, and AI isn't helping at all, how do you move forward?

That's where I can help -- I teach you to build (and own) the financial models that run real companies -- completely from scratch.

(𝘣𝘦𝘤𝘢𝘶𝘴𝘦 𝘵𝘩𝘢𝘵'𝘴 𝘵𝘩𝘦 𝘰𝘯𝘭𝘺 𝘸𝘢𝘺 𝘵𝘰 𝘳𝘦𝘢𝘭𝘭𝘺 𝘭𝘦𝘢𝘳𝘯, especially in an unstructured environment).

This is financial modeling in the real world.

🌐 𝗟𝗲𝗮𝗿𝗻 𝗺𝗼𝗿𝗲 𝗵𝗲𝗿𝗲 👉 https://www.financialmodelingeducation.com/ 


———

𝗥𝗲𝗰𝗼𝗴𝗻𝗶𝘁𝗶𝗼𝗻 𝗶𝗻 𝘁𝗵𝗲 𝗺𝗮𝗿𝗸𝗲𝘁:

🏆 Trusted by over 91,000 students with 4.9/5.0 Star average rating

🏆 Over 100,000 followers on LinkedIn & other social media platforms

🏆 Recognized by Business Insider and Financial Modeling World Cup

🏆 Featured by Wharton Online, Wall Street Prep, & LinkedIn Learning


———

𝗥𝗲𝘃𝗶𝗲𝘄𝘀 𝗳𝗿𝗼𝗺 𝗽𝗿𝗼𝗴𝗿𝗮𝗺 𝗮𝗹𝘂𝗺𝘀:

"𝘛𝘳𝘢𝘪𝘯𝘪𝘯𝘨 𝘪𝘴 𝘧𝘢𝘯𝘵𝘢𝘴𝘵𝘪𝘤..."
⭐⭐⭐⭐⭐

"𝘉𝘦𝘴𝘵 𝘮𝘰𝘯𝘦𝘺 𝘦𝘷𝘦𝘳 𝘴𝘱𝘦𝘯𝘵..."
⭐⭐⭐⭐⭐

"𝘈𝘣𝘴𝘰𝘭𝘶𝘵𝘦 𝘨𝘢𝘮𝘦 𝘤𝘩𝘢𝘯𝘨𝘦𝘳..."
⭐⭐⭐⭐⭐

"𝘉𝘦𝘴𝘵 𝘤𝘰𝘶𝘳𝘴𝘦 𝘐'𝘷𝘦 𝘵𝘢𝘬𝘦𝘯 𝘰𝘯𝘭𝘪𝘯𝘦..."
⭐⭐⭐⭐⭐

"𝘔𝘰𝘴𝘵 𝘤𝘰𝘮𝘱𝘳𝘦𝘩𝘦𝘯𝘴𝘪𝘷𝘦 𝘤𝘰𝘶𝘳𝘴𝘦 𝘐'𝘷𝘦 𝘵𝘢𝘬𝘦𝘯..."
⭐⭐⭐⭐⭐

"𝘐 𝘩𝘢𝘷𝘦 𝘵𝘢𝘬𝘦𝘯 𝘴𝘦𝘷𝘦𝘳𝘢𝘭 𝘮𝘰𝘥𝘦𝘭𝘪𝘯𝘨 𝘤𝘰𝘶𝘳𝘴𝘦𝘴, 𝘵𝘩𝘪𝘴 𝘰𝘯𝘦 𝘪𝘴 𝘵𝘩𝘦 𝘣𝘦𝘴𝘵..."
⭐⭐⭐⭐⭐

🌐 𝗟𝗲𝗮𝗿𝗻 𝗺𝗼𝗿𝗲 𝗵𝗲𝗿𝗲 👉 https://www.financialmodelingeducation.com/

Chris Reilly

A Balance Sheet even your 𝗸𝗶𝗱𝘀 𝗰𝗮𝗻 𝘂𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 👇


Even though I live in Excel every day, I was never a "finance person" in school.

(in fact, I started as an Art Major 🎨).

All the "business terminology" used to confuse me.

The only way I could understand things was to break them down to their simplest form, and talk about it like I was at the kitchen table.

So sometimes when I'm building a model, I bust out this guide and ask myself, 𝘥𝘰𝘦𝘴 𝘵𝘩𝘪𝘴 𝘮𝘢𝘬𝘦 𝘴𝘦𝘯𝘴𝘦?

𝘈𝘳𝘦 𝘵𝘩𝘦 𝘯𝘶𝘮𝘣𝘦𝘳𝘴 𝘮𝘰𝘷𝘪𝘯𝘨 𝘵𝘩𝘦 𝘸𝘢𝘺 𝘵𝘩𝘦𝘺 𝘴𝘩𝘰𝘶𝘭𝘥 𝘪𝘧 𝘵𝘩𝘪𝘴 𝘸𝘢𝘴 𝘴𝘪𝘮𝘱𝘭𝘦?

Hopefully this clears up anything you might find confusing 🙂


➕ 𝗔𝘀𝘀𝗲𝘁𝘀:

𝗖𝗮𝘀𝗵: Dollars in my bank account.

𝗔𝗰𝗰𝗼𝘂𝗻𝘁𝘀 𝗥𝗲𝗰𝗲𝗶𝘃𝗮𝗯𝗹𝗲: Money people owe me (for work I've already done)

𝗜𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆: Physical stuff I'm trying to sell

𝗣𝗿𝗲𝗽𝗮𝗶𝗱 𝗘𝘅𝗽𝗲𝗻𝘀𝗲𝘀: Stuff I paid for (in cash) in advance & will expense this year

𝗙𝗶𝘅𝗲𝗱 𝗔𝘀𝘀𝗲𝘁𝘀: Assets I bought (in cash) & will expense over several years

𝗧𝗢𝗧𝗔𝗟 𝗔𝗦𝗦𝗘𝗧𝗦: Everything I Have (or will be getting soon)

~~~
✨ Here's a guide to model it 👉 https://lnkd.in/ew4nwaVx 
~~~


➖ 𝗟𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀:

𝗔𝗰𝗰𝗼𝘂𝗻𝘁𝘀 𝗣𝗮𝘆𝗮𝗯𝗹𝗲: Money I owe other people

𝗨𝗻𝗲𝗮𝗿𝗻𝗲𝗱 𝗥𝗲𝘃𝗲𝗻𝘂𝗲: Cash I've received, but I haven't done the work yet (or delivered the service)

𝗔𝗰𝗰𝗿𝘂𝗲𝗱 𝗘𝘅𝗽𝗲𝗻𝘀𝗲𝘀: Expense I know is coming (this year) that I'll pay in cash later

𝗗𝗲𝗯𝘁: Money I borrowed to start the business or cover a cash crunch


🟰 𝗘𝗾𝘂𝗶𝘁𝘆:

𝗖𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗲𝗱 𝗖𝗮𝗽𝗶𝘁𝗮𝗹: My own money to start the business or cover a cash crunch

𝗥𝗲𝘁𝗮𝗶𝗻𝗲𝗱 𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀: A record of what I did with the profits (not cash)

𝗧𝗢𝗧𝗔𝗟 𝗟𝗜𝗔𝗕𝗜𝗟𝗜𝗧𝗜𝗘𝗦 & 𝗘𝗤𝗨𝗜𝗧𝗬: Where Everything Came From (or needs to go)


⚖️ 𝗪𝗵𝘆 𝗗𝗼𝗲𝘀 𝗶𝘁 𝗕𝗮𝗹𝗮𝗻𝗰𝗲?

To satisfy the accounting equation: 𝗔𝘀𝘀𝗲𝘁𝘀 = 𝗟𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀 + 𝗘𝗾𝘂𝗶𝘁𝘆.

This means all things a company owns (𝗔𝘀𝘀𝗲𝘁𝘀) are either:

   * Financed by borrowing money (𝗟𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀)
   * Or created by what the owners invest (𝗘𝗾𝘂𝗶𝘁𝘆)

It balances because every transaction affects 𝗯𝗼𝘁𝗵 𝘀𝗶𝗱𝗲𝘀 𝗼𝗳 𝘁𝗵𝗲 𝗲𝗾𝘂𝗮𝘁𝗶𝗼𝗻 equally.


𝗜𝗳 𝘆𝗼𝘂'𝘃𝗲 𝗵𝗮𝘃𝗶𝗻𝗴 𝘁𝗿𝗼𝘂𝗯𝗹𝗲...

No worries at all.  I've been there.

🧠 See what you're missing with a 𝗾𝘂𝗶𝘇 👉 https://lnkd.in/eccYpT-R 

🎓 Or look at a 𝗰𝗼𝘂𝗿𝘀𝗲 if you're interested 👉 https://bit.ly/FMECourses 

"...𝘣𝘦𝘴𝘵-𝘪𝘯-𝘤𝘭𝘢𝘴𝘴 𝘵𝘰𝘰𝘭𝘴 𝘵𝘩𝘢𝘵 𝘐’𝘷𝘦 𝘴𝘦𝘦𝘯."

Private equity & FP&A veteran that teaches you to build the financial models that run real companies | 🎓 91,000+ students

So this is called the "pro forma balance sheet."  It's what a PE deal looks like right after the deal closes.  Here's how I model it... 👇

It's a 5-minute video on social media, no captions (sorry).

BUT...

This is 𝗼𝗻𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗵𝗮𝗿𝗱𝗲𝘀𝘁 𝗽𝗮𝗿𝘁𝘀 of building an LBO model.

So it takes a little longer to explain and I didn't have room for captions.

So take a few minutes, turn the sound on, and learn to model the Pro Forma Balance Sheet.

𝙉𝙚𝙭𝙩 𝙎𝙩𝙚𝙥𝙨 ⤵️

📥 Grab the template 👉 https://lnkd.in/ex6BKa4E

The 13-week cash flow is the lifeblood of the business.  Can we actually keep the lights on?  Here's how I'd start 👇


🕜 𝗧𝗶𝗺𝗶𝗻𝗴?

13 weeks, 4 weeks, 7 weeks?

Doesn't matter.

I just need a general sense of what cash will do in the short term.

When will I collect payments?

Can I pay vendors?

Can I make payroll?


😡 𝗔 𝗙𝗿𝘂𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻

What drives me nuts about these forecasts?

They have become so overly "professionalized" that no one understands them.

I just want to know:

"What will my bank account look like next week?"

"How about two weeks from now?"

Enough of the fluff.


📚 𝗤𝘂𝗶𝗰𝗸 𝗦𝘁𝗮𝗿𝘁 𝗚𝘂𝗶𝗱𝗲

Open a spreadsheet and whip this thing together.

You build it like this:

1. Stuff that comes in

-- minus --

2. Stuff that goes out

= What you have left.

(repeat for next week)

(💡𝗽𝗿𝗼 𝘁𝗶𝗽: add "float" to your beginning balance = cut checks that haven't been cashed)


🖼️ 𝗣𝗶𝗰𝘁𝘂𝗿𝗲 𝗧𝗶𝗺𝗲

In the example image I'm focused on three things:

1. Mapping out the past

2. Making reasonable estimates about the future

3. Figuring out if I have shortfall (so I can do something about it 𝙣𝙤𝙬)


➕ 𝗘𝘅𝘁𝗿𝗮 𝗧𝗶𝗽𝘀

💡𝗣𝗿𝗼 𝘁𝗶𝗽 𝟭: Build a "cushion" line called "unknowns" to make things conservative

💡𝗣𝗿𝗼 𝘁𝗶𝗽 𝟮: forecast expenses early, receipts late (making it conservative)

💡𝗣𝗿𝗼 𝘁𝗶𝗽 𝟯: forget about weeks, just 𝗯𝘂𝗶𝗹𝗱 𝗶𝘁 𝗯𝘆 𝗱𝗮𝘆

(you can always summarize by week later)


🧠 𝗟𝗲𝗮𝗿𝗻 𝗶𝗻 𝗬𝗼𝘂𝗿 𝗦𝗽𝗮𝗿𝗲 𝗧𝗶𝗺𝗲

The best way to practice?

𝗦𝘁𝗮𝗿𝘁 𝘄𝗶𝘁𝗵 𝘆𝗼𝘂𝗿 𝗼𝘄𝗻 𝗹𝗶𝗳𝗲:

   + paycheck in

   - expenses out

Build a short forecast, maybe 4 weeks at most.

How'd you do?

If you were even 𝘥𝘪𝘳𝘦𝘤𝘵𝘪𝘰𝘯𝘢𝘭𝘭𝘺 close,

you have the raw skills to do this at the business level.


📌 𝗧𝗟;𝗗𝗥

   1. Map out history
   2. Make conservative estimates about the future
   3. Make a plan now


𝙉𝙚𝙭𝙩 𝙎𝙩𝙚𝙥𝙨 ⤵️

Here's a personal cash flow template to get you started.

📥 https://lnkd.in/edmwgYCv

Financial models can get insanely complicated, so I made this simple video to show how just ONE inventory purchase travels all the way through, which helps you visualize the cash conversion cycle 👇


✔️ 𝗧𝗵𝗲 "𝗥𝗲𝗴𝘂𝗹𝗮𝗿" 𝗔𝗽𝗽𝗿𝗼𝗮𝗰𝗵

Model Revenue & COGS first.

Then, calculate 𝘪𝘮𝘱𝘭𝘪𝘦𝘥 working capital using DSO, DPO, or DOH.


📙 𝗔𝗻𝗼𝘁𝗵𝗲𝗿 𝗪𝗮𝘆 𝘁𝗼 𝗗𝗼 𝗜𝘁

Model Inventory 𝗣𝘂𝗿𝗰𝗵𝗮𝘀𝗲𝘀 𝙛𝙞𝙧𝙨𝙩, and:

   - Watch it flow through AP
   - Then your Income Statement
   - And lastly through AR where cash is received


📝 𝗠𝘆 𝗳𝗮𝘃𝗼𝗿𝗶𝘁𝗲 𝗽𝗮𝗿𝘁?

This is a great way to 𝗹𝗲𝗮𝗿𝗻 𝗮𝗰𝗰𝗼𝘂𝗻𝘁𝗶𝗻𝗴 𝘁𝗵𝗿𝗼𝘂𝗴𝗵 𝗺𝗼𝗱𝗲𝗹𝗶𝗻𝗴, and also helps you "see" the cash conversion cycle over a few months.


𝙉𝙚𝙭𝙩 𝙎𝙩𝙚𝙥𝙨 ⤵️

I wish I could give away the model in this video but it's a half-broken WIP I use to create one-off lessons (like this one).

So here's the next-best thing: a guide to help you build the Balance Sheet.

📥 Grab it here: https://lnkd.in/ew4nwaVx

Here's a video on how I build direct and indirect cash flows in the 𝘴𝘢𝘮𝘦 financial model (and it's an awesome double-check) 👇


📘 𝗥𝗲𝗴𝘂𝗹𝗮𝗿 𝗪𝗮𝘆:

Normally, a three statement model uses the 𝗶𝗻𝗱𝗶𝗿𝗲𝗰𝘁 method only.

That means Net Income + 𝘤𝘩𝘢𝘯𝘨𝘦𝘴 in the Balance Sheet.


🔑 𝗧𝗵𝗲 "𝗧𝗿𝗶𝗰𝗸" 𝘁𝗼 𝘁𝗵𝗲 𝗗𝗶𝗿𝗲𝗰𝘁 𝗠𝗲𝘁𝗵𝗼𝗱:

How do I build both?

I use something called the "𝗕𝗔𝗦𝗘" or "𝗖𝗼𝗿𝗸𝘀𝗰𝗿𝗲𝘄" modeling technique, which works like this:

𝗕𝗲𝗴𝗶𝗻𝗻𝗶𝗻𝗴 𝗕𝗮𝗹𝗮𝗻𝗰𝗲
   (➕) Plus: [additions]
   (➖) Less: [subtractions]
𝗘𝗻𝗱𝗶𝗻𝗴 𝗕𝗮𝗹𝗮𝗻𝗰𝗲


📜 𝗔𝗥 𝗘𝘅𝗮𝗺𝗽𝗹𝗲:

So for Accounts Receivable it would be:

𝗕𝗲𝗴𝗶𝗻𝗻𝗶𝗻𝗴 𝗔𝗥
   (➕) Plus: Revenue
   (➖) Less: Cash Receipts
𝗘𝗻𝗱𝗶𝗻𝗴 𝗔𝗥


🔁 𝗛𝗼𝘄 𝗜𝘁 𝗟𝗶𝗻𝗸𝘀 𝘁𝗼 𝗬𝗼𝘂𝗿 𝗠𝗼𝗱𝗲𝗹

You can 𝗹𝗶𝗻𝗸 𝘁𝗵𝗲 𝗰𝗮𝘀𝗵 𝗽𝗼𝗿𝘁𝗶𝗼𝗻 of these BASE accounts to your direct method cash flow.

This makes the overall cash section so much easier to understand and also serves as a great way to double-check the structure of your model.

I've been putting this "direct method double-check" into every model I build.


𝙉𝙚𝙭𝙩 𝙎𝙩𝙚𝙥𝙨 ⤵️

📥 𝗦𝘁𝗮𝗿𝘁: Grab this indirect one-pager › https://lnkd.in/ez9Af7er 

🎓 𝗔𝗱𝘃𝗮𝗻𝗰𝗲: Join 91k+ students › https://bit.ly/FMECourses

My simple process for refreshing Actuals each month (helpful if you're the person who "owns the model") 👇


𝗞𝗲𝗲𝗽 𝗶𝘁 𝘀𝗶𝗺𝗽𝗹𝗲:

It all starts with an IF trigger - a formula that identifies whether we're looking at "Actual" results or still in "Forecast" mode.

If Actuals are available, it pulls directly from the Chart of Accounts (its own tab).

If not, it uses the forecast formula.

I control this through a LATEST_ACTUALS named range on my control panel.

That way, one simple date change updates the entire model.


𝗟𝗼𝗴𝗶𝗰 𝗳𝗹𝗼𝘄:

This logic flows through everything:

- Income Statement updates based on actuals
- Balance Sheet pulls new actual data
- Cash Flow Statement is automatic (indirect method)
- Support schedules adjust accordingly


𝗪𝗮𝗶𝘁... 𝗶𝘀 𝘁𝗵𝗶𝘀 𝗿𝗶𝗴𝗵𝘁?

Most importantly, I always include validation checks on my Control Panel to ensure everything reconciles properly.

- Does net income match QuickBooks?
- Does the balance sheet balance?
- Does ending cash match?


𝗣𝘂𝗻𝗰𝗵𝗹𝗶𝗻𝗲:

The beauty of this system is its simplicity:

↳ Formulas do the heavy lifting
↳ Built-in validations catch errors
↳ No manual data entry needed
↳ One trigger cell controls everything

Hope this helps 🙂.


𝙉𝙚𝙭𝙩 𝙎𝙩𝙚𝙥𝙨 ⤵️

If you want help mapping out a model, grab this checklist.

📥 https://lnkd.in/eVTU67fY

I still see this mistake 𝘢 𝘭𝘰𝘵, so I just want to drive home the fundamentals on building the balance sheet / SCF 👇


❌ 𝗙𝗶𝗿𝘀𝘁, 𝘁𝗵𝗲 𝗺𝗶𝘀𝘁𝗮𝗸𝗲:

Using the Statement of Cash Flows to 𝗿𝗲𝘃𝗲𝗿𝘀𝗲 𝗲𝗻𝗴𝗶𝗻𝗲𝗲𝗿 the Balance Sheet.

That's a "no no."

I see it most often in the Cash from Investing section.

For example, if someone knows they're going to spend $10,000 on new equipment:

1. They'll add $10,000 to the Cash Flow Statement first, and 𝘵𝘩𝘦𝘯;

2. Add that amount to the Fixed Assets account in the Balance Sheet


👎 𝗧𝗵𝗲 𝗗𝗼𝘄𝗻𝘀𝗶𝗱𝗲

It's not "wrong" from an 𝗮𝗰𝗰𝗼𝘂𝗻𝘁𝗶𝗻𝗴 perspective.

That's actually fine, but...

It will likely mess you up from a 𝗺𝗼𝗱𝗲𝗹𝗶𝗻𝗴 perspective.

Once you've got stuff from the balance sheet going to the cash flow statement 𝘢𝘯𝘥 vice versa, it's very likely you will create an error or unintended circular reference.


✅ 𝗛𝗲𝗿𝗲'𝘀 𝘁𝗵𝗲 𝗰𝗼𝗿𝗿𝗲𝗰𝘁 𝘄𝗮𝘆 𝘁𝗼 𝗱𝗼 𝗶𝘁:

1. Build the Income Statement

2. Build the Balance Sheet

3. 𝘛𝘩𝘦𝘯 build the Statement of Cash Flows (using the "indirect method")

What do I mean by the "indirect method"?

It means you refer to items that 𝘢𝘭𝘳𝘦𝘢𝘥𝘺 𝘦𝘹𝘪𝘴𝘵 in your Income Statement and Balance Sheet, and calculate the difference b/t time periods.

It works like this:

= Net Income (from Income Statement)

+ D&A (from Income Statement)

+/- the 𝘤𝘩𝘢𝘯𝘨𝘦 𝘪𝘯 Assets, Liabilities, & Equity


➕ 𝗔𝘀𝘀𝗲𝘁𝘀

For Assets, it's the previous period minus the current period

(i.e., January's ending AR balance minus February's ending AR balance)


➖ 𝗟𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀

For Liabilities, it's the current period minus the previous period

(i.e., February's ending AP balance minus January's ending AP balance)


🟰 𝗘𝗾𝘂𝗶𝘁𝘆

For Equity, it's the current period minus the previous period (same as Liabilities)

(i.e., February's ending Contributed Capital balance minus January's ending Contributed Capital balance)


⚠️ 𝗢𝗻𝗲 𝗘𝘅𝗰𝗲𝗽𝘁𝗶𝗼𝗻

The only exception to this rule is Fixed Assets, where you will also pull out the Depreciation because it's 𝘢𝘭𝘳𝘦𝘢𝘥𝘺 captured in the Cash from Operations.

(i.e., January's ending Fixed Asset balance minus February's ending Fixed Asset balance 𝘮𝘪𝘯𝘶𝘴 𝘍𝘦𝘣𝘳𝘶𝘢𝘳𝘺'𝘴 𝘋𝘦𝘱𝘳𝘦𝘤𝘪𝘢𝘵𝘪𝘰𝘯)


𝙉𝙚𝙭𝙩 𝙎𝙩𝙚𝙥𝙨 ⤵️

📥 𝗦𝘁𝗮𝗿𝘁 𝗵𝗲𝗿𝗲: one-pager download: https://lnkd.in/ez9Af7er 

🎓 𝗚𝗼 𝗱𝗲𝗲𝗽𝗲𝗿: master the full skillset: https://bit.ly/FMECourses

A short one-pager to explain "GRR" (Gross Revenue Retention) in SaaS 👇


𝗚𝗥𝗥 𝟭𝟬𝟭

GRR or "Gross Revenue Retention" is a common metric used in SaaS companies.

I like to think of it as, "here's how much ARR I have left after accounting for Downsells and Churn."

You're basically seeing how much your Revenue shrunk without accounting for anyone who might have upgraded (via an Upsell).

It's expressed as a percent, so the basic formula is:

(Beginning ARR - Downsells - Churn) / Beginning ARR


𝗤𝘂𝗶𝗰𝗸 𝗘𝘅𝗮𝗺𝗽𝗹𝗲

So if ARR looked like this:

Beginning ARR     $100,000
+ Upsells                $10,000
- Downsells            ($5,000)
- Churn                   ($3,000)
Ending ARR           $102,000

Then GRR would be:

GRR = ($100,000 - $5,000 - $3,000) / $100,000

GRR = $92,000 / $100,000

GRR = 92%


𝗦𝗮𝗶𝗱 𝗦𝗶𝗺𝗽𝗹𝘆...

"I only have 92% of the Recurring Revenue I started with."

 
𝗦𝗼 𝗪𝗵𝗮𝘁...?

Then, to actually do something about it, the next thing you'd ask is "why?"

Reach out to the customers, get the story, and hopefully make some changes in the future.


𝙉𝙚𝙭𝙩 𝙎𝙩𝙚𝙥𝙨 ⤵️

When it's time to take 𝘢𝘤𝘵𝘪𝘰𝘯 on what to do, this guide can help:

📥 Data storytelling guide: https://lnkd.in/dCt-P3Na

This remains my favorite "tagging" technique when building time-series models. Awesome guide that Jason Hershman put together 👇


Having trouble tagging him, but Jason Hershman put this together (https://bit.ly/PointFPA) -- he's a long-time modeler and fellow FTI Consulting alum.


𝗔 𝗳𝗿𝗲𝗾𝘂𝗲𝗻𝘁 𝗶𝘀𝘀𝘂𝗲 / 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻 𝗜 𝘀𝗲𝗲:

"𝘏𝘰𝘸 𝘤𝘢𝘯 𝘐 𝘣𝘶𝘪𝘭𝘥 𝘵𝘩𝘦 𝘮𝘰𝘥𝘦𝘭 𝘲𝘶𝘢𝘳𝘵𝘦𝘳𝘭𝘺 𝘰𝘳 𝘢𝘯𝘯𝘶𝘢𝘭𝘭𝘺?"


Here's the catch: you DON'T build it by quarter.

You 𝙗𝙪𝙞𝙡𝙙 𝙞𝙩 by month and then 𝙨𝙪𝙢𝙢𝙖𝙧𝙞𝙯𝙚 by quarter, year, etc.

You do this by building the "hooks."

Jason illustrates this on Slide 7 (sometimes called "tags" as well).

Those additional rows act as reference points for rolling into a larger summary.


𝗦𝘂𝗺𝗺𝗮𝗿𝗶𝘇𝗶𝗻𝗴

From there you can use SUMIFS, INDEX/MATCH, XLOOKUP, SUMPRODUCT to 𝙥𝙧𝙚𝙨𝙚𝙣𝙩 your data in a different format such as quarterly or annually.

But most importantly, you still have your detailed monthly model sitting underneath it all.


💡𝗣𝗿𝗼 𝗧𝗶𝗽: Fiscal vs Calendar year

If your 𝗳𝗶𝘀𝗰𝗮𝗹 𝘆𝗲𝗮𝗿 differs from your 𝗰𝗮𝗹𝗲𝗻𝗱𝗮𝗿 𝘆𝗲𝗮𝗿...

1. Create a lookup/mapping tab that maps calendar dates to fiscal dates, then;

2. Using a lookup function, you add the fiscal dates as another "hook" to the model

(i.e., another row as shown on Slide 7).

✓ This allows you to 𝘀𝘂𝗺𝗺𝗮𝗿𝗶𝘇𝗲 𝘆𝗼𝘂𝗿 𝗺𝗼𝗱𝗲𝗹 𝗯𝘆 𝗳𝗶𝘀𝗰𝗮𝗹 𝘆𝗲𝗮𝗿.


𝙉𝙚𝙭𝙩 𝙎𝙩𝙚𝙥𝙨 ⤵️

📥 Grab a copy here: https://bit.ly/excel-hooks

Building Excel tags/hooks to summarize your model

My first Private Equity interview started at 9am, 𝗲𝗻𝗱𝗲𝗱 𝗮𝘁 𝟭𝟬𝗽𝗺, and was a head-to-head competition with someone else 👇


𝗣𝗮𝗿𝘁 𝟭:

The day started normal enough: show up wearing "the suit," feeling jitters.

Told there was an "accidental schedule conflict," so I'd be interviewing alongside another candidate.

(deliberate of course, but I didn't realize it at the time).

Weird, I thought, but I just said "okay" and kind of moved on.

Regular day from there -- conversations with the team and a modeling test.

(I could 𝘯𝘰𝘵 get my balance sheet to balance, btw 🫠)


𝗣𝗮𝗿𝘁 𝟮:

We moved to dinner and drinks, much more casual.

But with another candidate there, I'm left wondering...

  - Am I saying enough?
  - Is he sounding smarter than me?

I've always been super introverted, so while I can "turn it on" in those social settings, it's not my comfort zone.


𝗣𝗮𝗿𝘁 𝟯:

The Partners "call it a night," and we head to the bar with the Associates.

The other candidate invites a girl to the bar, then kind of disappears.

I sat and talked with the Associates most of the time.

Eventually, we got an Uber back to my hotel, said thanks and goodbye, and parted ways.

I had no idea "how I did," but in my gut felt like it was decent that I at least finished the night with team members.

(and they were cool guys, so it was easy).


𝗣𝗼𝘀𝘁 𝗴𝗮𝗺𝗲:

I eventually got the job.

I'll never truly know how "well I did" vs the other guy, but since I submitted a busted model (🙃) , I have to assume the fit was better.‍


𝗧𝗵𝗲 𝗷𝗼𝗯 𝗶𝘁𝘀𝗲𝗹𝗳

It turned out to be really hard (at least for me).

I wasn't prepared for the hours or the travel schedule.

(I came from a more "comfy" 9-5 FP&A role).

Honestly, it was too much for me at times.

But, 𝗜 𝗹𝗲𝗮𝗿𝗻𝗲𝗱 𝗮 𝗧𝗢𝗡.  There was more growth in that one role than there was anywhere else in my career (other than going out on my own).

It's also why I created a modeling program: to help people learn faster and not struggle like I did: https://bit.ly/FMECourses 


𝗟𝗲𝘀𝘀𝗼𝗻𝘀 𝗹𝗲𝗮𝗿𝗻𝗲𝗱:

1️⃣ A huge part of PE is 𝘩𝘰𝘸 𝘺𝘰𝘶 𝘩𝘢𝘯𝘥𝘭𝘦 𝘺𝘰𝘶𝘳𝘴𝘦𝘭𝘧 𝘸𝘩𝘦𝘯 𝘵𝘩𝘪𝘯𝘨𝘴 𝘢𝘳𝘦 𝘶𝘯𝘦𝘹𝘱𝘦𝘤𝘵𝘦𝘥.

   - the "double booking"
   - unplanned travel
   - long hours

2️⃣ Also, 𝘩𝘰𝘸 𝘥𝘰 𝘺𝘰𝘶 𝘩𝘢𝘯𝘥𝘭𝘦 𝘺𝘰𝘶𝘳𝘴𝘦𝘭𝘧 𝘴𝘰𝘤𝘪𝘢𝘭𝘭𝘺?

Modeling skills get you in the door, but a huge part is spending time on the road meeting management teams.

That means all different types of personalities.

You need some level of EQ to build a partnership.

And although the travel was a lot for me, I loved the time onsite.

Meeting the entrepreneurs ultimately inspired me to do my own thing.


𝗣𝘂𝗻𝗰𝗵𝗹𝗶𝗻𝗲

PE is no joke, but it can be a really fulfilling career if you can find a good team and build genuine, human relationships with your portfolio companies.

I put this guide together as one small tool that can help.

📥 https://lnkd.in/ewh-x6_k

Private Equity Interview Guide

My quick thoughts on AI & financial modeling:

- AI is great in 𝗲𝘅𝗽𝗲𝗿𝗶𝗲𝗻𝗰𝗲𝗱 hands

- Experience can interpret what AI builds (and spot any mistakes)

- You gain this experience “the hard way,” building models from scratch

- By doing so, not only do you gain technical skills (Excel, etc.)…

- You 𝘭𝘦𝘢𝘳𝘯 𝘵𝘩𝘦 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴 along the way (which is ultimately your job)

AI can definitely save you time on the front end, but you’ll likely use that same time on the backend (1) interpreting/auditing the model and (2) learning the business.

That’s why I still prefer using the time to build by hand.  The total net time may be greater, but I’ll understand more.

𝗣𝗲𝗿𝘀𝗼𝗻𝗮𝗹 𝘀𝘁𝗼𝗿𝘆: taught myself to build a ROU Asset / Operating Lease with AI in a client model.  It worked because I already knew the underlying finance and accounting — my experience allowed me to take advantage of the tool.

I think the professionals best-suited for the future will have the foundation of old school learning coupled with new school tools.  That’s the edge.


𝗔𝗻𝗱 𝗮𝘀 𝗮 𝗻𝗲𝘅𝘁 𝘀𝘁𝗲𝗽...

If you're building a model from scratch, sometimes it's hard to know where to start.

📥 This checklist can help: https://lnkd.in/eVTU67fY

Which of the following is 𝘯𝘰𝘵 part of Cash from Investing Activities?

Take the full quiz here 👉 https://lnkd.in/eccYpT-R

Which of the following is not part of Cash from Investing Activities?

The author can see how you vote. Learn more

Antikythera Consulting, LLC

Operating Performance Services Powered by Financial Reporting, Finance, Analytics, Data, Digital Technology.

SEC Restatement project for Power Solutions, Inc, including complex accounting for multiple financial instrument financing transactions and stock compensation.
 
Annual Reporting, quarterly reporting, benefit plans’ reporting, ASC 842 lease accounting and adoption effective January 1, 2021, and other advisory for TTX. Worked with January 1, 2020 conversion from SAP mainframe enterprise ERP to Oracle Cloud enterprise ERP, part of adoption of a suite of Oracle Cloud Applications.

Principal

TTX Company

Responsible for GAAP compliance in accounting and reporting, and beginning process for IFRS adoption/conversion.  Expertise areas include accounting and reporting for benefit plans, including defined beneft pension plans; accounting for income taxes; cash flow presentation, and data analyses.  BI/Executive Dashboard/Data Warehouse subject matter expert [SME], data steward, and participant in IT data governance. Involved in internal controls assessment, KPI development, and various trasaction authorization and control procedures.  Actively involved in Financial Reporting for four defined benefit and defined contribution pension plans.

Senior Manager, Accounting Standards, Procedures, & Analysis (Retired)

Barrett Peterson

Provide services for interim or part-time accounting and financial management; projects like IT systems, cost/pricing analyses, cost accounting systems, M&A; financial reporting, including SEC compliance, specialized services in turn-around or bankruptcy; tax return preparation for individuals and businesses; business accounting and financial statement compilation/preparation; and business process improvement services.  Projects have included a data warehouse for a $450 million company providing services to residential and commercial construction companies, re-developing SEC reporting (wrote MD&A, CD&A, Description of Business) for a $650 million company providing marketing research services, and installing a ledger and reporting system for a small non-profit.  I have worked on a SEC financial restatement project for a $12 Billion automotive industry company (Navistar), and a Financial Reporting, analysis, and accounting process improvements project for a $1.2 Billion railroad company.

Business Consultant and Accountant, CPA

Hydrox Laboratories

Directed finance and accounting, information systems, administration, production planning and scheduling, manufacturing, warehousing and distribution.  Improved on-time deliveries to 95% from low 70s.  Increased output 46% with minimal capacity expansion.  Hydrox manufactures products for the Health Care, and Beauty Care markets.

CFO and acting COO

Barrett Peterson Consulting

Interim Financial Management for Ultimo Enterprises and Hydrox Laboratories; Bankruptcy work for Scentex and Evans Furs; process improvement advisory services.

Owner (Consultant), CPA

Graphic Direct A J Kennedy

Directed accounting, finance, administration, purchasing, production scheduling, and (digitally processed) personalization operations.  Led turn-around from a loss of $1.3 million/year to break even for this $13 Million/year commercial printer.

Vice President & CFO

Barrett Peterson, Independent Distributor

Marketing and distribution business offering air and water filitration products for home, office, and car.  Also offerec child educational development products for home and school use.

Owner

Olympic Packaging

Directed accounting, information systems, and office services.  Oversaw acquisition and integration of a second facility.  This company was a $50 million/year paperboard packaging (folding cartons) manufacturer.

Financial Manager (CFO)

Tech Web, Inc.

Directed accounting, finance, information systems and human resources for this $50 million+/year commercial printer.

Vice President, Finance (CFO)

Container Corporation of America

Directed 72 people in accounting and office services.  Responsible for Corporate financial reporting, corporate conformance with SEC and GAAP/International accounting standards, U.S. shared services for receivables, payables and payroll.  Directed four large information system installations, and responsible for running five large systems.  Company is a multi-plant, multi-national organization which operated in the United States, Europe.and Latin America.  company was about $2 billion/year operation at the time.

Corporate Manager [AVP level], Accounting

I drive corporate fitness and performance from data and finance.  My experience includes:

Senior corporate financial management;
Interim Chief Financial Officer;
Turn-around management;
Bankruptcy management and services;
Information systems project managment - large and small;
Management of manufacturing and distribution operatins;
Internal controls design, evaluation, and documentation;
Mergers &amp; Acquisitions;
Financial reporting, including SEC filings;
Asset-based, mezzanine, secured, and unsecured financing facilities;
Process improvement projects;
Independent and internal audit;
Benefit plans' managment; including Financial Reporting for ERISA and IRS
Human resouces management;
Non-profit organization financial management and reporting;
Manufacturing, consumer products, retail, and service industries;
Activity based and traditional cost accounting management;
Budgeting and projections;
Financial analysis;
Strategy development.

I apply my skills to help an organization thrive by aiding in small or large continuing improvement efforts.  My experience demonstrates this impact will grow from a base in financial and information management.

Specialties: CPA;
Interim financial management;
Corporate financial management;
accounting;
mergers and acquisitions;
information systems design, installation and operation;
process improvement;
Financial Reporting, including SEC;
internal controls design, evaluation, and documentation;
securing financing facilities;
turn-around success;
work with bankrupt companies;
cost accounting in manufacturing, retail, and services;

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