A career in one of the Big 4 professional services firms (PwC, KPMG, Deloitte and EY) have long been a popular choice among fresh graduates and young professionals in the field of accounting & finance. Most have a preconceived notion that a career in a Big 4 firm is limited to accounting, audit and tax.
While majority of Big 4 staff are in fact employed in these traditional lines of service, their Deal Advisory Practices (“Deal Advisory”) however have grown significantly over the past decade and today contribute to a significant portion of revenue. In addition, the skills gained from working in Deal Advisory are highly sought after.
As a result, job seekers are getting more interested in the Big 4 Deal Advisory Practice.
This article is going to explain the major lines of service in Deal Advisory, plus your potential career path and exit opportunities.
What is deal advisory in the Big Four?
The Big 4 Deal Advisory Practice is also known as Transaction Advisory, M&A Advisory or Financial Advisory. If you occupy one of these roles, you will mainly work on corporate transactions. In simple terms, the Big 4 Deals Advisory Practice can provide advice on anything related to the sale and purchase of a companies’ shares or assets.
While each firms’ organizational structure may differ, in general most Deal Advisory divisions are organized into the following major work streams: 1) Transaction Services; 2) Valuations & Appraisals; 3) Corporate Finance; & 4) Business Recovery Services.
There are other specialised teams like forensic, post-merger integration etc, however in this article we are going to focus primarily on the four major work streams mentioned above.
What's transaction services in the Big Four?
As the name suggests, this team focuses primarily on transactions, specifically mergers and acquisitions. Performing financial due diligence for client’s acquisition targets forms the bulk of the work in TS.
Very often TS teams also help coordinate the services provided by internal teams (such as valuation, tax and legal due diligence etc.) and act as the primary point of contact to the client. In some deals, they may also work as the financial advisor and help execute the deal from start to finish.
When the economy is doing well and there is a lot of M&A activity, TS tend to be the busiest team in Deal Advisory and often have to work past midnight and across weekends due to tight deadlines which is typical in M&A deals.
What's Valuation and Appraisal (VS) in the Big Four?
The VS team are regarded as the technical experts in Deal Advisory. VS professionals are strong in quant, good at financial modelling and possess qualifications such as the CFA and FRM. They value businesses, financial instruments and assets (using techniques such as discounted cash flows, option models etc.).
Apart from working on M&A transactions, they also provide the follow services:
- With the advent of fair value accounting, an increasing number of items (financial instruments, listed and unlisted investments, intangible assets etc.) need to be measured at fair value on companies’ balance sheets. Hence, VS performs these valuations for financial reporting purposes for their clients.
- VS also act as internal experts to the firm. The audit team does not have the technical capability to review valuations which clients use to measure certain balance sheet items. As such, the Audit team engage VS as internal experts to review these valuations. Because of the collaboration with audit, VS also share the same peak season (busy season which is around January to April) with audit.
- In corporate litigation and divorce cases, businesses and assets need to be valued by an independent 3rd party. Hence, VS also offers valuation services related to litigation and disputes.
Outside of the audit peak season, working hours tend to be better than TS.
What's Corporate finance (CF) in the Big Four?
CF is the team that help clients obtain funding. Their role is effectively that of an agent or advisor that brings together buyer and seller. They guide the client through the fund-raising process from preparing the pitch book to executing the deal, often with the help of other teams in Deal Advisory.
Working in CF requires a good understanding of the capital markets, both debt and equity. Client presentations and relationship building are also key to the role. CF is usually a popular choice among applicants, but it can also be hard to get into: teams are generally much smaller than other workstreams. Furthermore, its very typical for CF to hire experienced managers from other workstreams within the firm instead of hiring fresh graduates.
Working hours here very much depend on deal flow.
What are business recovery services (BRS) in the Big Four?
Unlike the other workstreams which benefit from an expanding economy, BRS gets a lot of new business during economic downturns. The people in BRS help companies in distress to figure out ways to survive, often through a debt restructuring, selling off some of the assets etc. If a company is beyond saving, the court may appoint them as liquidator to liquidate the company and distribute what's remaining to creditors and shareholders. Senior staff will need to appear in court in liquidation proceedings. One perk here is job security as you need not worry about getting fired during a recession. Working hours are relatively better than other teams in Deal Advisory but do expect a lot more administrative work which can be tedious and repetitive.
So, what will a career in Big Four Deal Advisory do for you?
You can expect to gain various skills from working in a Big 4 Deal Advisory practice, as follows:
1. You'll be a transactions Expert – After working on several deals, you will become familiar with;
• How transactions are structured
• The M&A process
• Sale & Purchase Agreements
2. You'll be a trusted Advisor – You will learn to operate as a trusted advisor / consultant to your client.
3. You'll learn how to write and make presentations – You will learn to present your findings both internally and externally.
4. Report Writing – You will learn to storyboard and structure your reports in a visually appealing format. You will also become very good at report writing and putting together PowerPoint slides.
5. Business and Strategy – You will develop sound business acumen, develop a commercial mindset and think more strategically.
6. Business Development, Sales and Persuasion – you will prepare proposals and pitch for advisory work. You will also learn to sell your ideas and defend your assumptions both internally and externally. For those in Corporate Finance, they will learn to network and put together deals.
7. Financial modeling – If you are working in Valuation and Corporate Finance, you will be very comfortable building financial models. If you are in Financial Due Diligence or other teams, you will be comfortable reviewing financial models.
8. Valuation and other- You will learn business valuation, how financial instruments are used in transactions and understand M&A accounting.
How to get a job in a Big 4 Deal Advisory Practice
How to get a job in Transaction Services
In a deal environment (i.e., an environment with tight deadlines) there isn’t much time to train people on the basics of the job (e.g., excel and basic accounting). Staff are expected to be comfortable with the basics and be able to handle certain tasks themselves. Hence it is very common for TS to hire experienced staff (2 to 4 years) from the audit team who are able to come on-board and hit the ground running with minimal supervision.
Furthermore, graduate hires in TS are sometimes sent on internal secondments to the audit team for a year or two, to accumulate sufficient experience before actually working on deals (such arrangement varies across firms and offices).
Having a few years of audit experience, being rated a high-performer and possessing a CPA qualification will be an advantage to getting into TS.
How to get a job in valuation
Valuation involves a lot of financial modelling and application of valuation techniques such as Discounted Cash Flows, Option models etc. Hence, having a quantitative background, such as a degree in finance, statistics, accounting etc. is a requirement. Furthermore, possessing a CPA / CFA / FRM qualification is advantageous.
For experienced hires, having prior experience in a valuation firm is a very good fit. However, equity research, banking and other finance related experiences are also relevant. Furthermore, it is not uncommon for the Valuation team to hire high performing staff from the audit team.
The interview process will involve technical questions and you should also expect a basic valuation case study to test your knowledge.
How to get a job in Corporate Finance
Corporate Finance typically hire experienced staff internally. Having said that, for external hires, deal experience (like investment banking, any buy side / sell side role etc.) is a big plus.
Qualification-wise, CFA and CPA are advantageous but not a requirement. Possessing strong soft skills is more important, so ensure you demonstrate this during the interview process.
How to get a job in Business Recovery Services (BRS)
The nature of work in BRS involves a bit of accounting, legal and administrative tasks. While a candidate with a general business background could qualify for a role in BRS, possessing an accounting degree or having legal or liquidations related work experience is advantageous.
Career Progression in Big Four Deal Advisory
The path in a Big 4 firm is standardized. What differs in each line of service is the time taken to reach certain grades. In the Deal Advisory Practice, here is a typical path and timeline:
Associate --> Senior Associate (~2 years)
Senior Associate --> Manager (~ 3 years)
Manager --> Senior Manager (~3 years)
Senior Manager --> Associate Director / Director (~3 to 6 years)
Director --> Partner (depends on new business acquired)
It will take 2 years from Associate to Senior Associate. Typically, most Associates are promoted unless you perform very poorly. Thereafter you will spend another three years as Senior Associate before being reviewed for a promotion to Manager. You will need to demonstrate the ability to manage small projects on your own and deal with clients to get to the Manager grade.
Typically, the tenure as Manager is about three years. The ability to handle large scale projects would help you make the case for a promotion to Senior Manager.
Progression from Senior Manager to Director is the most challenging as you will need to demonstrate the ability to bring in new business to the firm on top of your day to day work managing projects.
The above timeline is for more mature offices and teams however the progression could be faster for relatively new offices / teams.
Generally speaking, for Associate to Senior Associate, difficulty across all work streams are similar and most Associates get promoted. If you're looking for promotion to Manager or above, Transaction Services is typically the easiest place to achieve it thanks to the larger team and higher staff turnover. Corporate Finance is also relatively easy to get promoted in, as the team needs people with more senior titles when meeting clients. Business Recovery Services is hard to get promoted in as there is much lower staff turnover than in other teams.
Exit Opportunities from a Big 4 Deal Advisory Practice
Not everyone enjoys working late in a tense environment and the competition as you progress is quite fierce. Fortunately, Big 4 Deal Advisory experience would open up a large number of opportunities in industry. If you don't want to stay and become a partner, there are a lot more choices available in industry with potentially much higher salaries. Below are some of the common exit opportunities for each of the work streams:
Exit opportunities from transaction services:
Good fit: financial planning and analysis, deal team in a PE or VC fund, Financial advisor roles in corporate finance firms.
Maybe: equity research, investment banking
Exit opportunities from Valuation and Appraisal:
Good fit: In-house finance roles, corporate finance, In house M&A teams, equity research, quantitative analyst
Maybe: deal team in a PE or VC fund, Investment banking, equity research
Exit opportunities from corporate finance:
Good fit: Financial advisor roles in corporate finance firms, In house M&A teams
Maybe: deal team in a PE or VC fund, Investment banking
Exit opportunities from Business Recovery:
Good fit: Depends on industry exposure
Maybe: PE fund specializing in distressed debt
When is the best time to leave the Big 4 for industry?
The ideal time to exit from a Big 4 firm is at an experienced Senior Associate grade or Manager grade. If you exit too early, you may get a junior post at your new company and you will miss out on the relatively fast progression and uptick in salary available at Big 4 firms as compared to industry.
On the flip side, if you stay too long at a Big 4 (for example up to Senior Manager) it is much harder to exit as the companies in industry may not be willing to match your high salary when you have no proven experience in industry....
Bilal Noorgat and Jeff Sin have spent years working in Big Four Advisory teams and run Fair Value Academy , a site that helps clients measure Fair Value in accordance with best practice.
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