Managing Complex Models with Structure with Christopher Reilly

Financial Modeler's Corner

Welcome to the Financial Modeler's Corner (FMC), where we discuss the Art and Science of Financial Modeling with your host Paul Barnhurst.

Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.

In this episode of the Financial Modelers Corner, host Paul Barnhurst delves into the intricate world of financial modeling with returning guest Christopher Reilly. The conversation centers around what is necessary to build robust financial models, highlighting the importance of three-statement models and cash flow forecasting. The episode is filled with practical insights, advanced techniques, and professional experiences that underscore the significance of simplicity, accuracy, and best practices in financial modeling.

Christopher Reilly is a seasoned financial modeler with extensive experience in consulting, private equity, and financial modeling education. Starting his career during the financial crisis, Christopher worked on high-profile bankruptcies such as Lehman Brothers and Rescap. His journey took him from a senior analyst role at Hilton Worldwide to middle-market private equity, and eventually to founding his own financial modeling education business. Today, he focuses on teaching and building financial models, with his work being featured by Wharton Online, Wall Street Prep, and LinkedIn Learning among others.

Key takeaways from this week's episode include:

• The importance of simplicity in financial models and how over-complicating can hinder their effectiveness.
• Practical steps and considerations for building robust three-statement financial models.
• Tips for auditing models to ensure accuracy and integrity.
• How to use advanced Excel functions and shortcuts to enhance modeling efficiency.
• Insights into the role of AI in financial modeling and how it may shape the future of the profession.

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• Website - https://www.financialmodelingeducation.com/
• LinkedIn - https://www.linkedin.com/in/chris-reilly-mission-capital/

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In today’s episode:

[01:11] - Paul introduces the episode and welcomes back Christopher Reilly.

[02:31] - Christopher shares a story about a complex healthcare deal model that required significant simplification.

[03:55] - Discussion on the importance of keeping models simple and useful.

[05:01] - Christopher talks about his career journey and experiences over the past year.

[08:31] - Christopher explains why he is passionate about teaching financial modeling.

[11:43] - Why every finance professional should understand how to build a three-statement model.

[14:20] - Steps to take when beginning to build a three-statement model.

[22:17] - Tips on structuring models vertically and building essential checks to ensure accuracy.

[28:07] - How to effectively use support schedules and detailed assumptions in modeling.

[32:36] - Essential tips for error checking, building support schedules, and maintaining model integrity.

[39:10] - Key Excel formulas and functions necessary for building financial models.

[46:58] - Discussion on the potential impact of AI on financial modeling and its future integration.

[49:53] - Final thoughts and details on Christopher Reilly’s courses and where to find them.