Q&A: Valuation -> IB -> FP&A -> Strategy/BD

A jar

Hi there, thanks for doing this. Currently doing audit at Big 4 and thinking of moving to valuations. I think beyond my 2-3 years in audit, I do not want to work in a job that makes me work more than 50 hours a week. 

Based off of this, what fields do you think I should be aiming for with solid comp but that do not go above those hours. FP&A? Are the hours in FDD/valuations less than 50 hours a week?

Thanks

Based on my experience, I actually worked more in FP&A than I did in Valuations. However, I think the narrative out in the market is that FP&A should be working less than Valuations. This comes back to something I learned towards the later end of the career. What really defines workload and your true work-life balance is the company culture. A lot of companies push and market "work-life balance" but a lot do not practice it. You have to really probe during interviews and talk to ex-employees to get a better sense of the company. The difficult part of FP&A is the monthly close process. This is essentially closing the books for the month/quarter over a 5-8 day period. If you have a short-staffed team, that places a lot of pressure on the team to work later than usual to close on time. Ultimately, on average, workload is about 40-60 hours per week depending on culture.

Since I was in valuations >8 years ago, I am not fully apprised on current comp structures. However, I would think Big 4 valuation manager salaries would likely be $10-$15K higher than FP&A. I do believe a Direct/Sr. Director in valuations would ultimately make a lot more in Valuations than FP&A. If you work at a start-up in a FP&A role, you would likely get some form of equity options that would help bridge that gap in the long-term.

There are other things to consider when making this decision. For example, as you progress through the ranks in valuations, you are expected to have a book of business to sell services which will help you with compensation. This isn't expected of you in FP&A.

Other things that I would note:

(1) Valuations is extremely technical in nature and the work can sometimes get repetitive especially if you are only doing one aspect (i.e., ASC 805s, ASC 718s, etc.). It can also get annoying when you get comments/feedback because there never really is a right answer in valuations. The term I always heard when I was in valuations is that "valuations is more art than science"

(2) I was technically in a "Strategic Finance" role but about 60% of my work was FP&A. I personally found the FP&A and Strategic finance work a lot more fulfilling and engaging than the valuations work. 

I probably did not answer your question because, in my opinion, workload is ultimately driven by the company's culture at the top.

Best of luck.

One more thing to add here... I always felt like valuation work can ultimately be automated to a certain extent. I would not be surprised to see some software solutions replacing advisors in the future. For FP&A, the close process can likely become more automated, providing you with more time to focus on analytical and strategic finance projects.

Good questions! 

I made the switch to strategy/BD for multiple reasons which I am going to list below by significance:

(1) Healthcare exposure: This may sound cheesy but I did want to work in an industry where I could see the positive impact our products were having on people. Literally saving lives. I always feel all warm and fuzzy whenever I watch our patient videos. 

(2) Exposure to Strategy and BD: I was getting a bit exhausted with the required attention to detail in finance roles. Every time you prepared something, you always had to make sure everything ticked and tied and would get the stink eye or be criticized if something was off by a few dollars. I found it to be mentally exhausting sometimes. I wanted to take a break from that and take a shot at something that required more problem solving and high-level thinking. I am now focused on crafting our strategic narrative, influencing our strategic priorities, analyzing short/mid/long-term risks to our company and how to address them and reviewing/analyzing both organic and in-organic growth opportunities. I feel a lot less stressed and bogged down in small details in this role and it is refreshing.

(3) Work-life balance: Roles such as Strategy and BD tend to have better work-life balance with some exceptions

(4) Compensation: Got a meaningful bump compared to my prior role

For next steps... I am still working and refining what I'd like in the long-term. For now, my ultimate goal is to launch my own business or work my way to a GM or executive leadership position in a consumer, medtech or technology company.

I am in a Strategy and Business Development role which is different than corporate development, so I am unable to provide good insight to your question.

On a scale of 1-10, I would rate the difficulty of transitioning from Valuations to IB about a 6.5-7. Working in valuations, you certainly develop the financial modeling skills required in banking. However, the primary concern IBers have about valuation personnel is their analytical and problem solving skills given the technical nature of valuations. You just have to be well prepared to answer case study questions and really put a nice spin to your valuations experience.

While I was in IB, I was an industry and transaction generalist. I probably spent 40% of my time on distressed M&A/financings, 30% on restructuring, 20% on healthy company M&A/financings and 10% in restructuring consulting. I was lucky to have such a wide breadth of experience while in banking. I always saw myself as a hard worker so I was not too concerned with the workload. I come from a family of immigrant entrepreneurs and was helping my parents in their retail businesses at the age of 12... and I think that resonated with the bank I was interviewing with.

If I was to summarize my experience into two key takeaways:

(1) Valuations: Very technically oriented work. If you enjoy geeking out over valuation methodologies and formulas, this is the right job for you. This job really taught me to push through some of the menial work and try to make things as templated as you can, especially for more process oriented projects. This was my first job out of college so it was a learning experience.

(2) Banking: There is a lot I can say about banking. It is an absolute amazing learning experience and I wish I spent more time learning as much as I can early on versus complaining about the amount of idiotic edits I had to make (i.e., font sizing, periods, formatting, etc.). IB does a great job preparing you for all the challenges that arise in any future career moves you make (e.g., understanding business, drivers of business, importance of industry landscape, etc.).

I never found IB to be a mentally healthy career choice for people. Eventually, the high you get from the prestige and money wears off and that is when depression settles in (usually 2+ years out). Learn as much as you can and get the fuck out when you find the appropriate career transition.

Hope these answered your questions. Will be back on tonight to answer any other questions.

Credit Swish

Wow! Seems like you've had a variety of experiences.

Can you elaborate on the change of lifestyle that happened at each step? Trade-offs? 

Good questions. I am going to answer this in two parts.

Lifestyle and Trade-offs

I can go on quite a bit about this, so I am going to try to keep it short.

Valuations to IB: Significant shift in work life balance for the worse. I went from working 50ish hours per week to 70-80 hours per week. At this stage in my life, I was not concerned with work life balance and was just hungry to learn and get IB on my resume. It wasn't until year 3 or so that I started really dealing with some of the mental downsides of working so much.

IB to FP&A: I went from working 70-80 hr/week to working about 50ish hr/week. In addition, I did take a 50ish% paycut when you think about total comp. In hindsight, I wish I held off for an opportunity that paid more. Needless to say, I really did enjoy this role. No more pitches and no more demanding clients. Working on the company is very different and you get a very different perspective on things.

FP&A to Strategy: I went from working 55ish hr/week to working about 40hrs/week here and got a meaningful paybump (40%-ish percent). As I mentioned in one of my earlier posts, I went from a role that was very numbers oriented and required a lot of detail to one that required a lot of creative and high level thinking. This was a breath of fresh air for me.

What position facilitated the most learning and provided the most room for growth?

This is a very tough question... I felt most fulfilled both career and lifestyle wise is my current strategy and BD role. I feel like this role is a good role to develop your leadership skills since you do have some influence and sway with leadership. 

My FP&A role can also check both boxes as well since the primary reason why is because the company I worked for was <150 employees and our group had a lot of influence on business decisions. I was given the freedom to make calls on meaningful decisions regarding products, new customers, etc. I learned a lot in this role regarding running a $100M+ business. 

What position facilitated the most learning and provided the most room for growth?

For career growth, I would have to say my time at IB. I feel like promotions are slower on the corporate side than services. 

For personal growth, my time in strategic finance. I learned a lot and formed great friendships. Startup culture can be tough sometimes but it is pretty fun and the people in those environments are friendly for the most part.

I just started applying on Linkedin. I felt like I did all that I could to optimize my chances of getting an IBD role since I received some feedback from people with experience. The one thing I wish I did was be a bit more thoughtful about the bank I went to. Looking back at it, I wish I worked at a BB or MM with a good brand name. My location is exactly a finance hub, therefore, I did not have many options. I did have two phone interviews with banks in NYC but, ironically, both never called and flaked on my interviews. I just jumped on the first offer I got.

1) I did not go to a target school. My path to valuations through an internal lateral move at my company. I was initially brought on for internal audit and I lateralled into valuations about 3-6 months in. To your point, I knew a few people within my university which were able to land an entry-valuations role. This is the first time I heard about needing audit experience.

2) If you were to ask me as a senior in college where I would be in 8-10 years, I would have probably told you making millions at a hedge fund. I was figuring things out as they come. I had a general understanding of what I didn't want to do with a smaller understanding of what I exactly wanted to do. I liked the idea of having a multi-disciplinary background and that was one of the reasons I jumped into different roles. 

3) My main recommendation is sign up to clubs and do internships (unpaid/paid). Main thing is getting experience. Also have your story down for "why x industry" and "why should they hire you versus a target". I used to think work ethic would set me apart but I recommend building a story around something more unique (i.e., different way of thinking versus norm given your background, was exposed to business at a young age due to family business and could probably offer a diverse perspective than what others learn in textbooks, etc.). Don't be discouraged and of course network. Networking was a weak spot of mine mainly because I didn't practice it enough or read about the proper way of approaching it. If you want the path of corp dev, my reco is to skip valuations entirely and aim for an entry-IB role.