Valuation Experience at MM Accounting Firms
Can anyone share their experience working in valuations at one of the mm accounting firms (GT/BDO/RSM)? What kinds of projects are transferable to IB?
Can anyone share their experience working in valuations at one of the mm accounting firms (GT/BDO/RSM)? What kinds of projects are transferable to IB?
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I interned in valuation at a regional accounting firm. Although it is smaller than the firms you listed, the experience should still be similar. Valuation is much more accounting focused than it is finance. It is a more regulated industry and thus is focused more on being as objective as possible. You obviously will work with models a lot, so that is a transferable skill right there, although the modeling is slightly different than IB. However, you will still get experience with DCFs and Comps. You will also be tasked with writing detailed valuation reports, which while not being directly relevant to IB, writing is still a very helpful skill to have. In terms of transferable projects, it really depends on the type of valuation you are doing. Valuation is a very broad term, and the firms you listed do various types of valuations. The most transferable valuation group would be Transaction Advisory, as you will be working directly on M&A deals.
My firm had a generalist model, so I was able to work on all the different types of valuations they performed, but I am not sure if this is how the firms you listed operate as well. Sometimes LMM and MM valuation firms will take on a role very similar to a sell-side M&A advisor where you can work on putting together a CIM and other marketing material. I was staffed on this type of project once and the experience was very relevant to IB. I don't know how common this is, but if you're able to get on a project like this, I highly recommend it. Hopefully this was helpful.
Thanks for the reply I really appreciate it. Do you get any experience forecasting operating models or LBOs? Also, since it is an accounting firm do you think the work tends to be more financial reporting or tax focus or is there usually a good amount of M&A advisory focused work?
We didn't forecast operating models at my firm, but we did put together a DCF forecast whenever we performed a DCF (this is where the modeling differs from IB). We don't do any valuations that require an LBO, but other valuation firms might; I don't really know to be honest. Even though you are at an accounting firm, the work is definitely not financial reporting or tax focused. Those are very complex areas that will be handled by the accounting side. The valuation group is focused on valuations, whether it be for ESOPs, Litigation, Estate Planning (which has some tax implications, but you won't need to know the technical details), Transaction Advisory, or any other type of valuation.
The amount of transaction advisory work depends on your company. If your firm specializes in it or if you are placed in a group that only does M&A, then you will have a lot of exposure to it. My firm did not specialize in it, so we didn't actively pursue those opportunities and I ended up being staffed on only a few such assignment where we did fairness opinions. This is different than the project I described above, because that was a very rare one-off where we acted more like an IB than a valuation firm.
Do you think your valuations internship was helpful in you landing your SA IB offer? Also do you see people successfully lateraling from valuations into IB whether it be your bank or other banks. I know there’s a few threads on here about people lateraling into IB but I’m trying to gauge how often it happens. It seems like you can build an attractive skill set in valuations
Also if you don’t mind could you explain what you mean by it is more accounting focused than finance focused?
I landed my IB SA offer shortly after I got the valuation internship offer and well before I started at my Valuation Internship, so it wasn't very helpful in my case. I'm sure it would have been helpful though if I was interviewing for IB SA roles and I had already done a valuation internship.
I think the other threads on lateraling from valuation into IB are more insightful than I am, but from what I've seen, it is a very possible move, but not extremely common for a few reasons. 1. Lateral spots are typically filled by people lateraling from other IBs or other more IB related fields like corporate banking, equity research, or consulting. 2. Many people end up enjoying valuation and want to stay due to the better work/life balance. With that said, it is definitely possible to lateral from valuation as long as you network, get familiar with the technicals, and have a solid answer for "Why IB?". You can check LinkedIn and see how many people are currently in IB that were in valuation previously.
In terms of valuation being more accounting focused, that is a result of the strict regulations and requirements valuation firms have to meet that are set by the AICPA. Like I mentioned above, you won't be forecasting operating models or putting together merger models. Valuation reports have to abide by strict standards that you just don't see in IB to the same extent. Additionally, you often hear of analysts having to "massage the numbers" in IB; that can't happen in valuation unless you want to risk losing your AICPA member status.
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