2/7/16

Mod Note (Andy) - This AMA was originally posted last year but @SeekingAlpha180 said he can still take questions from you (+new questions about his transition)

3/7/16 update: WSO Monkeys - I just moved to a top MM IB doing M&A in one of the main sectors I covered in valuation; I'm happy to also answer questions about my transition

As a long time reader of WSO, I want to take the opportunity to contribute to the forum.
Since I started work in a big four valuation group, I have seen many posts on the forum that attempt to explain what these valuation groups do, what the exit opportunities are, and what type of graduate school placement these groups have. In order to shed some clarity on the aforementioned issues, I want to give back to the WSO community by highlighting my background, project experience, and observations after a year on the desk. Also, in order to provide candidates for these roles more clarity with their selection process, I will discuss some of the insider details I wish I knew when I was weighing offers.

The analysis that led me to accept the job was exhaustive and I will present my thought process as clearly as possible. This is only my personal point of view / experience and I understand that some WSO members may disagree or may have seen other things when working in valuation.

My Background

- Education: Top 75 (US News) University
- OCR: Non-Target type positions
- Extracurricular & Leadership: Solid finance focused club leadership positions / case competition wins / business school student leadership
- Internships: 5 in total ? Policy / Econ Intern - U.S. Government (Senate/House), 2 Project Management / M&A integration SAs at a blue chip IB, IB SA at a blue chip IB, growth PE SA
- Recruiting: Accepted MM PE analyst position, but unfortunately my graduation official diploma issuance date was pushed due to circumstances outside of my control. Had to give up the PE opportunity and ended up landing the valuation gig late in the spring of my senior year. I started that fall.

Background Of Valuation Associates

When I started around 14 months ago, > 70% of Associates hired into the position had work experience. Based on my experience with the national practice, previous positions of experienced hires is extremely broad including BB Credit Risk, Tax, IB, AM, Audit, and MM PE/Boutique PE. Campus hires had internships distributed across the same categories with only a few new associates that actually interned with the group.

Our national practice has started focusing more on recruiting students out of undergraduate business school and well regarded MSF/MS Valuation/MAcc programs for internships. On campus recruiting for undergrads is held at large state schools and private institutions concentrated in the 20-50 range with a few outliers on either end.

For interns, at least in my group, I've noticed that grades are extremely important. I haven't seen many with a GPA under 3.7 get an internship offer. Most interns have an internship at a blue chip corporate, transaction related boutique, or another group within our firm. Additionally, only finance and accounting majors are hired..... one of the few places where Technical Expertise > Pedigree when recruiting.

Project Experience

Purchase Accounting: 3 Pre-Deal PPAs, 3 Post-Deal PPAs

Tax Structuring: Three 338(h)(10) election assessments, where we helped the buyer determine how much they should pay for the tax amortization benefit.

M&A Advisory: 3 full scale M&A advisory projects, 3 pre-deal projects covering various areas such as Build vs. Buy, etc.

MC Strategy: Two M&A related pre-deal strategy projects (i.e. "We are being courted by this banker....Are they misleading us to get a fee? Should we sell now? Or improve the company before we sell?")

ROIC / Strategy Analysis: Two projects for large cap C-Suite. This analysis is straight out of the McKinsey corporate finance playbook if you're not familiar with it. Basically deconstruct shareholder returns in order to provide insight into the firm's capital allocation / operational abilities.

Notable Deal Experience

- Closed M&A Deal > $1 billion - My role included consulting on - Accretion/Dilution, Fairness Opinion (strategic purposes), Tax Structuring, Purchase Accounting, Earn-Out Structuring
- Consulted MF PE on Roll-Up Model > $2 billion opportunity - Worked with the client on their LBO to improve accuracy and build in sensitivity analysis

Breakdown Of My Hours By Project Bucket: Audit Support (15 - 20%), PPAs & Tax Valuations (15 - 20%), Everything Else (60 - 70%)

Breakdown Of My Hours By Task: Presentation Creation (15 - 20%), Professional Writing (15 - 20%), Financial Modeling (60 - 70%)

General Observations

* Most people aren't interested in lateraling to IB from what I've seen ? most people are thinking about Corp. Dev. / PE / MC and want to get there without having to do IB
* There is a wide range of competency and talent amongst the junior staff
* Like any big corporation, office politics will significantly affect your trajectory
* Exit opportunities are as broad as the products the group covers

Myth Busters - WSO Commentary On Valuation Roles That I Think Is Misleading

"You are a glorified auditor" - See project experience above. If you come from an Audit or Tax background (internship, full time, etc.) and are transferring in...expect to get stuck on Audit related projects. Unless you work hard to up you're modeling skills and strategic thinking (i.e. case study type analytics), you're not going to be competitive for the more interesting work the group sells. That being said, one of the guys I work with spent a year in tax but is crushing it here so there are always outliers. Also, the trend that I've seen is to break out the Audit support work into separate groups, so there has been a firm-wide reduction in the Audit work channel from what I understand.

"Valuation is a small step above Audit in terms of prestige and exit opportunities" - I tend to disagree with this......ultimately allot of what we do is becoming more strategy/transaction consulting focused where the mandate is outside of financial reporting considerations and audit support. A very technically focused strategy group, but strategy non-the-less. Also, Audit kids rarely get into my group.....FDD is the place where you have a strong case for transition from Audit after a few years of experience because you're ultimately just cleaning historical financials.

"You will probably not be competitive for M7 MBA programs" - False. Historically in my group there have been MBA exits to Wharton, Columbia, Chicago, MIT, etc. Harvard/Stanford will be tough to crack unless you are URM or are a rock star associate. If you get good project experience, are a top performer, and have good recommendations, you will be competitive for most M7 programs. And you won't be competing against IB/PE...possibly MC, but valuation is a hybrid role which makes it interesting. MBA exit was one of the main reason I chose this offer when I was weighing my options.

"You have no exit opportunities" - This is probably the most widely debated aspect of the valuation role. A few things to note about this consideration.
1. You are your project experience in this group. Similar to MC, you are staffed on various projects based on your networking ability, performance, and skill-set. Depending on the portfolio of project experience you put together in your first two years, exit opportunities will be different. If you only do PPAs, tax valuations, and audit support, transitioning to IB/PE/Strategy will be more difficult than if you're technically doing Strategy and M&A work already.
2. Rank Of Possible Exits From Most Common To Least Common: Corp. Dev. / Financial Analyst > MM IB / Tier 2 MC > MM HF > BB IB or EB IB > MM PE / MBB. Yes, you can go from valuation to MBB or PE with the right project experience. I know people who have done both. However these are the hardest moves to make. Again, in this case your progression and project experience will ultimately determine how competitive you are. And you will need to network. Corp. Dev. is the most common exit and many exits are to fortune 100 companies. MM IB and Tier 2 MC are also fairly common, specifically when candidates join right out of school.
3. Exit opportunities are generally worse for people who lateral in from other areas. This gig is fine for a year or two but if you want PE/HF I would lateral to a decent IB between one and two years on the desk.

Valuation Role - Pros

1. Broad project experience which you can "spin" when interviewing and go after what you ultimately want to do - unless you are a lifer which is fine
2. Brand name and a larger pool of candidates to out-perform which can make you more competitive for graduate school than smaller shops
3. Great training - we are continuously trained as associates in all of the areas we cover including LBO, Strategy, etc.
4. You will be unusually good at modeling if you get on the right projects because you spend more time on it than most roles ? to the point where multiple PE associates call my desk with questions
5. If you are doing well you will get responsibility more quickly than in most other entry level
6. Cash to GAAP modeling will become second nature if you work on many valuation aspects of the same deal
7. You get way more vacation at the big four than any other place I've heard of (5 weeks).....and you actually get to take it
8. Great exposure to purchase agreements and the working capital/tax structuring aspects of deals

Valuation Role - Cons

1. The pay sucks. I don't think the "prestige" is comparable to Audit, but the pay definitely is. The silver lining is that your base accelerates more quickly and at my firm you are bonus eligible like the other consultants
2. Variable project flow means you have to constantly hustle to get good project experience ? it can be pretty random when you start
3. Not really a performance based culture. My firm rarely fires people - so even if you're killing it the rub is that a mediocre performer who has been there for four years may beat out the younger candidate for promotion just because they warmed the chair longer. I saw this happen in my group.
4. Better Projects = More Hours. I work just as much as any IB analyst and walk away with about 60% of what they would be paid after taxes.
5. Less exposure to the debt/credit analysis of transactions than a typical IB/PE analyst
6. Less exposure to the transaction process as you won't be managing the data room, LOI, NDA, etc.

Who Should Take This Role

1. If you suck at technicals but want to work on deals this is a good place to start. People are generally cool about training you on the job and there are significant firm resources at your disposal
2. If you are unusually technical but for some reason don't end up with decent IB/PE gig, this can be a good stepping stone with the right project experience. If you care about the business school exit but don't have offers from companies with strong brand names, this can be a solid place to apply from, or lateral to the job you couldn't get out of undergrad after a year or two
3. If you have experience with the transaction process from internships, but only landed boutiques, this is a risk averse place to leave the business school door open while looking for better IB gigs after a year or two
4. If you couldn't break into MC and have the technical skills to hold your own, this can be a good place to set yourself up for a lateral move internally or externally

Those Who Shouldn't Take This Role

1. If you're mediocre technically, this role may be a step in the wrong direction unless you commit. Boutique IB may be a better fit in this case just because you will be guaranteed pre-deal and won't have t0 worry about getting beat out for the good projects.
2. Auditors looking to move to IB shouldn't take this role in my opinion. Everyone will know you're from Audit and you will have to fight to get off of the Financial Reporting/Audit projects. FDD offers more consistent experience and the Audit skill-set actually helps in that group.
3. If you have a decent MM IB/ BB IB / MBB gig, don't be an idiot and take this role unless you want MC. Even then think seriously about if you can fight for the good projects.

Feel free to ask any questions and I will do my best to answer. And apologies for any typos I'm not re-reading this.

Comments (61)

12/1/15

thanks for doing the ama, will add to the frontpage now

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12/1/15

Thanks for the AMA. Heard a little about this before. Whats the comp for first year and the years after?

12/1/15

Only been here around a year so I don't really know all the details of comp. progression. From what I understand it's pretty variable with salary and bonus allocated based on performance.

NYC salary at my firm starts at around $65,000 with a variable equity bonus based on performance. Most positions at the big four will start in that range.

12/1/15

Amazing post OP. Precisely today I received an offer for an internship in Big 4 TAS (mostly for a valuation group) in Europe and even though I have read a lot, I still have many doubts, I hope you can help me here:

Important: I am doing a MSc in financial economics and my objective is to move to a BB/MM IB for M&A or PE fund as an analyst, not in a support/middle office role

1) Projects: What projects will help me the most? Which ones will be useless? I know that I am just an intern and they will decide in what projects allocate me but, is there a way in which I can enhance my possibilities of working within M&A/LBO deals? I guess good performance is the first step...

2) Exit opps.: I have been told by a Senior analyst during the interview that PE is a common exit (he meant it, common) within their group. Now, my thoughts is that is common to exit to PE supporting roles, but difficult as you said to move to analyst roles inside PE, is this right?

3) This internship will last 5 months as they told me. What will happen then? Will they extend the internship, will they offer me a full time position, will they terminate it...? And by the way, what is the salary for a first year Junior advisor?

4) This is a bit off-topic, but I am a bit lost here as well and maybe you could help me: I might have the possibility of doing an internship in BNP Paribas, in Paris HQ, starting in September. Is this a good start for getting into a BB IB or is it just a 'meh'? (I'm still not sure if BNP is a MM or a BB IB)

Thanks for this post again, I am waiting for your answer, wish you the best!

12/2/15

Honestly I think there are some posts about Europe on here which may better answer your questions since I'm in the U.S. I'll do my best tho.

  1. A combination of hard skills, networking, and performance and most importantly, luck. The projects have to be coming in which is the tough part because there really aren't that many of them.
  2. Both are true in the U.S. You can end up on a deal team or in a support role depending on the shop. The trend I've seen is that the bigger shops tend to bring people in house to work on valuation aspects of deals. Some MM PE shops will hire valuation guys onto their deal teams depending on experience. You won't get MF PE from this role.
  3. No idea how Europe works we only have summer interns.
  4. BNP is MM in the U.S. but it could be different in Europe.

Overall I understand that Valuation is more respected in Europe which leads to easier exits. I would check some other posts tho.

12/1/15

I have read your post multiple times and I have to say, each time I'm left scratching my head in confusion. I don't think you understand what it is you actually do at your job. There seems to be a pretty significant disconnect that I'm hoping you can bridge. I've been in Big 4 valuation long enough to understand that there's pretty significant variation in engagement experience among, not only different Big 4 valuation groups, but also within the same valuation group, depending on your experience.

The things you say, though, are either incoherent or are so ambiguous that it doesn't do much help to the average WSO reader. I mean, I'm a Big 4 Valuation Senior Associate and I can't understand what you're talking about most of the time:

Incoherent:

SeekingAlpha180:

Purchase Accounting: 3 Pre-Deal PPAs

What is a 'pre-deal PPA?' PPA's allocate the purchase price over the individual units of account for financial reporting purposes. In order to allocate a purchase a price, by definition, there needs to be a deal, i.e., a transaction.

Ambiguous:

SeekingAlpha180:

M&A Advisory: 3 full scale M&A advisory projects...ROIC / Strategy Analysis: Two projects for large cap C-Suite. This analysis is straight out of the McKinsey corporate finance playbook if you're not familiar with it. Basically deconstruct shareholder returns in order to provide insight into the firm's capital allocation / operational abilities.

I don't know what any of this means man. Can you go into more detail? What is it that you actually did here? What were the fees? Why did you do it? Did you work with consulting?

You also go on to claim that you worked with a PE fund to 'improve on their lbo model' and to "build in a sensitivity analysis."

The latter part of that statement is, again, incredibly vague but, more importantly, the first part doesn't make any sense. Why does a PE shop need you to 'improve' their valuation model? I've never known anyone, at any level, that has any LBO experience in Big 4 Valuation. The only waterfalls we see are related to the reverse option pricing models we use for convertible preferred equity (which we do exclusively for regulatory purposes, not to 'improve' on the complex security valuations conducted by quant HFs).

Honestly, it sounds like you audited a PE valuation.

For people reading this. I have worked in Big 4 Valuation for a little over a year and in that time I have done well for myself and have diverse engagement experience. At the same time, I have never seen anyone in my group or in any other create a three-statement model or an lbo model. It just isn't done.

I'm just highlighting this so that people don't get confused and act on misleading information.

P.S. Did you recently quit your job?

"Elections are a futures market for stolen property"

Best Response
12/2/15

Haha.....yeah I was waiting for this post from another val. guy with different experience. If you're open to it maybe comment with exit opps and project experience in your group so people get an idea of the variability. Ultimately I'll provide as many details as I feel comfortable with.

A couple notes that might be helpful for people as I mainly talked about my project experience not the broader valuation experience available in the market place:

  1. There is a huge amount of variability in the project experience people have in these roles which I specifically mentioned in my post. Here are the categories covered.
  • Securities Valuation - Financial Reporting ASC718, etc.
  • Intangible Asset Valuation - Financial Reporting - ASC805
  • Impairment Testing - Financial Reporting - ASC350
  • Intangible Asset Valuation - Tax - IRC1060
  • M&A Tax Related Valuations - Tax - 338(h)(10), Asset vs. Stock Deal
  • Tax Restructuring Valuations - Tax - LE Valuation
  • Audit Review - Various Documentation Related Projects
  • Business Modeling - Various Strategy & M&A Related Projects
  • Strategy - MC - Really Depends On The Engagement
  • Litigation Consulting - Various Valuations For Damages To Be Presented In Court

My group doesn't really do much impairment testing, securities valuation, litigation consulting. We focus on the other areas with associates staffed based on skill set , interest, and obviously what we sell.

  1. Yes there is SIGNIFICANT variability from what I've seen at my firm more broadly, and then again in my specific group. If you look at my internship experience, it makes sense why I'm staffed on these projects vs. people without any live deal experience.

Incoherent?:

  1. The fact that you don't know what a Pre-Deal PPA is surprising. It's absolutely false that you need a purchase price to do a PPA - all you need is an assumed purchase price and financing assumptions which you can change during negotiations and are based on discussions with the corp. dev. team. Why would you do a pre-deal PPA? Because you can do a better accretion/dilution analysis if you have a solid estimate of the amortization which ultimately flows down to EPS. You also can't do M&A tax structuring work pre-deal without valuing the assets.

Ambiguous?:

  1. Yes we work with consulting but it's ultimately a corporate finance / modeling exercise. For more information read McKinsey Valuation. We have have a team of senior guys running these projects (including guys from McKinsey Corp. Fin.) vs. the financial reporting projects you probably see.
  2. Response To The LBO Rant:
  • We have people with full time PE and IB experience that work on any projects related to these methodologies.
  • We were trained on LBO and 3-Statement modeling. Many of the models I build are similar/identical to the ones I worked on as an intern in IB
  • Why would a PE shop need help? There were complexities related to the transaction that I won't take the time to go into.....but ultimately we didn't work on the debt waterfall that's not our thing. We worked on the proformas, tax structuring, GAAP schedules, refined the balance sheet assumptions, and structural items related to sensitivities. They obviously wouldn't need our help for financing assumptions - again not our thing.

I'm not misleading anyone. Again, this is a discussion of MY project experience and what I've seen in the role. I clearly stated the variability and competition for this type of work. The reason why my firm is expanding into these areas is because there is more fee potential since we are continually undercut by lesser valuation shops.

P.S. I'm trying to help the forum and you're being a prick. If you want to lateral let me know. I can see you being a great fit for our Audit support specialist group and I'll even split the referral fee with you.

12/2/15

Don't know why you would value goodwill and inventory with a hypothetical purchase price in order do an accretion/dilution analysis. There are more straightforward ways without getting bogged down in accounting standards. Also, I don't know why you continuously refer to the McKinsey textbook. I know what return on invested capital is man. It's not complicated. What I don't get, however, is how calculating it constitutes a full blown engagement or why the client couldn't just do it on its own.

To be honest with you, it all sounds like low-fee bullshit. This is not how Big 4 Valuation groups make money. This is what I'm trying to stress. We do valuations for tax planning, financial reporting, regulatory compliance, audit and occasionally the one-off consulting type of engagement that you refer to.

P.S. It sounds like your group assigns you these low-fee projects so that you don't bother them on actual, money generating engagements.

"Elections are a futures market for stolen property"

12/2/15

You sound like a very cool person to work with...

I worked in big 4 valuation for a while and i can confirm everything @SeekingAlpha180 mentioned in his post

12/2/15

Hey man just threw you a banana as a peace offering. Here is what I would like in return:

  1. An explanation of how the fees garnered by the projects you work on makes any difference in terms of your exit opportunities or ultimate internal progression after a couple years in a valuation role.
  2. Since you have an MSF, maybe you can weigh in on @rrajesva" question about his profile......rather than trying to call me out.

But I'm actually glad you brought this up - I'll explain how the big four works. For those learning about this role, the highest margin projects are Audit Review projects. Why? Because the Audit team in the firm you work for must use their internal valuation teams for reviews. I bill around the same amount of hours for every review regardless of how long it ultimately takes because we have a fairly standard quote (there are limited exceptions) ------------> therefore, -----------> drum roll -----------> the more Audit Review work you do, the higher your billables will look hours.

For all the other projects I mentioned, there are other firms competing on the market place so you won't be able to bill as much. For the record, 90-95% of my project experience is billable and we have the highest fees in the market place.

Ok So If You're Spending The Time To Read This Here Is What You Care About:

- @BankerC159 @kenneth635 As you both have made successful transitions out of valuation, I was wondering if anyone asked you in interviews the level of fees you bill and whether you undercut the competition on your project experience. Ultimately, from my perspective, as long as you are doing work for a client, you can count it as project experience regardless of the fees billed. Interviewers are looking for technical skills, analytical ability, and work ethic at the junior level, not your ability to generate revenue.

  • I guarantee you that every Associate at my firm would rather be doing consulting work over Audit/Consulting work regardless of the ability of the Partner/Director on the projects ability to get huge billables out of it. Therefore, the competition is fierce.
    • Don't be a billable hour whore. I know one guy like that....literally will only lift a finger if he can bill his time. Believe it or not, this doesn't fool anyone. Whenever I have the opportunity, I work on pitches / research projects / anything else I'm asked to do that contributes to the firm. Because I have that attitude, the people I work for will staff me on what I express interest in as much as they realistically can.
    • Doing strategy related work is probably the most demanding project flow I work on. In order to do really good analysis you will need to commit to the research process. How can you add value to a project team as the youngest member when you're working on strategy? Answer is exhaustive research.......whenever I get staffed on one of these projects I read extensively in order add as much value as possible. Ultimately, you will not get to bill all of these hours, but the knowledge you gain and the opportunity to impress senior people in your group will be of tangible benefit.

Pre-Deal PPAs: -------------- we do more of these than post deal PPAs. Think about companies with significant IP value and doing the accretion/dilution and Asset vs. Stock vs. 338(h)(10) analysis without accurate inputs. For large cap deals this can really matter and is an important part of the tax negotiations / financial modeling. Typically we do these pre-announcement and then update pre-close.

ROIC / TSR: I realize that you "don't get it". It is some of the most advanced modeling that I have ever done and ultimately not an easy exercise. The reason why I refer to the McKinsey text book is because it took me a couple months and live project experience to really understand the analysis due to its complexity and I found that book extremely helpful during the process. It's essentially an advanced form of three statement modeling where you can make granular adjustments to assess returns of businesses, individual business units of a company, individual products, etc.

P.S. Enjoy your high fee generating Audit and Compliance engagements. I think I'll be just fine to make a transition with my book of experience if I choose. And for the love of god don't ever talk about the $.5 million PPA fee your group received in an interview.....anyone in IB/PE/MBB will laugh you out of the room.

12/2/15
undefined:

But I'm actually glad you brought this up - I'll explain how the big four works. For those learning about this role, the highest margin projects are Audit Review projects. Why? Because the Audit team in the firm you work for must use their internal valuation teams for reviews. I bill around the same amount of hours for every review regardless of how long it ultimately takes because we have a fairly standard quote (there are limited exceptions) ------------> therefore, -----------> drum roll -----------> the more Audit Review work you do, the higher your billables will look hours.

For all the other projects I mentioned, there are other firms competing on the market place so you won't be able to bill as much. For the record, 90-95% of my project experience is billable and we have the highest fees in the market place.

undefined:

P.S. Enjoy your high fee generating Audit and Compliance engagements. I think I'll be just fine to make a transition with my book of experience if I choose. And for the love of god don't ever talk about the $.5 million PPA fee your group received in an interview.....anyone in IB/PE/MBB will laugh you out of the room.

This is not true. The margins on non-audit work are actually quite a bit higher.

The majority of audit engagements are for a fixed fee. Especially engagements for larger companies. You will only bill extra for work that is outside the scope of the traditional audit (i.e. not valuation review services that are performed on an annual basis). Even that work is usually for a fixed fee, too. Using PwC's internal metrics, it may appear as if you bill more for audit-related work. In reality, there's probably no invoice going to the client, and your cost is already baked in to the agreed-upon audit fee.

There's a reason accounting firms are placing far more emphasis on non-audit work. Deloitte is the best example, with its robust consulting practice. EY, PwC, and KPMG are trying to follow in its footsteps, with each firm (maybe not KPMG?) having recently acquired prestigious strategy consulting firms to beef up their respective non-audit services.

P.S. You sound like a pretentious, know-it-all douche.

12/3/15

Ok I can see how you are thinking about this. When you say that consulting overall has a higher margin than Audit you are absolutely right. But that's not what I was saying. I was responding to a comment someone else made about fees in valuation specifically related to traditional valuation projects and the newer product offerings.

When we bid for consulting work we never bill our full rates. Competition drives down the price per hour budgeted in many cases. However when we bill the Audit team we bill the full rate per hour. That's what I mean by margin. Our fee is baked in at the full rate per hour. I put together budgets all the time so I see how this plays out. Ultimately you can still realize similar rates on a consulting project if you bill less hours than budgeted but this is rare in my experience.

Not sure if you saw something different when you worked in valuation. And yeah I can come off that way.....but usually just responding to adverse comments that contradict what I know to be true....nobody likes being called incompetent and a liar, even on WSO.

12/10/15

Valuation associates the cover alternatives do indeed work on LBO's bro lmao...

12/2/15

I'm starting with a non-big 4 valuation shop (think D&P, HL, etc.). What do you think are the differences between big 4 and non-big 4 valuation groups? Pro's / Con's? Also, could you go into the difference between a FDD group and valuation? I had offers for both.

12/2/15

Congrats those are solid shops. Probably the two best Non-Big Four valuation firms out there. I will caveat my answer tho by saying that I obviously have only worked for one firm (i.e. 14 months experience) - I'll do my best to call out when I'm referring to my experience specifically.

Benefits Of Non-Big Four:

  • No Audit Support work streams - you will only do valuation engagements
  • I believe HL is very strong in the fairness opinion space so you would see more of that project type there
  • HL specifically is really strong in MM IB / Restructuring so a lateral from that seat would be a pro in my opinion
  • There is less of an accounting vibe to these brands which can be a benefit when making a lateral move
  • These shops pay better at the junior level

Cons Of Non-Big Four:

  • The big four carriers more weight for MBA applications
  • Not sure if this is the typical situation - but I know that for one of our main clients, we get more of the pre-deal/complex work and then D&P gets everything else. This may be a unique case tho.
  • Typically more exposure to MM companies - I list this as a con just because larger transactions are more complex from a modeling perspective, but if you like working with smaller companies it could be a pro

Benefits Of Big Four:

  • Global brand - everyone in the world will know who you work for
  • Some of the best projects I've been on have involved many lines of service (i.e. a mixture of Strategy MC, FDD, M&A Tax, Commercial Diligence, etc.) which is only possible at a full service firm
  • Potential for international rotations and cross-border work which is a great resume builder
  • Broader lateral opportunities internally since these firms have more service lines

Cons Of Big Four:

  • More variable project experience
  • You take a discount on your comp. for the brand
  • Bureaucracy at the partner level can lead to difficulties when trying to engage clients - more politics and these firms typically move slower
  • Risk averse culture

FDD vs. Valuation - Not An Easy Discussion - And You Will Find Varied Opinions Across WSO:

A couple high level observations which are based on MY experience:

  1. Everyone from my firm that I have seen move to top MM IB / EB IB / BB IB were either from a Valuation or Corporate Finance background
    • This could be because at my firm you typically need 2-3 years Audit experience for FDD
    • This could also be because the stronger associates that seem to make the jump out of valuation had IB/PE internships
  2. FDD offers more consistent experience and is always pre-deal - you won't have any risk of only getting post deal project exposure. But ultimately the reason why this group takes Auditors is because it is very accounting focus. Basically they receive granular accounting books from the client and adjust the historical cash flows to find the true EBITDA margin. They also do NWC / Debt & Debt Like Items analysis for purchase agreement purposes. There are other projects but that's what I've seen having read their reports on the deals we've been on together.
  3. This my opinion of TS project flow by group: Corporate Finance / Fairness Opinions / M&A Strategy / M&A Business Modeling > FDD / M&A Tax / Pre-Deal PPA > Post Deal PPAs > Tax Valuations / Financial Reporting Analysis (i.e. securities, impairment testing, etc.) > Audit Support. If you can get the right projects Valuation > FDD by a small margin in my opinion. Ultimately it's still big four TS.
  4. Valuation gets the CFA credential, FDD gets the CPA credential, but you can also get a CPA in valuation if you want. However CFA is the gold standard for my firm in the Valuation group.
  5. My view is that either way if you network, hustle, and are a rockstar you will be able to make moves. Choose what you want and take it happen.

"There's a choice that we have to make as people, as individuals. If you want to be great at something, there's a choice you have to make. We all can be masters at our craft, but you have to make a choice. What I mean by that is, there are inherent sacrifices that come along with that. Family time, hanging out with friends, being a great friend, being a great son, nephew, whatever the case may be. There are sacrifices that come along with making that decision." - Kobe Bryant

8/25/17

I'm going to add an incredibly late response and I apologize for that. I agree with almost everything seekingalpha has posted so far except for what was mentioned about the D&P/HL valuation shops being involved with smaller clients than the Big 4 val group. The big 4 typically avoid taking on large clients for independence reasons. The firms tend to target the largest companies for audits which generate big recurring fees (much more valuable than fees generated by val engagements). It's the D&P/HL shops that get the big fish because they don't have to worry about independence rules given theres no audit practice.

12/2/15

Hi,

Thanks for doing the AMA. I was wondering if you will take your previous MM PE role over your current job, given the benefits of the job which you had listed. In addition, how much does the lack of exposure to debt/credit analysis and transaction process hinder the exit ops of those who starts in big 4 valuation compared to those in IB. Lastly, do you mind providing a rough estimate of the % of people who stay in big 4 valuation in the long term e.g. more than 2 years and their reason for doing so.

Thanks a lot.

12/2/15

Hey no problem.

So looking back I'm not sure what I would do exactly.....I've had some unusually great opportunities where I'm at and like my team allot. However, I want to keep the PE door open long term so I'm currently trying to figure out what my next move is. Ultimately the problem is that I may not be able to get away the branding issue in the context of PE recruiting....so I may need to explore a lateral move if I'm set on the upper MM / MF PE shops.

The lack of exposure to debt/credit analysis is definitely a downside. I have some experience from internships but nothing compared to a Lev. Fin. guy.....I get financing assumptions from the corp. dev. team and model them in. Basically people here are probably better at tax structuring, proforma modeling, strategy, and some purchase agreement aspects than an IB analyst with the debt/credit analysis skills, among others. Not sure how many PE shops are open to that skillset but like I said I've seen people make the move with some effort. You should be fine for Corp. Dev. and IB transitions at most places with networking and luck.

Our turnover rate is incredibly high. I would say that 80% will leave before making Senior Associate. Exits typically happen between 8 months and 2.5 years so that's the sweet spot. If you stay longer you are more likely to remain. Ultimately the Partner comp. at my firm is solid and the work life balance is better than IB/PE at the senior level. If you want the MC lifestyle and similar pay at the senior level, but are more into Strategy/Advanced Modeling/Tax/Purchase Accounting, this could be a good place for you.

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12/2/15

are you still a slave to billable hours? (eg. you must work X billable hours a week)

12/2/15

Yes it's not ideal you are expected to post a certain amount of billable hours every year similar to law firms - ultimately it is not ideal because if the business development work (pitches, etc.) then you won't be getting a true billable hours.

12/2/15

Thanks for this. I currently have a summer internship offer from a Big 4 for Valuation that I've been debating on whether or not to accept, and it's nice to get a more detailed picture of what projects are worked on.

12/2/15

@SeekingAlpha180 What city are you in?

I worked in valuations for 3 years at two separate firms. His engagement experience is pretty impressive if your goal is to try to move into I-banking or PE. That being said, I think the experience he laid out is definitely not the norm. Most people who end up in valuations will be doing fair value and fair market value assessments for financial reporting and tax purposes.

Purchase Allocation/Impairment testing etc. are definitely not glamorous projects to work on but you can still build the technical skills that you can use and market yourself towards IBD and PE roles.

That being said, the projects you work on are highly dependent on the principal/partner/director. At my last company, my director had bid on or was trying to bid on some feasibility studies and LBO projects.

I think a good interview question to ask when interviewing for these types of roles is "What other type of projects does your team work on (besides purchase allocation, impairment, tax reporting etc.)?"

Also, I work in CD now and we had hired a big 4 firm to value the intangibles for an acquisition pre-close. So I think thats relatively normal, especially on deals that have the potential for a large amount of the purchase price being in goodwill.

12/2/15

@BankerC159 I'm in an east coast office but not NYC (i.e. Atlanta/Boston/Philadelphia)

For my firm, project experience is more variable and overall worse at the junior level in NYC. My office has several top senior partners in their later years that pull some great projects.

Agreed.....most people won't get these opportunities. But if you network well and crush-it you can come out with enough good experience to leverage.

12/3/15

To add the ASA verification, IMO, is a worthwhile certification to get. I can't think of any reputable firm that won't pay for their associates to get this.

For those who aren't familiar, it's a 4 day class with a test at the end. They go over very technical aspects of the DCF and the Comparable company analysis.

Plus last I checked they had one in Manhattan Beach, CA

12/3/15

Hi, I am really interested in learning about this valuation role now. I am currently set to go into TS FDD at a Big 4 firm, but I don't know if I should try to get valuations instead.

Since you've had 3 years of valuations experience in 2 separate firms, you probably have a very good picture of what it's like. Could you elaborate some more on YOUR personal experiences with valuation? Most of what OP posted is quite interesting, but it contradicts most of what I read on WSO and of course, I'm not sure to believe him or Esuric. Is it really possible to be building complex LBOs and DCF models as a regular day to day task? Pardon me if my question may sound stupid, but I'm a mere student with little internship experience so I'm not exactly 100% sure what tasks are good for finance. From what I hear, even analysts in IBD are doing grunt work all day, so maybe valuations is the right way to go?

Also, the OP said that FDD is basically just auditing historical financial statements. To be fair, the interviewers that I interviewed with glorified the job, so I'm not sure what it entails yet as I haven't started. If you (or anyone else) for that matter can chime in on FDD vs valuation some more, I'd greatly appreciate it. I was told that in FDD, you are more exposed to the deal process and you can network with PE professionals, and that the work itself requires a lot of judgment and is not mechanical like audit.

12/3/15

I had FDD/Valuation offers but took valuation

FDD sets you up for the CPA while valuation is more CFA/finance related. Although I was an accounting undergrad (still in school btw), finance was always more interesting. I was never really excited about getting my CPA. IMO, it pegs you as an accountant and makes for a more difficult transition to finance.

I really enjoy the modeling prospects. I'm also interested in IBD/PE/MC so valuation gives you a more transferable/relevant skill set.

PM me if you have any questions - happy to share my specific story with you.

12/3/15

Your questions are not stupid, finding information on valuations groups is a bit tough and the day to day is a bit opaque.

I'm not discounting the OP's experience but the valuation community is actually not that big. You meet a bunch of folks at ASA trainings and what not, so you can sort of get a landscape of what other valuation groups are doing and what projects people are working on. The LBO/Fairness Opinion/Consulting projects are all one off projects in my opinion. I would not take a valuations role thinking those are the type of projects you will be working on.

The types of projects that will be consistent across all valuations groups are purchase allocations, goodwill impairment, stock compensation, gift/tax, etc. As I stated earlier, these aren't glamorous projects but will expose you to modeling (DCF, Comparable Company, Precedent Transaction). I know some great modelers who work in valuations and have vast technical knowledge (you will also learn how to make presentable models as well). At the end of the day these are fair value and fair market value projects, which makes valuations a very accounting type function (hence why they are done by accounting firms).

I've never worked in a financial due diligence group but I've worked with a big 4 due diligence group (an advisor to a transaction) . They are able to look through historical and projected financial statements, analyze them and confirm proper accounting treatments were used and reflected accurately (this is especially valuable with companies lack proper audited financials). They are able to break down line items (Revenues, COGS etc.) to give you insight as to what are driving trends. They also provide analysis around working capital and quality of earnings to give you a true picture of those, along with any miscellaneous items (off balance sheet items etc.). IMO these reports are extremely useful and provide some level of comfort that the financials you are looking at are accurate and a true depiction of the company's operations.

It sounds like you may have plans to transition to IBD/PE down the road. I cannot say definitively which one will give you the best chance (I think that's highly dependent on how you market yourself and how you network) but each have their strengths. For instance, valuations will give you a very strong modeling base while financial due diligence will let you work on deals and be apart of the deal process. I know of people who have successfully transitioned from both valuations and financial due diligence.

I'd like to caveat these are just MY experiences, MY opinions and MY observations. Someone who works in financial due diligence would be able to provide much deeper insight into the day to day work.

Hope this helps.

12/3/15

Thanks for the advice, your insights are much appreciated.

Regarding the work that you did within valuation groups, you said that you were usually working with DCFs, precedent transactions, etc. which sounds very similar to what bankers do, even if they're for a accounting type function. However, could you explain in more detailed ways how is this different or similar to when bankers build complex DCFs to value companies for transaction? Does the fact that the models "have different end goals" make them very different in complexity, depth or form? Is it possible that people in valuation are better at modeling/technical stuff than bankers, and understand M&A/Corp fin better than bankers? Are you more often reviewing/auditing models, or building them from scratch? I'm just trying to get an idea of how transferable the valuation skill set is to PE/IB.

While I like that TS FDD gives exposure to actual deals, if valuation is really based on financial modeling, then I have a hard time believing that it's not better than FDD for high finance later on.

Thanks again.

12/4/15

I'll try to quickly hit your points as I am cramming down a wrap :)
- The mechanics of valuations and banking models will be the same for the most part (although in valuations, since there is an accounting governing body there maybe some guidelines you need to abide by when doing a valuation for financial reporting/tax/impairment....I think (I can't remember)). The biggest difference to me, are the drivers of the model. When you are doing a valuation for M&A (in my case CD) there is much more thought put into the projections and the drivers of those projections (e.g. how many widgets we can sell, what is our penetration into a segment etc.).
- It is possible that valuation folks may know the technical stuff better than bankers but M&A is much more than just knowing how to model. Its a process driven role IMO. So while a valuation guy may very well know the super technical aspects of modeling, he will never be able to run a deal like a banker.
- Reviewing/auditing models - depends on where you go to work. If you go to work for a Big 4/Accounting firm you will spend quite a bit of time auditing while doing external work for your clients. So at times (especially during busy season) it can be tough to juggle. If you go work for an independent valuations firm (D&P,HL etc.) you will do zero auditing since they aren't an audit firm.
- You rarely build a model from scratch, most firms have templates.

12/3/15

Thank you! I learned a lot.

Going back, would you say that this was overall something that you glad you did? (Valuations) How much has it helped you in terms of getting into Corpdev, and also your daily tasks in Corpdev?

12/4/15

Just want to clarify that I do NOT build LBOs on a regular basis. We were trained on LBO modeling and I was lucky enough to be able to get on a project....but It's been one project within 14 months.

FDD is great experience and one of the best groups to be in at the Big Four if you're interested in M&A/PE. BankerC159 is absolutely correct with his description quality of earnings and working capital analysis. They also analyze and interpret debt & debt like items on the balance sheet. It certainly requires significant judgement and skill and all of the accountants I know working in the group like what they do.

You do have great exposure to PE especially because private/smaller companies have a greater need for this type of work. One of my best friends at the office is a Senior Associate in FDD and he told me that they add the most value with smaller/private companies just because financials are less standardized than for the larger deals. Thus MM PE is one of the largest workstreams for the FDD business. But I've never seen an FDD guy transition to a PE role on a deal team.....it may happen more often than I think tho.

You are GAURANTEED live deal experience in FDD,.....in valuation you MAY end up with better live deal experience if you are lucky. It really depends on the group.

12/4/15

Thank you for the clarification, I may have interpreted your original posts wrong. Regardless, I am now much more interested in valuation, hopefully I can go find a boutique shop to intern at during the upcoming spring to try it out. Thanks again.

12/2/15

Hey OP, thanks for doing this. I'm currently a generalist in non-strategy management consulting at a Big4 equivalent and I have a 3.4+ undergrad GPA from a non-target in a math heavy major. Assuming I have 1.5 years in consulting, do a MSF (Vanderbilt, Boston College, WUSTL), get a 4.0 GPA, have a 730+ GMAT and complete a few levels of the CFA, do you think I stand to get into this Big4 group despite my low undergrad GPA? Thanks again.

12/2/15

Hey man I think you'll be very well positioned for a transition. I'm pretty sure we recruit from all of the MSF programs you mentioned, especially Vanderbilt. And the CFA will make you more competitive than the average candidate without it. If you do well in the MSF I highly doubt that your undergraduate GPA will be of issue.

Also, your ops experience will be useful in the context of strategy work we do when thinking about M&A integration or margin enhancements. Best of luck with the transition.

12/3/15

Thanks for this post. Currently have a summer offer from a Big 4 for Valuation...in your opinion how possible is a transition into ER or Corp Dev after a stint in valuation?

12/4/15

Do you go to a school where these roles recruit from? That in some ways will determine how easy it is for you to transition. But ultimately anything is possible if you network. One of my friends transitioned to MBB from a Big Four Valuation/Corp. Fin. internship. Another went to PE co-invest at a fund of funds.

Corp. Dev.:
- These teams tend to be pretty small from what I've seen and usually are typically looking for experienced hires. If you find a team that's willing to bring in talent at the junior level it's a possibility especially if you can pick up some decent project experience. There are a few tech/media firms that I know who recruit at the Ivy League so I would start reaching out to express interest now just in case they have openings.
- Allot of people I know who went to TS out of MSF programs did it because they wanted to get into Corp. Dev. without having to go through an IB analyst program.....I think the pool can be competitive in that respect.
- At my firm Associates typically are contacted within 6 months for Corp. Dev. positions by larger companies (market cap. > $1 billion). I know a bunch of guys who went to large companies within 2 years so I think valuation is a good career move if you want corp. dev.

ER:
- I've also seen guys make this move from my firm after a couple years. You build a good skillset in terms of really understanding financial reporting vs. cash flow modeling.
- You should try to register for the CFA if you want to do ER it's very well respected in that field and could help you transition out of undergrad or a valuation role.
- I would consider applying to MSF programs along with the CFA. I know a few guys who landed ER through that route with the extra year.

Hope this helps. I would think about IB too in this case it's also a very logical transition.

12/4/15

Thanka for the response. I don't go to a school where CD and ER roles recruit from, but I was lucky enough to intern for a CD team this past summer at a large company (>$1 billion market cap) and like you said the team was very small, and they all had previous experience either in ER or the legal side of M&A (turned to the finance side and went to M7 MBA program). Unfortunately there were no live deals during my summer there, and they also were not looking to bring on junior talent for more than just the summer.

As for the CFA, I know for big 4 on the audit side that a CPA is necessary to reach the manager level, does the same go with the CFA for Val.?

12/4/15

That's great.....I've never met anyone with a Corp. Dev. internship in college so I think you will have a unique story to tell when it comes time to interview for full time roles regardless of whether you accept the internship.

If I were you I would try to leverage that experience by targeting an ER/IB coverage group in the same sector (as long as you're interested in the same sector it's probably your best bet). Pick up some prep guides/modeling courses and you should be ready if you can land an interview. Also see if your old team can connect you with any of the bankers that court them.

For my valuation group you need a "credential" in order to make manager. That includes a masters degree (MSF, MAcc, etc.), MBA, CFA, or CPA. That being said, more than 80% of my group is pursuing or already has the CFA. I think it's a good idea to start on that right away if you end up in valuation.......especially if you see yourself in ER.

12/4/15

Yeah I've been targeting ER/IBD roles in the same coverage area, getting a little traction at some BBs, but it's looking like I'm going to have to go with Val. At least for the summer. Will most likely shoot for Full Time recruiting in either ER or IBD next fall.

Thanks for the responses, this post was really helpful.

12/6/15

As the questions are starting to die down, I'll leave the thread with my final thoughts after responding to comments over the past week.

  1. Definitely take the time to vet a valuation group after you receive an offer. Ask about what projects you will be working on and what you will be trained on etc. And after you receive an offer you can push a bit harder on these points than when you are interviewing. When I interviewed I specifically spoke with the hiring manager about my skill sets and how I would fit into the group....he ultimately talked to me about their growing fairness opinion/consulting business. That information was key in my decision to choose that job over a couple boutique/lower MM IB gigs I had on the table.
  2. There are many threads on this forum that discuss "What are the best groups at X IB". It's important to keep in mind that there are better/worse valuation gigs available in the market place in a similar way. Not all valuation groups work on the same types of projects and are selling the same industry/technical expertise. I think it's foolish to assume that every firm or group within that firm has the same quality of project flow and clientele. There isn't much information available on individual valuation groups out there so you have to work a bit harder to figure that out.
  3. I would think about the type of valuation firm you are considering. Will you be working on integrated project teams with other lines of service? Who are your main clients (i.e. strategics, hedge funds, etc.)?, Will you be working with Auditors and how often?, Does that firm have a strong strategy team that you may potentially work with?, etc. With banks it's easier to figure out what areas they are strong in because there is more information publicly available. There are no league tables for consulting/valuation that I know of - I've never seen an article include the name of a consulting firm that did Commercial Diligence/Financial Diligence/M&A Tax/Anything else pre-deal.....they only list the bankers and lawyers.
  4. I would try to understand how projects are staffed at the junior level in the individual valuation group you are considering. There are some groups in my firm that I know will only give new associates Audit Support for the first year or two before they're staffed on anything else. Just like there are friends of mine in IB who didn't do anything other than comps and pitch books until their second year. There is variability among groups and firms in this way as well.

Hopefully this helps the monkeys out there in making decisions about valuation.

12/6/15

Do you think that it's a smart move to jump from Big 4 audit to Big 4 Val/independent Val (D&P, HL...) after 1 or 2 years in audit? I am currently thinking about making the transition, but I am a little scared of jumping too soon.
I am not sure where I see myself 4 or 5 years down the road, but I am interested in ER and corporate finance.

12/6/15

I had the same thought when I was getting started. I've talked to a bunch of senior guys about what "leaving to soon" constitutes and most will say you need a minimum of 1 to 2 years to avoid having a black eye on your resume....which is why I started looking a bit after a year.

Valuation is a decent place to move...depending on the group. corporate finance should be an easy transition, and ER is doable with the right networking and project experience. I've seen both transitions from my firm's valuation practice. I would target both independent and big four groups.....there are pros and cons to each but the experience/exit ops won't be that different.

12/6/15

Thank you for replying, you are being very helpful!

If I may ask a few other questions: how would you prepare for a Valuation Analyst entry-level position? Is it easier to get hired if you are a CFA Charterholder (or L3 candidate), and would you join the firm at a slightly higher level?

12/6/15

No problem. So depending on the firm your title will be Analyst or Associate at the entry level. The CFA is highly regarded in Valuation groups and will definitely help you make a lateral move. The CFA will not allow you to come in at a higher level. If you come out of an MBA program, you will come in one promotion level higher at the Senior Associate Level. Even with few years of experience, an MSF, and/or the CFA, you will still come in at the Associate level. But you will be able to negotiate a higher salary than the campus hire rate which is set in stone.

12/6/15

I can't imagine the CFA helping too much if you're in val but looking to lateral to consulting or IB. The CFA would be great for ER or something like that but I don't see it being a huge help when applying to MS or McK.

12/6/15

The CFA will be a strong plus when looking for a valuation gig. But I can see where you're coming from in terms of the IB/Consulting consideration. I will say that McKinsey has a Corp. Fin./Strategy group where it would help....I have a friend in that group and it's very technical from what I understand.

However I do know of a Private Bank analyst who made a move to a BB IB coverage group and he said the CFA was viewed positively because it showed he could pass a series of difficult exams while being a top performer at work. It may not help you tremendously in terms of transferable skills but it is respected in finance regardless of your targeted transition just because everyone knows it takes commitment to pass it.

The added benefit of doing the CFA when in valuation is that it can help counteract the "accounting" stigma. If you can get on projects that are more geared towards MC/IB type work, the CFA will be something you can use to support selling the valuation gig as a more "finance" focused group than simply doing accounting work.

Regardless, the way I see it have the Having The CFA > Not Having CFA if you want to do any type of finance related work. Just my two cents tho.

12/7/15

I was always curious what McK CF groups do exactly...any insights on that?

12/6/15

Here's another question for all of you who may be able to chime in... What do you guys think about F500 FLDPs compared to valuation/FDDs for future exit into top MBA --> PE/IB/CD/MC? I'm asking this question here because it seems that we all have the similar goal of eventually breaking into strategy/high finance, and for "good" but "non-target" schools fldps and Big 4 valuations/TS are often the best OCR jobs you can get.

For reference, I got an offer VERY recently for an FLDP I interviewed for awhile back ( I was probably the back-up candidate lel). This FLDP is actually VERY finance oriented (as opposed to accounting, like most fldps are), with rotations in what seems to be a strategy oriented FP&A, treasury, bond trading desks, and the like. I poked very deep into the roles during the final round, and they all confirmed this information. But there is still a risk that I get placed into a boring internal audit/cost accounting rotation. The rotation also goes to major financial center cities, instead of being in the middle of nowhere (whereas my FDD offer is in a major city but it's not a financial hub).

Any insights would be appreciated, I'm just looking for general opinions, so it doesn't matter what your background is. Thanks in advance.

12/6/15

I think it depends on what you want to do in the long term. FLDP programs are great in terms of paying pretty well with a great work life balance. You are also in a different pool for MBA applications than any client facing position which can be a benefit.

If you want to move the buyside, FLDP programs are not the best option. But if you're fine with moving into sell side/consulting roles after business school than I think it's pretty much the same opportunity as FDD/Valuation. If you want to move to IB or PE/HF than FDD is definitely the better choice. I wouldn't worry to much about not being in NYC....you can always move there after a year or two if you really want.

12/6/15

Thanks for the advice. Why exactly is FDD/Vals better for IB/PE? Obviously, the experience will be more relevant in FDD/Vals. But I feel that is neigh-impossible to move to IB/PE from either of my options without MBA, and so my goal right now is to attain a top 10 MBA, and I think MBA OCR will determine everything for post-MBA career options. I am afraid that to MBA admissions, FDD people will be looked down upon as accountants and seen as non-unique due to being from Big 4, whereas FLDP candidates are "more unique" and can perhaps give me better MBA. I know some of the people at the FLDP interview had already successfully applied to M7s. So basically, I'm afraid that while FDD will give more relevant experience, it'll lead to a lower ranked MBA and therefore more limited career opportunities for PE/IB afterwards.

With the crucial intermediate step of getting an MBA in consideration, do you think the overall choice is still to go with B4 TS FDD (or Vals if I can get it) than corporate?

12/6/15

Not sure why you think it's impossible. If your resume is weak (I assume it isn't because FDD isn't easy to get into) than it will difficult to land an IB gig. But otherwise you should be fine to make a transition. Corp. Dev. is also a reasonable transition from what I've seen.

I spent some time on exit opps in my AMA above. It's up to you to decide if you believe it or not. Personally I think I'm going to be more competitive than FLDP candidates for MBA programs with my experience but some people may think otherwise.

12/7/15

From what I understand it's a mixed bag of services centered around value creation in the context of strategic initiatives. When you're looking at a company with the goal of enhancing its operations or services/product focus, the corporate finance framework revolves around capital allocation at the corporate level. Whether running a cost cutting project, divesting non-core businesses, or evaluating strategic market penetration in a certain area, the goal of the corporation per fiduciary duty is to maximize value for shareholders. So if you have a number of options that could potentially create value, in some situations it makes sense to apply the ROIC/IRR/NPV lense to deciding between potential projects. The McKinsey Corp. Fin. / Strategy guys work on traditional strategy projects but also apply the corporate finance framework to more traditional strategy engagements when appropriate. This is how it was explained to me.....you can also read some articles on their website if you're interested in learning more. And when I talk about working on strategy/ROIC projects in my AMA, I'm referring to this type of project experience. The strategy team at my firm doesn't have a Corp. Fin. / Strategy hybrid role so valuation works with them on these types of project to provide that corporate finance perspective.

12/8/15

What a killer thread. Its obvious there is a huge interest for other lines of service in the Big 4 aside from audit and tax. For a lot of people these roles are probably more attainable than IB or PE and in my opinion much better than starting in the back office of big bank. Thanks for doing these @SeekingAlpha180 ill will def be bookmarking this page.

12/24/15

Great post! I was an associate in big four valuation group and have to admit that the poster presents a really good picture.

12/25/15

Hi Seeking Alpha,

I am a current Big 4 audit associate. I started about 5 months ago and have completed the CPA and CFA Level One. I am thinking about trying to transfer either internally at my firm, or transferring to another firm and had a couple of questions for you.

  1. Does your group make any external hires of people coming out of audit with one year experience? Do you think it would be worth my time networking at other firms valuation groups with such a small amount of work experience?
  2. Out of the associates you see switching into your group from audit are there any similarities? Obviously outside of being high performers are people doing anything else to stand out and get transferred?

Thanks!

1/6/16

Hey so my group definitely hires from Audit, although typically with two to three years experience. There are a couple guys that managed to transfer earlier tho...usually the product of networking and skills (the CFA level one will help you here).

Additionally, as far as I know, none of the Audit hires came from an external firm. I wouldn't let that discourage you tho, I've seen guys go to specialty shops out of Audit which is also great experience.

I think the CFA will help you in terms of standing out. Can't think of any real similarities between the transfers other than networking, building relevant skills where they can in their group, and getting a bit lucky.

If I were you I would continue the CFA program and apply internally/externally to all the shops. The deal market is strong and I've seen a bunch of openings come through my inbox.

1/9/16

Thanks for the information! Currently studying away at CFA Level 2 and will probably start applying to places after this busy season.

1/5/16

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