Advice - BVal vs Audit for ER
Hello Monkeys,
I recently received an offer for a boutique IB on the business valuation side. The role includes utilizing DCF and multiples models for fairness opinions, employee stock option plans (ESOP) valuation, purchase price allocation, and goodwill impairment. The bread and butter is 409a valuations, which is essentially determining private companies' fair value per common share for tax compliance purposes. While the outputs of the work are generally financial reporting/tax-related, is this valuable experience to break into ER after a year or two given it involves modeling, assessing value drivers, talking to CFOs/controllers/CEOs about their business, etc.?
I am currently at just over a year in Big 4 audit and am crushing it (top performance reviews, good team, important client) and up for an early promotion. The boutique IB is much smaller, but it's a ~30% pay bump from my current compensation, more interesting work, and less hours so the only reason I would not switch is long-term career prospects.
Thoughts? Also, how does business valuations place into MBA programs?
Can't be much help. However, my recent thinking is that I personally should have looked into Big 4 Audit while in ugrad/ my first 6 months out of school when I was jobless. I was trying to break into ER at the time, and ended up in FI research instead. In hindsight, I realize that I would have heavily benefitted from having an accounting background - both for networking into ER, and performing well as an investment analyst.
What industry are you covering in Big 4 Audit? (if its even split up into verticals...not sure)
The IB role doesn't sound like one that'd have good exit opps. However, take a look on LinkedIn to see people who used to work in that division at that IB (along with people who used to work in similar positions at other IBs) and see where they are now to get a better idea.
Ultimately, given the info you've provided and my own thinking/biases, I'd say continue in Audit.
PaulAllen,
Thanks for the response.
I'm currently auditing private equity companies, so the most relevant ER vertical would likely be business development companies. I've networked with some analysts at MMs in this area over the past year, but so far no dice. Definitely an uphill battle.
I've been looking into former valuation analysts for this boutique IB on LinkedIn, but unfortunately it's a fairly small sample size and most seem to stay with the company. I've seen one move into ER at an MM, one move into the M&A side at the same firm -> MM IBD elsewhere, and another move into F500 FP&A. Similar kind of moves at similar firms, with a few scattered to corporate development or other valuation firms. Hard to say how many seek opportunities elsewhere, as the work-life balance and pay is respectable.
My main thought is that at least the day-to-day seems relevant as it involves analyzing financial statements/industry instead of just the fact checking nature of audit. It focuses on technology, healthcare, and aerospace/defense companies, wonder whether if I take the job and focus on learning one of those industries as much as possible, pass level 2 of the CFA, if I have a better shot at ER roles in that industry.
If my chances are the same or better, it wouldn't hurt to make some more $$ in the mean time.
Some questions you should be asking:
What's your long-term goal? I didn't see you mention that anywhere.
What's the career trajectory for a valuation role at this boutique? Could you transition into corporate finance and M&A type work? Or would you be stuck doing valuations? Keep in mind most bankers really look down on valuation work since they view themselves as above it, so this is likely to be the least glamorous and respected part of the bank.
What is the quality of the boutique? As I have written before, there are "boutiques" which are smaller firms but very well respective for their top employees and/or expertise (i.e. Moelis, Evercore, Lazard, Greenhill), then there are "boutiques" which are really just small firms struggling to make it. Which category describes the boutique you mentioned? Is it nationally recognized?
Valuation work is interesting and you would learn a lot. However, my only concern would be the nature of what you're doing, specifically 409(a) valuations. My impression is these valuations are usually "check the box" type activities which don't require a lot of rigor other than making sure you have a legally defensible output. You would probably have a better idea than me.
What if the role at the boutique didn't work out for whatever reason? What would you do next? Would you be ok financially?
Models and bottles,
Thanks for the response. My long-term goal is to be an ER analyst and work my way up an MM bank.
Career trajectory at the boutique is analyst -> associate -> manager -> ???. At the manager level, it seems most folks are trying to build a book of business to become a profit-participating director or cruising on their six figure salary and fairly undemanding schedule. Doesn't seem like an up-or-out culture.
The firm is definitely not an elite boutique like Lazard or Evercore. While it has offices nationwide, it's not a large firm, and is definitely not competing with any BBs for deals. However, I'm not sure I would categorize them as a struggling firm either, as they pay market rate and have attracted decent talent (folks who went to top 25 US News Colleges with BB internships, but also some top 75 colleges no work experience or worked in mid-tier consulting)
Yes, a majority of the work is 409a valuations, purchase price allocation, and goodwill impairment. I will also likely work on one or two fairness opinions a year. While it's less than sexy, do you think it could be a stepping stone?
If I didn't take the role, I would likely stay at my Big 4, get promoted to senior, and keep networking for ER roles/Transaction Advisory Services (financial due diligence for PE funds looking to add to their portfolio).
Financially, I am not terribly worried if the role doesn't work out.
If you're currently working in Audit, then transitioning to Bval, especially to a boutique IB, should bring in a much higher bump in pay. Probably somewhere around 50%. Out of curiosity, is it Houlihan Lokey or Duff & Phelps?
Quis eligendi sint id ea temporibus veniam amet. Tempore architecto hic voluptatem ab. Corrupti vitae quia asperiores ipsa corporis molestias. Quia nostrum recusandae doloremque a vel repellat fugiat.
Et totam quis voluptatem doloribus. Eaque qui et incidunt distinctio magnam enim. Enim nobis neque voluptatem alias vitae quidem. Ratione adipisci exercitationem provident ipsa ipsam temporibus.
Facere rem asperiores vel quod. Praesentium placeat et omnis sunt. Praesentium nesciunt eos architecto quis similique optio. Beatae officiis voluptatibus expedita temporibus eligendi labore explicabo. Qui sint saepe unde mollitia. Rerum voluptatem ad ut aut assumenda nam. Est libero qui reprehenderit sunt tenetur veniam aspernatur.
Quidem ut cumque iure. Sed vero incidunt consequuntur consequatur dicta. Ad et architecto ut mollitia ut ipsum maiores. Animi quaerat qui facilis officiis doloremque. Et dolores error voluptates. Aspernatur pariatur natus voluptatem cupiditate unde aliquam dolor nisi.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...