I will be starting in audit at a Big 4 this summer. I was wondering how the process works when getting placed into an industry/company/etc. Do we get to pick what companies (large/small) or industry we audit? How do they determine what teams we are placed on? (had better connections with some employees more than others)
The common misconception is that if you want to move to a HF/PE you should audit these types of firms. This type of thinking will get you landed in a BO gig at one of these places. I was told that I should pursue the industry in which I want to be analyzing in the future. So if I wanted to specialize in healthcare PE/HF for example, I would choose to audit healthcare companies. Correct me if I'm wrong.
I have a passion for value investing. I love reading the likes of Klarman, Graham, Dodd, and of course, Buffet. I also love bad news and knowing something the rest of the market doesn't. I also know I have A LOT more to learn. Value investing is something I want to pursue as a long term career. My ideal route would be to end up in a DEEP value or Long/Short HF. How can I set myself up to move into this type of work? What industry/companies should I try working in? What type of audit work (companies/industry) will give me the most relevant experience? I've expressed my interest to move into either TAS or Valuations (although neither is completely relevant to value investing, their better than audit), would it be wise to pursue this route? (I know it takes a year or so to even be considered, and once I move in and then try and leave its already 3 years so I don't want to be labeled as an "accountant" and ruin my chances) Or would you say it is better to pursue the leave after 1 year to IB or ER route? Or would an MBA be the best route?
Also, I plan to start investing with real money as soon as I get some. I've been using play money investing for a while (poor college kid problems), but it's better than nothing… But once I have my own portfolio it should help me gain more "real world" experience in investing while also showing my true interest in future interviews.
I appreciate any and all insights and guidance.
Alright I've been a part of the Big 4 for the past couple years and my thoughts are;
1) In my experience I got to rank my top three choices in terms of industry. It all depends on the size of your office - some of the smaller offices didn't really have specified industries (it was more split up into public/private).
2) As far as I know, to start off you are placed in whichever teams need you. You don't really get much say in terms of what clients you want to be on. After you have established yourself with a good reputation, I'm sure you can sit down with managers of certain clients and find a way to be on that specific team.
3) Yes, auditing a fund won't really help you get into a fund per say. Auditing in something like real estate does definitely add some value if you are planning to jump ship to a fund, however your best bet would to go through TAS/advisory branch of the firm.
4) I can't really speak to what path would be ideal to get into value investing as I don't know much about it as a career. I suggest searching the forums, there's tons of people that have had the same question as you in the past.
5) A heads up with starting your own portfolio - where I'm from I can't hold shares in companies I am auditing. Just watch out that you aren't indirectly investing in your clients through a mutual fund or something like that. If you do, your firm will most likely switch you off that client. You can also use this to your advantage ;)
Good luck. If you already know you don't want your accounting designation, it would be best to jump ship sooner rather than later. No use putting yourself through the busy seasons for nothing.
Your career goal appears to be contrary to your decision to go with an audit position at a big four firm. My recommendation would be to not settle on the big four position and continue the application process for a middle office or front office position.
The idea that the brand recognition / skill sets your learn / work experience from a big four firm will serve as a platform to launch your career to front office positions at bk/pe/he is shared by many. But candidly only a very few select individuals actually make it through the rat race.
The typical path that are taking from a big four are usually: 1. Continue application process and transition out ASAP 2. Back for top MBA program and roll the dice on landing the front office role through the university recruiting efforts 3. Internal transition to TS Valuation / M&A Advisory and roll the dice on landing a front office entry position
If your opting for #3, I would caution that not only is the internal transition extremely competitive, but your option out of TS/Advisory will still be limited. Definitely better than out of audit/tax but probably not to the extend that you may think (plus its a long road with many back steps).
Long story short, audit at a big four will not be direct line to front office (maybe a dotted line through other efforts or building the right story).
@TopChedder Thanks for the insights. I'll make sure to keep #5 in mind!
@beat2xg Thanks for the advice. Yes, I networked my tail off to get a few ib interviews this past fall but was essentially too late to the game and came up empty with no offers, so my backup plan was to go big four. I feel like #1 would be my best bet. Would you recommend any exit opps that are possible and will give me a chance to compete for a spot at a smaller value fund?
1 piece of advice for incoming Big 4 Auditor: Don't ask stupid questions or make retarded requests from the Accounting/Finance team.
I'm in the middle of that process right now. I qualify in a couple months and want to eventually end up an a value oriented HF.
TopChedder's post was great (informative to me as well, as I am currently looking at next steps). I will add a few additional insights for your consideration.
I can tell you that I went the route of being on financial services clients. I think there are pros and cons to both routes (auditing funds vs auditing companies in industries you want to follow).
In auditing funds, depending how large the fund and if your managers trust you, you could be making great connections with management at those funds (just make sure you ask good questions). Flip side is that you won't get the experience of auditing companies you would actually be investing in and the audit work on funds is NOT interesting at all. For public holdings, you agree the price to Bloomberg and for private holdings you have Valuation Specialists perform any potential interesting work.
In auditing companies in industries you want to follow, you certainly get immersed in their business and get to understand their financials very well. Great for a value orientation. Flip side is that who knows what you will be on/which clients your firm has. The way my firm is structured, you more or less have to choose a group of industries (e.g. everything to do with FIs, RE, etc., OR industrials). You could get stuck on clients you have no interest in (e.g. if you went to the media/entertainment group, you could get stuck on high tech clients, which you have no interest in as a value investor.
In terms of picking industries and clients. You can ask for a broad range or ask to be on specific clients, and they will attempt to give you that. Sometimes it's not possible since others already have continuity on that client and they won't break that just to put you on the client. Or they just need you more on something else.
I went the tax route...start the clock to see who gets to the HF/PE work first, then we can compare strategies. Booyah.
You went to tax with the goal of moving to HF/PE? What was your thought process on why that would be best? Which area of tax/type of clients did you move into and why?
Thanks @"ValueGet" I have done some more research and I think I might try to stay away from auditing financial services and try to get into Consumer Discretionary and Industrials as they have steady earnings, strong balance sheets, and are most relevant to value investing. They don't have overly optimistic valuations such as technology and healthcare either.
Also, @"MTx_2012" choosing tax "bold strategy cotton", clocks ticking… network network network
I agree w/ the guy on the 3 choices...except I advise you to keep looking for a front office (while you work your big4 job). Stay diligent, study the finance stuff, keep following up on network/contacts, hustle, etc. This was what I did in 2005 and I lucked out and found a start-up fund, took a risk and left after only a few months. Once you get that front office position, then you can go from there.
I work at value-oriented l/s equity fund and would advise auditing operating businesses rather than financial institutions. If you really know the accounting cold, have your CPA, do your CFA on the side, and can write a decent pitch I'm sure you'll get a lot of looks.
Some of the very best shorts involve heavy forensic accounting and the detection of fraud. I think somebody who can think like an investor and has an incredible accounting background would be quite useful.
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