Hello Fellow Monkeys,
Longtime reader here, and seeing as this site has been invaluable in helping prep me for the switch from Big 4 to the buy-side, thought I would try to pay it forward.
As the title says, after graduating from a non-target state school (Colorado, Arizona, Oregon) with a mediocre GPA (3.3) I started in Big 4 Audit (Financial Services) before transferring internally to the FDD team when I got the promotion to senior associate. Began trying to network/recruit for IB/Buy-side roles in June 2020 before accepting an offer to join a private credit fund (Comvest/Maranon/HIG Whitehorse/Ares) last week. Was promoted to Manager in FDD in the middle of the recruiting process but don’t believe it had much of an impact on my transition to the guy-side.
Happy to answer any and all questions about my time in accounting/advisory, my recruiting process, prep tools etc
JohnGutfreund 1) I would say the most transferable skills learned from audit were just a strong accounting base and knowledge of how the three financial statements link. Coming from a Financial Services background is not the best though as you don't get the revenue/inventory accounting experience that is extremely important when looking at the kinds of companies PE/PC firms invest in. In TAS/FDD, I was able to gain experience diligencing/analyzing companies in all different types of industries. This gave me a solid foundation in QofE / NWC analyses, the types of metrics companies use to track the health of their business and how to speak to the main drivers/levers of a business from a more high level point of view than in the weeds audit fieldwork.
2) Biggest thing I needed to teach myself was financial modeling, specifically how to build 3-statement LBO models (was given a modeling test for the current role that was basically just building a 3-statement LBO and then putting together data tables to model out different scenarios and how the target's credit metrics held up during base/worst case scenarios). I wanted to be as prepared as possible so I used the WSO and BIWS modeling courses and studied the WSO investment banking and PE interview guides.
3) Would absolutely recommend Big 4 as a jumping off point for those who do not have the grades to go into banking out of undergrad, although I would not recommend my path of joining financial services audit as it does not give you the right kind of experience and means you will have to work that much harder to make the transfers work. Also be prepared to work your ass of as the internal transfers are only given to the top performers/networkers. Another thing I wish I had known about as an undergrad was the Big 4 Corporate Finance teams which are MM investment banks, while exits are nowhere near as good as a reputable brand name bank, it would certainly be an easier transition than beginning your career in audit. Further, if you can begin your career in a TAS service line (FDD in some cities, valuations etc.) it will make for an easier transition as well.
Personally, I just used the general modeling courses and then spoke with some colleagues in IB who had been through similar interviews and had practice models that showed how to waterfall out the debt returns. I did not end up needing to know how to do that in my modeling test (was just a standard 3-statement LBO model with scenario analyses) but thought it was good practice regardless. I wish I had some specific readings or guides for you but I think the firm I signed with knew that I was coming from a non-traditional/non-credit background and wanted to test that I knew the fundamental technicals and how I thought through viewing a company from the investor's perspective.