Financial Due Diligence vs. Valuation
Hey Monkeys,
I have an offer for two Big 4 Transaction Services jobs, one in Financial Due Diligence and one in Valuation & Business Modeling. I was wondering which would be better starting off if I am looking to eventually get into PE. The Valuation job also pays a good amount more than the FDD role but I don't know if I should take that into account. Thanks in advance!
last summer I was in a valuations group at a bb and enjoyed it. would def. go with valuation
Due dilligence is similar to audit, and usually a ton of ex-auditors work in those departments. Both jobs will be pretty repetitive - simply sitting in front of your excel and punching numbers. DD is probably more mindnumbing, as it mostly is just putting in financial statements into an excel spreadsheet and reconciling numbers with respective breakdowns. Also, reading loan/dealer/distribution agreements or any other legal stuff for that matter - will kill you. But valuation is just marginally better - the procedure never changes and it can boring once you got the hang of it. You get to travel a lot more while doing DD. Both positions can get you exit ops into PE, and I would venture so far as to say that DD will give you a better shot at it. This is because guys from valuation have to compete with ibankers, who arguably have a lot more comprehensive experience under their belts. But, mind you, you will be stuck doing dilligence for the rest of your life (or until an MBA), just internally for fund this time.
to get into a PE shop, transition to banking ASAP...if the Big 4 offers modelling and deal experience, there's a shot, but its still very small compared compared to if you have a BB on your resume
Thanks for the input guys. One thing I'm worried about with valuation is that its a very specific skill that doesn't translate to anything else (I know everyone here has a hard on for modeling but I'm not so worried about that). I was thinking along the lines of tandaradei that DD is similar to audit so I could potentially move to audit at the Big 4 (though I don't know why anyone would move into audit) or into audit at a F500 company.
^^ true, but valuation will teach you accounting skills as well as DD. The company will probably sponsor an ACCA for you. If you ever get the idea to transfer into audit, controling, CFO roles than valuation is good for that. And going from DD into valuation will be more difficult than the other way round.
By ACCA I'm assuming you mean the the British version of Certified Public Accountant? They both sponsor the CPA. The main thing I'm concerned about is that it seems like the DD role has more PE clients than the valuation role, which might not have any, and I think it would be better to work with PE clients in DD than none in valuation if my end goal is to get into PE. But obviously I want to have some skill that is transferable to something outside PE and the Big 4 and I'm not sure how purchase price allocation sets me up to do that.
I'm European, so keep that in the back of your mind. I think you're correct with your argument. But just remember that audit or DD can be ungodly boring and you will be beating your head against the wall before you know it.
I've heard that DD is one of the straightest shots to PE from the Big 4 since you work with PE firms (that's still not great compared to IB backgrounds). However, I would think the skillset in valuation could open doors at HFs. I any case, you can always get an MBA if your having trouble making the transition.
Do you know how valuation could open doors to HFs? I don't think the models built in valuation are as thorough or complete as the ones built in IB. I was thinking the same thing about DD, though. Does anyone know of any PE shops that hire Big 4 TS people?
I've seen it done a few times - going from valuation to HFs...but that's been tough with the recent economy.
Also, to respond to a previous comment, in valuation, you can work a lot with PE firms on their valuations, but that is tough to translate into a FT offer with a PE shop.
I've seen certain profiles of people at long/short or event/driven funds with valuation backgrounds at Duff & Phelps type places. They're few and far in between, but it's possible.
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