To Excel or Not to Excel?
Why is the investment world hooked on Excel? Maybe it’s because it works well, and every business student has to learn how to use it. Or, perhaps, it’s the fact that every investment firm in the world wants to look at the model of any opportunity (and they typically prefer to see these models displayed in an Excel spreadsheet.) But is this really the best way? Some companies are saying “Stop!”
This is not the first time some companies have called for the end of Excel. But it’s hard to get off the bandwagon – using Excel is ingrained in the process of modeling investment opportunities.
Should we stop using Excel? If so, what’s the alternative?
I believe we should stop using Excel because every time an analyst builds an investment model it is different and each is prone to errors. Even the same analyst models differently every time. These are huge challenges for the uniformity of any financial analysis, not mention audit and control.
At Ultra Capital, we identified this challenge and developed an underwriting process that mitigates risk and improves the predictability of outcomes. From the onset, we knew we had to create a repeatable and uniform approach to financial analysis to reduce modeling errors. We also wanted to drastically simplify the process, looking only at the variables that drive a model, and including probabilistic analysis instead of only deterministic. Proudly, we built a system that would enable us to do this and a lot more. It’s an exciting road that Ultra has taken and it’s now paying off.