WSO Podcast | E41 Investment Banking Associate from Big 4 Audit
Member @CPAtoIB shares his path from a state-school into audit at the Big 4. Find out what piqued his interest in investment banking and the buyside and how he navigated over to transaction advisory services as an intermediate step to his end goal. Learn about pay ranges at each of these stages and what's in store next for him.
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WSO Podcast (Episode 41) Transcript:
Patrick (CEO of WSO): [00:00:04] It football. Hello and welcome, I'm Patrick Curtis, your host and chief monkey, and this is the Wall Street Oasis podcast. Join me as I talk to some of the community's most successful and inspirational members to gain valuable insight into different career paths and life in general. Let's get to it. In this episode, Member CPAtoIB shares his path from a state school into audit at one of the big four. Find out what piqued his interest in investment banking in the buy side and how he navigated over to the transaction advisory services as an intermediate step to his end goal. Learn about pay ranges at each of these stages and what's in store for him next. Enjoy.
CPAtoIB: [00:00:54] You know what?
Patrick (CEO of WSO): [00:00:58] All right, CPA, two, i b welcome to the Wall Street Voices podcast.
CPAtoIB: [00:01:04] Yeah, thanks for having me.
Patrick (CEO of WSO): [00:01:05] So be great if you can give the listeners a short summary of your background.
CPAtoIB: [00:01:09] Sure. So I started my career in public accounting, passed my CPA exam and moved to transaction services role advising private equity strategic clients. Then I had the opportunity to join an investment bank.
Patrick (CEO of WSO): [00:01:28] And how? And so like in terms of the timing, so you you graduated and then you were working in audit for how long? Two years. Is that right?
CPAtoIB: [00:01:41] Yes. I graduated from a state university and then I worked in public, accounting for about two and a half years. Then once I passed my CPA exam work in transaction services for three and a half years, I have currently been an investment bank for almost two years.
Patrick (CEO of WSO): [00:01:58] Got it. And do you join the merchant bank as an analyst, as an associate? After all, that experience
CPAtoIB: [00:02:04] Joined as an associate? Got it. Ok? As a senior, a senior associate. So let's experience.
Patrick (CEO of WSO): [00:02:10] So let's rewind back to kind of undergrad and you know, you're at a state school. You're thinking accounting. Probably a good, a good degree, a safe degree, right? You're going to be able to get hired. And tell me a little bit about like the on campus recruiting or the culture there at the state school. Was there any sort of exposure to investment banking or private equity or any of that? Or when did you kind of first start kind of thinking of making this this pivot?
CPAtoIB: [00:02:36] Yes, that's a great question. So as an accounting major in undergrad, I felt that the set path was. Of the county, mostly the big four, maybe a national firm, and then, you know, I think the. The interest in moving into a transaction role started after I ordered a venture capital company.
Patrick (CEO of WSO): [00:03:03] Mm hmm. Until tell there was really
CPAtoIB: [00:03:05] No exposure to investment banking or private equity of straight CPA. Public accounting.
Patrick (CEO of WSO): [00:03:12] Had you heard about it before, when you were an undergrad?
CPAtoIB: [00:03:16] Interesting. Not really. And because most of our courses, it was just, you know, auditing intermediate accounting, cost accounting. It was strictly accounting classes. I guess maybe in the electives that I chose, I probably didn't choose the those electives were offered. I mean, there was no financial statement analysis that might have covered that area. But I think really, if I, you know, you could really learn about what's truly out there. If you do a lot of reading, reading, the Wall Street Journal or other magazines or
Patrick (CEO of WSO): [00:03:57] Did you did you just not do that or you just were kind of you're kind of gung ho on the accounting path and you felt like, Hey, this is a good path? Or was it something you kind of just
CPAtoIB: [00:04:04] Very, very gung ho? You know, it was a very conservative route. You know, the job market for public accounting is they always need auditors, especially with Sarbanes-Oxley and the strict regulation. So that's really why I chose that path.
Patrick (CEO of WSO): [00:04:21] Got it. Ok, so you're you kind of have the set path you in an interview process was like on campus recruiting. I think your school has a pretty good feeder into the big four, right into the accounting programs.
CPAtoIB: [00:04:34] So like there's all the big four firm on campus, even all the regional firms national firms.
Patrick (CEO of WSO): [00:04:41] Was it pretty easy to get the accounting job? Like, would you say that the people who apply at your school? Is it like a 30 percent acceptance rate, 50 percent? What would you say? Like, how many people that are like that want it really get it?
CPAtoIB: [00:04:54] Yeah, I think if it starts off with having a great GPA, if you have a GPA, that's above three six three seven, that's certainly a ticket to an interview. Yeah, I think if you have great social skills, very personable, hardworking, that'll secure an internship. Yeah. And then once you have the internship, if you perform, well, hardworking, always willing to help. And developing great relationships, you know, that will definitely serve you well and trying to share full time offer.
Patrick (CEO of WSO): [00:05:27] So he'd say like 30 percent or 50 percent of people make it through that whole path around there, like
CPAtoIB: [00:05:33] I think that's
Patrick (CEO of WSO): [00:05:33] Reasonable is in turn to to full time offer rate and banks. It can vary widely, but typically it's pretty high. Is it pretty high for accounting as well, like 80 to 90 percent or higher?
CPAtoIB: [00:05:44] Yes, because the turnover at public accounting is rather high, so they always feel that they always need to replenish the pipeline.
Patrick (CEO of WSO): [00:05:54] So you're in public accounting culture, so you're in public accounting, you're kind of going through that first year, you're getting your feet wet, probably learning a lot. Or maybe not, I don't know. And you basically start auditing this VC, this VC firm, it was or a private equity firm. D.c., as a VC, a VC funds, and you start seeing kind of the types of deals they're working on or how does it what piques your interest?
CPAtoIB: [00:06:20] So I had to look at the fund's portfolio companies. There are about 10 to 20 and we had to choose those that were more material in nature from a valuation standpoint. And we then sent that over to our transaction services group for purposes of trying to determine the underlying value of the portfolio company. And I also had conversations with the associates over at the fund, and they gave me a 30000 foot overview of their career. And that as well helped kind of piqued my interest in more transaction setting.
Patrick (CEO of WSO): [00:07:02] What do you think interested you the most about it?
CPAtoIB: [00:07:07] I think just working with the TSA and just really understanding the valuation techniques that were going into valuing these assets, that really there's no public information behind and can get really creative evaluation.
Patrick (CEO of WSO): [00:07:23] So you're in accounting, you have a CPA that you're about, you're thinking getting the CPA at this point or you're thinking, maybe I don't want to do this or what's kind of pushing you to get the CPA if you're thinking, I want to go this, you know, corporate finance, banking by side or. Right.
CPAtoIB: [00:07:38] So I actually I actually passed my CPA four months into the role that I had. Wow. I passed. I passed two parts in the summertime prior to my start date. Got it. I passed the next exam. Really within about a couple of weeks, and then the final part was in the fall, so I started in September, I was done in about November.
Patrick (CEO of WSO): [00:08:05] Is that pretty typical or that seems pretty fast to me.
CPAtoIB: [00:08:10] Yeah, it's usually it takes about a year, but I really worked very hard over the summer time because was starting with work, I felt that I was going to have a lot on my plate just from learning the basic techniques of the job. And I wouldn't have much time to study, which is why I really pushed to get as many parts of the exam done with so. So you really need a CPA to if you want to be a manager. Accounting firm
Patrick (CEO of WSO): [00:08:38] Do you want to get if you want to advance right, you need that CPA gives you
CPAtoIB: [00:08:41] More credibility, gives you more credibility to in the Industry.
Patrick (CEO of WSO): [00:08:43] So you were putting in all that work, you got the CPA and then you're starting to do this audit on this VC fund. And all of a sudden you're saying, wait a second, this seems really cool. I like this potential, you know, the valuation work, the transaction advisory services. So is that when you first started kind of learning more about by side and investment banking and all this stuff? And did you start doing more research on your own or when did you kind of figure out, OK, I need to get to transaction advisory services to kind of make that next jump from audit?
CPAtoIB: [00:09:14] Yeah. So I felt that I wanted to get into investment banking private equity, but realize it's very difficult to make that transition directly from audit. So I then said, how can I leverage my accounting skills as well as be in a setting with private equity investment bankers? So that's why I chose transaction services. So I would say that we're thinking about it on a timeline. Investment banking would be point. See an audit at point A. You know that middle ground or is that point B, and that's where transaction services came into play?
Patrick (CEO of WSO): [00:09:54] Do you feel like because you had a couple of years in audit and then you did a couple of years in transaction advisory services before getting the IB? Do you feel like age is a problem or has been a problem when you're recruiting for IB? Like, they didn't know how to deal with you because you were already, say, four or five years out of school?
CPAtoIB: [00:10:09] No, I think mostly what I've really loved is my network and relationships. And if your personal if you if you do good work, that can be a huge selling point. So when I was on, I always tell people when I was in transaction services, every deal that I worked on, I met about five or six different people. Yeah, that the investment bankers, that being a target company management and what I did, I actually kept a running list of all the bankers I worked with and there were some I like them I wasn't as fond of, so I would try and stay in touch with those that I worked well with. And, you know, they were very instrumental as well.
Patrick (CEO of WSO): [00:10:54] So you were kind of staying in touch with all these bankers that you had been working with as you were doing this. But did you feel like once you started to? Were you recruiting, I guess as soon as you hit this and made that transition, we can talk about that a little bit. Were you recruiting immediately for banking or like, did you say, Hey, I got to put my head down for a year? Like, what was your thought on timing?
CPAtoIB: [00:11:12] Yeah, I want to. Yeah, it's big question. I wanted to learn just the process first. So take about a year or two years, really understand the M&A process, understand what bankers do, understand the system and then also understand our clients who are, you know, mostly private equity. Understand how they're coming up with their assumptions in their models. How is the structured? So I like mostly just to really master your craft first, and then once you do that, then you can begin to look elsewhere. What you're trying to do.
Patrick (CEO of WSO): [00:11:48] So it sounds like you were there for at least a few years before you started kind of actively looking, but you're building up your network throughout. Exactly. Is it fair?
CPAtoIB: [00:11:55] Ok, I always try to build up the network.
Patrick (CEO of WSO): [00:11:58] Ok, so you're building up the network. How often are you reaching out to these people that like these bankers that you worked on, like previous deals? Was it once every six months, once a year, once every? I don't know. A couple of months. What was the frequency, would you say?
CPAtoIB: [00:12:10] Yeah, I would say after the deal was done, hopefully it closed. I would probably reach out to the bank or maybe a few months after just to keep in touch. You know, I would look at their website, look at a recent deal. They were we're on and see if they were in the area, know, see if I could grab a coffee then. And also to because they may need sell side due diligence. They were going to take the company market. There was another reason why I also wanted to keep in touch
Patrick (CEO of WSO): [00:12:39] With them just to help generate business for your firm.
CPAtoIB: [00:12:42] Yeah. Yes. Got it. That as well.
Patrick (CEO of WSO): [00:12:45] Ok. And so you're reaching out to them a couple of months later. But then are you? When are you? When does when do those conversations pivot to being more about your own career? Is it a couple of years in and then how do you actually even bring that up? Is it something where you just start asking more and more about the actual banking? And can you tell me about like the recruiting process, like how many interviews you went into what that was like?
CPAtoIB: [00:13:07] Yeah. I mean, I would probably say it when I would catch up with them and say, Look, if you know anybody looking, you know, I'm always looking, always ears because, you know, I would always try and display my hard work, great work ethic when I was working on the other side from them. So, yeah,
Patrick (CEO of WSO): [00:13:29] So but did they I mean, when did I guess my question is, when did you start actually doing like full on recruiting like for a banking like, were you? Just because I'm trying to figure out like you were getting promoted right in the transaction advisory services. And so like you could have theoretically continued to stay on and eventually become, you know, from analysts to senior associate to vice president to eventually, I guess it's manager or partner, right? Right. So what I guess, at what stage were you? Was it when you got like that second promotion? Was it before then that you started, you know, I guess.
CPAtoIB: [00:14:04] Yeah, exactly. Good. Good point. So I would say one, I wanted a promotion first, just to show that that shows progression that shows attention to detail and ability to understand what you're doing. Exhibit that. So I would say at the senior associate and then once I was promoted again. That's when I really tried to put a full court press on.
Patrick (CEO of WSO): [00:14:28] And how did you do that? How did you do the full court press? Were you just immediately started? Like hitting up all the contacts you've developed over those years, both at your initial auditing firm and then,
CPAtoIB: [00:14:40] Yeah, yeah, it was mostly the banks that I worked with 'Cause, but I also had some other connections in the city. You know, even though I'd never worked with them when I was in 'cause I knew them from playing sports, growing up to a sibling and then maybe try and grab a coffee with them and they would connect me with someone else, and then that would lead to another connection. So it's really about just building the network.
Patrick (CEO of WSO): [00:15:07] And how long was that? Yeah, how long was that process like?
CPAtoIB: [00:15:12] So from when you started, it kind of takes a while. Yeah, it definitely takes a while. I would say it probably takes about, you know, from meeting someone and maybe actually getting an interview. It takes a few months, for sure.
Patrick (CEO of WSO): [00:15:26] So but how long did it take for you? So when you started the full court press and you started reaching out to all your contacts, when did you start planning interviews? Was it right away like within a month or what? Did it take several months to start planning those first round interviews and
CPAtoIB: [00:15:39] Then some several
Patrick (CEO of WSO): [00:15:40] Months, several months? And then sorry, I was just going to say and were these for specifically like, were you applying for anything from like experienced analysts through associate positions? Or was it all like, No, I want to be an associate because you've been working for so long.
CPAtoIB: [00:15:57] It was mostly experiencing to associate, but it was more just trying to get into one of these two places because then once you're in, you have your strengths.
Patrick (CEO of WSO): [00:16:06] Got it! Ok, so tell me about the interviews. Did you land? How many interviews did you land? Was it just a handful? I assume it's tough because it's all kind of like all lateral, right? You're not in like traditional recruiting process.
CPAtoIB: [00:16:18] Yes, I had about four interviews at four different places. I was given a full time offer at two of them. Great. The other two, it just wasn't the right fit. But I mean, it was it was great experience regardless of whether I was given an offer or not. And so most of the questions are pretty standard across the board.
Patrick (CEO of WSO): [00:16:42] Did anything surprise you in these processes, like in terms of like the types of interviews they put you through modeling tests, anything that kind of came out of left field on any of those ones, either the ones you got the offer from or from the ones you didn't.
CPAtoIB: [00:16:57] No, I think most I think where I got burned on some of the areas where the technical concepts because from Taz to I'd be, you're not doing LBO modelling as much, you're not doing DCFS. Yeah. Too much modeling there. But I think I was actually that only helped me because I knew what they were working for. So then after the interview, that's when they were learning would really kick in kind of going back to those questions where I knew that I tripped up.
Patrick (CEO of WSO): [00:17:33] Got it. Got it. And so you started kind of with the practice and stuff like that, you started kind of going back getting polishing up your technicals a little bit and then having more success. So would you say the last kind of two in terms of timing, the first couple, you didn't make it through to like the final or you didn't get the offer, but then the last two you did. Is that how it worked out?
CPAtoIB: [00:17:54] Well, it's funny, the first interview I had, I actually got an offer. Ok. But they didn't really ask me too many technical questions. So that's how I got the job. I also think to a big part of getting an offer is whether the group really needs an individual right?
Patrick (CEO of WSO): [00:18:11] Yeah.
CPAtoIB: [00:18:12] You know, because an M.D., you know, their job is the source work. If they don't have people on the ground kind of crunched out the work and the models, you know, it's going to be tough. So that's a lot of the reason why I think I got that first offer was they didn't really have any
Patrick (CEO of WSO): [00:18:31] People, right? They really needed bodies.
CPAtoIB: [00:18:34] You're saying yes.
Patrick (CEO of WSO): [00:18:36] So basically, you're going through this. And so how did you why didn't you not? Why did you not take that first offer? Then when it came to you, you didn't feel like it was a good place to be? Or I'd be curious. Yeah, yeah.
CPAtoIB: [00:18:47] I did a lot of diligence after I got the offer, and I knew a lot of people left the firm and I had a feeling that a few other indies were on their way out. So I just felt it just wasn't going to be a good fit.
Patrick (CEO of WSO): [00:19:02] And you knew this through just what finding people on LinkedIn or it just got it and people were kind of forthcoming about that. They said they got on the phone with you or they just shot some emails back and forth with you.
CPAtoIB: [00:19:14] And it's funny, a couple got on the phone with me. A few others just sent me a note and said, Stay away, be careful. I've been surprised. A lot of people, I mean, including myself, I mean a really open to speaking. You know, if you reach out, you know, I'm a big believer in it because, you know, I'll reach out to people and I'm always willing to pay it forward.
Patrick (CEO of WSO): [00:19:36] Do you have a lot of people from your alma mater now as an alum reaching out to you for advice?
Patrick (CEO of WSO): [00:19:42] Yeah, I'm sure you do. Cool. Well, is there, I guess. Do you mind talking a little bit about pay in terms of how it progressed, from audit to transaction advisory services to our tasks up to like an associate in banking? And I know you're at a boutique bank, so it's it varies widely and in terms of just range. Do you mind giving people kind of a sense of where, how that's progress for you?
CPAtoIB: [00:20:05] Sure, I mean, it's increased significantly. Yeah, I would say, you know, from cars to banking, you're going to make over 100 percent of what you were originally making. I also think to a lot of it depends on how the firm is doing. Yeah, 'cause you have a more steady income stream, whereas in banking, a lot of your comp is contingent, right?
Patrick (CEO of WSO): [00:20:33] Got it. So would you? Is the base in banking lower than the base and tax?
CPAtoIB: [00:20:41] I would say it's about the same, but you're where you really make your money is in your
Patrick (CEO of WSO): [00:20:45] Bonus, right? I'm banking, yes. So if the
CPAtoIB: [00:20:46] Fed has you get like a certain percentage, whether it be 20, 30 percent, it varies by some, but it can be anywhere from 50 to 100.
Patrick (CEO of WSO): [00:20:55] Got it. So like, if I'm doing rough numbers, tell me if I'm accurate here for like audit right out of school, you're probably looking at anywhere from 50 to 70 all in. Or higher.
CPAtoIB: [00:21:04] I'm sorry for
Patrick (CEO of WSO): [00:21:06] For just audit right out of school. Right out of undergrad. Just correct me if I'm wrong, I'm guessing between 50 and 70 thousand, like around sixty thousand or seventy thousand.
CPAtoIB: [00:21:14] Yeah. Yeah, that's a good. That's a good approximation.
Patrick (CEO of WSO): [00:21:16] And then for Taz, as you go from like analysts associate to VP analysts, probably just a little bump from that, maybe 70 to 80. Yeah. And then senior associate, you're getting close to kind of one hundred all in, I'm guessing.
CPAtoIB: [00:21:30] Yes. Or and then And then VP. Maybe like one twenty five, one one twenty five to one fifty. Yeah. Ok, cool. And so that's for tips and then for banking, obviously, boutiques, it's all over the place, all over the map base would be probably around. I don't know. One hundred, would you say, or one twenty?
CPAtoIB: [00:21:50] Yes. Okay, that's fair. Ok, cool.
Patrick (CEO of WSO): [00:21:53] And then bonus is all over again, if the fund does a small, small bank, if they do well, the bonus can be upwards of one hundred percent of your base. Otherwise it could be very low. Is that fair, right?
CPAtoIB: [00:22:04] Ok, yes.
Patrick (CEO of WSO): [00:22:05] Ok, OK, cool. So just for. So that recruiting, you know, you're saying that the technicals you kind of got better as you went along, you didn't take that first offer. They came along. Then it sounds like a couple of others didn't work out. And then finally, you got the offer they ended up taking. Tell me a little bit about that. What? What made you think that this was a good place to be and what kind of made you kind of make that leap of faith? Yeah. Do you do that same diligence, like what were you talking to people?
CPAtoIB: [00:22:33] Yeah, I was. Culture was very key to me. It wasn't as top heavy. Terms of. A lot of associates, BP's running the operation.
Patrick (CEO of WSO): [00:22:48] So tell me why that was important to you. Lifestyle.
CPAtoIB: [00:22:52] Yeah, my lifestyle is important. Yeah, so you knew that I think there's a huge price on your time. Yeah, see three time.
Patrick (CEO of WSO): [00:22:58] So you knew that if it was super top heavy with a ton of MDS and partners, you'd be getting worked, whereas a good pyramid structure could support a couple of strong MDS.
CPAtoIB: [00:23:08] Exactly.
Patrick (CEO of WSO): [00:23:09] Got it. Yeah, totally agree. That's important. That's a really important thing to take a look at as like how many what's what does it look like is like five MDS and one associate in one analyst. You don't want to be the analyst in that seat, right versus the other way around. So great. So what's next for you? What's the plan?
CPAtoIB: [00:23:33] Good question. You know, I thought of staying in banking, I thought of private equity as long as I'm in a transaction setting, I think that's. You know where I see myself, I've also thought about being a CFO of a company looking to sell, I think is a huge need for that. I've learned that when I was in Tazz, CFOs really didn't know what the company. Was or how the company really operated. I think that really. Prevented deals from getting done timely. So I think there's a huge need for that. I think that is also another good avenue. I think there are many opportunities, I think once you have banking, you can do many different things with it, for sure.
Patrick (CEO of WSO): [00:24:24] And so I think, is there anything kind of looking back and in your transitions from, I guess let's talk about go back really quickly and then I can let you run. But just the that initial jump from like audit to Tazz, you also switched firms. Was it were you trying to stay in the same firm and stay in ties in the same firm? Did you try that or did you feel like that was too hard of a leap?
CPAtoIB: [00:24:48] I thought it was very difficult because the potential for the group was previously in meeting me on an assignment. Yeah, the firm that I actually went to did not run into any independence issues, and I feel that these larger firms are more of an audit and tax firm where the firm that I went to was more valuation driven, transaction driven and consulting driven. Fair said no ties to an audit or a tax department got it.
Patrick (CEO of WSO): [00:25:25] So when you were kind of starting to look to make that jump to tax, you were really looking outside of the big four.
CPAtoIB: [00:25:32] Mostly, I was.
Patrick (CEO of WSO): [00:25:34] Ok, fair enough. And. And how did you kind of go about that? Did you contact recruiters? Did you start applying on job boards?
CPAtoIB: [00:25:41] I did. I actually applied on a job board, and the MD reached out to me is an interesting situation because there was no senior associate VP director. I was reporting right to my MBA and was learning directly from him. So my learning and getting up the learning curve took it was much quicker and working at a larger place where you had numerous individuals on the team. We had no shared service center, so I was processing everything. I really learned how to maneuver quickly and excel, which is very important for banking. And I was writing reports immediately. I would argue I was probably after my first year as an analyst, I was doing manager level work.
Patrick (CEO of WSO): [00:26:28] That's great. That's great. So it is a great experience. You had to kind of knot those tons of layers in between you and the MD, which is awesome.
CPAtoIB: [00:26:35] Exactly. A lot of I mean, it was a phenomenal experience. Looking back on it, I think I feel the CAZ is where my career really took off. Mm hmm.
Patrick (CEO of WSO): [00:26:44] That's awesome. Well, yeah, I mean, with the promotions and everything too that came along with that from gaining that exposure and doing a great job for your MD Taz.
CPAtoIB: [00:26:53] I think Taz, whether you're in Taz or whatever transaction setting you're in, you really have to know what you're doing it, but why you're doing it. You don't have any prior work papers to leverage the constantly learning every deal is different. So whereas an audit, if you're on the same client or after quarter year after year end, your work is pretty much the same if there's a huge acquisition or change in the company, which is pretty rare.
Patrick (CEO of WSO): [00:27:23] Got it! So it's a little more, you'd say, audit. It's a little more monotonous than tis.
CPAtoIB: [00:27:28] Yeah.
Patrick (CEO of WSO): [00:27:29] Is that fair? Yeah, that's an understatement. Cool, man. Anything else you want to share to the listeners or any advice you would give to your younger self? Kind of, before we call it?
CPAtoIB: [00:27:41] I mean, to the listeners, I would just say constantly work to build your network. I would reach out to anyone, you know, if you're trying to make a transition step in any industry. You never know who can really help you make that transition you're looking for.
Patrick (CEO of WSO): [00:27:59] That's great. Well, thanks for taking the time to really appreciate it. And thanks to you, my listeners at Wall Street Oasis. If you have any suggestions whatsoever, please don't hesitate to send them my way. Patrick at Wall Street Oasis. And till next time.
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