Is financial modeling commonly applied in consulting projects?

Question

Since many consulting projects will directly impact a corporate's financials, I'm wondering whether financial modeling is largely applied in consulting. Taking a market entry or M&A project for example, how would the consultant gain a concrete result without building a comprehensive financial model?

I'm asking this question because consultants are from various backgrounds, and financial modeling doesn't seem a skill highlighted by consulting firms. Is it because consulting firms have specific teams that do the financial modeling work, or do they outsource these works to big fours or investment banks?

Thanks for your reply!

Answer 1

Hello!

Good question.

It´s of couse very present in the job itself, but not particularly needed for prep.

Hope it helps!

Cheers,

Clara

Answer 2

In most cases you would not have to do elaborate financial models like you would in PE or IB. However, you definitely do need to know how a P&L works and how to model one. Examples could be to project P&L line item impacts of different strategic options on the table.

Bottom line: Basic financial modelling is critical in consulting, but it doesn't need to be as sophisticated as in other industries.

Answer 3

If you end in up a classic Finance/Deals/M&A project, then Yes. Otherwise Business Case and basic P&L diagnostic will be a part of pretty much every project- small or big.

Answer 4

Hi,

I can confirm it's not very common for generalist consultants.

Taking a course might be helpful but absolutely not mandatory!

Hope this helps.

Best,

Antonello

Answer 5

Hi there,

Yes, financial modeling, and other modeling (mostly in excel) is very common across consulting.

It's not emphasized as a pre-requisite becuase you will learn this on the job!

Answer 6

Hello there!

Yes, financial modeling is applied in consulting and involves the development of Excel models.

It's true that consultants have different backgrounds, so the skill will be cultivated on the job. The candidates don't need to have it in advance, though having basic knowledge would be useful.

Do you have any further questions?

Cheers,
GB

Answer 7

Hi,

Financial modelling is an integral part of most consulting projects, I only have a handful of projects where financial modelling is not part of it.

If what you mean by "doesn't seem a skill highlighted by consulting firms" is it is not tested during interview that is because as long as you are smart and have a good logic this is something that can be taught easily.

The consulting firm will do the modelling themselves and try to get a modelling experience early in your tenure so you have more time to build the skill.

Best,

Iman