Q&A: Big 4 >> Valuation >> IB FO

This is entirely dependent on the group / situation, but as we're seeing recently GS is focused on forcing analysts to recruit in secret their first year (only taking verbal PE offers etc.) and in return promising a speedy two year A2A program. In this sense I would say top IB firms aren't particularly interested in hiring analysts as laterals unless they are young enough to start completely over as an entry level campus hire. Something I was frequently told during my process was that there is a need for talent at the associate level, and I think this creates an environment where the majority of interested talent is either over or under qualified for particular roles.

My biggest challenge far and away has been working quickly (my bad excel habits and lack of powerpoint formatting experience shine bright) and contributing to my deal teams in a meaningful way without getting in the way when I'm not sure how to do something. The amount you learn in the first few months is truly remarkable, and as painful as it is things really do start to click.

I actually worked in Valuation for a bit and my story to get out was that I initially loved Valuation because you get the greatest possible understanding of a companies internal financials and how cash flows through the company to make it work, but once obtaining this knowledge I wanted to apply it to work on live transactions in a forward looking way.

Thank you! I think valuation experience is looked at fondly by senior bankers but as I stated previously the holes in my skillset became readily apparent after starting at the desk. Highlight your ability to create complex financial models but further explain that you understand what a CIM is and know modeling is a small portion of what bankers actually do.

I think being honest about your ambitions and previous experience works best. No one hiring you expects you to know how to run a transaction, but a willingness to learn and being able to talk about the STEPS in a deal process intelligently will make you as qualified a candidate as any. As for advice, it's a numbers game. Don't leave any stone unturned, talk to as many people as possible and don't give up. If you're flexible where you want to live, it's definitely possible to find something even if it can be discouraging at times.

I was an off-cycle hire. My training period was brief and basically nonexistent aside from creating a sample book and modeling out some theoretical buyouts. I truly got a trial by fire experience for better or worse. We have more than enough work to go around currently and it's been tough getting up to speed, especially considering the analysts I work with are incredibly talented so the bar is high. I've read a couple of different times here that M&A is apprenticeship model, and I can't stress this enough to prospective monkeys or those looking to lateral. There's no substitute for actually being in the trenches, and that's why theres such a strong preference for converting interns or hiring people with any sort of legitimate transaction experience.

hate to break it to you, but after 2 years in Big 4 he probably wasn't clearing 75k let alone 100k

Comp for 1st year associates is standardized across firms, and first years make well over 200k including bonus; I don't believe there's any adjustments to this on a case by case basis.

I see your point, but also it's important to remember that if you leave IB to a non-buy-side role (and even then, I've seen guys take a pay cut to lateral into PE) your annual comp drops to a fraction of what it was. In this sense, base is much more comparable to what I was earning previously. Bonuses are designed to incentivize hard work, and when deal flow is heavy you earn every penny of that annual figure.

Cold emails lead to opportunities. Everyone I know who's successfully made a lateral move reached out to someone they didn't know and asked for advice. From my experience, reputable investment banking firms don't use headhunters. They have a robust infrastructure and more than enough applicants for any vacancy they post.

Yes I interviewed at several firms and I had been looking for close to 12 months before I came across the opportunity I found. I was in a good position before I moved, and people I worked with had similar ambitions. We frequently talked about which firms were worth the move (boutique M&A opportunities are a dime a dozen), and whether or not starting over as an analyst made sense. I explored lots of different options, but the offer I accepted was too good to turn down.

Definitely takes a little leg work, but big 4 firms in my experience love to poach each other’s employees. These groups constantly need people because most employees don’t stay for much longer than a few years in advisory, and they typically go to grad school or obtain opportunities afterwards that the firm can’t match (again just from what I’ve seen). I think more often than not the tricky part for candidates is you have to move to a major office to get exposure to these roles.

100% I did and absolutely none taken. That I think is the true weakness in people transitioning into banking with an accounting background; nothing in my former role forced me to think outside of the box or create content from scratch. Everything I ever needed to show in a slide or build in a model could be pulled from a previous project. In this regard, your assessment of the content valuation shops put in their reports is very accurate.

Referencing prior projects often doesn’t cut it in M&A because things need to be done quickly and you start to create problems for yourself when you rely too heavily on examples. CIM content should usually be made from scratch, and for other random creates it’s easy to send yourself down a rabbit hole looking for an existing copy of something when time is always of the essence. Once you’re capable of beginning to hone that judgement, of how to go about tackling an output and wasting the littlest time possible, is when things start falling into place.

As far as candidates go, I was convinced coming in I had the skill set necessary to succeed. However, as I said above I was quickly shown how much ground I needed to make up from day one. Firms take a significant risk in hiring you, and people are making a large investment in you before they expect to get anything sizeable in return. How people in my situation compare to MBA hires is a more complicated question, but I don’t think it’s ever as simple as “relevant experience, plug-and-go.”

Hi Bullet-Tooth Tony , do you have any opinions on the candidates from the Corporate Finance M&A advisory teams at the big 4 And assuming that VISAs were not an issue, would there be any differences in how you'd perceive big 4 M&A in the US vs. big 4 M&A in Europe? Many thanks!

People in business valuation typically move to finance roles across the spectrum, or end up in business school. Aside from FP&A as I’ve talked about above, I’ve seen IB, PWM, Corporate Banking, and even small cap PE. There are some incredibly intelligent people who technically taught me more about financial modeling than I could have ever learned online, but I generally haven’t seen anyone move directly to a solid corporate development or strategy team without getting an MBA first. IB is a rough sport, and I feel like most of the people I worked with understood the doors it opened but didn’t want to live the lifestyle for whatever reasons they had. Having said that, most people I know who wanted to work in M&A made it happen.

If you’re dead set on working in M&A then moving out of audit as soon as possible is your answer. There are more than enough boutique opportunities in major cities and these can be a great stepping stone if you wish to try to move upstream later on - but better yet they’ll give you insight into the industry and show you whether or not you actually like finance. My route worked well for me, but it’s hard to say I wasn’t lucky along the way.

I don’t feel as though firm brand matters much when trying to lateral unless it is another IB (undergrad certainly does and always will in this industry) so I wouldn’t stress it. These shops teach you how to model, and making that much out of undergrad will allow you a lot of flexibility your fellow accounting grads don’t have. Learn everything you can and start focusing on your next step after 6-12 months.

None in particular! Congrats on the offer. Attitude is everything, keep your cool, and remember how hard you worked to get where you are. Don’t let anyone take that away from you. Things get easier every single day, and time will fly.

I can add a little color to the problem with internal transfers between groups at Big 4.

It also involves a weird game of balancing being an excellent performer and being dispensable. If you're too good at your job, you're too valuable to the audit and the clients you've been staffed on. If you're not any good, the new group won't take you. Do you be above average? Well, nobody is sticking their neck out for someone who is above average in my experience, unless they really had a great rapport with whoever can help them with the transition.

It's really unlikely that you would be able to transition into something like valuation or TAS with the blessing of your partner when you're so important to the audit's efficiency (and thus their bottom line). One way they try to get around this is they will often say you need to have X years as a senior under your belt. Sort of a "work hard for me another two to three years, and I will repay you for that loyalty by helping you move into the group you want."

There are two problems with what they are saying, IMO. The longer you stay in Audit or whatever LOS you are in... the harder it becomes for you to transition into those roles because you begin to be viewed at as an "auditor" "accountant" or "compliance" type (this is my opinion). Good luck breaking into an external TAS/VAL/IB job with 4-5 years of audit experience. It certainly can be done, but where do they place you? You are the age of an associate or possibly even VP, but you most likely will be having to perform analyst tasks. It just makes you face an uphill battle. Not to mention you be making much more money by then, meaning you will be more expensive to them without the increased productivity. Many people make this transition, so you can definitely do it then, but I think it will put you behind the eight ball. You're better off going for it earlier on and telling your team that's what you're going to do unless they commit to a solid timeline of moving you.

The second problem is that, by the time you put in the X years... you don't know if the group will need you when your partner is willing to help you move. Then you might end up being stuck for another busy season, and next thing you know you could be an audit Manager. This is how I think some people end up getting stuck in audit even when they didn't intend to. Not to mention, it's also a lot easier for these TAS and VAL groups to take people who are high performers in their own offices, which is mostly significant if you're not located there.

A guy on my last team made the move from audit into TAS, but he did it after 5.5 years of audit. He also had to be willing to go whichever office that needed him (less of an issue). I find it hard to believe that he wouldn't have been better off looking to make the transition externally after 2 or 3 years and going into an office of his choice instead of the nondescript location he went to.

All of this is why I decided to move externally after 1.5 years, despite facing some backlash with the old firm when making that decision and going to a less prestigious institution.