How do you get up to speed as a consultant on finance?
I'm at an MBA and previously was at McKinsey. I don't have much finance experience. I'm in the late stages of a couple of hedge fund interviews (shops of 5-10 guys with ~$1-2bn doing classic TMT/consumer/fintech L/S). The models I make are all basically P&L plus CF just projected % of revenue to get to FCF (unsurprising given consulting DNA) and the firms I've interviewed at have been OK with that. I don't have reps thinking through things like cost of SBC, really understanding BS and how a business can grow based on financing/BS strength, ROE / ROA and what you can actually finance, etc. I.e. I'm more commercial than financial.
How do I get up to speed? Business school was basically useless for hard skills development. I was listening to a podcast with Bill Gurley and Brad Gerstner and they're talking about like accounting changes with the CFO of Priceline, and while they're not like public guys #1 or anything, I'm still thinking like, shit, I'm so far out of that deeply financial world, I wonder if it's not worth pursuing. I'm about 30 if that makes a difference.
I have a quarter left so basically wondering, what can I do so that I come in the same as someone with many deal reps?
To get up to speed on finance as a consultant transitioning into a hedge fund role, especially coming from a background like yours at McKinsey and currently pursuing an MBA, it's crucial to focus on developing a deep understanding of financial modeling, accounting principles, and investment analysis. Here are several steps and resources that can help bridge the gap in your finance knowledge and skills:
Deep Dive into Financial Modeling: Since you're already familiar with creating P&L and cash flow projections, the next step is to enhance your financial modeling skills to include more complex analyses such as DCF (Discounted Cash Flow), LBO (Leveraged Buyout), and M&A (Mergers and Acquisitions) models. The WSO Financial Modeling Courses are highly recommended for this purpose. They cover a wide range of topics from basic to advanced financial modeling techniques.
Strengthen Accounting Knowledge: A solid understanding of accounting is fundamental for anyone working in finance. Focus on mastering the balance sheet, income statement, and cash flow statement interactions, as well as more nuanced topics like stock-based compensation (SBC) and how accounting changes can impact financial statements. The WSO Excel and Accounting courses can provide a practical approach to learning these concepts.
Learn from Real-world Case Studies: Engage with case studies that focus on the financial analysis of companies, especially in the TMT, consumer, and fintech sectors since these are your areas of interest. The WSO Case Study Interview Prep can offer insights into how to approach these analyses from an investment perspective.
Networking and Mentorship: Leverage your McKinsey and MBA networks to connect with professionals working in hedge funds or those with a strong finance background. Gaining insights from their experiences and perhaps even finding a mentor can accelerate your learning curve.
Engage with Financial News and Analysis: Regularly follow financial news platforms and listen to podcasts that discuss financial markets, company analyses, and investment strategies. This will help you understand how professionals think about and analyze financial information.
Practical Experience: If possible, take on internships or project roles that allow you to work on financial analysis and investment projects. The WSO Finance Research Analyst Internship could be a valuable opportunity to gain practical experience while still in school.
Participate in Finance Competitions or Simulations: Engaging in finance competitions or simulations can provide hands-on experience with investment decision-making and financial analysis.
Utilize the WSO Community: The Wall Street Oasis forums are a treasure trove of information and advice from finance professionals. Don't hesitate to ask questions, share your experiences, and seek guidance from the community.
By focusing on these areas, you can significantly enhance your financial acumen and be better prepared for your hedge fund interviews and roles. Remember, finance is a vast field, and continuous learning is key to staying ahead.
Sources: https://www.wallstreetoasis.com/forum/consulting/should-consultants-get-an-mba-8-scenarios-to-consider?customgpt=1, Q&A: I was a consultant and interviewer at McKinsey, Case study interview for MBB consulting - 24 of my best tips on how to get in, Tips to crank out work really fast, Best books to read to get me up to speed at a distressed debt hedge fund?
Thank you Monkey Bot... any humans care to opine? Penny for your thoughts?
Outside of doing the reps, you don't.
I'd probably focus on your revenue/expense builds and dig into what each assumption implies, rather than growing everything as % sales since this ignores operating leverage.
If you have 10% CAGR top-line for 5 years, and you think 8% of that growth is incremental pricing, your gross/EBIT(DA) margins should be expanding rapidly.
Maybe this is the pod shop in me speaking, but being able to think practically is probably more important than having the deep-rooted fundamental philosophies on cash flow/ROICs that you see a lot of these hardcore finance people talking about.
Trainingthestreet.com
Just reading your vernacular / how you think about investing, it does not seem like you have the experience to be successful in L/S with your current knowledge base. At about 30, I'm thinking if they hire you they are expecting you to hit the ground running. I'd think strong and hard about whether this is something you are interested in and have a passion for or you just want to interview for prestigious roles. I do not mean to be offensive or deter you; it's just that the skillset isn't transferable and you need to put in 110% of the effort 110% of the time to win.
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