1/5/17

Hello,

I have an opportunity to join EY's Valuation & Business Modelling teams. Within the team there are a number of sub-teams. I am trying to assess which would be best for eventually moving into an M&A role. From reading the descriptions I have narrowed it down to the two groups below. Could anyone opine on which will provide the most useful experience? I initially thought the Modelling role. However, it seems like PPA/Fairness opinions come under Business Valuation. I'm not sure which team would be creating e.g. a DCF model, and I guess that is the most useful experience to have.

Business Valuation

The valuation team advises clients on the value of businesses, shares, debt and intellectual property/ intangible assets, for various purposes. You will join a market leading practice and will learn to deliver solutions tailored to the needs of our clients based on knowledge of economic factors, an appreciation of the business and industry context, and the ability to get to the heart of valuation issues.

Led by senior leaders in our practice, you will work in teams to assist our clients with their business valuation requirements. In your first years you will complete different types of projects covering a variety of countries and industries within our focus areas of: commercial valuations for the purpose of acquisitions, disposals and mergers; tax valuations for fiscal purposes; intellectual property valuations of trademarks, brands, copyrights, patents and licences; expert valuations in litigation and dispute resolution cases; regulatory and accounting valuation for financial reporting purposes.

Business Modelling team has two main sub-teams; Transaction Modelling and Decision Support. You will have the opportunity to work on projects in both parts of the team. Success in this environment requires rigorous analytical techniques combined with exceptional communication skills and commercial acumen.

The Transaction Modelling team builds and reviews complex financial models for transactions, financial restructuring, and forecasting. The Decision Support team uses expertise to help clients make the best possible strategic and operational decisions by applying strategic thinking and quantitative rigour to unstructured problems.

You'll be adding value to client projects by applying your modelling skills immediately on joining. Your work will include meeting with clients to understand their commercial issues, building and reviewing complex models, interpreting the outputs and presenting findings. You'll work directly with clients' staff at their premises as well as in EY offices.

Thanks for the help,

D

Comments (21)

1/6/17

Bump

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1/6/17

Sounds like transaction modeling is the most useful

1/6/17

Thanks for the response - do you mind elaborating on why?

1/6/17

This.

Also OP, people transfer inside EY all the time from the looks of it.

Just show you have the capacity and the fit and after 5-6 months ask to transfer.

1/6/17

Sorry - to transfer to what? The M&A teams after being in V&BM?

Again, do you mind clarifying why Modelling over Valuation? I was under the impression that the best skill to have is to know how to value businesses which Business Valustion seems to do. I guess it's unclear to me from their descriptions whether for e.g. An acquisition whether the modelling or valuation team will be doing the interesting work.

Thanks

1/6/17

To transfer into a M&A role. V&BM is close to M&A in the sense that models are being made, but it's a different department.

I'm in EY M&A so AMA I guess.

I don't know what the valuation people do per se, but it's different than our work. They're not making pitch books, teasers for clients or closing deals. Which is fine, I respect their work, but it's a separate department.

As for business or transaction valuation, I honestly don't know the difference. Business valuation could be more consulting or restructuring oriented and transaction valuation sounds like it could be modeling to find what the enterprise value for a company is. That's what it sounds like anyways.

1/7/17

Cool, thanks. Are you in the US or Europe? What was your background before EY? Are you planning on staying? I have heard that the turnover in these groups are very high. Any general advice about getting in to these teams, or about TAS in general? What groups are regarded highly (or not).

Thanks for the insight.

1/7/17

I'm in South America.

I worked two years at a stock brokerage at a bank. Not a Morgan Stanley or JPM, but a large high income client bank.

I would like to stay, the work environment is amazing. Everyone is great, supportive, and you're just generally in the right place mentally to work. I wasn't expecting to be in such a great team. However the salary really isn't that great at all, and it's sort of a downer. You won't be making the same salaries that are being made in banking. That's the only reason I see a high turn over. The good news is the work is the same. So learn a lot, do your best, that that salary that you want will eventually find you. That's where I see ex-EY employees today.

General advice to getting into certain teams is basically to network, but going to other teams at EY seems pretty easy. Just show you work well. Revise your spreadsheets before emailing them, show that you're producing value, and just generally being on top of your game. One thing that I think is worth mentioning is that it's an up or out culture. So always think ahead, where you want to be in the next couple of years and what you need to do to get there.

The most regarded groups in EY TAS are M&A, lead advisory, then valuation or OTS (which is basically post restructuring advisory from what I understood), I think there is another one, it would go after those, and last is Transaction Support, which is back office tier work.

I don't know if that was helpful or not, but if you have any other questions feel free.

1/8/17

Hi Embiv,

I am currently doing internship in Singapore EY, a team called financial instrument valuation team under FAAS. Our main work is to perform independent validation of clients' derivatives position. The work aligns my background quit well but as you said, the pay is not so ideal for the full time postion. If it's possible, could you please share some of your understanding for this kind of valuation? I mean, if I take this full time job as a stepping stone, where can I head to.

Thanks!

1/8/17

Hey there!

So I'll have to be honest, I don't know where the FAAS people head to, specially because there are so many different divisions under Assurance, and they all do different work.

I can only tell you what someone with some work experience has had, that if this is your first internship you're heading in the right direction professionally. EY is a good place to start your career.

What do you want to do? Do you want to work with clients? Do you want to analyse portfolios?

A good way to know where you could be headed is the obvious "where have people that left the team have gone". Try to find someone in your team who likes to talk, ask them what working at EY is like. You'll either get two kinds of people, those who want to stay and those who leave, and to be honest it's pretty 50-50%. So in my case, a friend of mine on the team, who wants to leave, has told me what EY is like. The pay is bad, and those who left have left for boutiques, other finance positions, or just have gone into different kinds of business.

I can imagine those who have left FAAS have gone either into banks or into other businesses. That's pretty general, but that's the most I can imagine, sorry. Try to find what departments they have gone to.

I don't think that helped much, but if there's anything else I can help with feel free to ask.

1/11/17

Thank you very much for your elaboration. I will share more feelings and thoughts after I finish the internship in EY with guys here.

1/11/17

Hope everything works out!

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1/7/17

So M&A leads deals whereas valuation is just a supplementation to companies performing due diligence to check their own valuations?

1/7/17

Valuation performs valuations, there is a separate team that deals with due diligence which is called Transaction Support.

But you're pretty much spot on

1/8/17

What do you think the Transaction Modelling team doing then, if the valuation team is completing most of the valuations?

Thanks again

1/7/17

The BVAL team does a lot of audit support valuation work e.g. ASC 350 impairment testing. You will perform DCF, comparable company and transactions analysis, but the purpose is entirely different. Apart from audit support, valuations are also done for purchase price allocation work. The overall work is accounting focused, so you will tend to have calls with the FP&A folks, director of accounting etc at the client site. The pay is on the lower side compared to OTS, and Performance Improvement / Advisory functions within EY

1/8/17

Hello gogetit,

Thank you for your posting. Could you pls elaborate on "the purpose is entirely different" when you say "You will perform DCF, Comps..."?
I know that PPA is normally post-deal, but reagrding the DCF & comps, are they also post-deal or pre-deal? I assume that pre-deal exp would be more valuable if my ultimate goal is move to M&A roles.

Cheers,

Best Response
1/8/17

Replied to a PM from the OP about this and I thought some of it could be useful to the general forum so might as well paste below:

*Let me preface by saying everything below assumes you're in London, and that the roles of the respective teams are similar to at my firm (we have the same names, but it's not EY).

Valuations is more technical and often focusses more on complex financial assets such as ABS, derivatives etc. rather than actual company corporate finance valuation work for transactions. The Val team will work closely with multiple areas of the firm including audit, consulting and corporate finance (note to US readers - corporate finance = investment banking in the UK whereas I believe in the US it refers to the internal finance team at a corporation) where their specialist input is required, either as part of a financial disclosure or a specific transaction.

Business Modelling will do a hell of a lot of modelling work (obviously...) and this will be in depth, often focussing primarily on the operational side. I.e. they are likely to produce full production models, bottom-up revenue builds, restructuring modelling etc. Again, this will support multiple areas of the firm (primarily consulting and corporate finance) but they may also be engaged separately to do specific, bespoke pieces of work for firms.

The corporate finance department is essentially a mid-market investment bank sitting within a Big4 structure. They won't deploy any balance sheet (i.e. no underwriting of equities, debt funding etc.) but they will fully lead a capital markets or M&A transaction on the advisory side. They will do the transaction modelling, comps analysis, market updates, liaise directly with client management and potential buyers, help drafting the documentation/IM, co-ordinate the due diligence, project manage the entire thing etc. This is exactly the same work as you will do with any investment bank (except for the capital raising aspect, as mentioned before). Clients are typically in the small/mid cap size (PS50m-PS500m). The department is organised into a mixture of product (ECM, Public Company, Restructuring) and sector (Industrials, TMT, Consumer etc.) teams.

As an additional note, in case it's of interest, the Transaction Services group will do the due diligence for a variety of corporate transactions, both private and public. The majority of their work (at least at my firm) will come from private company PE deals or mega-deals (PS10bn+).
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Now for the pros and cons of each team....

Valuations - shows you are highly technical, able to work with a wide variety of assets and in many different situations (i.e. the output for an audit is likely to be different for an M&A transaction, but the underlying work will be similar). However you will gain little transaction experience as you are simply 1 cog in the process and won't see the entire thing or gain as much understanding into the commercials of a deal.

Business Modelling - you'll be better at producing models that make commercial sense than anyone at an investment bank, but again you may lack on the 'financial rationale' side of things and your experience won't be as transaction based. You will however work with many different sectors and view each 'job' through a different lense - i.e. considering the impacts of a spinoff, outsourcing production, restructuring the business from an operational side etc.

corporate finance - you'll develop exactly the same skillset and experience as you would at an investment bank, with 2/3 of the hours (and 2/3 of the pay). You'll do a wide variety of transactions, get exposure to private equity firms, be client facing (or at least able to listen in on the calls) from almost day one. However, your deal flow and the reputation of said deals will not be at the same level of an investment bank, and your team will have to work really damn hard to win business over a Rothschild, Lazard, JPM etc. A lot will hinge on Partner/Director relationships.

Transaction Services - you'll go through more M&A transactions than you can shake a stick at, far, far more than if you went to a corporate finance team at a Big4 or investment bank. You'll gain a full understanding of how the underlying businesses work, how PE deals are structured and you will see some of the 'big picture' of the process. Your hours will be really long at times (midnight or later) and the work is essentially just due diligence (audit 2.0) so potentially not that interesting.
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I can't really tell you which team you should go for, as I do not know your career goals, motivations, interests, desire for work/life balance etc. but I can offer the following potential 'exit opportunities' (I hate this phrase) for each one:

Valuations - potentially into an IBD/Buyside job. You'll have the technical knowledge but lack the transaction experience. Very easy to move into an 'industry' role.

Business Modelling - basically you're a technically competent consultant. No problem moving into consulting, strategic development, COO/CEO track etc. Probably good chaance at moving into an IBD/PE job as well in the future if you get some good jobs under your belt. Again you will lack the transaction focus/experience.

corporate finance - very easy to move over into an investment bank as you're basically doing exactly the same job and have the perfect skillset. A lot will hinge on what deal experience you actually get and, as I mentioned above, this will be influenced by the reputation/contacts of your team head and his/her ability to win business over the more established players

Transaction Services - many people here move into an IBD role or even straight to a PE job simply because they have done so many transactions and understand the structures, how to 'normalise' performance, how to stress test a business through various scenarios etc. However you'll be overworked most of the time and your life will be spent producing 50-150 reports for management/buyers which never make it into the public eye.*

1/9/17

I would go Transaction Modelling for sure. Not that the other teams aren't good as well but modelling is such a key skill in finance, IBD especially, and the Big Four train you well in it. It will be an excellent stepping stone to an IBD role later.

1/11/17
1/11/17
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