What is Financial Modeling for Investment Banking?
In investment banking, financial modelingWhat is Financial ModelingFinancial modeling is performed in Excel to forecast a company's financial performance. Overview of what is financial modeling, how & why to build a model. is required for a wide range of services and transactions, including mergers, acquisitions, leveraged buyoutsLeveraged Buyout (LBO)A leveraged buyout (LBO) is a transaction where a business is acquired using debt as the main source of consideration. An LBO transaction typically occur when a private equity (PE) firm borrows as much as they can from a variety of lenders (up to 70-80% of the purchase price) to achieve an internal rate return IRR >20%, and underwriting in equity, debt, and hybrid markets. The clients of banks that require the models can be governments, institutions, corporationsCorporationA corporation is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit. Corporations are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes, and borrow money from financial institutions., and nonprofits around the world. The work of building a model is typically performed in Excel by an Analyst or Associate.
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