I added a few more slides to the database today, one of them was this one: a template to present a sensitivity analysis.
Why this particular layout?
- It is nicely spaced out, a calm composition for so much data
- Numbers are disconnected from the spreadsheet: rounded up, entered by hand
- Colours, bold, are used to direct the eye to what is important, and what is secondary
Some thoughts about how and when to present this type of analysis:
- Presenting sensitivities and not the same as analysing them. The latter is the homework that you should have been doing before the presentation. Figure to what factors your model is sensitive, decided whether that is how it should be, then gather more information where needed to increase your confidence in variables that can make a big difference. What is left to discuss are sensitivities after you did everything to minimise and/or understand them.
- The ranges of the variables you show should be realistic. This is not an exercise in mathematics, but an attempt to really understand what drives the future.
- Pick dimensions that are not correlated, if the risks on the x and y axes are the same, you are not adding much insight.
- Try flipping the analysis upside down, instead of showing deviations from the base case, show “what you would have to believe” in order to get to a certain number.
- Be careful when sharing this type of data if you are in some negotiation about valuation. If the other side understand your model, they can basically salami slice the valuation using your own excel. You need to understand the sensitivities, but sharing them directly might not be smart.
The slide layout is available inside the SlideMagic app, or here on the web site.