Please Help Me Understand Corp. Finance / M&A at the Big 4

Hi all,

As the title says, I would appreciate if someone, preferably who has worked at one of these firms for a few years, could take some time to explain the different divisions within the Big 4 firms, with a focus on Investment Banking / M&A. I have read a few threads on WSO and also on other sites but I am struggling to understand the nuances of the way the firms are structured (e.g. difference between TAS or TS and Corporate Finance). I have a friend who works in Advisory at PwC and he travels every single week to San Fran because he was staffed there. Is this the case for analysts in the M&A / CF division as well? Or is it strictly for the Consulting side of the firm? I probably sound extremely clueless about all of this, and to be honest, I am. I have never taken the time to properly research these firms.

Your help be very helpful since I have a few contacts at various Big 4 firms I intend to leverage, and I'd like to understand the structure a bit better in order to not sound like I don't know anything during informational chats. I have a few lined up within a week's time and thus would love a crash course on the main things to know about Big 4 M&A.

Thanks in advance

Comments (34)

Most Helpful
Feb 7, 2019

I'm not sure why people find the concept so perplexing. There are clearly defined roles on Big 4 websites about what each function is and does.

Corporate Finance:

  • Middle market IB - DCF best of the bunch (Tier 2 MM), KPMG distant second, PWC and E&Y have weak presence in the U.S., though have been hiring/staffing up at the senior and mid-levels (much stronger internationally)
  • You are doing sell side and buy side work to support clients involved in M&A transactions - meaning sell side is actually running an IB process and buy side is making intros, helping with modeling, etc. (not sure if they are doing fairness opinions or not)

TAS:

  • Transaction-related (usually M&A) Due Diligence around quality of earnings, sales, IT systems, etc. Mix between buy side diligence (larger portion) and sell side diligence (hired by client prior to sale process)
  • More accounting heavy, requires more travel potentially (usually a few days onsite), depending on the city/team/firm/client makeup

Advisory is a large bucket that encompasses deal-related work (see above), consulting (could be post-merger integration, strategy/management consulting, etc.), IT and risk advisory, forensic services, etc.

    • 8
Feb 11, 2019

Its confusing because half the people in the big 4 don't even know it exists. I have not met a single recruiter or contact who even is aware of them doing any sell-side work.

Most have told me the firm only does post-deal integration work

Feb 11, 2019
teaktable:

Its confusing because half the people in the big 4 don't even know it exists. I have not met a single recruiter or contact who even is aware of them doing any sell-side work.

Most have told me the firm only does post-deal integration work

Which Big 4? The accounting/IB model is inherently flawed despite having some unique advantages to client access. But, with its acquisition of McColl, DCF is doing fairly well and has plenty of sell side mandates. As I mentioned, it's a big drop to KPMG and another big drop to the others in terms of quantity and quality from my perspective.

    • 1
Feb 11, 2019

I'm surprised recruiters or people working there don't know about the M&A teams. It could be that they're not getting a lot of mandates in the US. But globally, they do quite a bit better, at least in terms of deal count.

I've attached the mergetmarket stats below, hopefully you can see the image.

    • 1
Feb 11, 2019

Can someone give some insight into Big 4 CF group rankings in continental Europe? Deal league tables below suggest KPMG having the largest deal size by a mile, EY distant second and PwC/Deloitte battling for third place.

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Feb 11, 2019

Someone working now in one of these teams will have first hand experience, but when I was in London at one of the Big4s, the market places would shift quite often, especially if one of the Big4s managed to get on a bigger deal in one year. A friend of mine told me recently that KPMG has an edge in London now, but I take that with a grain of salt since he worked there.

If you want details on different markets, the mergermarket data can be downloaded from their website for free, and splits deal activity per region and country by volume and value.

    • 1
Feb 15, 2019

A London Perspective:
Each of the Big 4 have a Corporate Finance Service Line with multiple sub-products. The name of the service line differs from firm to firm e.g. Financial Advisory Services, Strategic Advisory (not to be confused with S&O), etc.
- Lead Advisory/Corporate Finance M&A/ M&A Advisory:
As Bullet-Tooth Tony mentioned, Middle Market IB. In the UK the middle market is hugely dominated by PE houses. 70%+ of deals advised by the teams have a PE house on at least one side of the transaction.
Junior staff typically lateral from Audit/Consulting. Senior staff are also known to have been poached from banks e.g. there were lots of rumours that Deutsche MD's were leaving for the Big4 CF groups.
No underwriting capabilities, typically marketed as no conflicts of interest. However, there is A LOT of cross selling from Lead Advisory. As Lead Advisor, you see the whole M&A process so you can cross-sell services throughout the process e.g. "Hey, you'll need to perform some FDD when analysing targets, why don't you speak to our TS guys (see below)".
- Debt Advisory: Advising firm's on capital structures. A lot of PE clients here as well. Have seen PE clients get shared services from M&A advisory (for the deal) and Debt advisory (for the capital structuring).
Strong relationships with banks/lenders.
No underwriting capabilities.
- Valuation/Business Modelling: as said in the title, provide services in valuing anything from a target in an acquisition, to a portfolio of assets, to a single highly complex asset. Their services could assist in M&A, Audit or consulting.
- Transaction Advisory Services "TAS":
Certainly the bread and butter of the CF service line, at least in the UK. The Big4 lead in this field. In the M&A process, both acquirers and targets will conduct vendor due diligence/financial due diligence.
This service, if not done in house at the corporate/PE, will be outsourced to a Big4.
"Ensure that the EBITDA multiple is accurate".
Rumours that, apart from the exec, the partners in TAS are the highest paid at the firm.

Feb 7, 2019

Don't know if this is the same in the US, as I am from Australia but in addition to those we also have Valuations and Restructuring Teams.

'M&A Advisory' / 'Corporate Finance' will for most firms apply to a division focusing on sell and buy-side mandates (sometimes even capital raise) with comparable experience to what goes on in the IBs.

Feb 8, 2019

Thanks for your answers folks, I appreciate it.

One more question: in preparation for interviews at one of these firms, either in the Corporate Finance or Valuations division, how would one best prepare for potential interview questions? Are the questions asked typically the same as questions asked at Investment Banks (BB or Boutique), or is there more of a focus on fit vs. technical? I would assume that at least for a role in Valuations to be asked a myriad of technicals?

Would the investment banking interview guide suffice for these types of interviews, or are there other resources that I should consider taking a look at?

Thanks once again.

Feb 10, 2019

Generally, Big4 interviews focus more on fit than technical questions. You may get some sort of case type work, but for undergrad level, that will likely focus on business acumen, intuition, general knowledge. If your background is more finance heavy, you may get more technical questions. Still, if you are preparing for IB interviews as well, the IB guide should be enough for Big4 interviews.

Feb 11, 2019
SReaper:

Generally, Big4 interviews focus more on fit than technical questions. You may get some sort of case type work, but for undergrad level, that will likely focus on business acumen, intuition, general knowledge. If your background is more finance heavy, you may get more technical questions. Still, if you are preparing for IB interviews as well, the IB guide should be enough for Big4 interviews.

Thanks for the response and insight!
Given that I am no longer an undergrad (almost 2 year WE in unrelated field) I suppose some technicals may appear (maybe to test my finance degree from college). Nonetheless, my plan is to work diligently through IB guides and refresh some accounting/finance concepts.

Thanks for the input!

  • flexingonyourparents
  •  Feb 10, 2019

Wtf

Feb 26, 2019

Just interviewed and received an offer for Big 4 valuation last month. If you are prepared for a typically IB interview, you will have no problems. It was majority fit, with one interviewer focusing on basic technicals. Could differ for the corp. finance groups, but for valuation (falls under advisory) it wasn't too bad.

Feb 26, 2019

Congrats on the offer!

Would you mind sharing what location / office you're based out of? And do you happen to remember some of the interview questions by any chance?

  • flexingonyourparents
  •  Feb 10, 2019

*I probably sound extremely clueless about all of this, and to be honest, I am. I have never taken the time to properly research these firms
*
Do a research then.

    • 1
Feb 11, 2019

I work in advisory and as poppinbottleS points out, Val and Reorg are included with M&A/Due Diligence.

Essentially M&A at big 4 like shops is glorified real estate agents but with companies instead of properties really. I go in, take a look at the company financials, forecast it out and present in pitch deck along with company information, industry analysis, blah blah blah. The love for EBITDA valuation is where it gets a bit basic. Usually we take the EBITDA of the company and multiply by a factor on par with comparible transactions in the industry. Problem is most of these comps are publicly traded larger companies so it's not exactly clean taking an average EBITDA multiple of lets say 4x over transactions that may not exactly be the same.

The Restructuring/Reorg is the unsung hero though in my opinion. Most people don't know what the hell goes on there and what it consists of but I think it's much more enjoyable. I can go more into detail on that should you wish but you seem more in on the M&A side.

Feb 11, 2019
MetropolitansFan:

I work in advisory and as poppinbottleS points out, Val and Reorg are included with M&A/Due Diligence.

Essentially M&A at big 4 like shops is glorified real estate agents but with companies instead of properties really. I go in, take a look at the company financials, forecast it out and present in pitch deck along with company information, industry analysis, blah blah blah. The love for EBITDA valuation is where it gets a bit basic. Usually we take the EBITDA of the company and multiply by a factor on par with comparible transactions in the industry. Problem is most of these comps are publicly traded larger companies so it's not exactly clean taking an average EBITDA multiple of lets say 4x over transactions that may not exactly be the same.

The Restructuring/Reorg is the unsung hero though in my opinion. Most people don't know what the hell goes on there and what it consists of but I think it's much more enjoyable. I can go more into detail on that should you wish but you seem more in on the M&A side.

Thanks for sharing MetropolitansFan. Would you be able to expand on Restructuring/Reorganization being the hero? I am assuming you mean they do more interesting work? Not sure if you're a part of that team or not, but would be interested in hearing more about it at least how it works at your specific firm.

Thanks again

Feb 27, 2019

Clearly you aren't at DCF then. They run legitimate M&A processes (been on the other side).

Feb 13, 2019

I work in the corporate finance practice at a Big 4 in a smaller sized country in Continental Europe (think Switzerland/Austria/Benelux). Here's how things work around here.

First, for their transaction-oriented teams all Big 4 have umbrella terms that sometimes get confused with individual teams. For Deloitte this umbrella term is Corporate Finance, KPMG calls theirs Deal Advisory, EY has Transaction Advisory Services and PwC calls it Corporate Finance as well as far as I know. Note that those are umbrella terms similar to IBD at investment banks and there are several difference teams.

Now, for the Big 4 those teams typically are:

  • M&A (sometimes also referred to as Corporate Finance; again, it depends on the Big 4 and the country if CF is actually a team or the umbrella term).
  • Transaction Services
  • Valuation
  • Restructuring
  • Niche teams like real estate, project finance (but these are country-specific)

M&A is exactly what it sounds like. Deal flow and exposure depend on your firm and country, but generally these guys do mid-market deals that fly under the BB/EB's radar. There are occasional pitches where we compete with investment banks, but usually we operate in different spaces. They do models as well (sometimes with the help or guidance of our valuations team), but generally Big 4 M&A is more focused on leading the M&A process smoothly.

The Transaction Services team is doing the due diligence part of transactions. They are often times hired by investment banks for their local expertise and, consequently, often get to work on larger deals than the M&A team.

Similarly, the valuation team usually doesn't perform LBO modelling for large deals, but rather supports M&A, does fair-value opinions for other transactions or perform audit-triggered valuations.

Restructuring is doing both financial and operational restructuring from negotiating with lenders to being on the ground with the client.

With the exception of restructuring, most of our work is not at the client-site but within our own office. Things are different for other parts of the Advisory branch (management consulting and accounting advisory is usually travelling, no idea about risk advisory and forensics).

All that being said, the Big 4 are structured differently than your typical investment banks or MBB-type consultancies; they are a lot more regional in terms of ownership and culture, so sometimes things are organized or called differently across different countries even within the same firm. What I wrote should help you to better understand your local Big 4 websites, which I highly recommend you to check for more information.

At my office at least, we aren't snobby at all, so no one would expect you to understand the nuances of how the firm is organized. (Which is not to say that it's easy to get a job here. We're desperately looking for juniors but still rejected the last dozens of people.) Just be curious, ask good questions (preferably about what it's like to work there and what they're doing) and stay open (sometimes resumes get passed around and a good candidate who expressed interest in TS might be referred to valuations instead if that's where there's an open spot at the moment.)

Anyway, I'll be happy to comment in more detail if you want me to.

    • 1
Feb 13, 2019

Thanks for taking questions.

What's the interview process like? I'm guessing there is some type of case. Are they guesstimates etc.? What kind of technicals is required? Does Rosenbaum's book help? How should one best prepare?

What are they looking for in behavorials? You mentioned a lot of junior applicants get rejected despite a desperate search, why is that?

I'm in a similar country as yourself (maybe the same :)). What is comp like for these groups? For advisory base pay tends to be low in Big 4 here.

Feb 13, 2019
danpo:

I work in the corporate finance practice at a Big 4 in a smaller sized country in Continental Europe (think Switzerland/Austria/Benelux). Here's how things work around here.

First, for their transaction-oriented teams all Big 4 have umbrella terms that sometimes get confused with individual teams. For Deloitte this umbrella term is Corporate Finance, KPMG calls theirs Deal Advisory, EY has Transaction Advisory Services and PwC calls it Corporate Finance as well as far as I know. Note that those are umbrella terms similar to IBD at investment banks and there are several difference teams.

Now, for the Big 4 those teams typically are:

  • M&A (sometimes also referred to as Corporate Finance; again, it depends on the Big 4 and the country if CF is actually a team or the umbrella term).
  • Transaction Services
  • Valuation
  • Restructuring
  • Niche teams like real estate, project finance (but these are country-specific)

M&A is exactly what it sounds like. Deal flow and exposure depend on your firm and country, but generally these guys do mid-market deals that fly under the BB/EB's radar. There are occasional pitches where we compete with investment banks, but usually we operate in different spaces. They do models as well (sometimes with the help or guidance of our valuations team), but generally Big 4 M&A is more focused on leading the M&A process smoothly.

The Transaction Services team is doing the due diligence part of transactions. They are often times hired by investment banks for their local expertise and, consequently, often get to work on larger deals than the M&A team.

Similarly, the valuation team usually doesn't perform LBO modelling for large deals, but rather supports M&A, does fair-value opinions for other transactions or perform audit-triggered valuations.

Restructuring is doing both financial and operational restructuring from negotiating with lenders to being on the ground with the client.

With the exception of restructuring, most of our work is not at the client-site but within our own office. Things are different for other parts of the Advisory branch (management consulting and accounting advisory is usually travelling, no idea about risk advisory and forensics).

All that being said, the Big 4 are structured differently than your typical investment banks or MBB-type consultancies; they are a lot more regional in terms of ownership and culture, so sometimes things are organized or called differently across different countries even within the same firm. What I wrote should help you to better understand your local Big 4 websites, which I highly recommend you to check for more information.

At my office at least, we aren't snobby at all, so no one would expect you to understand the nuances of how the firm is organized. (Which is not to say that it's easy to get a job here. We're desperately looking for juniors but still rejected the last dozens of people.) Just be curious, ask good questions (preferably about what it's like to work there and what they're doing) and stay open (sometimes resumes get passed around and a good candidate who expressed interest in TS might be referred to valuations instead if that's where there's an open spot at the moment.)

Anyway, I'll be happy to comment in more detail if you want me to.

Thanks Danpo, very interesting to hear your insight.

You mentioned: "they (M&A teams) do models as well (sometimes with the help or guidance of our valuations team), but generally Big 4 M&A is more focused on leading the M&A process smoothly." Is the Valuations team responsible for all the modelling work during an M&A process? I am a little confused by: "M&A do modelling work as well."

For example, let's say you are a sell-side banker at one of the Big 4 (under Corporate Finance or whatever other term the firm chooses to use). Let's say Firm X is trying to sell and you (Big 4 firm) win the deal. At this point, are the sell-side bankers responsible for every single step in the deal? It sounds to me like there is a bit of overlap between different teams and the roles they play.

Thanks for the insight!

Feb 14, 2019
Apteka:

Thanks for taking questions.

What's the interview process like? I'm guessing there is some type of case. Are they guesstimates etc.? What kind of technicals is required? Does Rosenbaum's book help? How should one best prepare?

What are they looking for in behavorials? You mentioned a lot of junior applicants get rejected despite a desperate search, why is that?

I know it's an unsatisfying answer, but it depends on the team and maybe even the interviewer. I know our valuation guys like to get really technical, so Rosenbaum would be a good resource to prepare. In my team, we focus much more on accounting basics and making sure you understand how the three financial statements play together and have a decent understanding of Excel.

I think what all teams (at least in my firm in my country) have in common is that we don't try to screw you. No one is going to grill you on deferred taxes (heck, we got accountants for that). If you got your basics down, can articulate a good reason for why you want to work here and seem like a person I want to work with, then we're more than happy to hire you.

This seems like a low bar, but unfortunately these requirements are still high enough to weed out 95% of our applicants. We are not accountants, but if you don't understand what happens in the three financial statements when you purchase fixed assets with debt, then how do you ever want to build a financial model? If we hired someone like that, then we'd end up with more work than before, so we keep dinging them.

Apteka:

I'm in a similar country as yourself (maybe the same :)). What is comp like for these groups? For advisory base pay tends to be low in Big 4 here.

I'm not going to lie, comp is low for junior folks. That being said, most people hang on for quite a while, because most Big 4 don't employ a churn and burn model and comp rises by 10-15% per year anyway. It simply pays off to stay unless you want to end up in a corporate development job that pays you more in the short-term but significantly slows down your trajectory. The first big jump in comp will be your promotion to Manager, that's when it starts to get competitive. Most senior managers and directors get paid way more than your average non-C-level senior management staff in a corporate. Partners obviously make more, but you never know if you'll make it or not. It's not purely performance-driven.

achille_17:

Thanks Danpo, very interesting to hear your insight.

You mentioned: "they (M&A teams) do models as well (sometimes with the help or guidance of our valuations team), but generally Big 4 M&A is more focused on leading the M&A process smoothly." Is the Valuations team responsible for all the modelling work during an M&A process? I am a little confused by: "M&A do modelling work as well."

For example, let's say you are a sell-side banker at one of the Big 4 (under Corporate Finance or whatever other term the firm chooses to use). Let's say Firm X is trying to sell and you (Big 4 firm) win the deal. At this point, are the sell-side bankers responsible for every single step in the deal? It sounds to me like there is a bit of overlap between different teams and the roles they play.

Thanks for the insight!

I understand that it sounds confusing. The reason is that, yes, there is an overlap and the lines are often blurred. There is no standard process that says "all valuations must be done by the valuations team". It depends on the project, capacity and whether there's anything you need a valuations expert for.

Again, we are a smaller country and our entire Deal Advisory/Corporate Finance staff are probably around 70 people. If I have a question about valuation, then I can walk over to the valuation guys and ask them. Similarly, I have worked on M&A and due diligence mandates despite not being on these teams, simply because it was related to one of my managing partner's clients or I had some sector-specific expertise. Heck, I even did credit rating advisory and worked on an IPO. For projects like these, you put together a team of capable people and then you can always get some required expertise from other countries as well. That's where the Big 4 network can play out its strength.

All that being said, things may be very different in larger countries like the UK or Germany. I know my firm's London-based private equity transaction services team has more junior staff than our entire Deal Advisory/Corporate Finance practice. Those countries tend to be more narrow in their organization and a clear standardized process for a sell-side M&A mandate may exist. But you'd have to ask someone from there.

Feb 15, 2019

I can add some flavor from how it works in the London office of Big4 Advisory. There is almost no overlap on pitches or in work between the teams.

Although, depending on the work, they could be mixed pitches or where you have a team take the lead and then other teams are brought into the workstream.

Some examples on how it works in practice:

a) a large M&A deal - Big4 likely won't get sell mandate, but FDD. Transaction services FDD leads work, M&A tax does the transaction tax, Deal Strategy can help the FDD work (or do commercial DD, but hard for big4 to win those vs MBB), Valuations does purchase price allocation, management shares valuations.
b) a mid-market deal - Corporate finance/M&A leads the work. They do the entire process, but may bring some FDD experts, strategy or tax experts, or get help from Valuations on a more complicated model. M&A still do most of their own modelling themselves.

    • 3
Feb 15, 2019

What you're writing in this thread is consistent with what I've experienced and heard from colleagues. Things are similar here, just with a bit more fluidity and you tend to see the entire picture.

One more thing, in my country we recruit junior staff directly instead of having them move internally. While I have seen people pull it off, it's rare. So generally, I imagine it to be more difficult to break in from audit in countries that hires junior staff directly. You may wanna keep that in mind if that's your plan.

Feb 24, 2019

Hi all,

I have a case study interview with one of the Big 4 Corp Fin/M&A teams coming up. Has anyone taken this before? If so, how can I best prepare for it?

Thanks

Feb 26, 2019
ib_dreamer95:

Hi all,

I have a case study interview with one of the Big 4 Corp Fin/M&A teams coming up. Has anyone taken this before? If so, how can I best prepare for it?

Interested in this as well. Have you done the case study yet?

Thanks

Feb 27, 2019

No, haven't done the case study yet,

Feb 26, 2019
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