Business Valuation Entry-Level Tips?
Hi all, this is pretty general, I'm looking to soak some WSO wisdom on making an impact at entry-level at a business valuation/financial advisory outfit, straight out of college.
Much obliged and TIA.
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what are you talking about? what do you want to know, in specific?
I mean an Associate-level position at a firm that provides valuation services for financial reporting (i.e. GAAP compliant) and tax purposes (i.e. tax law compliant).
Any specific resources to stay up to date in this field, during the run-up to my entry would be nice.
Beyond that, any monkeys already working in this field who could share their entry-level experience.
Hope that's specific enough?
Are you entering into a Big 4 role, an M&A boutique valuation role (ala HLHZ), a consulting firm (ie Duff and Phelps) or second-tier accounting firm (such as Grant Thornton or Weiser)? That will have a big effect on the type and quality of work, the background and general caliber of your coworkers, and the exit opps.
EDIT: I noticed now that you are asking more for industry resources. Some good resources are: Damodaran, Aswath (2006). Damodaran on Valuation The McKinsey Valuation Book (http://www.amazon.com/Valuation-Measuring-Managing-Companies-University…) Also you should try to read SFAS 141, 142, and 144 (assuming you will work in the US.) , especially
The free magazine "CFO" (http://www.cfo.com/) would be a great start as a resource. I believe Duff&Phelps is a big player in this area as most of the big tax/acct. firms are, too. JH Cohn also. Hope that helps.
Edomerp is exactly right.
learn about valuation techniques, how to review valuations, writing memos, technical jargon.
Reading McKinsey's book on valuation may help, but you'll mostly just be someone to grind through the models, review valuations (if its audit support), writing reports and memos, and finding evidence for assumptions...
Thnx, appreciate the guidance y'all
@Edomerp - This is a Big 4 role, can you provide some detail on how this affects "quality of work, caliber of coworkers and exit opps"?
@lunchis4wimps - thnx for the magazine tip
FAS 141, 142, 144 - sounds like a great weekend in the making. :-)
Quality of work - Deloitte has the largest valuation practice, wheras the other 3 are rebuilding after SOX took them out. That said, I think the quality of work depends on who you work with. Some manager/partners pay a lot of attention to detail while others don't...but the quality in the big 4 is definitely better (in general) than smaller shops, though some groups do crappy jobs - have heard complaints about EY and Duff's valuation work).
Caliber of co-workers - the best people I knew left to do banking, and those at the associate (entry) level has serious issues, like not knowing how to format simple things, what DCF stood for, or what a multiple was...after a few months they started getting it, and there are definitely those that are awesome and rock stars, but they generally move on to other things.
Exit opps - depends on your network, but in general, I'd say B-School, business development, another valuation shop, hedge funds (for those that get their CFA I have seen this done), banking, etc. I saw one person move into a PE shop, but that was an exception - you won't generally move into PE going up against bankers.
My experience is similar to Mitt Romney's.
I worked in a Big 4 valuation group. I was one of those associates who didn't know how to do a DCF (I was an econ major). Exit opps I have seen from my former group: Hedge fund Front Office (FO) Banking FO, lower BB and good MM/Boutiques (often experience associates who lateral to analyst programs) Giant Buyside Middle Office (MO) BB Bank MO Valuation elsewhere, including internal valuation at PE firms, which is basically MO (this is where the valuation-to-PE jump can happen but you really need to excel to move from MO to FO) B-school (to mixed results-some ended up basically where they would have been had they stayed, in part due to the economy and in part due to the Big 4's weird hiring/promition practices re: grad degrees) Completely leaving finance I don't want to get too specific because it's not a huge world out there.
Like Mitt says, turnover is a problem and it's the worst amongst the best employees. The pros and cons of B4 valuation as I see it are: Pros Big 4 name: well respected, especially outside of Wall Street
Learning Opportunities: I was one of those associates Mitt mentioned that didn't know what a DCF was and if I'd joined a bank analyst program I would have been roadkill. The managers I worked for were very helpful and taught me a lot.
Breadth of Experience: I valued every type of asset imaginable across lots of industries, as opposed to a banker who is on a specific product or industry desk. The Big 4 will often let you spend time overseas if you're well regarded in your group.
Timing: You're joining after a lot of turmoil and turnover in the Big 4 valuation (at least at my old group), and they've been going out of their way to keep the remaining employees happy. Hopefully this will translate to better raises/hours than I ever saw.
Cons Hours: the hours for me were around 9 to 9 with some weekends work, 9-12 or later during our busy season with work most weekends. This varies based on person, firm, and office though.
Pay: the pay isn't terrible, but it's far less than banking or consulting especially when you figure that even when you work less than a banker your life still sucks. Also, when you're leaving your pay will often be far less than other finance professionals with your experience, something your next employer may use to their advantage.
Finance Exit Ops: If someone sees Big 4 on your resume they will often assume you are an accountant (I don't know if the original poster is or not.) This is often a barrier to getting front office interviews since most buyside firms hire straight from analyst programs. Finding a buyside recruiter who will give you the time of day can be a big help with this.
Big 4 Culture: While I liked most everyone in my group under the sr. manager level, Big 4 partners are a mixed bag. Some are smart, insightful, and have good experience to learn from. Many are Big 4 lifers who've never done anything else and have a hugely inflated sense of importance given how their customers view them and the service they provide (which is correlated to the fact that their income compared to people in law or finance with similar tenure is much lower). Add in some of the BS like tracking hours and taking CPE courses and it's a pretty irritating environment.
For the kind of modeling that is done in IB do you guys recommend: 1) Damodaran on Valuation by Aswath Damodaran or 2) Investment Valuation by Aswath Damodaran? I can't decide which one might be better. A lot of people on this forum have recommended 2) but the latest edition of 1) came out 5 years later in 2006 so I was thinking it might be more up-to-date.
Thanks!
I would not recommend either for learning how to model. Valuation, as in the set of finance concepts and techniques people use to value companies, is not really all that complex and the difficult part (determining inputs) is probably best learned as you go.
Modeling, on the other hand, is largely applied excel and accounting considerations. If you hunt around the web you can find some practice LBO models and other tools to learn excel shortcuts and tricks.
@Edomerp: do valuation groups have partners in every office?
Valuation is usually only in larger offices (NYC, LA, SF, Atlanta, others) - where there is a valuation group, a partner will be there.
Agree with Mitt Romney. The firm I was with had Valuation staff in the 8-12 biggest offices, each with at least one MD or partner. One note on the Big 4 though is that senior partners often get some leeway to live wherever they want, so I (as a staffer in NY) would work on projects managed by partners who lived in upstate NY or CT, and "Worked" from those offices (in practice from home).
Generally big offices provide valuation services for other offices in the region (NY provides for NJ and CT, Chicago for Detroit, Milwaukee, Minneapolis/St. Paul, etc).
Business Valuation Billable Hours (Originally Posted: 08/07/2013)
I was hoping to hear from others at Big 4 in regards to what your billable hour goals are each year? Thanks in advance.
Target around 90% for the year. Pretty easy to hit when averaging in the busy season hours.
Either 75 or 80 percent, I forget. This is at the associate level.
Sorry, I meant how many hours are you guys shooting for, not realization. Trying to determine differences in workload.
I think most valuation professionals have a target utilization % rather than hours. Minimum at my shop is 75-80%.
From business valuations to IB? (Originally Posted: 07/06/2015)
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I'm pretty sure we went to the same school. What the BDO recruiters all told me was that it had good exit ops in IB (they used it like a selling point for the position)
It's a tough sell as an IB Lateral. At least in the BB/EB caliber places. The MM guys are even starting to get pretty competitive. Lateraling bval to bval doesn't look like you want to do IB.
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Exits opps from business valuation (Originally Posted: 02/01/2013)
So.... Got sucked into 5 yr accounting program in school and started my career at a big 4. I have since moved into business valuation within the firm. What kind of exit opps can I get from valuation? Will valuation provide me with anything valuable? How long should I stay? I just wanna make some fucking money...I'm tired of this bullshit salary. I don't mind putting in my dues in IBD to Hopefully get PE, equity research, Asset Management...etc. But can I even hope for any of this now? I feel like public accounting fucking taints you.
You'll get solid skills in business valuation (unsurprisingly) which is actually quite valuable.
The problem is the work is generally accounting based (read unfulfilling) and the nature of the work is not very attractive to potential employers. I'd put it like this, working in IB you do valuations as part of a transaction...in big 4 you do valuation as part of the audit process....furthermore valuation is only part of the work in IB...in valuations its all you do.
Now thats the negative side but what it will give you is a very solid grounding and pracitcal expeirence in dcf/multiples etc. a lot of people will read a book and think they know how to value a company but its good to get actual nuts and bolts experience of looking at comps and actually doing the research and thinking about the results.
Its prob the most intellectually stimulating work done in Big 4 and you will actually learn a useful finance skill (unlike in audit where work is not applicable to anything besides audit) but it will not open many doors for you and you will still have to graft very hard to get a front office finance role.
Business Valuation to BBs / Second Tiers IBD ? (Originally Posted: 05/15/2012)
Hi everyone, my current role is helping listed companies to perform independent business (their subsidiaries) and financial asset (Share options, convertible bonds or exotic derivatives) valuation. I have been doing this job for a year.
My career goal is to get into IBD. My key skills developed so far are financial modeling ( DCF, Market Multiple, options / interest derivatives pricing model ....... ) and the understanding of accounting standards.When I look into the job requirement of an analyst position in IBD, the employers almost require a candidate with deal exposure. Since my role is really "independent", I didn't have many opportunities to communicate with clients even we help pre-IPO companies to value their assets. Needless to say the exposure on the deal process ......
Plus, my company is not the top tier one (i.e. Jones Lang Lasalle) and I didn't graduate from a targeted school (second lower class). I have passed CFA level 3 exam, but it doesn't help much ( recruitment agencies usually recommend equity research role only ...... ) .So, is it better to go back school and study MBA or Mfin ? or, how can I position myself (maybe, my financial modeling skill ?) to get an offer ?
Thanks !
I'd go for the MBA at this point, especially if you have the fin modeling skill set, an MBA will greatly increase your attractiveness to banks, and you'll be coming out when the M&A market will have recovered, as opposed to right now.
Take your GMAT, break 700, develop a marketing plan to position yourself to the top 10 b-schools, get into one and go. IBD will be very easy for you post.
Good luck
Im a little confused on what business valuation has to do with JLL? Are you talking like REIB work?
Many listed companies need someone to help them value their assets to access the so-called "fair value", according to the accounting standards. Plus, they may want someone to help them value their targeted company / asset if they wanna acquire. And we are the party to do this. JLL performs this kind of valuation besides property valuation ( details in link here : http://www.joneslanglasalle.com.hk/HongKong/EN-GB/Pages/Corporate-Appra… )
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