For Private equity
Diligence the model, not just the business
Audit target company models and management accounts for broken logic, hidden assumptions, and formula inconsistencies before they influence your investment decision.
Your day with Formula Audit XL
Diligence on a target's management model
The target sends their three-statement model as part of the data room. Before building your own view, run a consistency check on the revenue schedule. Several growth assumptions are hardcoded in cells where formulas are expected. You note them as diligence items before the management meeting.
Tracing a revenue driver the model claims
Management references a specific upsell assumption as a key value driver. Trace its precedents through the model to understand exactly how it flows into EBITDA. The path reveals it is double-counted in two sub-schedules.
Reviewing your model against the management case
You've built an independent LBO. Run Model Check on the management file and on your own. Any errors, hardcodes, or broken references in either model become explicit diligence points. Use Cell Map on the management workbook to confirm its structural assumptions align with how your model is built. Discrepancies in the working capital treatment become the focus of the next diligence session.
Post-completion: 100-day plan model review
The deal closes. The operating model is now owned by the portfolio company's CFO. Run an audit to establish a clean baseline: document the formula structure, clear out any remaining hardcodes, and confirm the version the CFO takes ownership of is the correct one.
Private equity diligence demands skepticism about every assumption in a management model, especially the ones that are hardest to find. A target’s Excel model is a primary diligence document. Understanding its structure, verifying its logic, and comparing it against your own view is analytical work that deserves the same rigor as any other part of the process.
“Management models in diligence are rarely clean. Being able to systematically flag hardcoded assumptions and broken references changes how quickly we can form a view on model quality.”
Stop eyeballing models. Start auditing them.
For Microsoft Excel on Windows: 2016, 2019, 2021 & 365 · No data leaves your machine