Valuations vs. Transaction Advisory Services

valuedriven's picture
Rank: Chimp | banana points 11

Hello all,

I've tried to do some research on this but have not seen many posts comparing the two specialty groups within many Big 4 firms. I did find a lot of interesting information regarding transaction services type roles, however, not much on valuations. My question is, which group do you think would offer better exit opportunities? Whether its corporate finance, IBD, PE, HF, top 10 MBA. Is any one group more attractive to potential Wall Street employers? Regardless of what one wants to do after a stint in these groups, which group would offer the best learning experience and thus, best exit ops and variety of choices?

what is transaction advisory services?

While each firm will describe it different, EY describes their transaction advisory services by saying:

We help create social and economic value for our clients by helping them make more informed decisions about strategically managing capital and transactions.

We advise on strategies to raise, invest, optimize and preserve capital. Our teams bring together transaction professionals across functional areas, sectors and geographies to evaluate your Capital Agenda. Our goal is to help you achieve your best capital performance, deliver value to your stakeholders and meet your strategic corporate objectives.

What does a Valuation Big 4 Group Do?

PwC describes the work of their valuation group below:

PwC offers an integrated approach to helping you measure, analyze and report on a broad range of valuation issues, by bringing together professionals with extensive valuation, technical accounting, corporate finance, tax, and deal strategy expertise.

Below is a picture summarizing more of their offerings in the valuations group.

You can read more about their group on their website.

While these descriptions can vary from firm to firm, this gives you an idea of the work done by a valuation group.

Exit Opps From Valuation and TAS Groups

Our users shared that generally you will need to go to business school to jump into banking from either of these options. However, in Europe TAS employees are often able to jump into banking and middle market PE due to the due diligence experience that you gain in this group.

jhoratio - Investment Banking Associate:

The path into IB from valuation or TAS usually runs through a top business school. Valuation and the like are 3 yards and a cloud of dust type businesses, whereas IB is much more client centered. Not a huge difference, but one that pervades the culture in each industry. Remember, if your goal is to jump into IB and look for "exit ops" you are already at a severe disadvantage. PE shops hire former IB analysts about 97% of the time. Your jump into IB will look more like TAS -> b-school (Columbia, Kellogg, MIT, etc.) -> IB associate. Banks hire Associates because they think they will make a career of it, not leave in two years. Associates still do leave to do other things, but even so, usually not the things that analysts typically leave to do.

User @EuropeanBob, an asset management associate, shared a European market perspective:

EuropeanBob - Asset Management Associate:

TAS would offer better exit ops. TAS can mean a lot of things (in some places it includes Lead Advisory, which is IB), but I suppose you're referring to the group that does financial due diligence for M&A deals.

In the UK this offers great exit ops to IBD and mid market PE. A lot of the lower mid-market PE shops have nearly only big 4 guys form the TAS groups. The due diligence experience is valued by PE shops, not sure about the type of valuations you'd do in a valuations group.

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Comments (6)

Mar 12, 2010

My guess would be both are pretty similar. The two jobs added up are what an ibanking analyst does, with some exceptions. For example, Big4 valuations services do more fairness opinions, asset impairment tests and so on. And the transaction services are much more limited than that of an ibank. I would venture to say transaction services have more client exposure, but valuations will teach you more technical skills. The question basically boils down to whether you want to be an excel monkey, or a powerpoint monkey?

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Mar 12, 2010

TAS would offer better exit ops.
TAS can mean a lot of things (in some places it includes Lead Advisory, which is IB), but i suppose you're refferig to the group that does financial due diligence for M&A deals.
In the UK this offers great exit ops to IBD and mid market PE. A lot of the lower mid-market PE shops have nearly only big 4 guys form the TAS groups. The due diligence experience is valued by PE shops, not sure about the type of valuations you'd do in a valuations group (i'm guessing mostlyuimparement tests).

Mar 12, 2010

Oh, right, completely forgot about due dilligence. In E&Y the whole team is called TAS, and within it they have TSS (transaction suport services) which is simply financial due dilligence. I second what EuropeanBob said, with a little adnotation that due dilligence is mostly ex-auditors and other accountants. The job itself isn't like auditing per se, but there are a lot of similarities and if you're not into auditing you won't like it. And once you get into it you'll get pigeonholed and it will be very difficult to switch to sth more IB like. Its true that you will have PE exits, but again - you will be doing due dilligence, the only difference is that it will be inhouse.
As to valuations - from my experience it was mostly deal related work, but the share of fairness opinions, intangibles valuations and MSSF testing was substantial (way more than in a bank - do banks even do impairment tests?).

Mar 12, 2010

I could be wrong, but the path into IB from valuation or TAS usually runs through a top business school. Valuation and the like are 3 yards and a cloud of dust type businesses, whereas IB is much more client centered. Not a huge difference, but one that pervades the culture in each industry. Remember, if your goal is to jump into IB and look for "exit ops" you are already at a severe disadvantage. PE shops hire former IB analysts about 97% of the time. Your jump into IB will look more liek TAS -> b-school (Columbia, Kellogg, MIT, etc.) -> IB associate. Banks hire Associates because they think they will make a career of it, not leave in two years. Associates still do leave to do other things, but even so, usually not the things that analysts typically leave to do.

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Mar 12, 2010

Just wanted to point out that what I said was for Europe.
I think it might be very different in the US.

In London it is very doable to go fom Big 4 TAS to IBD or PE.
Some PE shops prefer accountants with due diligence experience than bankers.

For example: I recently met with a fund that co-invests in large buyouts (they only put ca. PS 50 to 150 million along the lead sponsor). Out of 3 guys, two came from a big 4 background. One did big4 tas, then BB leveraged finance, then PE. The other started in big 4 accounting , moved to due diligence, moved to lead advisory, ans is now MD in the fund. This is just an example but there are loads of big4 guys in the City in PE and BB IBD.

Now this may not be the case in the US.

Mar 12, 2010

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