The case against spreadsheet-first underwriting

What spreadsheets are good at

It is worth being fair to the spreadsheet. For expressing a financial relationship quickly, in a form another analyst can read and challenge, nothing has replaced it. Most of the objections raised against spreadsheets are really objections to how they are used.

The trouble starts when the model becomes the system of record. A file that began as a calculation turns into the only place where a set of assumptions exists, and it acquires a history that lives entirely in one person’s memory.

The costs show up later

Six months after a deal closes, the question is rarely what the model produced. It is why a particular assumption was chosen, who approved it, and what the alternative was. A spreadsheet answers none of that.

The same applies across deals. If every underwriting starts from a copy of the last one, the institution never accumulates a view. It accumulates files. The difference becomes obvious the first time someone asks how your assumptions have moved over the past year.