Author: Ryan Spear
Skilled analysts are changing companies and roles at an increasing rate.
Often overlooked, the model handover process comes up more often than you might consider. From collaborating on deals, to passing deals between teams, to changes in team members, this handover is crucial to maintaining a consistent approach to underwriting and reporting recommendations to investment committees.
Within any team there are generally unspoken rules, such as version controls, reporting requirements, management expectations and above all, the stewardship of a single template model. Most companies will base their next deal on a template. However, each model and deal will have its own nuances, funding requirements, incentive structures and business plans.
There are plenty of easy ways to prepare your models for an easy handover when the need arises.
Here are some steps for a smooth transition:
- Embed modelling best practice into your day-to-day. Logical calculation flows will make it easier to handover/transition between team members.
- Avoid workbook dependencies where possible. All it takes is for the location of a workbook to move to have your entire model break. This knowledge is commonly held in someone’s head, or in a document hidden in a hard-to-find location.
- Have a clearly defined process for versioning your workbooks. Being unable to quickly revert to an old version of a model can spell death for a property deal. The simplest example of this is to manage a restricted folder of master models. Extra redundancy comes from using OneDrive or SharePoint’s ability to revert to old file versions.
- Develop a baseline proficiency in excel among all quantitative members of your team. Having multiple sets of eyes that can spot small errors at a glance will greatly improve new employee onboarding.
- Clearly define the calculation for each metric your company focuses on. You will often take your key metrics for granted. However, after working with hundreds of real estate groups, metrics with the same name will often have a different meaning for different professionals.
- Understand the scope of each model. Model bloating occurs mostly when taking a model built for one purpose and trying to twist the ability into another. Taking a model built for income producing assets and trying to tack on a BTR module is not the way to go. It might seem like a place to start but having a clear distinction between model purposes will help keep errors in check through deliberate design.
- Give your new team members time to learn the model. We all bring biases, expectations and opportunities for improvement from our prior experiences into a new role. A new analyst will likely take certain calculations as a given. You want to eradicate assumptions in the first few weeks. Ensure your new starter has had time to understand the inner workings of the model and dependencies that will cause issues in the future.
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