The building blocks of every model
A model is a handful of schedules wired together. Learn the schedule and you can find it in every model that uses it; each page below explains one, lists the lines a good version carries, names the mistakes a reviewer looks for, and shows exactly where it sits in each downloadable model.
The statements
Revenue build
Where the top line comes from
In Integrated three-statement model, Discounted cash flow model, Leveraged buyout model
Operating costs and margins
Cost of sales, opex, EBITDA
In Integrated three-statement model
Tax
Tax on profit, and tax on operating profit
In Discounted cash flow model, Leveraged buyout model, Merger model: accretion and dilution
Equity roll-forward
Share capital and retained earnings
In Integrated three-statement model
Cash flow statement
Indirect method, closing on balance-sheet cash
In Integrated three-statement model, Discounted cash flow model, Leveraged buyout model
Balance sheet
Every line from a schedule, and the check
In Integrated three-statement model
Operating schedules
Working capital schedule
Receivables, inventory and payables in days
In Integrated three-statement model, Discounted cash flow model, Leveraged buyout model
Capex and depreciation (PP&E roll-forward)
Opening, plus capex, less depreciation, closing
In Integrated three-statement model, Discounted cash flow model, Leveraged buyout model
Financing schedules
Valuation and returns
Cost of capital (WACC)
CAPM, after-tax debt, target weights
In Discounted cash flow model
Discounting and terminal value
Discount factors, two terminal methods, reconciled
In Discounted cash flow model
Enterprise value to equity value
Debt off, cash on, per share
In Discounted cash flow model
Returns analysis
Exit value, MOIC, IRR and the bridge
In Leveraged buyout model
Sensitivity tables
Two assumptions at once, without a data table
In Discounted cash flow model, Leveraged buyout model, Merger model: accretion and dilution
Calendarisation
Every peer on the same calendar year
In Comparable companies model
LTM build
Last fiscal year, plus the stub, less the prior stub
In Comparable companies model
Trading multiples
Enterprise value, the five multiples, and the range
In Comparable companies model
Precedent transactions
What acquirers paid for control
In Comparable companies model
Football field
Each range applied to the target, to a share price
In Comparable companies model
Transaction schedules
Sources and uses
What the deal costs and who funds it
In Leveraged buyout model, Merger model: accretion and dilution
Purchase price and consideration
Offer, premium, mix, new shares, exchange ratio
In Merger model: accretion and dilution
Synergies
Run-rate, phase-in, after tax
In Merger model: accretion and dilution
Purchase accounting
The write-up that amortises
In Merger model: accretion and dilution
Pro forma EPS: accretion and dilution
Standalone to pro forma, per share
In Merger model: accretion and dilution
Contribution analysis
What each side brings against what it owns
In Merger model: accretion and dilution
Venture schedules
SAFE conversion
What a post-money SAFE turns into at the round
In Cap table and exit waterfall model
Priced round and option pool
Pre-money to price per share, with the pool shuffle
In Cap table and exit waterfall model
Exit waterfall
Preference or conversion, then what reaches the common
In Cap table and exit waterfall model