lbo-model by anthropics/financial-services-plugins

TEMPLATE REQUIREMENT

This skill uses templates for LBO models. Always check for an attached template file first.

Before starting any LBO model:

If a template file is attached/provided: Use that template's structure exactly - copy it and populate with the user's data
If no template is attached: Ask the user: "Do you have a specific LBO template you'd like me to use? If not, I can use the standard template which includes Sources & Uses, Operating Model, Debt Schedule, and Returns Analysis."
If using the standard template: Copy examples/LBO_Model.xlsx as your starting point and populate it with the user's assumptions

IMPORTANT: When a file like LBO_Model.xlsx is attached, you MUST use it as your template - do not build from scratch. Even if the template seems complex or has more features than needed, copy it and adapt it to the user's requirements. Never decide to "build from scratch" when a template is provided.

CRITICAL INSTRUCTIONS FOR CLAUDE - READ FIRST

Core Principles

Every calculation must be an Excel formula - NEVER compute values in Python and hardcode results into cells. The model must be dynamic and update when inputs change.
Use the template structure - Follow the organization in examples/LBO_Model.xlsx or the user's provided template. Do not invent your own layout.
Use proper cell references - All formulas should reference the appropriate cells. Never type numbers that should come from other cells.
Maintain sign convention consistency - Follow whatever sign convention the template uses (some use negative for outflows, some use positive). Be consistent throughout.
Work section by section - Complete one section fully before moving to the next, as later sections often depend on earlier ones.

Formula Color Conventions

Blue (0000FF): Hardcoded inputs - typed numbers that don't reference other cells
Black (000000): Formulas with calculations - any formula using operators or functions (=B4*B5, =SUM(), =-MAX(0,B4))
Purple (800080): Links to cells on the same tab - direct references with no calculation (=B9, =B45)
Green (008000): Links to cells on different tabs - cross-sheet references (=Assumptions!B5, ='Operating Model'!C10)

Number Formatting Standards

Currency: $#,##0;($#,##0);"-" or $#,##0.0 depending on template
Percentages: 0.0% (one decimal)
Multiples: 0.0"x" (one decimal)
MOIC/Detailed Ratios: 0.00"x" (two decimals for precision)
All numeric cells: Right-aligned

Clarify Requirements First

Before filling any formulas:

Examine the template structure - Identify all sections, understand the timeline (which columns are which periods), note any existing formulas
Ask the user if anything is unclear - If the template structure, calculation methods, or requirements are ambiguous, ask before proceeding
Confirm key assumptions - Any key inputs, calculation preferences, or specific requirements
ONLY AFTER understanding the template, proceed to fill in formulas

TEMPLATE ANALYSIS PHASE - DO THIS FIRST

Before filling any formulas, examine the template thoroughly:

Map the structure - Identify where each section lives and how they relate to each other. Note which sections feed into others.
Understand the timeline - Which columns represent which periods? Is there a "Closing" or "Pro Forma" column? Where does the projection period start?
Identify input vs formula cells - Templates often use color coding, borders, or shading to indicate which cells need inputs vs formulas. Respect these conventions.
Read existing labels carefully - The row labels tell you exactly what calculation is expected. Don't assume - read what the template is asking for.
Check for existing formulas - Some templates come partially filled. Don't overwrite working formulas unless specifically asked.
Note template-specific conventions - Sign conventions, subtotal structures, how sections are organized, whether there are separate tabs for different components, etc.

FILLING FORMULAS - GENERAL APPROACH

For each cell that needs a formula, follow this hierarchy:

Step 1: Check the Template

Does the cell already have a formula? If yes, verify it's correct and move on.
Is there a comment or note indicating the expected calculation?
Does the row/column label make the calculation obvious?
Do neighboring cells show a pattern you should follow?

Step 2: Check the User's Instructions

Did the user specify a particular calculation method?
Are there stated assumptions that affect this formula?
Any special requirements mentioned?

Step 3: Apply Standard Practice

If neither template nor user specifies, use standard LBO modeling conventions
Document any assumptions you make
If genuinely uncertain, ask the user

COMMON PROBLEM AREAS

The following calculation patterns frequently cause issues across LBO models. Pay special attention when you encounter these:

Balancing Sections

When two sections must equal (e.g., Sources = Uses), one item is typically the "plug" (balancing figure)
Identify which item is the plug and calculate it as the difference

Tax Calculations

Tax formulas should only reference the relevant income line and tax rate
Should NOT reference unrelated sections (e.g., debt schedules)
Consider whether losses create tax shields or are simply ignored

Interest and Circular References

Interest calculations can create circularity if they reference balances affected by cash flows
Use Beginning Balance (not average or ending) to break circular references
Pattern: Interest → Cash Flow → Paydown → Ending Balance (if interest uses ending balance, this circles back)

Debt Paydown / Cash Sweeps

When multiple debt tranches exist, there's usually a priority order
Cash sweep should respect the priority waterfall
Balances cannot go negative - use MAX or MIN functions appropriately

Returns Calculations (IRR/MOIC)

Cash flows must have correct signs: Investment = negative, Proceeds = positive
If using XIRR, need corresponding dates
If using IRR, cash flows should be in consecutive periods
MOIC = Total Proceeds / Total Investment

Sensitivity Tables

Excel's DATA TABLE function may not work with openpyxl
May need explicit formulas that reference row/column headers
Each cell should show a DIFFERENT value - if all same, formulas aren't varying correctly
Use mixed references (e.g., $A5 for row input, B$4 for column input)

VERIFICATION CHECKLIST - RUN AFTER COMPLETION

Run Formula Validation

python /mnt/skills/public/xlsx/recalc.py model.xlsx

Must return success with zero errors.

Section Balancing

Any sections that must balance (Sources/Uses, Assets/Liabilities) balance exactly
Plug items are calculated correctly as the balancing figure
Amounts that should match across sections are consistent

Income/Operating Projections

Revenue/top-line builds correctly from drivers or growth rates
All cost and expense items calculated appropriately
Subtotals and totals sum correctly
Margins and ratios are reasonable
Links to assumptions are correct

Balance Sheet (if applicable)

Assets = Liabilities + Equity (must balance)
All items link to appropriate schedules or roll-forwards
Beginning balances = prior period ending balances
Check row included and shows zero

Cash Flow (if applicable)

Starts with correct income figure
Non-cash items added/subtracted appropriately
Working capital changes have correct signs
Ending Cash = Beginning Cash + Net Cash Flow
Cash balances are consistent across statements

Supporting Schedules

Roll-forward schedules balance (Beginning + Changes = Ending)
Schedules link correctly to main statements
Calculated items use appropriate drivers
All periods are calculated consistently

Debt/Financing Schedules (if applicable)

Beginning balances tie to sources or prior period
Interest calculated on appropriate balance (typically beginning)
Paydowns respect cash availability and priority
Ending balances cannot be negative
Totals sum tranches correctly

Returns/Output Analysis

Exit/terminal values calculated correctly
All relevant adjustments included
Cash flow signs are correct (negative for investment, positive for proceeds)
IRR/MOIC formulas reference complete ranges
Results are reasonable for the scenario

Sensitivity Tables (if applicable)

Row and column headers contain appropriate input values
Each data cell contains a formula (not hardcoded)
Each data cell shows a DIFFERENT value
Values move in expected directions
Base case appears where headers match base assumptions

Formatting

Hardcoded inputs are blue (0000FF)
Calculated formulas are black (000000)
Same-tab links are purple (800080)
Cross-tab links are green (008000)
All numbers are right-aligned
Appropriate number formats applied throughout
No cells show error values (#REF!, #DIV/0!, #VALUE!, #NAME?)

Logical Sanity Checks

Numbers are reasonable order of magnitude
Trends make sense (growth, decline, stabilization as expected)
No obviously wrong values (negative where should be positive, impossible percentages, etc.)
Key outputs are within reasonable ranges for the type of analysis

COMMON ERRORS TO AVOID

Error	What Goes Wrong	How to Fix
Hardcoding calculated values	Model doesn't update when inputs change	Always use formulas that reference source cells
Wrong cell references after copying	Formulas point to wrong cells	Verify all links, use appropriate $ anchoring
Circular reference errors	Model can't calculate	Use beginning balances for interest-type calcs, break the circle
Sections don't balance	Totals that should match don't	Ensure one item is the plug (calculated as difference)
Negative balances where impossible	Paying/using more than available	Use MAX(0, ...) or MIN functions appropriately
IRR/return errors	Wrong signs or incomplete ranges	Check cash flow signs and ensure formula covers all periods
Sensitivity table shows same value	Formula not varying with inputs	Check cell references - need mixed references ($A5, B$4)
Roll-forwards don't tie	Beginning ≠ prior ending	Verify links between periods
Inconsistent sign conventions	Additions become subtractions or vice versa	Follow template's convention consistently throughout

WORKING WITH THE USER

If the template structure is unclear, ask before proceeding
If the user's requirements conflict with the template, confirm their preference
After completing each major section, offer to show the work or run verification
If errors are found during verification, fix them before moving to the next section
Show your work - explain key formulas or assumptions when helpful

This skill produces investment banking-quality LBO models by filling templates with correct formulas, proper formatting, and validated calculations. The skill adapts to any template structure while ensuring financial accuracy and professional presentation standards.