Big4 M&A - An Explanation

Over the years I've seen several posts on people considering jobs at Big4 corporate finance / M&A / TS departments, or people making statements about these jobs which have some pretty large inaccuracies. I'm going to try and clear up any confusion over the topics here....

Big 4 corporate finance

The corporate finance departments at Big4 essentially offer MM boutique bank advisory services. You will do sector research, deal sourcing. deal advisory, act as sponsor / Nomad (in the UK). You'll do a lot of work with PE firms, especially if you're in a capital markets role.

Many of the people here have superb backgrounds and join from bulge bracket IBD teams or elite boutiques. For example, some CVs of people I work with include head of IBD at BNP Paribas, MD in ECM from JPM, head of corporate broking at a mid-cap bank, ED from CS etc.

Usually you will be separated into sector or product specific groups (i.e. TMT, Industrials, IPO). There is slightly more focus on private company work rather than public, i.e. small / mid caps. It's extremely unlikely you'll ever be working on a mega cap deal that makes the front page of the FT/WSJ. Typical deal sizes are usually $100m-$1000m. Deal volume is pretty good depending on sector conditions.

Upsides

Workload is lighter than at a BB, usually a more friendly and relaxed culture, work with top tier people, exactly the same work as in IBD, work very closely with company management and PE owners (if applicable).

Downsides

Have to work harder to win deals, less 'prestige', usually lower bonus potential (base not too different), no real access to institutional investors if you focus on capital markets, less valuations and technical modelling work than at a BB, but still good exposure.

Big Four Transaction Services

TS in particular is an area where there is a lot of confusion. It's often referred to as M&A deal services or something similar.

You will be working entirely on M&A deals, usually with PE firms. The work you do is financial due diligence, i.e. digging into the company to find any problems with it, verifying whether forecasts are reasonable, whether the company is likely to run into difficulties, producing summaries of business performance over the last 3 years etc.

Again, you'll be in sector or product groups. Deal sizes can get very big as Big4 are pretty much the ideal companies to hire to undertake DD on mega cap deals.

Upsides

Lots of deal exposure, learn a lot about the companies you're working on, do a lot of PE deals (inc. LBOs and IPOs).

Downsides

No getting around the fact that it is due diligence. Quite long hours especially if it's crunch time on a deal as you are entirely at the beck and call of the PE firm you're hired by.

Transaction Service Salaries

It's quite hard to get into one of these teams unless you come across as a lateral or have already completed 3 years in consulting or audit.

Base salaries are usually the same between TS and CF and roughly correspond as follows:

1st Year (i.e. first year out of audit/consulting): $75k
2nd Year: $90k
4-5th Year: $110-120k
7-9th Year: $175-200k
Partner: $200-250k base, 7 figure bonus potential
https://www.youtube.com/watch?v=RqBXgyrUvjY

Hopefully this clears things up a bit. Happy to answer any questions anyone has.

Recommended Reading

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (48)

Feb 2, 2016 - 5:37am

Can't comment on F200 FLDP rotations, no knowledge of it. Big4 TS will give you a good skillset in understanding the ins and outs of companies, but as mentioned in the post it is entirely DD work, so I'd question the value of it to move across into IBD. Certainly valuable for moving into corporate strategy or something similar.

I have personally worked in Big4 corporate finance covering M&A and ECM, with very close friends working in TS so I have understanding of the work they do.

Feb 2, 2016 - 5:41am

No info on KPMG specifically but valuation services in general is often focussed on asset-specific valuation, derivatives etc. You are unlikely to be building DCF/LBO/merger models for M&A deals.

KPMG have good league table creds in Europe, no idea about the US. PwC and Deloitte are also good, EY lagging behind a bit.

Feb 1, 2016 - 3:37pm

First year and second year figures are off for associates. There's large variation depending on the group location and whether or not you have a certification (including advanced degrees).

“Elections are a futures market for stolen property”
Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
Best Response
Feb 1, 2016 - 5:19pm

I dont know about big4 corp fin, but the TS pay you quoted doesnt sound right...

My ex worked in PwC TS, starting is 63k (2010), bonus is fairly small first yr (less than 5k), you can make senior after 2 yrs, abt 8%-15% raise every yr, depends on which bucket you fall in. Top bucket makes senior 2 yrs, the regular time is 3 yrs. Senior bonus is about 10k. Again, top bucket makes manager 5 yrs, base is 90k-120k. not sure about bonus, 30k-50k?

Some directors make up to 300k a yr. Directors' age vary wildly, from 30s to 50s. A decent portion of directors are ex-bankers/traders (all different levels) from bulge brackets/big international banks as well as tiny boutiques that probably just wanted some easy money.

Partners are even more different, some of them don't make much they are pretty much like directors, probably junior partners. And the lead partners are the one making the 7 figures you were talking about, the top 5-10%, they are at least 7-8 yrs in after making partner, think PwC has a 20 yr mandatory retirement policy or something.

On a side note, there is a good amount of quality chicks at the big4, esp. auditors, just my observation.

Feb 2, 2016 - 5:45am

Roughly agree with your figures, depending on what grade you start at. Manager level salary is accurate although bonus is high.

Definitely on point with the discrepancy in directors - there's some really top notch backgrounds for some and others are ex-auditors or lifelong Big4.

Quality of females at Big4 is pretty much a barbell. You get some stunners and some..... not so great.

Sep 27, 2016 - 5:12pm

Deleted

The fool thinks himself to be a wise man, while the wise man thinks himself to be a fool.
Feb 1, 2016 - 11:40pm

Hey OP, thanks for doing this. I was wondering whether you've seen people in transaction services make move to PE pre-/post- MBA? Also, how common do you see it and do they end up filling more accounting-oriented positions or will they have actual investing experience?

Feb 2, 2016 - 5:50am

MBAs are not big or very important where I am. Haven't seen many go to PE or BBs in investing/dealmaking roles from TS, but ample opportunities in the smaller boutiques or in accounting type roles (what recruiters love to pitch as 'portfolio management' which definitely isn't).

Feb 3, 2016 - 3:43pm

Hey thanks for the response. Really appreciate it. Would you say that there's some overlap between what you were doing in TS and your REPE fund? Also, how do you find these kind of firms and network with them? I've never really known how to do it because there usually aren't any alumni from your school and company.

Feb 2, 2016 - 5:39am

For the comp figures, these are assuming you start as a 4th year (i.e. after 3 years in audit / consulting / tax). So 1st year = 4th year at the firm etc. These are accurate ballpark territory for my experiences at a Big4 in a major financial centre with advanced qualifications.

Feb 2, 2016 - 6:28am

Asatar We spoke a while back, happy to hear you broke out of audit into M&A. I am currently doing a grad tax placement at a BIg4 in London, specializing in private equity- backed firms. I don't plan to stay in tax and only took the gig to pay the bills while looking for other work. Reckon they might move me to CorpFin if they give me a grad offer?

Feb 2, 2016 - 6:44am

Typically you can't move until your training schemes are up. Otherwise everyone would just apply for audit/tax as an easy entry option and then try and move across instantly to CF.

Usually once you get an offer for audit/tax, there may be potential to change your application but you will have to go through all of the interview process etc. again.

Feb 2, 2016 - 6:52am

The thing is that I am not on a grad scheme. My firm does graduate internships (exclusively in tax). Since I am well into the internship and they are doing all the appraisal crap in order to see if they give me an offer, I wondered if I should just tell them that I am either interested in CorpFin or I leave the firm (provided I get the offer)

Feb 3, 2016 - 3:55am

Great thread! I am currently doing an internship in Valuation & Business Modeling in Europe, what could you tell me about it? How possible it is for me (considering I am in an internship while doing a semi-target MSc in Finance) to move to a BB? What about moving directly to a MM PE?

Thanks!

Feb 4, 2016 - 11:20am

Business Modelling gives you more (obviously) modelling experience, TS gives you a lot of transaction experience. Different aspects but if I had to choose, probably business modelling.

Feb 4, 2016 - 7:41pm

It goes from 200k - 7 figure bonus potential?

What are hours like? Is it much different than IBD? Associates pull in 300k+ now in IBD, thats 9th year equivalent of TAS?

Array
Feb 9, 2016 - 10:29am
Asatar:

Yes. Equity partners get paid.

Hours are far better. You will always earn more in IBD (primarily due to bonus) until you get to Partner / MD level, at which point it becomes more equal.

I disagree. Comp will always be lower in Big 4 shops because allowing for a BSD to come in an earn massive comp. would make the Partnership feel small and inadequate. The balancing act is always difficult, but you just aren't going to see someone pulling in substantially more than the top partners, which really puts a tight ceiling on MD comp.

Also, if one enters the Partnership track, comp is immediately limited. That's why many MDs prefer to stay in the Director role, so bonus allows for higher comp than the traditional range.

Feb 9, 2016 - 1:07pm

Probably got a point there but it's certainly a lot more equal. The average partner salary is something like $1.2m and that's probably a fairly tight range whereas as you say, MDs can either hit it out of the park or muddle by for a few years. Certainly comp is a lot closer at Partner/MD level than any previous level.

Sep 27, 2016 - 5:13pm

Deleted

The fool thinks himself to be a wise man, while the wise man thinks himself to be a fool.
Feb 16, 2016 - 6:00pm

For what its worth, KPMG Deal Advisory is paying 69,000 base for FT out of 5 year MAcc programs. Also pay 5k signing bonus and another 5k for passing CPA in the first year.

Jul 13, 2016 - 9:31pm

I'm a recent grad from a highly ranked macc program in which I took all MBA finance electives. I'll be starting in Big 4 TS FDD out of school. I'm interested in MM / PE in the long term. Does starting in TS out of school offer a leg up on pursuing those career paths as opposed to the traditional audit -> TS path

Jul 17, 2016 - 11:13pm

Being in TS out of grad definitely gives you a leg up. What you need to develop to get into MM/PE are transaction experience. FDD is just a small part of the deal. Things you need to develop
1) Running the deal, may not be able to gain in FDD but involve yourself as much as possible with the client (acquirer), FA (IB), target, target's FA (IB) to learn the process. If you are asked to help with drafting the SPA, dive into it.
2) Industry knowledge - Big 4 group tend to specialize by industry, this also forms your edge. This is why IB/PE/Corp Dev hire you instead of an IB analyst. Because you have hands on industry operational experience. Or that you know the names in the industry so well. The more you can bring to the table the higher your chance.
3) financial modelling - if you can contribute on day 1 it's valuable to PE/IB
4) Networking - network heavily with the IB/PE you interact with. And the industry contacts as well. TS could be asked to help the client finding target (pre-deal work), this is like sourcing deal. Senior TS partner are like rain maker MD in IB by bring deals in.

Jul 17, 2016 - 1:06pm

Am a Big4 consulting manager but work with TS people a lot.

The description is fairly accurate and answer most ppl question about TS and CF. The comp is roughly in line with my understanding too, note that the 1st year he mentioned is the 1st year out of audit/consulting which means it's not fresh grad salary.

Assuming you do 2 years of audit (A2)=>TS(B1)
Senior Associate (B1): 75k
Senior Associate (B2-B3): 90k
Manager (C1): 110-120k
Senior Manager/Associate Director (D): 175-200k
Above figures then looks quite reasonable to my understanding.

For Partner, it depends on your level, salary partner vs. equity partner. And it's true equity partner may make million(s) a year, he/she is basically the owner of the business (i.e. EMPLOYER). Some equity partner take home tens of million when they retired (cashing out his stake or the retained earning over 20-30 years in the firm).

Even if you are a MD in IB, you are still EMPLOYEE.

Not so sure about Partners in GS though, do they have equity in the game?

Jul 17, 2016 - 4:52pm

Your senior associate figures are quite low. I know senior's that make close to 120k all-in for bval.

“Elections are a futures market for stolen property”
Jul 17, 2016 - 11:00pm

Minima saepe sit inventore quo in laborum. Tempora aut voluptates cupiditate eos quos eum. Inventore qui ut quo officia reiciendis dolore laudantium. Nemo officia eaque eligendi aspernatur.

Dec 5, 2019 - 8:54pm

Ratione in eos eum ipsa recusandae laudantium aut. Blanditiis ut quisquam reprehenderit non. Et error accusamus esse accusamus modi quis et.

Maiores quae sint incidunt sequi sed consequatur est. Iure est officiis sint hic vitae perspiciatis.

Consequuntur iste tempore ut consequatur nobis qui fuga. Reiciendis aliquid esse exercitationem maxime. Delectus sit et nihil eveniet. Possimus non eligendi possimus qui qui officia.

Illum error quia ea. Odio ut laudantium quia officia cum eum. Inventore dolorem eum eum minus iste aperiam magni. Sed voluptatem rerum id saepe sed architecto.

Aug 14, 2021 - 8:43am

Ab voluptatum quis est porro voluptatum culpa facilis. Enim cupiditate nisi saepe eum. Et nesciunt dolores error et molestiae est.

Omnis nesciunt odio possimus ad ut natus delectus. Consequatur voluptatem autem ut. Facere quod quo autem. Nihil corrupti sequi aut omnis et eos.

Architecto accusantium accusantium accusantium sint soluta non. Cupiditate molestias eveniet excepturi qui quisquam magnam. Nihil rerum voluptatum eaque atque amet expedita qui.

Voluptatum distinctio est possimus ad laudantium. Voluptas numquam corrupti doloribus sint qui dicta. Qui incidunt consectetur sit occaecati est accusamus minus. Odit voluptas animi qui et porro. Doloribus eum autem id impedit suscipit.

Start Discussion

Total Avg Compensation

October 2021 Investment Banking

  • Director/MD (10) $853
  • Vice President (39) $363
  • Associates (229) $233
  • 2nd Year Analyst (137) $154
  • 3rd+ Year Analyst (31) $147
  • Intern/Summer Associate (104) $143
  • 1st Year Analyst (501) $135
  • Intern/Summer Analyst (387) $83