Does Being in Big 4 Basically Guarantee RX Consulting Offers?
Never was in Big 4, but was going through some of the better known RX consulting firms, and it consistently looked like around a quarter of their turnaround & restructuring groups are composed of former B4 ppl, from a bunch of different areas (valuations, pricing, RTS etc). Is that just a coincidence or does being in Big 4 basically mean that you're more likely than not to get a RX consulting offer if you apply? If so, why? Also, is there a preference for the B4 people over say bankers or PE folks?
Based on the most helpful WSO content, being in the Big 4 does not "guarantee" RX consulting offers, but it does provide a strong foundation and increases your chances significantly. Here's why:
Big 4 Experience is Valued in RX Consulting:
Why Big 4 Professionals Are Preferred:
Preference Over Bankers or PE Professionals:
Networking and Application Strategy:
In summary, being in the Big 4 doesn't guarantee an RX consulting offer, but it positions you as a strong candidate due to the relevant skills and experience you gain. Firms value the hands-on, operational, and strategic expertise that Big 4 professionals bring, often making them a preferred choice over bankers or PE professionals for certain roles.
It's important to recognize how consulting shops are formed / grow. It's often the case that entire practices leave from other shops to start new firms or join existing ones.
Take FTI's Creditor Rights practice operating out of NY for instance. That entire division was essentially formed as a result of a group of EY Creditor Rights practitioners leaving the firm and joining FTI circa 2004. Of course, this was no coincidence. 2002 brought on the Sarbanes Oxley Act which created restrictions on audit firms participating in consulting. As a result, you saw waves of consultants from the Big 4 leave to form new shops.
Because of their deep personal history and understanding of the culture at the Big 4, the folks who left in early 2000 (that are now MDs, SMDs, and Partners) tend to recruit talent from there. Doesn't mean that a banker or a PE guy wouldn't be a good fit. It also doesn't necessarily mean that a Big 4 "consultant" or valuations "expert" is a shoe-in. The industry has seen a nice blend of Big 4 and non-Big 4 backgrounds over the years. However, what I would question is why a banker or a PE guy would want to go into restructuring consulting for a 30-50%+ pay cut. That move isn't as common, though on occasion I've seen a few burnouts come this way.
Personally, if I see a Big-4 resume come my way, I'm more doubtful of their experience than with a person who has previous restructuring or banking experience. The bridge from doing desktop-style analyses at the Big 4 to real-world problem resolution, people management, and modeling under-pressure in restructuring is a long one to cross and I've seen many ex-valuations guys come in for interviews and just bomb.
Makes a lot of sense, thanks. What's the motivation for B4 people to move to RX consulting? I mean the hours are definitely not better based on what I've heard from people in RX, and if there's a 30 - 50% comp cut for a banker, I don't see how the amount of hours you're going to be working in RX consulting is justified by the pay. At that point, wouldn't the Big 4 work pay "better" if you look at hours worked?
I left B4 for RX because I wanted to do work with "real" consequences. Whatever I end up doing long term, RX consulting provides exposure to much more accountability and has required much more than good modeling. Big 4 was a great experience, and yes the dollars/hour were decent, but it's wise to go get your ass kicked a bit early in your career if there's good learning involved.
Bankers would see RX consulting as an exit op because of the better hours and it offers operational experience, while still making good cash. I've worked with a few former M&A and RX bankers who have said RX consulting is more stress per hour, but you still usually get a full night's sleep.
I would definitely question the RX CO firm that’s paying 30-50+% less than an average M&A shop. T1/T2 firms, for the most part, are paying close to, if not on par (A&M) with your average M&A shop (LMM/MM). Also, probably echoing what everyone else has said, the operational spin seems extremely exciting, and the scenarios you are dealing with are far more interesting and “important” than majority of the work done at Big4. You will learn a great deal more and garner more respect on the street because of the operational & financial expertise required within both creditor and debtor side deals. The hours seem like they can get super long, but RX CO offers the more ambitious people at Big 4 a chance to grow, get paid more, and undoubtedly further their career, however, it is absolutely not a given that every Big 4 goer will break into this industry.
Very interested in breaking into RX down the line. I am going to begin in audit at a B4 and would love to know if people typically break in after transferring into TAS or FDD, or if it’s possible straight from audit too.
Audit is a great way to break in, just get very good at modeling
I would also suggest moving to TAS as soon as you possibly can if nothing else is working. Provides more excel-focused work and understanding red flags in business transactions, how transactions are financed, and, most relevant of all, how working capital can be impaired/misleading on financial statements. These are all much more relevant for a career in Rx.
Definitely want to make that move eventually. Are you familiar with how difficult the transition can be?
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