Evergreen Fund Growth and the NAV Valuation Challenges Financial Modelers Face with Rafael
In this episode of Financial Modeler’s Corner, Paul Barnhurst sits down with Rafael Le Saux to talk about valuation, modeling, and how the field is changing. They dig into real challenges from working on complex models and what happens when things go wrong. The conversation also covers how private markets are evolving and why valuation is getting harder. It’s a practical look at how modeling connects to real decisions in today’s finance world.
Rafael Le Saux is a valuation and modeling expert with over 16 years of experience in financial advisory and alternative investments. He leads Valuation and Modeling Services at PwC Luxembourg, working across multiple asset classes. He has also worked at Partners Group and across global markets, including France, Australia, and Chile. Alongside his professional work, he teaches, speaks at industry events, and supports the valuation community.
Expect to Learn
Why a strong model structure is critical in real-world projects
The impact of evergreen and semi-liquid funds on valuation risk
Why regulators are increasing scrutiny on valuation practices
How AI is helping improve workflows but not replacing human judgment
How to bridge the gap between auditors and investment teams
Here are a few quotes from the episode:
“Some students are actually afraid of Excel, and you can see that change in just a couple of days.” - Rafael Le Saux
“Financial modeling is not just about numbers. It’s about understanding where you are today and where you’re going tomorrow.” - Rafael Le Saux
Valuation and modeling are becoming more demanding as markets continue to change. Better tools make the work faster, but they don’t replace the need for clear thinking and solid structure. The people who focus on understanding the “why” behind the numbers, not just the output, will be the ones who stand out.
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LinkedIn: https://www.linkedin.com/in/rafael-le-saux/
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In today’s episode:
[00:00] – Trailer
[04:25] – Modeling Horror Story
[06:36] – Teaching Modeling
[09:11] – AI in Education
[11:21] – AI in Daily Work
[16:45] – Luxembourg as a Financial Hub
[19:48] – Regulation & Valuation
[22:55] – Retail Investors & Private Markets
[26:59] – Valuation Frequency
[30:10] – Auditors vs Investment Teams
[33:30] – Excel Tips
[35:20] – World Cup Model
[37:30] – Rapid Fire
[44:00] – Final Advice
Full Show Transcript:
Host: Paul Barnhurst (00:44):
Financial Modeler's Corner is the world's premier modeling podcast. It is brought to you by the Financial Modeling Institute, the world's leading financial modeling accreditation organisation. Welcome to Financial Modeler’s Corner. I am your host, Paul Barnhurst, the FP&A guy. This is a podcast where we talk all about the art and science of financial modeling with distinguished financial modellers from around the globe. The Financial Modelers Corner podcast is brought to you by the Financial Modeling Institute. FMI offers the most respected accreditations in financial modeling, and that's why I completed the Advanced Financial Modeler this week. I'm thrilled to welcome Rafael to the show. Rafael, welcome to the show. Thank
Guest: Rafael Le Saux (01:30):
You Paul. Thank you so much for inviting me again.
Host: Paul Barnhurst (01:32):
No, really excited to have you. I know last time we had you on it was a panel discussion so we're excited to have you on just by yourself this time.
Guest: Rafael Le Saux (01:39):
Thank you.
Host: Paul Barnhurst (01:40):
So lemme give a little bit of Rafael's background and then we'll jump into some fun questions We have quite a bit we'd love to talk about. We'll see how much we can get through in our time. RafaelLe Saux is a seasoned valuation and modeling expert with over 16 years of experience in financial advisory and alternative investments. He currently leads Valuation and Modeling Services within PwC Deals and Strategy Luxembourg, where he advises clients on complex valuation matters across multiple asset classes. Before PwC, Rafaël served as Conducting Officer Valuation for Partners Group’s AIFM, one of Luxembourg’s largest in-house AIFMs, overseeing USD 120 billion of assets under management and contributing as a standing member of all four Global Valuation Committees (Private Equity, Private Debt, Real Estate, and Infrastructure). His career also includes more than nine years at a leading professional services firm across France, Australia, and Chile, as well as an Associate Director role at a niche infrastructure fund specializing in Public-Private Partnerships.
(02:57):
Rafael is vice chairman of the Luxembourg Valuation Professionals Association, co-leads its technical writing group and serves on the advisory board of the ED HEC Infrastructure and Private Assets Research Institute. He is a frequent speaker at industry events and has lectured valuation topics at 10 business schools, including Nemoa and the University of Luxembourg. He holds a degree from the University of El Dafo Ibanez in Chile and multiple professional designations including the CA i a charter holder financial modeling and valuation analyst, the accredited financial modeller, the chartered financial Modeler and the Certified Valuation Analyst, and he's also accredited in business valuation and certified valuation professional. Did I cover 'em all? Most
Guest: Rafael Le Saux (03:54):
Of them. I have a new one also but which is a certified ation professional Chew. I mean we was launched by the Luxembourg Ation Professional Association last year, so that doesn't count because we started ourselves. But yeah, thank you very much for the introduction Paul.
Host: Paul Barnhurst (04:06):
You're welcome and I love the background. I'm super excited to have you on again. I mean I know you do obviously tonne of work around valuations. You got many different certifications and experience there, but where I like to start with every guest, it's the same question I ask. We all have a horror story when it comes to modeling what's yours
Guest: Rafael Le Saux (04:25):
Goes back almost 15 years ago when I was brought into an office with a colleague to solve an issue for a very senior partner of the firm who wanted us to help a client with budgeting issues for a very large mining operation. And I remember very vividly that we were narrating a model that we needed to transform. This senior leader promised many different features and things to the client around this model. As soon as we went out of the office, we narrated the model and never, I didn't see him again. Any of the meetings and the model was just horrendous. I mean very difficult to follow. We had to rebuild it and at that point I was not an experienced modeller so it took me lot sweat and tears to produce something that was half decent but helped me also to learn core important it is to follow best practises when doing so. It was a very challenging process. Also learn a lot from mistakes to that and I think the client was half happy at the end at least, but much happier than when the initial version was shared with him and that was from very large mining operation. So yeah, it was painful memories but at the same time those are the kind of experience that you get where you start learning and you get to understand the importance of what we're doing in commercial modeling .
Host: Paul Barnhurst (05:49):
Definitely a lot of truth to that. You realise the value of good structure when you have to fix something that's a total mess,
Guest: Rafael Le Saux (05:57):
Which is it's Frankenstein type of model that started from different sources here and there that was linked and there is no consistency across the different working elements. So those for me are the hardest to link and this one was definitely one of those.
Host: Paul Barnhurst (06:16):
No, I hear you. I've built a few Franken models as I like to call 'em in my time, so I totally get it. I want to talk a little bit about education. I know you've lectured, you've done some teaching at several different universities. What is it that you enjoy about that in your profile? I mentioned 10 different universities, so what is it you enjoy about lecturing at different universities?
Guest: Rafael Le Saux (06:36):
Well, we have more value as professionals coming to interact with students is that most academics are not actively working with Excel actively building models and the biggest gap that you have in competencies for entry level professionals is spreadsheet proficiency and that's where, I mean I try to invest as much time as possible to look into different spreadsheets to help them work different with models, to teach 'em a few shortcuts, to teach them a few techniques on how to review models, how to go, how to use precedent, how to evaluate formulas, how to colour code quickly and to give them the basis on how to work around models and I mean through that journey, which is normally two days, two days and a half that I have with them that you see the evolution. Some of them, I mean and what's very painful sometimes that you have some students that are very advanced working on independent but some of them have been afraid are been terrorised of working with Excel and you see that through those days is really, if you manage well, you can be very transformative from them to become, to lose, to become more confident working with this.
(08:09):
And this is a key differentiate criteria when they're going through interviews, two case studies for the first when they're trying to obtain to secure the first job. So I really enjoy this interaction and I really enjoy seeing how transformative this can be for some people.
Host: Paul Barnhurst (08:27):
Love that. Yeah, it's always great when you see something transformative for somebody. I train a lot of students and every so often when I'm training power query for a certain student, the light bulb goes on and they're like, you mean I don't have to spend six hours? This will take 15 minutes once I've built it or two seconds in some cases I'm like, yeah, it becomes press a button instead of spend all day and I totally hear you. It's always rewarding when you see that type of thing and know it makes a difference. What kind of questions are students asking or what are you seeing in the way of AI from students? I imagine you're getting a lot of question or that's a conversation that comes up a lot in universities these days. So what are you hearing or what are you saying to students on that front? It
Guest: Rafael Le Saux (09:11):
Does, I mean not necessarily related directly with financial modeling, but more broadly, I mean in terms of them challenging what they're doing, challenging the models that they're using, helping using AI to review their own models using AI to search for better formulas to address one question, better ways to answer the question. I think that's where we want to see them evolving and that's where I think that there is still a lot to be learn, but I mean in general it's more about using the tools that they have. I think that, and I don't want to get too philosophical into this question, I mean the educational model that we're currently going to was built in the late 19th century and it was built for to have 20 people, 30 people, 40 people within one room listening to one person and that was the best and most efficient way to do shared knowledge back in that time. Now with the tools that we have with computers, with ai, I mean it's becoming more and more evident that this will change eventually and that what you want students to work with and what you want students to do is, I mean, is to challenge as much as possible what they're learning but also to use the tools that they have at hand to sharpen the skills. So I think that these will change very quickly and you see that these tools will impact the way they're learning
Host: Paul Barnhurst (11:03):
For sure. I mean it's disrupting just about everything. It's a question of how much, when and what changes tomorrow is what it feels like sometimes. And so I'm curious, how do you think about AI in your day-to-day work or how are some ways it's helped you be more productive?
Guest: Rafael Le Saux (11:21):
I think that now, and pretty much everyone I work with we're becoming much more, the density of use has increased over the last 18, 12 months dramatically. I think that now I'm prompting at least 10 times per day for different subjects. I'm prompting either to have them to review the models that I'm using to challenge when some results do not make sense to me, but also, I mean actively to research on different topics on different industries to get guidance and now it's becoming much easier to get guidance to upload a couple of documents and ask for an opinion. So this is for part of how we're seeing the AI being used and it's becoming, I mean it's becoming essential in terms of optimising our workflows and we have a strong investment across teams to learn how to better use AI to learn how to use different technologies and incentivizing the use across the teams to find new possible uses. So that's part of how we are incentivizing how we're using it today.
Host: Paul Barnhurst (13:06):
Yeah, no, it's always good to incentivize and not surprised to hear you say research PDFs, opinions review models. It seems like every time we turn around it gets better.
Guest: Rafael Le Saux (13:16):
There are some limitations and I think that we're all adapting on how to work with AI and I think that that means that also there is part of the world that does turn and become much, much simpler, much quicker, much seamless and much more seamless in terms of, but the other parts that don't think are relatable and the judgement analysis, even if you have AI that's very difficult to replace. The automation part, of course that's becoming easier. But one anecdote I often have with students is when I started working many years ago, I mean I went from initially having one Bloomberg monitor having to estimate this con rate and spending one day, one day and a half extracting everything from the Bloomberg terminal, having to send every one of the graph screens to my own computer, going to it, inputting everything by hand, realising that some of the screenshots were not accurate, having to go there again, doing it at the end. I mean I was spending 12 hours, eight hours, 12 hours just to have a very simple estimate. As soon as I realise this could be automated and using Excel plugins, particularly the one from SP Capital iq, I mean I was able to get this workflow to last to be full automated to be done in a few minutes.
(15:01):
Did I lost my job at that point? No, I didn't. Why? Because I mean I was a financial analyst and a financial analysis supposed to do analysis. It's not supposed, I mean the operational part, which the operational part now was done, but the financial analysis, that was what I liberate a lot of time and was able to do that now. And this is to a certain extent, there is some similarities with ai. I mean in terms of the use of AI helps you to liberate some time, but the analysis and large part of the thinking, it still needs to be done on the worker and that's where I think we are trying to incentivize these technologies.
Host: Paul Barnhurst (15:41):
That's a great example you shared there of hey AI used to have to spend all the time extracting the data, taking the image, translating 'em eight, 12 hours later you're done, then you automated it. But did you spend less work? You're probably still working probably as late as you were before, as in nor said on one of our podcast episodes he commented, I can guarantee you all the analysts on Wall Street aren't going home at five because they have ai. We just kind of laugh. He's like, they'll find work for you to do. It's just you may not be doing some of the work you're doing before, you may be doing more of it just depending on what happens. But trust me, they'll still be work. I want to ask a little bit about where you're located. I know you're in Luxembourg, which obviously is one of the smallest countries in Europe but has one of the largest financial sectors in the world, largest in Europe. Can you share a little bit of why that is? I know they have some structure there that's a little different that has allowed them to kind of carve out a niche
Guest: Rafael Le Saux (16:45):
By you means. So Luxembourg, which is situated between Belgium, France and Germany as you mentioned is a relatively small country but which is a grand Gucci and is the largest investment hub. I mean investment fund hub worldwide after the us So the largest one in terms of distribution of funds, correct. And obviously there were the largest one in Europe and I mean it has been growing steadily for the past few years has made it much easier for asset managers to be here in Luxembourg I believe of the 99 98 or the hundred largest asset asset manager worldwide, 98 of them have a presence in Luxembourg. And regarding alternative investments, it has been growing a very steady pace for the past 20 years. So that's where we see there is significant growth and part of it is because there is proximity from the regulator is very modern regulator.
(18:13):
There is also mean infrastructure qualified workers that are working around this industry. There is a very international workforce just for you to have an idea. So the fact that it's very international and has facilitated that there is this industry that has been growing and it has naturally become a centre for portfolio valuation and portfolio modeling, given all the interest that there are from alternative investment funds. Yeah,
Host: Paul Barnhurst (19:02):
It makes a lot of sense that there's going to be a lot of need for modeling, portfolio modeling, and valuation when you're dealing with billions and billions of dollars, people want to make sure the homework's done and that they feel relatively secure. There's always risk, hence investing. But your clients want you to minimise that for sure. And I would imagine, I know Luxembourg has some tax friendly laws that are different than the rest of Europe around investment and I know there's been a lot of interest in private markets and different things, so I imagine it has to be a lot of work with the regulators in what you do. You're probably spending a lot of time supporting valuations. Maybe talk a little bit about that. What's the regulatory environment like for you?
Guest: Rafael Le Saux (19:48):
So I think that taxi becoming, in my view, I think taxi is less of a point now. Luxem is part of the European Union and therefore needs to lever the playing field in many aspects with other member states. Having said that, I mean in terms of regulation and we have a common regulation across the European Union, there are requirements that valuation models need to be sound and there is a strong governance around them, meaning that they are properly defined within the valuation policies of the funds that they are reviewed in depth, that there is scrutinised by the management. So meaning that the risk of error of evolution models is mitigated to a very extent. This is particularly important for infrastructure funds where you have complex motors that are involved. It could be very important when you have capital structures which are the type that you can have for mezzanine or for venture capital funds and maybe also support for private equity investments.
(21:03):
So is, and given this requirement from European regulation, we see more and more requests from clients to support them either with training, either with reviewing the models, either with building models that are being used in this context. And that's where, I mean our expertise, which is linked between valuation and modeling is very useful for the local market players and that's why we are pushing also on helping FMI for example here too, that people are more aware of the programme that it'll help as it'll help people, it will help asset managers to be able to comply with these knowledge requirements for use of models.
Host: Paul Barnhurst (21:44):
While my background is in fact, I am also passionate about financial modeling. Like many financial modelers, I was self-taught. Then I discovered the Financial Modeling Institute, the organization that offers the Advanced Financial Modeler program. I am a proud holder of the AFM. Preparing for the AFM exam made me a better modeler. If you want to improve your modeling skills, I recommend that AFM program podcast listeners save 15% on the AFM program. Just use Code Podcast. One other thing I'm curious about is I know over the last few years there's been a lot of interest in private markets, kind of attracting retail investors. We always are trying to find the new way to grow, increase the pie. How has that been for you? I imagine anytime you have retail investors, private markets, regulators are probably a little nervous, there may be some challenges. So I'm just curious, how's that been for you as there's been a stronger interest there? How do you think about that?
Guest: Rafael Le Saux (22:55):
Definitely we see that more interest from asset managers to fundraise from retail investors. This is shown and if you look at the largest asset managers, there is a more important fraction, more important portion of their fundraising that comes through evergreen vehicles. So evergreen semi-liquid, I mean perpetual capital, some are calling it, which means that there are different timeframes, different entry dates for investor within these funds. Meaning that essentially they're allowing entries and exit that are different that we had from the regional buy and hold investors, which were large institution investors that were parking their money for 10, 12, 15 years and now think about retail investors, the investment horizon are very different. That could be much shorter and they could need liquidity more abruptly, meaning that now the consequence, the practical consequence of this is that valuation is becoming much more valuation is becoming a higher risk.
(24:17):
So back in the day if you think about institution investors, they were investing and they will care normally that as long as the investment is not being overvalued and at the moment of the exit they get their money back, they will be, in most cases they would be fine simplifying a bit. But that's a perception for most closed-ended funds. For open-ended funds, the issue is quite different because if the NAB of the fund, if the funds the fund is overvalued, that would mean that some of the current investors in the fund could exit the fund at other value that's fundamentally higher than the one, than the fair one. If the NAG is undervalued, that would mean that some new investors could enter the fund and they at a lower price on the fair value, which means that to the detriment to the current investors. So that's why regulators have obtained a lot of interest into the valuation subject with this surge of evergreen funds. And we're seeing these from the SEC, we're seeing these from the esma, which is a European regulator on all the national competent authorities including the CSSF, the EMF in France and Baffin and many more as well as the financial conduct authority in the uk. But not only, we also see regulators in many different countries that are paying much more attention to valuation given contingencies. And given these elements that are these surge of open-ended vehicles,
Host: Paul Barnhurst (26:15):
I'm curious, is it requiring you to do valuations more often to make sure you're kind of resetting things that some of that's private, right? It's not like it's a public market where I can just see the stock pretty much 24 7 and what the price is and decide if I think it makes sense. You have to periodically things have to be revalued. It's not a continuous where a market speaks. So are the regulators asking for more common valuations as you talk about the risk, right? Okay, we reprice it monthly, someone gets in at a time, there's some kind of announcement or something that happened and they kind of get a big benefit compared to the existing investors. So are the regulators asking for more valuation or how are they thinking about that?
Guest: Rafael Le Saux (26:59):
The way they're thinking about this is that they're asking the valuation periodicity to match the exit and entry window and which makes impact is that valuations are becoming much more frequent. They could be from quarterly to monthly. We have heard of some funds that are daily enemies in the US actually. So which is, as you mentioned, these are assets are not transacted and that means that you need to find the proxies, you need to find ways to be able to estimate the value and that's obviously comes to our cost to the industry. Obviously the one of the reasons we're getting there is because technology is helping, there are more supporting this in terms of how you catalogue the data, how you are able to have models that are easier to be updated. And so without technologies this would be impossible and technology and financial modeling, and integration of different data platforms has actually enabled the evergreen industry.
Host: Paul Barnhurst (28:19):
Totally makes sense without being able to quickly gather that data and turn it around in a fast manner, which I'm sure data is one of the long poles in that whole process. You couldn't do it on a monthly or a daily or a weekly or whatever that timeframe would be. I mean you think 50 years ago and a private market, it'd be hard enough to update it quarterly, let alone a daily.
Guest: Rafael Le Saux (28:42):
Absolutely. Yeah,
Host: Paul Barnhurst (28:43):
That makes sense. If you read the early days of Warren Buffett, there was a lot more price arbitrage he could do and he'd find certain things than today because there's so much more transparency in the market with technology.
Guest: Rafael Le Saux (28:57):
There is this brilliant podcast from Roger Grabowski from, I think it was from three or four years ago, even five who's one of the legends of evaluation and when he studied his career, all of the calculations, he had to put it in a very large programming software and it will take two to three days for information to go out. Obviously it's a very different situation what we have now, but I mean obviously with the technology that we have with that, it's becoming feasible to have this valuation much more often than we have back in day,
Host: Paul Barnhurst (29:31):
Which is great for everybody because as you increase transparency allows people to be more informed when they're making decisions. Alright, so I have one more question before we'll get into some kind of standard Excel questions and standard modeling questions I ask guests. So I'm curious for you, I know you deal with auditors a lot, you deal with modellers, auditors come from a very different perspective than a modeller might, different mindset, different thinking, different training. How do you work with the two? How do you bridge that gap when working on valuation projects? Any advice you can offer people?
Guest: Rafael Le Saux (30:10):
So very often we sit between auditors that want hard evidence and they have an evidence-based mindset and investment teams which are investing, they believe, I mean, and they are normally models. They are also taking decisions based on information that they have gathered from the market, which is not always easy to put in evidence and they think in value, in value creation in broad terms, there is a lot of subjectivity in the way they assess investments. And our work is to turn these insights this way to see value creation in an asset into evidence that the auditors can use. And often, I mean we are there to intimidate and to transform and to transform the requests from one on, see how the inputs and elements we can get from the others are able to reach that gap. So certainly it takes patients takes understanding the two languages it takes, I mean understanding the way investors look at projects at alternative investment projects. So it's a lot about finding these I finding language and this conversation and what are the motivations for each one?
Host: Paul Barnhurst (31:50):
Bad financial models can lead to bad decisions or worse. So how do you minimise the risk of a bad model? You make sure the models you build are great Financial Modeling Institute developed the Advanced Financial Modeler accreditation programme to help modelers like you. The AFM programme offers a step-by-step approach to building world-class financial models. The programme ensures that you know the best practises in model design and structure and will help you brush up on your Excel and accounting skills too. Be the one on your team to build great models. If you want to impress your boss and your clients, get a FMI accredited podcast listeners, save 15% on the AFM programme. Just use code podcast at http://www.fminstitute.com/podcast.
Guest: Rafael Le Saux (33:07):
Yeah, it couldn't it. No, no.
Host: Paul Barnhurst (33:09):
So we're going to get into a few Excel questions and some of that stuff because where would we be without it? So these are some of the more standard then we're going to move into rapid fire, which I'll explain. I've made some changes to that. So you're my Guinea pig. Hope that's okay. I added some new questions to mix it up, but before we get there, what's your favourite Excel shortcut? I
Guest: Rafael Le Saux (33:30):
Like F five Alt S, what that is going from go to special and finding all the cells that have been our coded. So we go to special and this is one that I commonly show at uni because I mean it is very important to teach 'em how to colour code, but also how can you locate the elements that should be colour coded. So that's one that I use. I mean whenever I open a model that I did not build in order to get it to the right colours, that's one that I'm using. Yeah,
Host: Paul Barnhurst (34:09):
I'm a big fan of the special. I think you can also control G and then alt S.
Guest: Rafael Le Saux (34:14):
Okay, well try that one.
Host: Paul Barnhurst (34:15):
I think because control G takes you to the go-to and it has the special in it as well. So that's usually how I do it. That's why it took me a second when you said F five, I know what you're talking about, how Excel almost has three ways to do everything. Yeah, that's a big one. I used to use that all time to find blanks needed to get rid of all the blanks in a file in a certain section and I can remember the first time holding down the control and clicking on it. I'm like there has to be a better way. So I'm a big fan of that one. So what's the most unique or fun thing you've used Excel for, built a model for in your personal life? So outside of work?
Guest: Rafael Le Saux (34:52):
Yeah, I mean I built the model back in 2018 and it was assessed as mean as one of the top models in the eloquence platform. If the eloquence rings the bell to you and it was a Monte Carlo mod simulation model to predict the results of the FIFA workup in 2018,
Host: Paul Barnhurst (35:20):
I had a feeling you were going to go with sports. I'm like, let's see, Europe soccer, have a hunch here.
Guest: Rafael Le Saux (35:28):
And I mean the idea was to use very simple multicar in Excel and which random implied dots from bedding houses to get to estimate the possibility of any team winning and also chart it a bit. I mean seeing what other the probabilities seeing when you were feeling results. Oh the were changing and it was, I mean obviously it was an interesting, I mean it a bit geeky of course, but I think there was a very interesting way to prove that you can work in Excel, I mean easily and that you can use Monte Carlo for Excel without any other add-ins. And we often use it here for different purposes, particularly for auction pricing models. We use these Monte Carlo simulations and without having with Excel and without having to complicate it too much,
Host: Paul Barnhurst (36:25):
I'm not surprised to hear you say that's what you built. You doing one for 2026, we got a World Cup coming up this summer.
Guest: Rafael Le Saux (36:31):
That's true. It's true. I should update it. Quality will update. I mean it will take some time, which I don't have at the moment, but I will.
Host: Paul Barnhurst (36:40):
Yeah, I was going to say, I know it's your busy season so I might have to wait a couple months
Guest: Rafael Le Saux (36:44):
In a couple of months perhaps. I think April. April May you hear from me again.
Host: Paul Barnhurst (36:49):
I might reach out in May and see where the World Cup file is. Alright, so here's the rapid fire section. Should only take us a few minutes. How this works is I think I now have 17 or 18 questions and what I'm looking for is a quick yes or no answer. You can't give me the consultant answer of it depends because that doesn't make for fun. Then at the end you can elaborate on a couple of 'em. I recognise they all have nuance, right? There could always be an exception, but if you had to pick one or the other, it's about which way would you go. So you ready? I'm going to kind of go through these quickly. First one, circular references in models, yes or no?
Guest: Rafael Le Saux (37:30):
No.
Host: Paul Barnhurst (37:31):
VBA yes or no?
Guest: Rafael Le Saux (37:33):
No. VBA
Host: Paul Barnhurst (37:35):
Lambdas in financial models?
Guest: Rafael Le Saux (37:38):
Not sure, let's say no.
Host: Paul Barnhurst (37:40):
Okay, we'll go with no external workbook links, yes or no?
Guest: Rafael Le Saux (37:43):
Ever.
Host: Paul Barnhurst (37:45):
Never. How about mouse for modellers?
Guest: Rafael Le Saux (37:47):
Ideally not.
Host: Paul Barnhurst (37:50):
You struggled a little bit. I like it. Should models always be print ready?
Guest: Rafael Le Saux (37:55):
Ideally yes.
Host: Paul Barnhurst (37:57):
Okay. Are merge sales ever acceptable?
Guest: Rafael Le Saux (38:01):
Never. Never.
Host: Paul Barnhurst (38:04):
Should financial modellers learn Python in Excel? Not necessarily. All right. How about power query?
Guest: Rafael Le Saux (38:11):
No, not necessarily
Host: Paul Barnhurst (38:13):
Power bi.
Guest: Rafael Le Saux (38:14):
Say again
Host: Paul Barnhurst (38:15):
Necessarily. Okay. And then do you believe every financial modeller should be able to build a fully integrated three statement model, yes or no?
Guest: Rafael Le Saux (38:24):
Certainly yes. Yes.
Host: Paul Barnhurst (38:25):
Okay. Will excel ever die?
Guest: Rafael Le Saux (38:28):
I don't think he will.
Host: Paul Barnhurst (38:31):
All right. And then we'll ask you, have you used AI to help you build a model in Excel?
Guest: Rafael Le Saux (38:36):
Certainly, yes.
Host: Paul Barnhurst (38:38):
Okay. And then this is not a yes or no question, but what financial statement is most important for modellers? Income statement, balance sheet or cashflow If you had to pick one
Guest: Rafael Le Saux (38:48):
Balance sheet.
Host: Paul Barnhurst (38:50):
Alrighty. Balance.
Guest: Rafael Le Saux (38:51):
Balance
Host: Paul Barnhurst (38:52):
Sheet. I like it. What's your favourite? LLM, Claude copilot chat. GPT or something else?
Guest: Rafael Le Saux (38:58):
I use copilot a lot. We're using Harvey here at uc, which is great too. Or those two.
Host: Paul Barnhurst (39:06):
If you can only pick one for all of your models, would you be able to do a sensitivity analysis or scenario analysis?
Guest: Rafael Le Saux (39:16):
I would say sensitivity. So we kept you to,
Host: Paul Barnhurst (39:20):
Do you believe financial models are the number one corporate decision-making tool?
Guest: Rafael Le Saux (39:25):
I would say yes.
Host: Paul Barnhurst (39:26):
Okay. And then what's your favourite lookup function? Do you like X lookup, vlookup, index match, choose something else?
Guest: Rafael Le Saux (39:36):
I would say, I mean I've always been using index match. I'm turning up to use X lookup but never vlookup.
Host: Paul Barnhurst (39:48):
Alrighty. Is there any of those you want to elaborate on your answers? I could tell there are a few. You wanted to say more?
Guest: Rafael Le Saux (39:54):
Yeah, I mean there are quite interesting questions. So I mean mouse for others, I mean avoid it as much as you can, but obviously for certain points you need mouse. I mean you need a mouse to work on a daily basis and if you have a mouse you want it to be the sharpest mouse possible and the quickest mouse possible. And I have way too many people that I know they're using the touch pad and they lose much more time by not having a mouse that using the touch pad. So if you are fully working on a model, yes, I can imagine you should try to avoid it as much as you can. Then another one I want to touch on is are merge cells ever acceptable? I mean I invented a setting which is if you merge a cell you'll go to hell because I think that's something that's unacceptable for me to review to see that you lose so much time when you inherit a model and you're trying to add a column, homogenise do something, and then you see there is mer cell.
(41:00):
So please avoid it as much as you can and there are very alternatives to do it then will excel ever die? I mean I think the beauty of Excel is that as it's commonly accepted that people understand that it's not a black post. Most of the issue we had in previous crisis was because of this black box effect. And I think that's where is extremely useful, the beauty of it. And that's why I think it's becoming so difficult for the industry to go beyond Excel because eventually we need something that even if it's more streamlined, more automated, I mean you'll lose this transparency that you have an exam. Yeah,
Host: Paul Barnhurst (41:49):
That's one of the hardest things to let go of, right? Whole black box, the spreadsheet, whether it's Excel, Google sheets, whatever, it's just transparent spreadsheet form factor is incredible to be able to open it up and figure out whatever you need.
Guest: Rafael Le Saux (42:01):
Maybe the last one is, I dunno, I don't think that any serious hot guest here has ever answered the lookup regarding you lookup function of choice, but maybe wrong.
Host: Paul Barnhurst (42:11):
I think I've had one, but it was probably a very old school modeller that modelled for a while. Yeah, it's very rare. There's not many, it's less than 10% that I'm sure of.
Guest: Rafael Le Saux (42:22):
I mean, I review hundreds of cities every year for entry level positions. And as you may imagine, many are using an equity, well Excel advanced user, and some of them they even dare to put the kind of formula that they use. When I say, look, if you're going to include, please don't include Excel, user brackets the lookup because you know right away you won't get the job, you won't get the interview and you see it from that time. I can swear that at least 5% of the cities that I see include B cap there and it's like, okay, it's an immediate,
Host: Paul Barnhurst (42:53):
So I'll tell you a funny story. I was interviewing someone for an FP&A job, so they'd be doing a lot of budgeting forecasting type models. I would always ask people rate yourself from a one to 10 in Excel, but then I would ask them, explain why, because I always wanted to hear their reasoning, what that meant to them. I didn't really care what they said between one and 10, but I had this guy, this is probably 2022 timeframe, maybe 2021. And he goes, I'm a 10. And I'm like, okay, well elaborate. And so he starts telling me and I'm like, have you heard of this function? It was X lookup. No. Have you heard of this function? No, no. And I did it just because he was so cocky in his answer. I said, do you want to change your answer? And he looked at me begrudgingly, he was upset and he goes, fine. A nine. Like, oh my goodness. And he may have said, I'm pretty sure he probably mentioned VLOOKUP in his answer. And I was just like, alright. So it was pretty funny. Well thank you so much for joining me. Before we wrap up, give you an opportunity, any final advice you want to share and what's the best way if somebody wants to get in touch with you or maybe contact you after listening to this episode?
Guest: Rafael Le Saux (44:00):
I mean, any final advice for anyone who wants to work Financial modeling? I mean in this time with Excel now, there are great resources available. Mean certainly the FMI has great curriculum. There is also the financial modeling workup and the Excel series. Try to learn at least one shortcut per day, try to and enjoy it. I mean, for me, the people that are working and that they like financial modeling, I mean, this is my case. I could be working with a model for hours. Whenever I touch a model and I am building something, I'm flowing. And this is part of the beauty of, and the pride of creating models, creating a tool and creating something that's a collaboration tool and something that you will be able to share with people. So I mean, enjoy it as much as you can and invest time. And if anyone wants to get in touch with me, I'm reachable to LinkedIn. I'm happy to discuss about modeling, valuation, alternative investment or any of those subjects. And Paul, thank you so much for having me on the podcast again. I hope we'll see each other soon.
Host: Paul Barnhurst (44:59):
Yes, thank you so much for joining me. It's always a pleasure to have you on. I really enjoyed it. So thank you Rafael. Much
Guest: Rafael Le Saux (45:05):
Appreciate it.
Host: Paul Barnhurst (45:06):
Financial Modeler's Corner was brought to you by the Financial Modeling Institute. This year, I completed the Advanced Financial Modeler certification, and it made me a better financial modeler. What are you waiting for? Visit FMI at https://fminstitute.com/podcast/ and use Code Podcast to save 15% when you enroll in one of the accreditations today.