Should I start in Big 4 Audit or PE
Hey everyone, I've got a career path question for you. Last year I interned and received a full-time offer from a Big 4 firm in their audit division. I knew that audit wasn't really my passion, so I explored around and discovered PE. I got lucky and made a couple of connections and have been interning at a small PE shop (2 partners, and me the intern) for the past six months that invest in ~10MM EBITDA companies. They recently extended an offer to me to join them full time, however, the comp was a below market which I assume is appropriate since they are smaller.
I am torn as to which offer I should accept. If I know that long term PE is what I want to do instead of accounting should I consider myself lucky to have a chance to get my foot in the door and go ahead with this smaller firm now or will that stunt my growth long term? I know there is value to having a Big 4 brand name on my resume for a couple of years, but there is no guarantee that I would have another opportunity like this again. I really love the work I have been doing as an intern and can see a defined role I would have if I joined them full-time, plus I would get to have my hands on deals throughout their lifecycle. The deal flow wouldn't be as strong as a bigger firm, which would be a trade-off. If I ever needed to transition out would it be more attractive to a larger firm for me to have experience at a Big 4 firm or at a smaller PE shop?
I would appreciate any other questions you guys think I should consider (hours, work-life balance, etc.), and please let me know if there is any other information I can provide you guys. Thanks!
Would you like to work in a transaction environment later on? Then PE will be the far better choice. There was a recent thread of someone asking if the small PE fund underpays him, one of the comments had a fantastic list of questions to consider before taking a PE offer - check that out and apply it to your situation. Coming from Big 4 accounting it will be a very rocky path to a PE fund, so unless you are happy with the accounting career I´d be wary of that. Not sure how much weight the Big 4 brand holds in the US, but here in Europe it seems everyone and their mother easily obtains an offer there and it doesn't´t take you that far.
Are you sure about the 10mm EBITDA? Real rough estimate, at 10m Ebitda, lets say 8x entry, 50% equity and 10 transaction from that fund, it should probably carry 300-500m, an incredible amount to run with just 2 partners and an intern. Or is this more of a single investment and the partners will act as management type deal?
It doesn't have that much weight here either, esp. for audit.
Do you mean $10M in revenue or $10M in EBITDA. If EBITDA those businesses have got to be pretty significantly sized, which means if it's 2 partners and yourself you've got to be having a great experience.
$10M in EBITDA means the businesses are at least $40-50M in revenue and probably a lot bigger. At that size and profitability, you'd be running into a lot of the bigger PE players and paying a pretty decent multiple on either EBITDA or Revenue. The funds would have to be at least a few hundred million if not bigger, which would be big for just 2 partners, especially if you're doing buyouts and not just minority investments. Those numbers are almost unbelievable...
Anyways, the short answer is you should take the PE gig. Given the partners have good PE experience and they've raised a decently sized fund with decent LPs, your decision is a no brainer.
Comp really shouldn't matter to you at all at this point in your career. If you have live off of it in whatever city you're in, that's all I'd really worry about. Plus, you have to remember that you effectively have 0 experience besides your internships. It would be different if you'd done audit or banking for a year or two, but because you have no experience, you're going to get paid like that for a year or two.
Given the size of the firm though you should try to negotiate for some upside in either bonus or carry though, but that's up to your discretion. I would focus on the opportunity first and not worry about how much you're getting paid.
Simply need to ask yourself, do you want to work on deals or count shampoo bottles in a warehouse 3 months out of the year?
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