AMA - Big 4 Audit to Boutique M&A Shop

rp-53's picture
Rank: Baboon | 108

(11/24/17 - still taking questions Hello all, I've been a lurker for some time now and have found/utilized some useful information on this site, so I wanted to give back in some way. I recently landed an investment banking analyst position at a boutique bank for M&A. In regards to my background, I graduated from a non-target with an accounting degree and worked for a big 4 firm in their audit practice for about 2 years.

After 2 years, I moved onto one of the big 3 credit rating agencies and was there for a little under a year before landing the banking gig. I am a CPA and have passed Level 1 of the CFA as well. These past couple of years have definitely been a huge learning experience, and I'm happy to answer any and all questions you guys may have.

Cheers!

Comments (49)

Sep 12, 2016

Grats, I'm at a mid tier firm (RSM,Grant Thornton, BDO), Just finished my first year and have been planning a move to banking as well or Transaction advisory services.

How did you position yourself to get out of accounting?
Why did you pick the credit agency job?
Did you focus more on networking or applying for jobs online?

Very interested

Best Response
Sep 12, 2016

@Worth a Try

Thanks, appreciate it.

  • How did you position yourself to get out of accounting?

From a tangible/concrete perspective, I positioned myself by leaving the Big 4 for a "finance" job and by taking level 1 of the CFA. Equally if not more important, in order to position yourself out of an accounting role, you need to have a certain mindset. Don't view yourself or even present yourself as an accountant. Your play all along has been to become a financial statement expert which will help you exponentially in banking; you chose accounting since its the language of business. Anyone can create three-statement models or run DCFs but your mastery of accounting enables you to really understand the models and the nuances in them which essentially makes a first-year banker better than you solely from an operational standpoint. You can close this gap once you get a shot and do this on a daily . Make sure this comes across when you speak to everyone in your network so they understand your game-plan.

I also positioned myself by learning how to run three-statement models and DCFs as well as my own reading/research. I found the following to be helpful:

  1. Wall Street Prep - I bought the premium package for a little over $400. Thought it was helpful as it walked through a bunch of models including DCF, M&A, LBO, etc. These models also provided me a baseline model to work off of as I was never formally exposed to it at either of my current jobs.
  2. Aswath Damodaran - this NYU professor really breaks valuation down and essentially allows you take to his class for free via his website: http://pages.stern.nyu.edu/~adamodar/
  3. Investment Banking handbook - came across this somewhere but found it to be solid reference material: http://cec.shfc.edu.cn/download/ff9afd43-a63a-4c1e...

You have the right idea of transitioning into a transaction advisory services (TAS) job as that is the most logical next step towards banking but I'd be wary of doing this internally. At my previous Big 4, this transition was a multi-stage process with numerous rotations outside of busy season and essentially set you back multiple years before you actually joined the group unless you had a solid relationship with a partner that was willing to pull you in. While you're gunning for these TAS jobs, I'd look into other firms like Houlihan Lokey as they have similar roles that could potentially get you exposure to better deals than you would see at a Big 4 or other accounting firm. Also, not sure what your CPA plans are but the designation itself came up a couple of times in my interviews as firms do view this positively. No one really talked about my CFA level 1 but they did talk about my CPA. I'd be opportunistic with the exam only if you can get it done quickly.

  • Why did you pick the credit agency job?

I think these jobs are wall street's best kept secrets and really doesn't get the credit it deserves, pun intended. The experience has been very fulfilling from a learning perspective. Significant deep dives into SEC filings and company presentations, executive management meetings to discuss business strategy overall performance, and spreading comps across industry verticals. The analytical rigor that these firms put you through is relatively solid and you essentially get trained to look at a company from both a qualitative and quantitative perspective which is what I was missing at my Big 4. The structure if very similar to equity research in the sense that a younger analyst (myself) follows a senior analyst/MD who's been in the game for sometime now which equates to a solid learning experience overall. Also, the pay was actually pretty good considering the hours I worked. With that being said and if banking is your goal, I think you can only stay here for 2 years max unless you want to get your MBA and then do IBD at the associate level. Coming here allowed me to not only leave accounting but sharpened my analytical skills. The exit opps from here can also be solid if you network properly and position yourself well within the respective agency but that's a whole different conversation.

  • Did you focus more on networking or applying for jobs online?

To be honest, I did both feverishly. My goal was to try and reach out to someone new every day who was in IB whether it was a high school alum, a college alum, an ex-Big 4 alum, whoever it may be and simply ask for career perspective and try to get on the phone for a couple of minutes. Whenever I'd find an open position, I'd go ahead and reach out to anyone in my network that worked at that specific firm to see if they could push my resume in any sort of way. In regards to sourcing these positions, I checked everything including linkedin, monster, indeed, firm career pages, as well as random google searches pretty much every other day. At the end of the day, I wanted as many people in my network to know exactly what I wanted, so if they heard of something down the line, I would be the first person they thought of.

On a side note, don't entertain headhunters that try to feed you nonsense jobs that appear to be front office and don't get led astray by titles. 99% of the headhunters that are consistently calling you don't care about your front office dreams as they can't place you in such positions. As a rule of thumb, if there was anything in the job description that included some text around tasks done annually, quarterly, or periodically in any way, I proceeded with caution.

Hope this helps and feel free to reach out here again or via pm.

    • 16
Sep 12, 2016

hey great response, opened my eyes to see that I'm not putting enough hard work to get to my goal.
Will work on those things and hustle harder!

Will pm you in future with further questions, thanks alot.

Sep 12, 2016

No offense intended with this question - did you have any issues going from a 2+ year position where perhaps a promotion was around the corner to an "entry-level" position in IB?

Sep 12, 2016

No offense taken. Interestingly enough, I ended up getting hired as a 2nd year analyst as oppose to a 1st year analyst due to my work experience and how the interviews went. I will say though that even if I didn't get hired as an experienced analyst, I wouldn't think much of it as the career trajectories aren't the same. An ex director in my group got hired as an associate at BB bank for banking, so promotions in other industries outside banking don't mean anything. Thankfully it kind of worked out for me but even if it didn't, I wouldn't have cared that much.

Learn More

Side-by-side comparison of top modeling training courses + exclusive discount through WSO here.

Sep 12, 2016

Amazing story, and congrats! Happy that your hard work paid off, mate!

Sep 12, 2016

Thank you sir. Definitely felt good to see results at the end of it all.

Sep 13, 2016

Is there any disadvantage moving from tax to IB SA positions?

Sep 13, 2016

I would be surprised if they gave you a look if you just had a tax background. There are almost no transferable skills (you aren't going to be the one figuring out the tax nuances on M&A deals as a banker, that'll be the Big 4 tax M&A guys).

    • 1
Sep 14, 2016

I'm a sophomore in college. Full time Big 4 experience is better than no experience right?

Sep 13, 2016

I don't see any disadvantage in you doing so as tax and IB are worlds apart. A summer analyst position if anything puts you on the right career trajectory if you want IB exposure as an analyst. I could see some people arguing the fact that you could be potentially "aged" out but I don't think that's necessarily true. If a firm is willing to give you an SA position, then they obviously don't think so. I think you should run with it as it doesn't happen often to my knowledge.

Sep 14, 2016

My situation is pretty different. I'm a sophomore working full time at a big 4, so id be the same age if not younger than others competing for SA positions. Do you see Big 4 client facing experience as an advantage over others who have no work experience?

Sep 14, 2016

If you're still in school, then yes any experience is better than none at all. The fact that you have it with a big institution only adds to your credibility. If I were you, I would do the following:

  1. Network/reach out to as many IB people as possible, usually works best with VP and above. Try to get considered for an SA position that way.
  2. Look out for for any transaction services role either within your firm or outside. The play here is to find a partner that likes you and leverage that relationship. Even if it's a partner you're currently in contact with, ask him/her for guidance.
  3. Assuming none of the above work and you're in tax, try to get some audit experience within your firm or another firm as that will be more highly valued than tax any day.

Hope this helps. Feel free to reach out again or pm me.

Sep 13, 2016

Hey Op, gratz and great job! I'm going to start at one of the Big 4. How long do you think I should stay in audit before I tried to move to the other side (IB/TAS)? My ultimate goal is IB and I have seen a lot of ex-Big 4 moved to TAS and leverage that experience to get into IB. I am thinking of doing the TAS to IB route if possible, any advice?

Sep 13, 2016

Usually for TAS you need at least 2 years of audit experience, they only hire Senior Associates. For IB, the less time in an audit role the better. Pass your CPA asap though as it will be looked at favorably.

Sep 13, 2016

Thanks for the advice!

Sep 13, 2016

Thanks a lot. I wouldn't worry about time as much as I would worry about learning what banking entails, basic valuation, basic modeling, and hammering down accounting concepts. While you're doing the aforementioned stuff, I would network constantly and start doing so asap. By the the time you get the IB position, you'll already be a significant amount of time in, and even if it isn't significant, that just works out better for you. Don't be afraid to have those conversations with people early but make sure you're still performing at a high level with whatever is currently on your plate.

If I were you, I would try for both TAS and IB positions. Why restrict yourself in your search? I know one guy in particular that left my Big 4 about 5 months in for an elite boutique and one guy to another boutique in 1.4 years as well. To my knowledge, vacancies tend to be highest at banks post bonus period and right before 1st year FT analysts start training which I think is in the early summer as there may be a handful spots that are open for some reason or another. I would target my efforts around these times and be opportunistic during the off season. I myself caught my gig simply due to turnover as the individual resigned for personal reasons.

If you can source openings and connect with the right people, convey your story/pitch, and demonstrate that you have the ability and desire to do banking, whether you stay in audit for 2 months or 2 years makes no difference. Lastly, don't take any crap from fellow colleagues, seniors, and head hunters who try to feed you nonsense about why you should stay for x amount of time or until you hit your senior associate year. All that is bullshit and is irrelevant and will work against you.

Hope this helps. Feel free to reach out here again or pm me.

Sep 13, 2016

Thanks op for the great advice! Will take your advice to heart and pm you in future for further questions

Sep 14, 2016

Congrats on your transition. I think this is one of the biggest takeaways from this entire thread for anyone in Big 4.

rp-53:

Lastly, don't take any crap from fellow colleagues, seniors, and head hunters who try to feed you nonsense about why you should stay for x amount of time or until you hit your senior associate year. All that is bullshit and is irrelevant and will work against you.

My former peer advisor has been texting me frustrated with how her job search has been going and she's only on her 3rd year.

"Even if you're on the right track, you'll get run over if you just sit there" - Will Rogers

Sep 21, 2016

Hey OP, just a quick question. What are your thought on finishing the CPA first before start recruiting for IB?

Sep 13, 2016

Congrats on the new role! Do you think the CFA helps in IB beyond positioning yourself for a finance job (as you said)? I am taking CFA L1 in December but the overall impression that I've gotten is that people in IB don't particularly care for it. My goal is to land an IB analyst position.

Sep 14, 2016

I'm not op, but I've talked to several professionals in the field.
The CFA really relates to Asset Management careers and not really for banking jobs. I guess if your'e not form an accounting/finance background it shows your competence/desire for the industry but it's not that common in banking. Doesn't hurt to do it if you got the time.

Sep 14, 2016

Thanks for the input!

Sep 14, 2016

Thanks a lot.

I took L1 because my firm sponsored me, my hours were good, my CPA helped exponentially, and I was an accounting major in college, not finance. Based on the aforementioned reasons, I only spent about 2.5 months studying in total for L1 while networking/learning, so not a major time commitment for me.

I never looked at the CFA as my ticket into IB. All the stars sort of aligned, I was opportunistic, and to a certain degree, I was looking at it from a learning perspective as well. To a banker, passing a level or the entire exam and obtaining the charter essentially means that you cant take a test, you're a hard worker, and you manage your time well. Outside of those qualitative factors, the technical translation to banking is minimal at best. Whenever I'd interview or pitch my story to anyone, passing L1 was never the main topic of discussion but more of a side comment I'd throw into conversation primarily to add credibility to myself. For banking, the exam or progression through the exam adds a differentiation element to your profile at best which isn't a bad thing but should be weighed against the opportunity cost of your time. If you're fine with this reasoning, then I would go ahead with the exam.

If you're goal is indeed an IB analyst, I'd do what I've said in earlier posts. Learn/Research, source openings, and network constantly.

Hope this helps. Feel free to reach out again here or pm me.

Sep 14, 2016

Thanks, your explanation was crystal-clear! I will continue with Level 1 and then assess where I am in my career and if I can make the time commitment to continue with the program after I graduate.

Sep 14, 2016

OP,

I am beginning an associate role in a Big 4 TAS group, specifically in their Valuation and Business Modeling line. How long is usually appropriate enought to lateral over to an IB analyst position? I understand there may not be a required amount of time, but just wanted your opinion.

Sep 15, 2016

I think you should start having those conversations as soon as your comfortable walking people through basic valuation techniques including dcf, comps, precedent transactions, etc. You're in a fortunate position because you don't have to sell anyone on the fact that you understand valuation. Your primary job is/will be valuation and the fact that you're at a big 4 validates it further. On the other hand , I'm not sure how solid your understanding of accounting is so maybe that's something worth putting a little time into. If someone asked you the affects a decrease in amortization would have on all three of the main financials at a specified tax rate, you should be able to answer that and walk them through that thought process fairly simply.

Overall, as long as you know what you're talking about from both a valuation and accounting perspective, tenure at any one firm is irrelevant. If you want me to quantify it and based on the assumption that this your first job out college and you're well prepared, 1 year to 1.5 years is the most likely scenario. One thing I've learned is preparation and overall readiness is key in landing the job as you never know when a position will open up. If a spot opens up and you're still scrambling to understand basic stuff, odds are you're too late. On the flip side, if you're on your game, the transition can be made in months. As I've previously alluded to on this thread, I knew one guy that did it within 5 months with a formal audit background, not even valuation. At the end of the day, if youre well prepared and can pitch your story professionally, the bank won't care about age or tenure. If anything, they'll be happier you're younger so they can mold you however they want to.

Sep 18, 2016

What are your hours like now and what is your end goal?

Sep 19, 2016

Haven't officially started yet as I'm in my 2 weeker. From talking to the firm, they said I can expect to get out anywhere from 9 to 1am everyday. Deal-flow has been solid there with a couple more mandates on deck, so I'm assuming I'll be busy right when I start.

Right now, I'm thinking I want to go PE or HF as my end goal but all that can change. I'm going to a very lean boutique with potential promotions in the medium term if I perform well, they like me, deal-flow is good, etc. I'm going into this with an open mindset, and I don't want to cross long-term banking off the list for good prematurely.

Sep 19, 2016

Hi Rp,

First off thanks for doing this, much appreciated. I have a couple of questions for you as I am attempting to break in and would love some advice as I feel like are backgrounds are not far off. To give some background before I get to far in I graduated from a semi-target and have about 1.5 years in Big 4 Audit servicing FS clients. Similar to you I passed the CFA level 1, and all of the CPA exam. I am about 2 full months into my attempt to transition directly to a boutique IB. Also its great to hear from someone with similar ambitions as me start in audit and make there way out.

1) I have gotten to the final round of interviews for two sizable boutiques and been passed over for the other guy with more deal experience. How long do you suggest I keep networking, cold emailing, and applying to IB analyst jobs before I transition my search to other positions that might help me break into IB? I think a constant concern in my mind is that busy season is approaching, and the though of another audit busy season fills me with a little dread, not from the hours but from the work of course.

2) I know you mentioned above that you jumped to a CRA position before getting in to IB. Outside of TAS and CRA positions do any others come to mind that would increase your background to break into IB? Would you see corporate or commercial banking as a good move, or would you suggest just staying in audit until I break in or get a MBA?

3) What form of networking do you think paid the most dividends for you? I have been going with LinkedIn messages, referrals from friends in IB, and cold emailing within in the banks. Anything else you think I should be doing?

Its great to hear of your success!

Sep 20, 2016

Thanks a lot.

1) So from what you've said, it seems like you have a process in place that's working for you, and so, I'd keep going with that. The fact that you've made it to two final rounds says a lot which is good. If I were you, I'd try to review both interview processes in my head and really see what I could have improved on. If the firms you're corresponding with were really keen on hiring deal guys, they wouldn't have pushed you to final rounds. To me, it seems like you may have gotten passed over for more intangible reasons than actual technical skill, but again, just my perspective and reasoning. I think it's overall very important to understand you what bring to the table especially when you come from an audit background. You're not going to be the financial modeling guru or the valuation guy right off the bat, but demonstrated learning/understanding will help here and you need to express that in your interviews/conversations. You're the financial statement guy that can synthesize information from the financials quicker and smarter than anyone else which is evident by your Big 4 experience and CPA. Overall, I really think you should continue your process. Whichever firms you had final rounds with, I'm assuming you have contact info from all the people you interviewed with. I would try and kindle a connection there, so they keep you in mind for future openings. You've already gone through their respective processes, so it could be efficient/beneficial for both parties going forward. It also shows that you're hungry, that you want that specific firm, and you know how to manage relationships even after facing rejection.

2) I think any sort of valuation position will greatly increase your chances with IB firms. TAS is a solid option at another Big 4 which I've heard isn't as terrible a transition as there is a high chance of politics within your own Big 4. I can't really comment on corporate or commercial banking as I have never really looked into it too much, and I don't want to potentially lead you astray. What I will say is that it would depend on the work you're doing. If you're in corporate banking which I'm assuming is corporate finance, then yes I think it would be a solid move as you'll be involved in transaction work and modeling. I think audit is good for 2 years, max 3 years. Outside of that, you will get pigeonholed and it will be very hard to diversify. If you get a TAS, valuation, or corporate finance job, I'd leave immediately. If you're in busy season when you get the offer, I'd try to tell your future employer that you'd like to come on board post busy season as you don't want to burn a bridge. More often than not, they're conducive to it and actually appreciate it as it speaks to your character. At the end of the day, they are somewhat reassured that if/when you leave them in the future, you'll give them the same respect.

3) I have done all of what you've said except cold-emailing or calling. I have found that it was simply a poor return on my time, but then again, I'm sure it has worked for some people. I think it's helpful to have some sort of connection to the person. The best part about that is that the connection can more or less be anything including high school alum, college alum, Big 4 alum, 2nd connections on linkedin, etc. I got a lot of good perspective from my high school alum and college alum. I landed my banking gig through a linkedin job posting, but the numerous conversations I have had with people all across my network from alums to colleagues of friends in IB have been fruitful. At the end of the day, more people know exactly what I want which only helps and grows the network. Overall, you need to show that you're hungry and that you're dead focused on IB. Don't get distracted by other Big 4 people and head hunters as they're relatively useless in your path to IB but try stay on good terms with them. Lastly and importantly, don't forget people who have helped you. Keep your network updated as to what you're doing, what moves you're making, etc. At the end of the day, when you do land your banking gig, make sure to thank everyone that has helped you in any way, shape, or form. I have found that it's these little things that people remember about you than anything else.

Hope this helps. Feel free to reach out here again or pm me.

    • 1
Sep 20, 2016

Also, I'm assuming you went to Vanderbilt. Your school has more of a presence in IB than my school hands down and probably by a significant margin. Definitely make use of this as it will make your life a lot easier connecting with people.

    • 1
Sep 20, 2016

Thanks for the response RP. You helped confirm a lot of my thoughts, not getting an offer after being so close with those two opportunities, I think I wanted a little confirmation that my approach was correct. Also the point of thanking and keeping your network informed rings especially true to me. I have gotten a lot of strong support from others and a definitely plan keep them informed. Also I might PM you another question this week to get some additional networking advice from someone who has gone the distance, if that's alright .

Appreciate the help

Sep 21, 2016

Congrats on your new role.

Can you expand on what will be expected of an accountant/auditor moving into M&A in terms in financial statement analysis?
Will we be expected to answer advanced accounting questions?

Thanks for your help.

Sep 21, 2016

Thank you.

You have to understand how the financial statements work in regards to how the three main financials (BS, IS, CF) are linked. You have to understand how changes in one account on one statement affects another account on another statement. No one is going to ask you about consolidation accounting, IFRS vs GAAP nuances, pension adjustments, journal entries, etc.

I have found the best way to approach accounting techincals for banking interviews is to assess them as I prep for banking technicals. By banking technicals, I'm referring to the infamous "walk me through a DCF" question. If you understand how a DCF works, there's tons of accounting technicals they can throw at your from free cash flow questions to wacc questions to enterprise value questions. Some examples include:

Financial Statement - How would an increase in depreciation at a certain tax rate affects a company's cash account?
Free cash flow - How do increases and decreases in networking capital affect FCF?
WACC - Assume a capital structure of 25% debt to equity. What are the percentage components of debt and equity when calculating WACC?
Enterprise Value - How do you get to equity value from enterprise value?

As you can see, the aforementioned questions aren't by any means advanced but do require a solid understanding of accounting. More often than not, your response to questions will be followed up another question inquiring of your logic or reasoning. At the end of the day, even if you don't get the right answer, your thought process is equally if not more vital, so think out loud and have be able to intelligently justify your responses. Remember, they're not looking for geniuses; they're just looking for hard-working people that are well grounded in the basics.

Hope this helps. Feel free to message here again or pm me.

Sep 28, 2016

Thanks!! This definitely helps.

What do you think of transferring to a top 10 corporate finance shop eg BDO, Grant Thornton if one can't move internally. Do you think this would affect future career options?

Feb 22, 2017

I have an MBA degree and 1.5 years of accounting experience. Is it difficult to land an audit job at big 4? Do i need a cpa or is just being eligible good enough?

Nov 29, 2017

are you serious lol

Nov 24, 2017

Many thanks for doing this, and my belated congratulations to you for an exceptional job well done. Great use of the CRA as a pivot. I always stress that this is an underrated tool in the arsenal of a nontarget student or prospective experienced hire to make the transition to IB or even buy side investment management, so it was definitely fantastic to see that it was helpful in your case :)

Now that you've been in the role for little over the year, do you mind sharing an update on how things are going? (e.g., deal flow, hours, prospective exits, overall sentiments surrounding the role). My experience has been marginal with respect to former Big 4 accountant folks coming over to our group, but I know of one in particular who I thought had a very strong grasp of accounting and financial statement analysis.

While I don't think Big 4 is the ideal place to start if you are looking to get into some form of transaction based/banking role, I'd posit that the skillsets you gained from your unique roles likely put you ahead of comparable 1st/2nd year analysts from a technical standpoint.

    • 4
Dec 2, 2017

Thank you. Happy to provide an update. I have been at my firm for a little over a year, and I feel like I have learned exponentially and continue to do so. In regards to deal flow, two of my deals have signed (one buyside and one sellside). Currently, I have one sellside deal that should be signing by Jan 31st along with three other projects that I am working on (one buyside and two sellside). I feel fortunate to spend less than 2% of my time working on pitches with most if not all my time dedicated to live deal work. Hours are typical banking. I'm in between 9-9:30 and I'm out between 10:30 and 11. An early night would constitute leaving at 9pm and I have the sporadic 1, 2, 3 and a handful of 4ams.

In regards to exits, I have headhunters reaching out for PE, HF, Corp Dev., so I have gotten looks despite not coming from the Goldmans of the world. I was early promoted to Associate very recently, so I've been soaking that in and feel fortunate for this to have happened. Granted, the promotions here are not as structured as a bigger institution, it's always nice to get paid more :)

I think most people (myself included) come into banking with the pre-conceived notion of leaving in two years to the "promise lands", but I have to say, I've really been enjoying the work. I think a function of it is due to the fact that I'm with a boutique, so I work hand in hand with the MDs and get to see my analysis/deliverables all the way through to the client. I also really appreciate the exposure I've gotten and the deal-work that I have been lucky to have been staffed on. Feels good to know that a CFO is comfortable enough to shoot me a text if he has a question or concern. While I have considered testing PE recruiting waters, I don't feel an immediate need to leave just yet. I feel a true ownership of my work and I enjoy the advisor aspect of IB.

Nov 29, 2017

hey mate; thanks for this! Did these experiences take within UK or US? Got a few more questions if the UK.

Dec 2, 2017

Ofcourse. I'm in NYC.

Nov 29, 2017
Comment
Dec 2, 2017