Why do buyers develop an Excel financial model for Mergers and Acquisitions deals?

Buyers develop an Excel financial model for Mergers and Acquisitions deals primarily because it enables rapid modification of financial assumptions. This flexibility is essential during the evaluation process as it allows buyers to quickly assess how changes in variables like revenue growth rates, cost structures, or financing terms impact the overall valuation and potential return on investment. Excel’s capabilities make it ideal for running various scenarios and sensitivity analyses, which help buyers understand the range of possible outcomes based on different assumptions.

This adaptability is crucial in M&A transactions, where buyers often need to perform real-time analysis and adjustments based on new information or insights gained during due diligence. This quick-response feature of Excel models supports strategic decision-making and helps buyers arrive at more informed conclusions on whether to proceed with a transaction or negotiate different terms.