The memo needs the model version

An investment memo needs to survive a model revision. I want the narrative to tell the committee which version it reflects and what remains unresolved.

- Sasha Deneux

The Take: Better document generation raises the review standard

The W3C's April 2013 PROV overview describes provenance as information about how a piece of data was produced. An investment memo needs that history in practical form: which source documents, which model, and whose approved assumptions shaped this version?

The opportunity is easy to understand: organize the inputs once and draft the material the team needs to discuss them. The harder part is keeping the outputs attached to the same approved view of the deal.

A memo can describe a business plan from Monday, show returns from Tuesday, and include a risk paragraph written before a new lease arrived. Every section can sound plausible. Together, they may describe a deal the team no longer intends to buy.

I would give the generation process a named input set. Which operating statement? Which rent roll? Which workbook version? Which assumptions have the analyst approved? The output should carry those references and show the unresolved diligence beside the recommendation.

That also changes the revision request. Ask which sections must change when a material input changes. A new insurance estimate may affect cash flow, coverage, the risk discussion, and conditions of approval. Rewriting the executive summary alone leaves the rest of the package behind.

A committee should be able to challenge the inputs without first reverse-engineering the document. The model can help draft the explanation; the investment team still owns the recommendation. A useful memo makes that responsibility clear and gives the next reviewer enough detail to check the work.

The Teardown: Assemble a memo that can be revised

Begin with a folder for an already-reviewed practice deal. Use documents your team is permitted to process in the chosen environment. Keep a copy of the accepted result so you can compare the generated package against it.

Freeze the input set. List the source files, dates, and the approved workbook version. Separate extracted observations from investment assumptions. A stated lease expiration belongs to the source record. A proposed renewal probability belongs to an assumption with an owner and rationale.

Define the decision on the first page. State what the committee is being asked to approve, the business plan, and the conditions attached. Avoid turning a preliminary screen into an unconditional investment recommendation through polished wording.

Draft from approved fields. Require each material number to point to its workbook cell or source location. An unresolved figure stays visibly unresolved. The analyst should inspect the reference itself; an attractive citation can still point to the wrong period or an irrelevant paragraph.

Keep disagreements visible. Include an open-diligence section with the question, responsible person, and evidence needed. If the OM and rent roll disagree, record the conflict rather than choosing whichever number produces the tidier memo. The reviewer decides how to resolve it.

Run a change exercise. Alter one assumption in the practice model. Ask the workflow to identify affected tables and narrative passages before regenerating them. Then verify both the numbers and the explanation. Look for stale copies in the summary, risks, business plan, and any accompanying deck.

The acceptance check is specific: the memo and deck refer to the same approved model, material figures can be traced, open questions remain open, and changes are logged. Record the analyst's corrections and review effort. A polished first draft by itself doesn't tell you how the process performs through a revision.

Our IC memo tools guide frames that vendor evaluation. Begin with the source-to-model handoff underneath the narrative, because a well-written memo still depends on approved inputs.

Signal

Reference desk: useful foundations for a memo that can be revised.

• April 2013: document how the output was produced. W3C's PROV overview offers a vocabulary for tracing an output to its origins. Apply the idea simply: attach the source-file list, workbook version, and assumption approvals to the committee package.
• July 2024: a fluent explanation can be incorrect. NIST's generative AI profile identifies confidently false output as a risk. Review the memo's material claims against approved inputs. A persuasive explanation of the wrong insurance figure is still a correction to make.
• January 2023: define responsibilities. NIST's AI Risk Management Framework includes documenting human oversight roles. Name who reviews the numbers, who resolves diligence conflicts, and who owns the recommendation before a draft enters the committee process.

From NextAutomation

We build source-to-model-to-memo workflows for acquisition teams. Book a conversation and bring a redacted example of the package your committee expects. The underwriting model-builder pack provides a useful starting structure for the underlying inputs.

Make the memo easy to revise and the recommendation easy to question.

Next edition: keep an incomplete deal out of the rejection pile.

- NextAutomation Team