378 Chris Reilly

Jeffrey Feldberg: [00:00:00] Chris Reilly is a finance professional with a unique journey that began during the 2008 financial crisis working on Lehman Brothers bankruptcy. He transitioned from consulting to senior analyst roles at Hilton Worldwide, providing exposure to the world of private equity. With self taught expertise in LBO financial models, Chris spent nearly a decade in middle market private equity in Denver.

In 2020, he founded Financial Modeling Education, where he imparts advanced financial modeling skills in a relatable manner. An influential LinkedIn figure with 85, 000 plus followers, Chris simplifies the intricate finance landscape, sharing his extensive knowledge of private equity, FP& A, and financial modeling. 

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Welcome to Deep Wealth Podcast, and Deep Wealth Nation, you know me, I love my rhetorical questions. Here's one for you. Do you believe that luck or hope is a business model? And if you said, yes, I have some great news for you.

We're going to show you why that isn't. I know, it isn't. We're going to show you why that isn't and why you're going to do better. And if you said no, we're still going to give you some terrific insights. Another rhetorical question. Would you love to accelerate the growth of revenues and profits?

And of course you said, yes. Well, that's exactly what we're [00:04:00] talking about today. So Chris, welcome to the Deep Wealth Podcast. And I'm curious because there's always a story behind the story. So Chris, what's your story? What got you from where you were to where you are today?

Chris Reilly: Jeff, so thanks for having me on the short background on me is I started my career in consulting in New York City right in the financial crisis. And then from there I went into more of a classic corporate finance or treasury role at Hilton Worldwide, which is the big hotel chain out of Virginia.

And then from there I got into middle market private equity, which is where I really owned all of my skills, specifically in the world of financial modeling. And that's kind of what I do today. And after being involved in several diligence processes and acquisition and sales of companies, I wanted to double down on what I love to do most and what I was best at, which was financial modeling.

And so today that's what I do. That's my sole focus. I help people build financial models the right way because they're always typically built the wrong way. And so I started my own company a few years ago and it's still going today. And it's that focus [00:05:00] on financial modeling and that's what I do now.

Jeffrey Feldberg: course, you have a terrific entrepreneurial story. I'm curious, every entrepreneurial journey, it has to begin somewhere. And for you, were you born to just wake up, say, I'm going to do financial models when I'm big and grow up, or how did you get to this? What did I just say? I love this stuff. I'm going to share what I know and make the world a better place with financial modeling, because I got to tell you, that's not me.

That was the, all the courses. I was the worst student in that area. So what was it with you that you're so good with this, but how did you know that you'd get to where you are today with that?

Chris Reilly: Yeah. So I did not know I wanted to do this kid. It was, well, it wasn't of interest to me at all. I didn't even know it existed. And to be honest, I struggled with just sort of the business world in general, even when I was working on it, it just happened to be a skill that sort of self presented when I was on the job.

I suddenly was the best modeler at every company that I was at. And I just had this intrinsic interest in it. Building the models and building them the right way and that probably came from a background of just enjoying maybe building stuff as a kid. Legos or anything else. I got good at putting these [00:06:00] systems together and suddenly I went from learner to instructor and I, once I noticed that trend Then I decided I'm going to double down on it and educate people on it.

So is it a lifelong passion? No, but it has become one as I've built it into a business. So it really was self revealed throughout my career.

Jeffrey Feldberg: And Chris, I'm curious, because of your background, it's a really varied background, different industries, small companies, big companies, everything in between, I'm going to ask a question and you'd be completely right to say, well, Jeffrey, it really depends. It depends on the company or the industry or their trajectory, where they're at.

But that said, let's look at both sides of the coin. So glass is always half full. So for those companies that got it right, that they're successful. Did you notice some common strategies or traits, or perhaps another way I can ask that, it's a good old 80 20 rule, or Pareto's law. Yeah, these companies, they followed the same 20 percent of these strategies.

That got them 80 percent of the success. What would you say to that?

Chris Reilly: I think the first [00:07:00] is just establishing some kind of financial model in the first place. You do need a way to keep score when it comes to finance. And when it's early stage, you can wing it a little bit and you can just open the bank account and see if there's cash in there. And great. I guess we can operate.

for another week. But as you get more sophisticated, you need to build out those projections if you're going to take on potential investment or if you're going to bring a lender to the table for some financing. And so you need a way to track your results as a starting point. And so the best companies that I worked with, they had that system in place, but then they also had somebody in the finance function who could really speak that language.

I think a lot of companies Outgrow their initial finance function. It might be a bookkeeper who isn't quite ready for the forward looking thinking that comes from FP& A or later stage when you get to the private equity level and so if you can bring in somebody to That really understands strategic finance.

Those were the companies that were the true differentiators that did well because they could report on the results of the company internally, [00:08:00] and they could also interact with investors externally. So those were the true winners.

Jeffrey Feldberg: And so, Chris, I heard you say strategic finance, and I know for a lot of our listeners, if they're like me, they didn't get past kindergarten when it came to finance, they're saying, what, strategic finance? I thought finance was just finance. So what's strategic finance? What makes that different than, generally speaking, we just say finance?

Chris Reilly: Yeah. I'm glad you brought that up because that's basically a buzzword, right? Strategic finance. It just means going to use the numbers in our business to try to figure out what to do next. we're going to have some kind of strategy. So when you report on your results, that's typically the past, and that usually sits in what's called the accounting bucket.

We're just looking at the history. When it comes to finance, we're thinking about the future. And so we can make a bunch of random guesses. Or we can have somebody who kind of knows what they're doing. They understand the capital markets a little bit. They understand how the P& L and the balance sheet all weave together, and we can come up with a thoughtful strategy.

And so that's what's meant by strategic finance. If I was just sitting at the kitchen table, it's Let's use [00:09:00] the numbers and come up with a plan of what to do.

Jeffrey Feldberg: Interesting. And for the listener out there, I can just picture them saying, okay, yeah, Chris, I hear you, but you know what? I'm going to really over exaggerate on this one. My best friend's uncle, third cousin removed. They're doing my books. They're doing the accounting and we got the finance down to that listener.

What would you say?

Chris Reilly: That's fine for now. That's okay. As long as you have a decent picture on what the past is doing, that's a good place to start. You may want to get that information reviewed at some point by a formal CPA or something like that. As you start to grow, though, and you start to think about the future, you're going to need a more sound structure to predict that.

And when I talk about structure, I mean, First, you just want to start projecting when the cash is going to come in and out in the future and not just look back at the bank account and the history. And then beyond that, even more sophisticated, you eventually need to build what's called this three statement model, which is the income statement, the balance sheet, and the statement [00:10:00] of cash flows.

You need that presentation if you're going to talk to lenders. Or private equity investors. So definitely not needed right away. Just keeping the books is all right, but when you start to switch from, hey, we're actually having some success and we need a little bit of a strategy, then you have to bring in that finance function.

Jeffrey Feldberg: And on the flip side of that, as We let those words percolate and sink in with our listener for the companies that were in trouble when you saw them, or perhaps back to your M& A days. They wanted to raise some capital. They wanted to have an exit. But the investor or buyer just walked away. What was or wasn't happening in those situations that we can look at that and learn from?

Chris Reilly: So there's two things when it comes to distressed companies. The number one thing was cash. There just wasn't a great understanding of what the cash was going to do. And so this goes back to my consulting days in the financial crisis. We'd spend all night building a cashflow forecast. You typically build it out over 13 weeks.

The only reason to do that is because that's basically [00:11:00] a calendar quarter, but you're just trying to figure out money in and money out. And that was the very first thing that we did in a distressed situation. The presentation of the financials maybe isn't, all that accurate or not all that clear. So not a lot of work has been done behind the scenes to make sure that things are presented in a clean way. There's also a lot of what are called adjustments.

I'm getting a little bit into the weeds, but you're basically trying to say, here's what we actually did, and then here's what we could have done if we hadn't made all these mistakes. And so you should value us based on what we could have done without making mistakes. And if I see too much of that, I start to think to myself, okay, this company isn't quite as sophisticated as they're letting on.

And then as you get further into diligence and get into the details of the data room, sometimes there's something that's an obvious deal killer. There might be a giant liability that you're worried about or customer concentration or other things that just make. The deal, a general risk, because what you're solving for is a company that's going to perform well into the future and generate some cash flow.

You don't want to [00:12:00] expose the investment to some risks. So usually something pretty obvious pops up in diligence.

Jeffrey Feldberg: And so all of that said, so Chris, you've begun to share the good, the bad, the ugly. And what I'm hearing you say is plan this out, have something down on paper or a spreadsheet, whatever the case is going to be, a spreadsheet in terms of how you're going to map it out, what it's going to look like, what your KPIs are going to be, what your metrics are going to be.

So with that said, and full disclosure, I'm a bootstrapping kind of guy. I always have been not really in favor of, in early stages anyways, private equity or venture capital. But that said, for the companies that do have private equity or venture capital, that's backing them. They have many zeros in the bank account.

It's a different way of thinking. And sometimes that way of thinking is, well, yeah, luck is a business model. We don't really need a business model because we got gazillions of dollars and we've got this burn rate that we got to meet and we just got to get out there and spend money and we'll worry about profits.

We'll worry about a real business model later. We'll [00:13:00] figure it out as we go. So for those listeners that find themselves in that particular camp, what are your thoughts? What would be some of your insights for them? And

Chris Reilly: So I'm glad you brought that up. And I myself am a bootstrapper. That's kind of how I operate. And I like to find profitability as soon as possible without taking on financing. But that said, I do a lot of financial modeling work for early stage software companies that have a crazy amount of burn. And by burn, we just mean how much cash they're going through each and every month.

And they're just going from fundraising round to fundraising round, thinking that they can keep the lights on. And that does work for a time, but at some point, the company has to become profitable. It has to be able to generate its own cash or eventually the value will deteriorate. The investors will lose interest and the founders will probably get really diluted.

So when I'm looking at companies like that, I'm trying to manage basic things that as a bootstrapper are automatic. I just want to make sure that my revenue exceeds my expense. [00:14:00] And it seems so obvious, but a lot of companies don't operate that way, especially in the early days, because they say, well, we've got to, spend money to make money, right?

We've got to hire tons of people. We've got to blast out the sales pipeline and we've got to do all kinds of marketing. And eventually the revenue will catch up to us and we'll break even and we'll turn this nice profit. And that happens sometimes, but not all the time. And I would argue that in these early stage companies that do need to focus on growth, if they can rein in some of the spend.

It really goes a long way. I've never seen a revenue pipeline really get ahead of schedule. That one always lags, but the hiring pipeline does tend to get ahead of schedule. And suddenly you've got this huge gap between revenue and expense. So I think just basic things like managing the cost, that's going to help bring down the burn rate.

And that's something we talk about all the time with these early stage startups that say, Hey, I I can't get any more funding right now. And you say, well, that's because there's no cash, so let's just look inward, manage the expenses, and that will help things in the long run.

Jeffrey Feldberg: So, Chris, as you're talking about [00:15:00] this, Different models and how we're going to put this together and how it's going to affect growth or how it could hold back on growth. I'm sure for many listeners in Deep Wealth Nation, they're saying, okay, yeah, Chris, I hear you. I don't know where to start. I don't know where to begin.

Even if I have the advisors or the right people on board, I want to make sure that I'm using their time wisely. Where do I focus? Where do I start? And I know for that, you've put together a whole number of programs and courses and right after my own heart being online with these courses, just like at Embanet.

So talk to us through that. You have different courses. What should our listeners know? What are these courses doing? Why do they care? Why should they be going through this?

Chris Reilly: Well, I built them to help people with their financial forecasting when it comes to financial modeling for all the companies that we're talking about today. The reason I built them is because a lot of financial models are very poorly put together, they're poorly designed, and they're error prone. And you can't have an error prone model for yourself, or especially if you're going to go out And raise capital.

And [00:16:00] so after getting burned so many times in a career in finance and spending all nighters kind of learning how to do it the wrong way, I wanted to teach people to do it the right way. And so that's what I offer. It's called financial modeling education, and it actually teaches people what we were talking about.

13 week cashflow forecasting, which is, let's just figure out cash in and out of the bank. And then when you get more sophisticated, the three statement modeling or the longer term forecast that you would need to bring on investors. And so that's the. Portfolio of products that I offer. And I'd say, before you even get to that level, if you're like, man, where do I really start?

Just take your personal finances as a place. Open up your checking account and say to yourself, when did my paychecks come in? When does our mortgage go out? When do we buy groceries? And kind of build that out into a little spreadsheet. Those are the core financial modeling skills that can get you started.

And once you're comfortable with that, then you're probably ready to engage in something a little more sophisticated like the courses I offer. But I started by learning with my personal life.

Jeffrey Feldberg: And so with that said, Chris, I'm wondering [00:17:00] again, going back to the Pareto's law or the 80 20 principle with the courses that you have, there's all kinds of insights and strategies and methodologies of doing this. Do you find, and again, it's a tough question because you can say Jeffrey and rightly so, depends on the company, depends where they are, depends on their trajectory, but that said, is there a few tried and true strategies that coming out of this episode, a listener could do today that could really make a difference?

Anything come to mind?

Chris Reilly: Yeah. And the beauty of it is the answer is not, it depends it is cash management. That's the number one thing, whether it's a great company or a company that's in distress, getting a sense of what your cash is going to be doing in the future, as best you can. It's the future. Nobody knows the future, but you want to start there.

I've seen a lot of companies say, well, we don't need to do a cash forecast. But I can tell you when I worked at Hilton, which is one of the largest hotel companies in the world, we had a cash forecast and we updated it every couple of days, same thing for a small mom and pop company. So I would say that is the number one thing.[00:18:00]

that somebody could focus on right away to have an impact.

Jeffrey Feldberg: And so when we're talking about an impact, you've been there. I'm going to take you back to your days in M& A. Every listener on this podcast in Deep Wealth Nation, at one point or another, there's going to be some kind of liquidity event or some kind of exit, whether it's 30 years away, whether it's three years away, or maybe it's to the next generation, or perhaps they're going to be raising capital.

So when you sat on the other side and you're either an investor, you're a buyer, I would love to hear what really has people walk away from the table or keep them at the table. And we can go through a whole number of different scenarios, but why don't we start with first the whole business model in and of itself?

What are you seeing? What are people looking for or what don't they want to see? What would really have them walk away from the table?

Chris Reilly: So the first thing is actually it's a people business, oddly enough, which sort of seems strange as a finance person to say, but it really is. You get in the room and you meet the management team [00:19:00] and you ask yourself, does this team have the drive to move this business forward? And do I feel like That we could back them, and you start asking yourself basic questions like the elevator test or the beer test, could we hang out for an hour and would it be a productive and enjoyable conversation and time?

And so you're doing that analysis of the people and their ability to execute, because a lot of deals crash because of culture clashes there's a misalignment of how the management team wants to do things and the private equity team. And so getting all that out on the table first. is the right way to do it so that when things get started, you're not going in opposite directions.

So a lot of it is people focused. Then secondly, it's just going to be the financials. They still have to make sense. There still has to be profitability. There still has to be real cashflow. And there still has to be an opportunity for the first buyer to be able to exit to the next buyer. And so that's where that financial model plays such a critical role throughout the process, because you're always keeping score [00:20:00] from a financial perspective to make sure that you're Generating a return for your current investors and also being able to exit for the next buyer.

Jeffrey Feldberg: So people, business, and we're talking models and cashflow. What would be some things that right now today I can look within my own company, do a little bit of an internal test. Hey, Jeffrey, you know what, doesn't look like we're there or yeah, we're there. We're doing what Chris was saying.

Chris Reilly: think it always comes back to expense management. In my mind, I think we always take on expenses that we don't need. And I will often do a software audit of my own little one person business every quarter or so, because I probably have a couple subscriptions that I really don't need. And so I think as your revenue grows, it's kind of easy to get carried away with expense a little bit.

But if you can keep expenses, As lean as possible, well, then it's just, it's all the better on the upside and then it helps you when things are in a pinch. And so feel like that's just always a great approach. Look inward. You don't need tons of crazy KPIs or metrics or customer acquisition costs, all that stuff is helpful, but really you're just trying to optimize [00:21:00] the revenue generated relative to the offset expense.

And so if you can keep expenses tight, everything else is going to fall into place.

Jeffrey Feldberg: And in terms of some best practices with what you're seeing today, so the companies that you're working with, or again, going back to your management consulting. Or your M& A days in terms of our mindset, how should we approach this, Chris? And I'm really thinking specifically from the entrepreneur or founder who maybe like myself, they're not necessarily right up there when it comes to finance.

You're looking to have the right people on the team. If you're not familiar with the area to begin with, how do you know we have the right people around us that we don't want to become the emperor of no clothes. People are telling us what we want to hear, but it couldn't be the furthest thing from the truth in terms of what they're telling us.

Chris Reilly: Yeah, it's a hard position to be in because if you don't know finance all that well, well then it's hard to hire for the right person and then how do you know and unfortunately at some point you just kind of have to go for it, you have to go based on people's pedigree, based on their history and then you have to feel it out over the first three to six months and say to yourself, am I [00:22:00] getting the financial insight that I need?

Is this person communicating to me in a simple way? I think maybe that could be your first red flag or litmus test. If your finance person is really trying to over complicate stuff with a lot of jargon, they're probably they're talking their way through stuff without actually being concrete and getting to the point.

So if you can have a finance person that, that simply explains what's going on in your business, That is a good finance person and that is somebody worth keeping. And then if you're in your position, it pays to spend a little bit of time just educating yourself on the basics. You're going to hire a CFO, let them be the CFO.

But you want to know some of the headline numbers like the revenue, the margin, the cash, the EBITDA, and a few other core metrics, related to customers or something like that. Just so that in your brain, you want it to triangulate. So you want to be just educated enough to kind of sanity check what they're saying.

Jeffrey Feldberg: Interesting. And so it's a two part question. Let me start with the first one and [00:23:00] that's covering the basics. So we talked about KPIs, key performance indicators, and you're right. Chris, I've seen these spreadsheets. You would need to be a NASA astronaut to figure this out of what's there. They're so complicated.

There's so many that's there. And with the question I'm going to ask, again, you'd be right to say, well, Jeffrey really depends on the company, the industry, what they're doing, where they're at, again, generally speaking, what are some tried and true KPIs that every company should be looking at and considering?

Chris Reilly: But there's what I call the big four for every company. Revenue, gross margin, EBITDA, and cash. Those are your core financial metrics, and you want to be able to know those at all times. From there, then you get a little bit more industry specific, and it depends. But then you're usually calculating some kind of operational metric related to the financial results.

So that could be, average revenue per customer or revenue generated per employee or customer acquisition cost. But every industry is going to have its own unique metrics. So I think you want to [00:24:00] start with those core four that come from the financials, and those are universal across all companies.

And then you can extract the other industry specific metrics that you need.

Jeffrey Feldberg: So we've got some of the basics that are going on there and then next up. So once we have that, it's amazing, particularly post pandemic with technology, societal norms, we become used to not having people number one, full time and number two, physically in the seat. And so you can have all kinds of fractional positions from a fractional CFO, even to really fractional bookkeepers all the way through, all the way and up.

So, from that perspective, thoughts about that in terms of. When should we be bringing on a CFO? It has the letter C starting in the title, which usually means big responsibilities, big dollars that are coming on with that. You can defer some of that by having it fractional, but when do we need a CFO? When do we not?

What's it looking like from your side?

Chris Reilly: That's a really interesting question because I think fractional CFOs now are [00:25:00] becoming more and more common because the skills required, especially with the technology available, doesn't necessarily require full time work. And so I think there are a lot of fractional CFOs out there that can be extremely effective and apply the impact of a full time CFO.

If they're only managing, two, three, or four clients. And so I actually think that's totally appropriate to do what I would argue. And this is funny coming from me, a guy who just works from home by myself is that remote work is great. And that can be the norm, but you do need some in person meetings at some point to get everybody around the table, talking about the results in the form of a traditional company.

I found when I go on site to clients, It's just more impactful than always being at home, and it was the same idea when I was in PE. We would just get more done when we were on site with the portfolio company than we were sitting back in our offices in Denver. So, I'd say the busy work can be remote, but there are times when everybody has [00:26:00] to come together and collaborate, especially for a role like the CFO, where you want that finance person in the room.

Jeffrey Feldberg: Got it. Okay. And so from the CFO. Would there be some intermediary people or titles between where we are now to a CFO? Is it an all or nothing kind of scenario? Okay.

Chris Reilly: It's definitely not all or nothing. I think these, a lot of the fractional CFO firms will offer all kinds of resources that can be helpful to you before you have to bring on an official CFO or fractional CFO. So a lot of these companies will market themselves as the office of the CFO, and basically you can outsource analysts or senior associates or directors of finance or something like that.

So it's almost like an extended team. That you can bring in if you need them. I

Jeffrey Feldberg: And so with that said, so we've got the KPIs down. We've talked about CFOs or fractional CFOs or other resources to help us. So with that said, I want to bring in something that's making headlines every day. At Deep Wealth, this falls squarely [00:27:00] into step one, big picture of our nine step roadmap, and that's artificial intelligence, AI, making huge headways.

So firstly, when it comes to really big picture wise, that the area of finance, what we're talking about here, where are we today with AI? And Chris, where do you see it going?

Chris Reilly: think today we're still at the very beginning of it, but I see the impact being really valuable for big data sets in the long term because AI can just do a ton of analysis on that information and give you insight quickly. I might eat my words saying this, but I don't know that it's going to disrupt the lower middle market as much as people think it will.

I think there's a lot of companies out there, I've worked with some agricultural companies in the Midwest, they don't really care about AI all that much, they just care about working in the production in the fields like they've done for however many years and just want some basic financial insight.

And so I think it's going to have a larger impact on larger companies and maybe not quite as much in the lower middle market. [00:28:00] Also with financial modeling, I see it playing a big role in the future in terms of maybe being able to automate a lot of the models themselves, and it'll be done in Python and potentially instead of Excel.

The reason that's still a valuable skill to learn today is one, understanding the financial statements. That fundamental logic will never go away. And then when it comes to debugging these advanced AI models, which they are going to make mistakes, only somebody who knows how they work behind the scenes and understands the gears.

is going to be able to actually debug the AI models. And so it's worthwhile to invest in that skill now. And truth be told, I've actually been approached by a couple of AI companies asking to use my models to teach their learning systems. And so it just kind of gives me some insight that if you know how it works today, well, then you can become more of a fixer and an analyzer in the future and less of a builder.

Jeffrey Feldberg: Terrific. And AI is changing by really the moments. What we're seeing today could become obsolete tomorrow, but where we are today with AI, without me being a programmer, me [00:29:00] just going to my favorite AI bot, whatever that happens to be, and I'm going to keep the names out of it because what's working today may not be around the next time someone listens to this episode.

So whoever that AI bot happens to be, is it at the point right now, Chris, where I can share some financials and say, okay. Tell me the overall trends or tell me what you're seeing or point out the problem spots. Are we there yet with that?

Chris Reilly: We are, if the data is formatted correctly and it needs to be formatted in tabular format or basically like a table. Where the first row has a bunch of headers, and then everything else below it is the data. When I fed AI that format, it can do a pretty good job, actually do a really great job of analyzing the data and giving me some insight.

If I ask it to build a model from scratch, create data from scratch, or analyze an Excel file that I've built. Today, it doesn't like the structure of the way those files work, and it usually spins itself into circles and ends up creating errors. So right now, I'd say it's really good at analysis. It's not so great at [00:30:00] construction.

Jeffrey Feldberg: Got it. Okay. And so it sounds like we're still early days. It's going to get better. I imagine at one point we can just put a spreadsheet in there. It'll figure everything out and come back at that with us. But today it's there, but something that can be improved upon is really what I'm hearing from you.

Chris Reilly: Yeah, for sure.

Jeffrey Feldberg: But formatting aside, if we got the formatting right, if it's in the tabular format, like you're saying. Does it have the wherewithal to really now quickly go through things to give us insights that maybe we could find on our own, but it would take us a whole lot longer?

Chris Reilly: Yeah, I'd say so. we talked about run an online course business, and so that comes with sales, and I get a nice output of that's in tabular format, and I've put that into AI before to just say, help me with price points or seasonality or other trends I just might want to know, and It does the analysis, of course, faster than I would do it, maybe.

I don't know if it really tells me a whole lot, though, because you have to, in your head, you still know some of the one off nuances of I maybe did a flash sale here or something else there, or I experimented with this, and AI doesn't know [00:31:00] that. Unless you instruct it, so you have to be very careful with your instructions so that doesn't accidentally skew all of your analysis.

So it comes down to a prompting exercise in a way, but if you can get the prompting right and give it the holistic suite of information, well then it's really quick at running scenarios and what if, because it understands the data and it understands the context.

Jeffrey Feldberg: And so, Chris, let me ask you this because you're a fairly modest individual. What you've done though, really is outstanding. And so for our listeners, can you have them appreciate the models that you've put together why that's going to save them so much time? What's there that perhaps they could do, it would take them a long time to do, or they may never get there.

Point to this is whether you're saying, yeah, Jeffrey and AI company has asked me to use some of my models so they can learn to take a look at that. So you're in the thick of things right now. And you're really like that terrific, mad scientist, genius inventor that's out there putting all this together.

But for the benefit of our listeners who may not get that or understand that. So Chris, [00:32:00] what's going on? Let's take back the curtain here. What's going on with your models? What do you want them to know? Our listeners in terms of what's there for them?

Chris Reilly: Well, the idea is just to help people get a better holistic picture of the financial performance of their company. And so, like I was saying earlier, a lot of these models are not well put together. And they're error prone. And the truth is 90 percent of all spreadsheets contain error. And so if you want your business to grow, whether it's bootstrapped or it's going to be raised, you're going to raise capital from an investor.

You just want to know, do you ultimately have the liquidity to live the lifestyle you want? And a financial model is going to help you. In that goal, it's going to help you in that vision by giving you an approximate glimpse into the future. So you kind of know what to do today. And that's the whole idea.

And so I reinforce that skill so that people can build these models and then do what they need to do. Either manage their own company or take it out to market.

Jeffrey Feldberg: And again, you can say, Geoffrey, the question you're asking, it really depends. [00:33:00] Generally speaking, though, with the models that you've put together, the programs that you have, and by the way, they're very reasonably priced. No one's going to be breaking the bank to go through these programs. They're taking thousands and thousands of hours that you've done out there, and they're now the benefactor of that.

Who's the ideal person, Chris, if I'm as a business owner? And I'm listening here and saying, okay, I can accelerate the understanding of our business models, make a better business model, really go after our growth, find what's holding us back and accelerate that. Who on my team should I be thinking about to go through these programs?

Chris Reilly: Perfect candidate is probably somebody who is a mid career professional that works in either FP& A or private equity. FP& A is financial planning and analysis. And they want to own their financial modeling skills because they understand the value of the skill, but they've had a lot of frustration with it in the past because the models have been built poorly, incorrectly, or inaccurately.

And so That's the ideal candidate coming from somebody who's in the [00:34:00] CFO position. It might be, we just need somebody to harness the skill so that we can get some foresight into the future. And the actual doer of the program might be more of a mid level person.

Jeffrey Feldberg: And as you're saying that, Chris, what I'm thinking about for the benefit of our listeners at Deep Wealth Nation, when we go through the Deep Wealth Mastery Program, Scale 90 day system, step number four, it's an internal audit, it's due diligence. And the whole key to not getting any deal, but the best deal.

And it doesn't matter if you're raising capital, if you're having a full exit or partial exit, the thing they all have in common, the higher the enterprise value, the better off you're going to be. But to do that, it needs to be done, the preparation well in advance. Before you ever show up to an investment banker, before you're ever in market.

You need to have your business model locked down. You need to have your internal audit, the due diligence, those skeletons in the closet. You have to find all those things and do it. Chris, I'm thinking back to my liquidity event. Our business model, it took us, I [00:35:00] can't even begin to count how many hours, days, weeks, months it took us to really refine it, put it together, have it so that someone from the outside could understand it.

Thank goodness we did that because once we went to market, It was scrutinized. We had some of the smartest people in the room that were looking at that and verifying and checking. And the questions that we got was really over the top. Have we not been prepared? I can only imagine we would have a lost a deal or B we would have been heavily penalized on the enterprise value.

Neither is a good scenario. So with what you're saying, Absolutely. And the more time we have to prepare, the more time we have to really internalize this, make it a best practice, build it into our culture, the better off we're going to be. Would love your thoughts on that.

Chris Reilly: Yeah, I think you don't ever have to sell, but you always want to be ready to sell. And now that's much easier said than done. And I'm guilty of that myself. Is my business in a position to sell? No, it's not. I probably have to take a good six weeks and do the internal diligence that you just mentioned to get it ready.

But if you can kind of keep that. Front [00:36:00] of mind and get going on some of that work now, it's just going to save you a ton of headache down the road when you do bring it to market because you're right, bankers and investors, they are going to rip it apart. I've seen it happen over and over again. And so the more prepared you are with your backend diligence, not only will it prepare you better for an investment, also going to make your life easier because when diligence comes around, you're basically working two jobs for anywhere from three to nine months.

And so the more you can get done now, while the pressure isn't on it, the easier it's going to be down the road.

Jeffrey Feldberg: Exactly. And Chris, when I was preparing to speak with you, when I had gone through some of the things that you're offering, I'm looking at some of the models that you're putting out there. And for starters, I would say, I Could I go to my favorite search engine, type in cashflow model, cashflow analysis?

Yes. I have to go through a lot of things. Most of those are probably not all that great. They're going to be filled with errors or not up to date. What I really enjoyed with what you're doing, this is from the trenches. This is not theory. This stuff works, you've tried it, you've [00:37:00] refined it, and for me, as someone who would be going through your program, I'm really getting the best of the best in the shortest possible period of time that I can take it, make it my own, and now begin to apply it to my company.

Thoughts about that?

Chris Reilly: you're right, and I think it's okay to start looking for stuff for free on YouTube, and there are a lot of great resources out there that do educate on some of those, and I have a few YouTube videos, not a ton, but the point of bringing in together a course is that you get All the information, the complete information in one place, and you also get access to the instructor.

When you're looking at stuff online for free, you're going to get bits and pieces. It's not quite as customized as what you probably want when it comes to a full scale course. And then the one thing that I've always been proud of, my differentiator, is my stuff is really detailed. It's just going to be far more specific than what you see in a free course or something on YouTube.

Because I've, like I said, I've been there. I've built these models in private equity and FP& A, and I still do the work every month. I still do some consulting just to say sharp. And [00:38:00] so I know what's going on every day. And the models that I teach are the models that are actually used on the job. They're not some of the theoretical illustrative ones that make for a great YouTube video, but not necessarily a holistic course.

Jeffrey Feldberg: Said from the master himself. And so, Chris, let me ask you this, before we head into wrap up mode, is there a question I didn't ask, or a topic that we didn't cover, or even a message you want to get out there to Deep Wealth Nation?

Chris Reilly: Honestly, no, I mean, I thought you asked a bunch of great questions. And I think maybe one lesson I'll drive home for everybody listening, because financial modeling is, it's an overwhelming topic. Start with building a short model of your personal life. That's how I learned. It's the easiest way to learn because there's no learning curve.

You just know what's coming in and going out of your bank account. It'll probably help bring your credit card bills down. It's a great place to get started. And then if you want to apply that to the job in the business setting, then that's a great next step that you could take. But start with your personal life.

Jeffrey Feldberg: Some terrific advice and it's personal, we have a vested interest in that and hey, [00:39:00] why not? Why can't I optimize where my expenses are or saving some money or just understanding at a very basic level what I should be doing that I can apply it to the business side. Absolutely love that. Well, Chris, with that said, while we're going into wrap up mode, it's a tradition here on the Deep Wealth Podcast where I have the privilege and the honor to ask every guest the same question.

It's a really fun one. Let me set this up for you. So when you think of the movie Back to the Future, you have a magical DeLorean car that can take you to any point in time. So Chris, here's the fun part. It's tomorrow morning, you look outside your window, not only is the DeLorean car there, curbside, but the door is open.

It's waiting for you to hop on in, which you do. And you're not going to go to any point in your life. Chris, as a young child, a teenager, whatever point in time that would be, what are you telling your younger self in terms of life lessons or life wisdom? Or hey, Chris, do this, but don't do that. What would it sound like?

Chris Reilly: I think I would choose two. is, I'd go back to the very beginning of my life and try to appreciate the finality of time. Because as I've gotten [00:40:00] older, start getting closer to midlife crisis, you realize how fleeting time is and you spend a lot of your youthful years happy, but unaware of that finality and unaware of how limited that resource is.

And so I, do my best to appreciate that now. And I just wish I had that perspective when I was younger. So I would go back and I would do that right away. And then when it comes to the business side of things, I would actually teach myself about money much earlier in life because. I thought your paycheck worked just like your grades in school.

You put in your time, you do the work, you get a grade, you then go to the next, class. Do your time, get your grades, move on, get a job, get a salary, promoted, and you get another salary. That's kind of how I thought it worked when I realized money is really it's an exchange of value for the service that we provide to the world.

And if you provide it to your employer, you have one customer. But if you go out and do it for yourself, then you have a lot of customers. And [00:41:00] so that wealth can be scaled by just understanding what it truly represents. It's not just a paycheck. It is a way to be compensated for the value that you provide to the rest of the world.

Jeffrey Feldberg: Wow, two tremendously profound insights there. So one is make the most of your time, enjoy it. And to paraphrase from what I've heard elsewhere, be in the moment, make the most of it. Who knows what tomorrow brings or what we're going to be doing. And it goes by in the blink of an eye. So really make the most of your time all day, every day.

And then I'm also hearing you say, Chris, when it comes to money, really understand it. How does it work? What does it represent? What's it doing for me? What am I doing for others? As opposed to, well, here's a paycheck. I'm just going to put it into the bank or here's a check for the business. We'll just deposit it.

Really go behind that and see what's there. Really insightful. Absolutely love that. And Chris, before we wrap up, somebody has a question or they want to go through these courses or see some of the courses or get some more information. Where's the best place online someone can reach you?

Chris Reilly: So for my courses, it's [00:42:00] financialmodelingeducation. com. The one thing I love about being a course provider, and then also just working for myself, is that people get access to me when they enroll. I don't outsource to a VA or anything like that. So they get the education piece and they also get access to me.

So if they're interested in working on that, they can go to financialmodelingeducation. com. When it comes to day, I'm always on LinkedIn. That's my primary social network. I'm not everywhere else. I just post tips and tricks on there pretty much every day. And I'm as active as I can in terms of comments and direct messages.

And so if anybody just wants to say hello, then just head over to LinkedIn. They can find me there.

Jeffrey Feldberg: Terrific. And for our listeners in the show notes, it's all there. It couldn't get any easier. It's a point and click and we'll get you there to Chris. And that said, Chris, congratulations, it's official, this is a wrap, and as we love to say here, Deep Wealth, may you continue to thrive and prosper while you remain healthy and safe.

Thank you so much.

Chris Reilly: Thanks, Jeff. Really appreciate being here. Thanks for having me on.

Jeffrey Feldberg: So there you have it, Deep Wealth Nation. What did you think? So with all that said and as we wrap it up, I have another [00:43:00] question for you.

Actually, it's more of a personal favor. Did you find this episode helpful? Have you found other episodes of the Deep Wealth Podcast empowering and a game changer for your journey? And if you said yes, and I really hope you did, I have a small but really meaningful way that you can actually help us out and keep these episodes coming to you.

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So all that said. Thank you so much for listening. And remember your wealth isn't just about the money in the bank. It's about the depth of your journey and the impact that you're creating. So let's continue this journey together. And from the bottom of my heart, thank you so much for listening to this episode.

And as we love to say here at Deep Wealth, may you continue to thrive and prosper while you remain healthy and safe. [00:45:00] Thank you so much. God bless.