14 steps to improved marketing in your financial model

by Rickard Wärnelid at August 25 2009

In the majority of large transactions the information pack that is circulated will include a number of written documents (Information Memorandum (IM), etc) and a financial model.

The presentation of the Information Memorandum is pretty much always spotless and has been prepared by a professional print-marketing company. Everyone agrees that the presentation of this information is critical to the success to the transaction.

Presentation of the financial model in a corporate finance transaction

Unfortunately the financial model that comes with the written documentation often ignores the great marketing intentions of the team who put together the written collateral. Often the colours, fonts, and sometime even numbers(!) don’t add up to what has been presented in writing.

How to align the Information Memorandum with the financial model

Aligning your financial model to the information memorandum is not always easy, but if you consider this from the start then it is reasonably straight forward. They way to think about it is ‘I need to prepare this model so that the marketing team can copy-paste certain outputs into the Information Memorandum’.

Suggested actions

Use Excel Styles to achieve perfect consistency
Apply a tailored colour-scheme aligned with your corporate profile (ask Marketing for the RGBs)
Use logos as taglines as per the marketing guidelines (it doesn’t have too be complicated so prepare a draft and show it to marketing and adjust accordingly)
Prepare a cover sheet which links the model to the Information Memorandum
Prepare a Summary Sheet with all the outputs that are presented in the IM
Ensure that there is built in Scenario Functionality so that a user can replicate the scenario analysis outputs in the IM
Perform an independent review (financial model audit) of the financial model - it would damage the deal if an error is prepared in the model at this stage
Review the model for typos, incorrect spelling, lack of units, incorrect acronyms, etc
If macros are used - use proper Error Handling to give tailored error messages should something not work. You really don’t want an investor to get the error message ‘Error -45234′ but rather ‘Unfortunately the intended actionwas interrupted. Please contact your contact at XXX a phone number YYY for further assistance’.
Password protect the file (or, if you have a large file - zip the file and password protect the zip-file)
Create a log sheet so that investors can track changes between different versions
Use a Comment System to enable more efficient communication with investors

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Comments

Great article, thanks Rickard.
It’s very true. I’ve seen companies that have beautifully laid out document templates with corporate branding, standard font size etc, and yet the financial model that accompanies the document does not come close to adhering to the same standard.
It goes without saying that the numbers need to be correct, but financial modellers should not be excused from upholding the same rigours of design, layout and (dare I say?) spelling!
Danielle Stein Fairhurst
Plum Solutions

Danielle Stein Fairhurst | 29/08/2009 6:52am

Good article with practical points.

I have noticed that the value of good, clean, consistent formatting is usually underestimated - the figures may be perfect, but if presented poorly will lose credibility.

Business users may not appreciate the complex formulae and macros that went into producing the final results in a document such as an IM, but they can easily get a poor initial impression of a poorly formatted and structured financial model.

Some people view formatting and tidying up as a final task to do once the model is finished. I believe good formatting (as described in the article) should be applied from the very beginning of a model build process.

Styles in Excel are relatively easy to use, but why do so few people use this functionality?

Gavin Townshend | 10/09/2009 9:21am

Hi Gavin,

I completely agree with your comment that Excel Styles are very easily accessible, quick to set up, and drastically improves presentation. I our courses we generally spend the first hour or so on Style and most people never look back. We frequently see people going back to the office after the financial modelling training course to rebuild their old models in a new format using styles!

Even if someone doesn’t find the time to build up their own set of styles then just ‘borrow’ a template from someone else. Just download one of our Financial Modelling Tutorials and you will get a free starting point which will do 90% of all formatting.

Rickard Wärnelid | 10/09/2009 9:30am