Big Four Career: Corporate Finance vs. M&A vs. Valuation

indieologue's picture
Rank: Monkey | 37

Hi,

I am a second year auditor at a Big 4 firm, double-majoring in accounting and finance (bachelor's degree)
As I am about to complete my second year, I have been looking for another opportunity to transfer to my firm's (or other Big4) corporate finance, M&A or valuation departments. The reason is because I would like to focus more to finance field instead of continuing my career in accounting (i.e. auditing), with a goal to hopefully get PE job.

My questions are:
1. Does anybody have more information about these three different departments? How do you differentiate the three departments in terms of the types of work done?
2. Which one will give me more expertise/opportunity to land PE job?
3. I heard that M&A in big 4 firm is not as good as M&A in IB or PE firms. Is this true? If so, why is this the case?
4. With my background (Bachelor's dual degree in accounting and finance, 2 years of audit experience), which of these department do I have the best opportunity to land a job on?

Hope someone can help me get more information about these three different opportunities.

Thanks in advance!

Comments (15)

Jul 22, 2014

Corp Fin is a whole different world and not exactly easy to get into... Valuation will put you into valuation roles within a PE/HF... I've seen plenty of people make that transition.

Jul 22, 2014

Thanks for the information jckund. But how do you compare M&A and valuation department? It seems like both departments do the same thing, i.e. valuing a company (due diligence)?

Jul 22, 2014

PM me

Jul 22, 2014

@onemanwolfpack: thanks for the message! unfortunately I can't PM anybody until I get 10 bananas hahah... I guess I would have to wait for a little bit.

Jul 22, 2014

U should do the thing you are really good at. If you like to dig into documents, look for dealbreakers etc, go for due diligence. If you are more the technical guy, go for valuation. If your a mix of both, go for transaction services.

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Jul 22, 2014

U should do the thing you are really good at. If you like to dig into documents, look for dealbreakers etc, go for due diligence. If you are more the technical guy, go for valuation. If your a mix of both, go for transaction services.

Jul 22, 2014

@floridawolf what i'm confused with is... what kind of work does due diligence entail? doesnt the purpose of due diligence also consist of valuing the company? then how is M&A different than valuation? sorry if my question is stupid. still a noob trying to learn more about the finance world... and thanks for the input by the way :)

Jul 23, 2014

No. The DD teams do not perform the valuation. Its a little bit like audit but with more degree of freedom and with less legal requirements regarding the tasks to perform. In a due diligience, its, in my eyes, all about understanding the business model, the historic financials, the clients, etc... its about identifying key considerations that are relevant for the acquirer. you do not conclude on any Enterprise Value or something. During a valuation u typically do not really challenge the financials (you normalize them but this is more high level). Based on these financials, market data, valuation models... etc, you then conclude on a Enterprise Value and then on the equity value.

Note not every valuation is linked to M&A. In M&A you pitch in order to become short listed and if you succeed you perform an initial valuation. After some back and forth you do another, more detailed valuation with more detailed data. At one point, as the parties are fine with the price, you start doing a DD (and here the task is to identify whether the biggest value drivers were captured during the valuation or whether a huge risk has been overseen ( e.g. litigation or a big client that going out of business... stuff like that))

Jul 22, 2014

I don't know what you mean by M&A, but within Transaction Services there are a handful of different groups... Due Diligence, Capital Markets Accounting Advisory, and Valuation

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Jul 22, 2014

I made the transition from Big 4 audit to CorpFin after four years on the audit side, which was longer than I had hoped. I found it was hard to break through because even after only a couple years you are pretty pigeonholed as a "beancounter" and you're also competing with candidate fresh out of b-school. Starting the CFA or something might help. CorFin focuses a lot on capital markets/hedging, shareholder policy and strategy, business finance consultation on certain busdev items (return analysis, build v. buy, etc.), cash and liquidity management. Some companies have CorpDev under CorFin as well, which is not the case in my shop. If your ultimate goal is PE, CorpFin won't help you get there IMO.

My understanding (and this is a second-hand understanding) is that Big 4 M&A doesn't really work much on deal structuring, modeling, and negotiation like they do in IB. The focus is on due diligence, which is essentially auditing for a specific transaction with a focus on quality of earnings, risks to the deal, etc.

Jul 23, 2014
Grassisgreener:

I made the transition from Big 4 audit to CorpFin after four years on the audit side, which was longer than I had hoped. I found it was hard to break through because even after only a couple years you are pretty pigeonholed as a "beancounter" and you're also competing with candidate fresh out of b-school. Starting the CFA or something might help. CorFin focuses a lot on capital markets/hedging, shareholder policy and strategy, business finance consultation on certain busdev items (return analysis, build v. buy, etc.), cash and liquidity management. Some companies have CorpDev under CorFin as well, which is not the case in my shop. If your ultimate goal is PE, CorpFin won't help you get there IMO.

My understanding (and this is a second-hand understanding) is that Big 4 M&A doesn't really work much on deal structuring, modeling, and negotiation like they do in IB. The focus is on due diligence, which is essentially auditing for a specific transaction with a focus on quality of earnings, risks to the deal, etc.

This is bad information. You are confusing the corporate finance role in a corporate company, with the Big 4 corporate finance teams. The CF teams within the Big 4 absolutely do valuation, deal structuring, negotiation, etc.

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Jul 23, 2014

Thanks, agreed...I read corpfin and missed the Big 4 part.

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Jul 30, 2014

Apologize for not being active in this thread for a few days now as I've been busy with work. But thank you all for your comments, they have definitely given me more insight on my next career step.

So from what I gather from the discussions that have been going on, M&A at big four is pretty much doing audit work all over again. Possibly ruling this option out then...

Now I am more interested in Big 4's corporate finance department as it looks like valuation is part of corporate finance daily bread and butter.

Question now is:
1. What is usually the requirement to break into this department for an entry-level position? (Entry-level because I have never done anything related to finance, other than getting the finance degree from college)
2. What is usually the exit opportunity from this department? Is it more IB or PE-related field?

Thanks!

Nov 14, 2016
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