I currently work in a tax group at a big 4 firm. I am looking to transition to a hedge fund or private equity firm even for a back office supporting role where I can analyze investment performance and work closely with the deal teams. I am currently a CPA and have a finance degree. What is the best path to accomplish this goal and how best to prep for PE interviews? Would it be more beneficial to transition to one of the big 4's transaction services groups before making this jump?
Big 4 to private equity
Below you see a detailed response from one of our certified venture capital users. He notes that the primary hurdle lies in overcoming the gap in transferable skills. He suggest transferring to transaction services if possible. He also points to the MBA route. Finally, he notes the possibility of simply networking in.
from certified user @MR. manager
First, it is certainly possible to make this transition, especially if you are okay going to the back office initially. The problem, however, is that there are LOTS of different paths to get you to where you want to be, but they are all difficult and each has a few pros and lots of cons.
Transactions services path could definitely get you where you want to be, but I will say that it is much more difficult than the firms let on. For example, you have to be in, or willing to be in, one of the NY, SF, CHI, LA type offices. Even big offices like Dallas and Atlanta have very small, exclusive transaction services groups, which are difficult to break into because attrition isn't as high in TS. Also, it is highly bureaucratic. In my own experience, even when TS became interested, audit partners blocked the progress even while saying they'd do whatever they could; and career advisers in HR were always sure to mention how cliche it is for audit and tax associates and seniors to want to switch.
The MBA path is obviously lengthy and expensive, but it also isn't a guarantee, even if you get into a top school. However, it is a definite path especially if you have been a high performer for a number of years at your firm. Also, if you can manage any type of finance job (even if it's not your desired HF or PE) that looks like an obvious upgrade and a step in the right direction on your resume, it will be easier to get into a good MBA and it will make more sense to potential employers, with whom you will have lots of chances to meet through your school's career services.
That said, you can do that sort of convincing without an MBA. Starting to network now, including cold calls and emails and interview wherever possible will push you in the right direction. When you go all-in, good opportunities start coming out of the woodwork. I knew early that I didn't want a career in Big 4 and recently gave my notice because I began to have too many interviews and fly-outs to manage during busy season.
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Welcome to WSO! I was a Big 4 auditor until last week so I can maybe shed some light on the situation.
First, it is certainly possible to make this transition, especially if you are okay going to the back office initially. The problem, however, is that there are LOTS of different paths to get you to where you want to be, but they are all difficult and each has a few pros and lots of cons.
The transactions services path could definitely get you where you want to be, but I will say that it is much more difficult than the firms let on. For example, you have to be in, or willing to be in, one of the NY, SF, CHI, LA type offices. Even big offices like Dallas and Atlanta have very small, exclusive transaction services groups, which are difficult to break into because attrition isn't as high in TS. Also, it is highly bureaucratic. In my own experience, even when TS became interested, audit partners blocked the progress even while saying they'd do whatever they could; and career advisers in HR were always sure to mention how cliche it is for audit and tax associates and seniors to want to switch. They would often say "just one more year/busy season, and we will make it happen" and then say the very same thing the next year, sometimes dragging it out multiple years. This is obviously one man's experience in one office of one Big 4 firm so it may be different at the other ones. But based on conversations with others, it is likely the same, even for high performers.
The MBA path is obviously lengthy and expensive, but it also isn't a guarantee, even if you get into a top school. However, it is a definite path especially if you have been a high performer for a number of years at your firm. Also, if you can manage any type of finance job (even if it's not your desired HF or PE) that looks like an obvious upgrade and a step in the right direction on your resume, it will be easier to get into a good MBA and it will make more sense to potential employers, with whom you will have lots of chances to meet through your school's career services. Again, though, it's not a guarantee, because at the end of the day your job is to convince one of these firms that your experience in tax combined with your other skills makes you a competitive candidate and potential valuable employee.
That said, you can do that sort of convincing without an MBA. Starting to network now, including cold calls and emails and interview wherever possible will push you in the right direction. When you go all-in, good opportunities start coming out of the woodwork. I knew early that I didn't want a career in Big 4 and recently gave my notice because I began to have too many interviews and fly-outs to manage during busy season. I am now in final rounds with a top BB middle office role, an IB analyst role at a MM, and best of all, an offer from a small but very active (and extremely well funded) HF.
Hope that helps. I posted an AMA earlier, so any other questions you might have, it should be in the current topics list under AMA: Big 4 Auditor.
Thank you very much for your input, much appreciated. I currently have a few exit opportunities but nothing special just an opportunity to break out of the tax mold. I also currently have an interview with our TS group in a few weeks, although my concern is this particular section of TS does not do financial modeling on a daily basis. I am not sure if I should continue to pursue exit opportunities and continue to network or if I should put more of my focus on this interview and into transitioning to this area of TS anyway. I will also post this question under your other topic "Big 4 Auditor".
Mr. Manager - based on your experience of this career shift - what function would the Big 4 be performing in BO? A finance role, or their Big 4 role?
Yep. @"Mr. Manager" hit the nail on the head. I was in Tax at Big 4 and tried to make make the switch and it was always a moving target: "Let's get to the end of the Summer when we have the new hires." "We really need your help training the new hires. After fall busy season we will revisit" "We have had more attrition than we expected and we really need your help to get us over this hump."
Your best bet would be networking your way into a completely different firm in the TS role. This can be done if you know the right people at the new firm. I would rekindle some old friendships with old classmates at different firms that can vouch for you and get you in the door. It isn't easy, but it can be done.
From Big 4 to PE (Originally Posted: 02/12/2010)
Hi,
I've been reading the forums and it seems that the only way to transition from Big 4 audit to PE is to go back and get a MBA from a target school and try to get an i-bank position than (maybe with the grace of god) transition to PE. Is there any other method other than going back to school? I really don't have the financial capability to do this. And I realize that auditing my whole life does not seem too appealing ( ha, took me two years to realize this!)
Any advice would be greatly appreciated. Also, what if i can get into a boutique P/E firm, would that help me in anyway?
Thanks
Nothing against accountants, but why did you choose auditing in the first place?
In my personal experience - studied accounting because adults told me I'd always have an open job opportunity, went to college and everyone told me to be a big 4 auditor, become a big4 auditor and hated it
Yeah, try to lateral to a boutique or MM IB, or even a small PE shop, before b-school. I don't know about NYC, but in Chicago people in the Big 4 lateral to boutiques and MMs more often than you'd think. A lot of these smaller shops would rather bring in someone like you than someone out of undergrad for analyst positions, because they don't have the resources to train people.
Edit to ask what region are you in? This certainly has an impact on your chances of PE right now (a lot of senior PE professionals didn't come from IB in the Midwest, but in NYC that's a very different story).
some boutique PE firms have ex- Big 4 accountants in them who don't have MBAs, so it's possible.
Chances are these guys
1) are very good at what they do 2) have a very good professional network
and either 3) lateraled in to IB after a couple of years of Big 4 and then lateraled into PE after that
or
4) worked up to senior manager level at Big 4 and used their contacts to lateral over into PE
I think it's also important to note that if you are in a specialty Big 4 group, such as transaction advisory services, you will have a much better shot at getting into IB. Your best shot at getting into PE directly from Big 4 is working within the transaction advisory group that assists private equity firms.
Before you do anything - get your CPA. The language of business is accounting. A CPA says you have mastered the language.
You absolutely can get into PE from Big 4 Transaction Advisory groups if you focus on private equity clients. It happens often.
Big 4 to PE (Originally Posted: 02/21/2015)
Hi,
I'm trying to break into PE from a big 4 firm.
A few notes on my background:
I wanted to ask the board a few questions: 1. Financially is it worth it to exit consulting at this level for PE? 2. Is it possible from my current position? 3. Any specific recommendations on strategies for an exit?
Thanks,
1) Yes, based on upside. Big 4 partner comp is solid, but does not touch PE comp including meaningful carry in a sizeable, performing shop.
That being said, you are going to live a nice, comfortable life as a Big 4 partner.
Can't answer the others.
Financially yes. SM salary at the big 4 (depending on city, seeing you went to Canadian undergrad let's assume you are in Canada) is equivalent to first year associate at IB. PE salaries are often a bit more compared to IB. There was a thread a while back about PE salaries in Canada and it went something like:
Pension funds: 150k a year Mid market PE funds :200k a year Onex: 250k a year.
Those are associate level salaries.
Even if you break in as associate, I bet you'll make more than your current level of salary. But given your experience I would expect you transitioning to a much more senior role. So yes, I think it will be highly beneficial financially.
The question is can you manage to exit. Most SMs I know at the big 4 are pretty much in it for life. Very hard if not impossible to get out at this point. Making equity partner is also very difficult, but at least more likely imo.
Big 4 is known to drastically underpay relative to the finance/consulting firms, until you reach partner. Good luck to you but honestly, if you made the switch out earlier in your career, you could've made significantly more $ with better career/exit options by now.
Hope this helps.
Thanks for the advice.
A couple of quick clarifications -- I'm actually in the strategy consulting arm of a big 4 firm and was brought in through an acquisition.
Let's say I'm roughly the age that most folks would be after a couple of years out of B-school (30-31) and currently pulling down about 300K-350K all-in (275K base + bonus) -- still worth it is my gut assumption? Does that change the math on exiting at all?
In terms of exiting I'm assuming for PE given my background, lack of an MBA / direct finance experience it would be the typical route -- basically have to network my way into a role at a fund with a need for my industry expertise and knowledge?
Depends what level you could lateral to. If you had to take a step back to Associate, maybe not, depending on the fund/firm.
The long-term payout potential is significantly higher, but the stability is much lower.
Big 4 M&A Tax to PE? (Originally Posted: 02/23/2015)
I joined an M&A tax group at a Big 4 some yrs ago, and went to first-tier bba and law school, and have nyu tax llm. lots of the work i've done is with big-name PE, and I'm thinking about my exit ops in the next few yrs. i hesitate talking to my coworkers as it's a competitive group and the last thing i want anyone to know is that i'm thinking of jumping ship and cratering my work at my current firm. i don't do due diligence, but tax planning and structuring for the investment funds themselves and the entry and exit of portfolio companies. do i have any shot of lateraling to a PE firm?
Very interested in this as well, similar situation (minus LLM).
I had seen people move to Big 4 corp finance or consulting before joining PE as an associate.
as a tax specialist, maybe. but as an investment professional working on deals - no chance
Thanks for the replies everyone!
What would be required to jump in as an investment professional? Getting an MBA seems redundant given I have a BBA and plenty of valuation experience (LBO, etc.).
Always cool to see more tax professionals on WSO.
JD/MST/CPA international tax consultant here.
you need a few years of transaction and m&a experience. so yes, investment banking is the most straightforward path to PE. what you currently do provides NO value to PE from a transaction perspective.
Would working towards a CFA be helpful? I have no interest in getting an MBA given my BBA.
No, the CFA would not help. CFA is not really relevent for PE, but it would work if you wanted to move to public markets investing. You need transaction experience. You can join a IB, corp Dev, or something similar; anything where you're getting in the weeds on a deal will work. Then you should be qualified to try to transition to PE.
https://www.linkedin.com/jobs2/view/43035542?trk=vsrp_jobs_res_name&trk…
seems like you're overqualified, just thought i'd throw it out there though
would people that have extensive due diligence experience help?
Big 4 Audit to Hedge Fund Back Office Role (Originally Posted: 03/09/2015)
I want to preface this by stating that I'm a second-year audit associate at a Big 4 firm.
I want to eventually leave public accounting for a small hedge fund back office gig with no intentions to ever gun for a front office position or the illusion that it is likely to happen. How many years should I put into my firm before considering the switch? I have heard two different camps in this discussion: stick around 4-5 years vs. leave right after 2. What would my progression be like in each scenario and what can I expect my hours/pay (base/ballpark bonuses) to look like assuming it is a good economic year for the fund? Also, am I limited to the greater New York City area, or are there areas where hedge funds flourish in warmer climates (California/Florida)?
Thanks
Try to stay till manager if you can deal with it.
I'd say there are some hedge funds throughout the better weather. You could always move to Bermuda.
Stay in big4 as long as you can. It's painful but advancement is much more painfully slow once you leave the lockstep up/out structure. That said, if you find a good position in a warm climate....who cares about the bump in paygrade.
double post
Thanks
Big 4 Audit to Private Equity Analyst (Originally Posted: 06/04/2015)
Hi everyone,
I've been a reader for a few months now but first time posting, thanks in advance for the great info! So, I'm a Big 4 auditor (almost 2 years of experience, CPA, Accounting Masters Degree) looking to transition career into PE/VC/IB (small shop, presumably). I knew early on that I would need some finance experience if I wanted to break into PE/VC/IB so I worked hard and performed well/networked with leaders my first year and ended up convincing HR and local leadership to transfer me to an M&A audit (meaning the audit of a company in the process of being acquired by a larger company, it was a $2B deal). I worked my ass off there and got a 1 rating, which is pretty rare for a 2nd year, and got to work on the higher risk areas (revenue and goodwill). Goodwill testing gave me exposure to the valuation specialists and I got to play with the models and had to test the assumptions (discount rate, terminal rate, NWC requirements, etc.) which gave me a great base of experience to break into PE/VC/IB (I think). I laid out my resume very nicely detailing my experience auditing a large $2B transaction and how I gained experience in modeling, etc... I then started applying to private equity analyst positions. Within the same day (today), I landed an interview with a small private equity fund ($350M AUM) in Philly next week, and a possible interview with a cleantech VC firm ($250M AUM) and I wanted some advice / ask some questions for those who have experience:
1) Is it a huge deal that my modeling skills aren't up to par with some of the investment bankers applying? For example, as of right now, I can't explain to you certain complexities of an in-depth (yet). I know that with the right training I can get there no problem but I'm worried I'm lacking in-depth modeling experience. I just landed this interview today and I'm not sure how much I can advance in a week (lol). Any advice there? I'm not sure how technical the questions can be and I'm not sure how much training you receive once you start at these smaller PE shops (in the event that I land and accept the job).
2) Was I just really lucky to land this? I looked all over the forums and don't see any Big 4 auditors transitioning over to PE/VC... There are quite a few transitioning to however.
3) Any advice on what type of questions I can expect?
4) They did ask me over the phone of the $ I'm expecting. I answered something competitive and hopefully with a bonus tied to fund performance. They came back with telling me to expect 65-80k base with 20-25% bonus. Are those good or bad numbers for an analyst at a Philly PE shop??? Any thoughts on what I could expect?
Sorry for the long post and thanks again in advance
I don't think its a big deal you are not a modeling expert, if you can build a functioning 3-statement model you can learn to build an lbo model fairly quickly with a bit of practice and guidance.
At smaller shops outside of NYC its more common to see former big 4 guys for a couple of reasons. One of them being they are not willing to pay what an investment banker would typically expect when moving to PE. That being said, I think what they are offering you is market for Philly.
I'd expect a lot of questions around why you want to move into PE, what type of investor you are, etc. They will probably ask some questions to test your knowledge of how the financial statements link i.e. if I increase CapEx by $1mm what are the effects on the 3 statements?
Did they say if you will be doing a modeling test?
I know the Philly scene very well - shoot me a PM if you'd like to discuss in depth, but here are some high level answers to your questions:
1) Since this is for an analyst and not associate role, I think you should be fine. Given your experience I'm sure you know the basics like how the statements are linked, etc.
2) Recruiting is a lot more non-traditional in Philly. I have seen a few guys from Big4 (generally transaction services / valuation) but I can think of one shop that has an ex-audit guy.
3) Would guess the bulk of your interview will be behavioral but wouldn't be surprised if it had a modeling test and at least one or two people asking you technicals.
4) Base sounds about right but that bonus definitely sounds low. Cost of living is great though.
.
Remember, with Philly, you can rent a 1 bedroom apt in the nicest parts of the city for less than $1500. So just keep that in mind when comparing salaries to NYC/BOS/DC.
your comp is actually quite good for an analyst. PE comp is not really tied into location but rather cash flow of the fund. you should know how LBO works.
I am completing my 150 credit hours for the CPA and have an offer from a Big 4 in Audit. I am having cold feet. Similar to you, I am interested in ER/IB/PE/M&A but accepted the offer from the Big 4 in audit because I thought it was a great place to launch my career. I am starting to realize that if I want to move into that field, I should start looking now. I am glad to see that you received an interview after two years in audit. I am curious to see how it plays out for you. Good luck!
How far along are you in your masters? While it is possible to go audit to PE it is certainly not the norm... Your best bet would be try to get into a TAS or Corp Fin group as soon as possible... I know someone who did his masters, had a big four offer, turned it down, and went to work for Houlihan doing valuations and fairness opinions and had a pretty easy time moving to the buyside. If you do stay in audit, speak up early and often about getting on projects that will allow you to direct your career as you want. Way too many people come in and don't really understand how to get what they want out of their experience
Just out of curiosity, is this for Hamilton Lane in Philly? If so, just as a small FYI, they are a fund of funds, not a strict PE shop. Just saying since they reached out to me a while back with their pitch and made it seem like they are doing direct investing.
.
Question, how did you start applying? Cold calling? Or did you use a website?
Big 4 Assurance to Private Equity (Originally Posted: 11/01/2015)
.
Can you elaborate further? I am guessing you had to do something like Audit --> TAS ---> IB ---> PE or Audit --> IB --> PE..
What type of consulting, how long and which firm and are you in the US or EU?
I have a summer intern offer from a big 4 in Risk assurance, specifically Process Assurance, guess which firm? Quite honestly the amount of money they are throwing at me makes me want to do it even if i hate it. I have a few offers to go back to PWM firms including MS but the pay is terrible. Also, I could go back to an accounting internship doing a lotta bookkeeping that paid alright and had incredible work life balance and casual dress, free lunch and an awesome pantry and decent pay. I want to learn something new and make more connections, but finance interests me a lot more than accounting, I'm a double major. Wish I had more contacts in IB. I would much rather be doing TAS or CF at a big 4 as that would actually interest me. I've been trading since I was 18 although it was a lot more like gambling until I actually learned what I was doing.
Is there any lateral mobility after an internship? If i receive a full time offer could I ask to be in TAS, CF or even core assurance? Logic is if i can prove that I am a good employee they would figure they've already invested in my and try to keep me around. If not, would it be possible to decline the offer and try to move to one of the other 3 for TAS? From what I've heard, most big 4 CF just hire former bankers.
I passed my series 65 before I took a finance class and am thinking if I could pass my CFA level 1 this summer and level 2 right after I graduate I could swing the internship into a story of wanting to see a variety of different industries and better understand how various things may effect their financials to make me a better analyst or something like that. I think I could pass level 1 right now, I am in securities and investments right now and most of the material is strait from CFA practice tests, the professor is known for failing kids and being a dick but so far I have gotten A's on everything and screwed the curve/skew. Thoughts? Also, I wouldn't mind being a small business owner and just hating my life in audit for a few years until I can start or buy a small business. Also another worst case plan would be CPA to FP and A with a smaller company. Another backup plan would try to be on Asset Management and or banking clients to make networking easy and work on the CFA.
The money at the big 4 isn't bad and although accountants hate the hours I don't think it's that bad, especially for risk assurance from what I've heard. Just don't want to be appear as only "an accountant" or "a CPA" and keep other opportunities open.
In a similar situation, Audit -> Consulting looking to now go buy-side. Scheduled to take CFA Level 1 in June. Would like to hear how you made the transition. Also, what type of consulting?
Tax Professional looking to jump to Finance (Originally Posted: 03/07/2016)
Hello.
I am an acting manager at a big 4 working in Private Equity. I have three years of tax experience out of college but I am considering making the switch into finance, specifically Private Equity. I enjoy tax but I would like to work in a position where I add more value and am challenged to a greater degree. I work a lot of hours in tax and while I am well compensated, I feel I could gain more from a position in PE. The duties of an analyst (from my research) of valuations, IPO preparation, and assisting with acquisitions intrigue me.
I wanted to know how realistic it is for me to move from my current situation into finance/PE as described above. I have reached out to my internal network to see if I can connect with some recruiters and have also messaged some directly on linkedin. I receive tons of messages for tax but obviously none for finance.
I am based out of New York.
Any tips on moving as an experienced professional into a new industry are appreciated.
Thank you.
you won't be able to go from tax to PE. try to figure out a way to get into an IB group somewhere.
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