Richard Wilson: asking for history when the answer is a forecast
An answer about next year can leave a question about last year unanswered. Richard used that exchange in his due diligence time savers module.
The period in the question
Richard described asking for previous financial results and receiving an ambitious revenue projection. He returned to the earlier period. A forecast could be discussed later, but it had not supplied the historical information he requested.
A basis for the growth claim
He compared a projection following very limited revenue with the same projection following a larger established business. The target alone did not reveal how much growth was assumed. His example gives the earlier results a specific job: they help explain the distance between the business as it exists and the business in the presentation.
In Richard C. Wilson's words
"it's not really what I asked. What'd you do last year?" (Richard C. Wilson, Due Diligence mini-series)
How to use this
- Label each financial figure with the period it covers.
- Keep an unanswered historical question open when the response supplies a projection.
Questions and answers
What did Richard ask for again?
The prior year's results, after the answer had described a future target.
Why did the earlier revenue matter in his example?
It changed how much growth the projection required.