Deal Advisory (Big 4 vs IB)
What's the difference between advisory at Big 4 and M&A in IB? If Investment Banks are the primary players in M&A transactions then what role do big 4 advisory/valuation have?
Big 4 M&A/Advisory is very different from Investment Banks and offer two different services. An IB will typically hire a Big 4 M&A team to conduct financial due diligence for them, notably a Quality of Earnings (QoE) report that seeks to analyze how accurate and fair the reported earnings are. Big 4s all have corporate finance teams that offer a much more similar service to IBs, but they are more so catered towards small transactions.
Adding on to this, while the valuation teams are often under the "Deal/Transaction Advisory" umbrella, they are often doing work like purchase price allocations, audit support work, valuation for tax planning/shareholder dispute/reorganization/estate planning, etc which is often unrelated to M&A except for PPA's. They often use templates for their valuation models where they dump financials/forecasts so you're not really building out a set of assumptions or building anything from scratch. However, you do develop a fairly in depth understanding of valuation.
There are two services that the big 4 offer related to M&A:
Corporate Finance/M&A - This is no different than IB, the deals are just much smaller. I used to work in this department and we typically worked on deals between €10-100m
Transaction Services: They are typically hired by investment banks to do financial due diligence/vendor due diligence.
As previously stated, Big4 M&A department encompasses several different teams:
Coming back on the second offering, these teams cover the mid/lower market. They tend to be weaker in the US than in Europe, where they often rival with EB and other boutiques. They have significant deal volume and are pretty solid places to start your career. In Europe, they tend to place relatively well in PE shops and corporate development teams of large corporates. Plus, the work life balance isn’t too bad (ie somewhere between 30-60h per week), but the comps is not super good if you compare it to IB.
Although salary is not comparable, for non-traditional backgrounds, wouldn’t this be a great place to start a career in banking/FS to eventually pivot to IB?
Yes, and this is not uncommon in Europe.
Honestly if IB is your thing, directly go to M&A at a Big4. Don’t bother with due diligence. However, DD can give you nice skills for a transition to PE later on.
How would you choose between the Deal Strategy and M&A Transaction services team if I eventually want to end up in PE? I also get to do FDD on top of V/C/ODD at the deal strat role
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