by Brian DeChesare Comments (7)

From Regional Audit to Investment Banking: How to Break in *Without* the Big 4 Pedigree

Audit to Investment BankingCan you break into investment banking as an accountant?

We’ve published so many success stories from accountants that the answer seems to be “yes.”

Just one problem, though…

They were all at Big 4 firms and therefore had the benefit of a strong brand name; in some cases, they even had firsthand experience working on deals.

But it is possible to break in even if you’re at a regional audit/accounting firm – like our reader today did.

It’s just that you might need a few more “hops” in between your current job and the one you’re aiming for.

Among other topics, we discuss:

  • The process of breaking in.
  • How to position yourself coming from an audit/accounting background.
  • And the differences in the job itself at an accounting/valuation firm compared with an investment bank.

Into the Land of CPAs and Regional Accounting Firms

Q: Can you give us a quick overview of your story and how you moved into investment banking?

A: Sure. I went to a non-target university, majored in accounting, and interned at a regional audit/accounting firm after my third year in school.

I liked the work, at first, and they offered above-market pay and lots of responsibility for new hires, so I accepted a full-time offer there.

The Big 4 firms never appealed to me because they use an “assembly line” style of work, and you’re not likely to get as much responsibility or client interaction early on.

I started the full-time role, applied for my CPA license a year into it, and began getting bored with the job right around then.

Everything is historical and backward-looking in accounting, but I found it more fun and exciting to predict future scenarios, like you do in finance.

Also, many of my friends, roommates, and former colleagues were in finance and they all seemed to be more satisfied with their jobs.

So I quit that role and joined a business valuation firm to move closer to finance.

I gained a more relevant skill set there, and then I networked my way into a boutique/middle-market investment bank after about a year in that job.

Q: I see. So why didn’t you just move directly from the accounting firm into investment banking?

Did they think your skill set wasn’t relevant?

A: Exactly. I started networking and cold calling banks even when I was at my first firm, but the CPA didn’t carry nearly as much weight as I thought it would.

[NOTE: This point may not be as valid outside the U.S., since certifications mean more in other regions – especially in emerging markets. CPAs enter the finance industry more frequently elsewhere as well.]

A lot of bankers thought I didn’t know enough about finance, especially since my firm focused on taxes for small, private companies.

So I had some exposure to the financial statements, but it was all for tax purposes rather than valuation. And I had no experience working on deals or even the aftermath of deals (e.g., purchase price allocation).

Also, I was up against a lot of accountants from Big 4 firms, and I could not adequately explain how I was better than them.

Q: So what if you had been at a Big 4 firm?

Would you still have needed to move to a valuation firm first?

A: I probably would have gotten better responses, but I still wouldn’t have been able to interview successfully without valuation experience first.

Going to the valuation firm was a huge benefit because I got exposure to more detailed models than the ones you complete in banking.

And I could tell a much better story about how I got some exposure to deals at the valuation firm, and now wanted to drive deals forward.

From Auditing to Valuing Companies… or Royalty Streams

Q: Right, that makes sense and matches what previous interviewees have stated.

So how did you move from the accounting firm to the valuation firm?

A: This move was not too difficult, and the CPA carried some weight: they wanted someone with an excellent understanding of both accounting and finance.

I reached out to contacts via LinkedIn and also went through recruiters – anyone who was connected to valuation firms – and said, “I’m currently doing audit/accounting work at Firm X, I have my CPA, and I’ve taught myself valuation and financial modeling (via your courses). And I’m now looking to transition into valuation work.”

One recruiter from the firm I eventually joined told me about an audit position there, but I replied and said I was more interested in a valuation role.

And then the recruiter sent my resume to the valuation team, they expressed interest, and I went through the interview process with them.

The team did a lot of work with purchase price allocation and valuing intangible and fixed assets to determine what should be written up or down upon transaction close (and, in effect, valuing the company as a whole).

I thought it was a great move since I would gain valuation experience and deal exposure at the same time.

Q: But then almost as soon as you joined, you began recruiting for IB roles.

A: Yes. But that had been my plan all along – I wanted to use the valuation role as a steppingstone into banking.

I started networking with bankers about six months into the job, and at first I targeted people from non-finance backgrounds who had broken into the industry.

I figured that someone with a law or liberal arts degree might be more receptive.

But I wasn’t getting enough leads like that, so I broadened my search and started reaching out to people who had anything in common with me: a similar degree, similar hobbies/interests, a similar hometown, etc.

I did not expect to receive offers from bulge-bracket banks, so I used informational interviews there to gain insights into the industry and to assess bankers’ objections in advance.

At middle-market and boutique firms, I also sought information, but I was more aggressive in pushing for a resume submission at the end of each call or meeting.

Q: And what were bankers’ main objections to your background?

A: The top two issues were:

  1. Bankers saw me as “an accountant with some finance knowledge,” and didn’t think that I knew enough to do the job.
  1. I looked like a job hopper since I had left my first firm in under a year, and I was now looking to switch companies once again in less than a year.

I answered the first objection by explaining the in-depth modeling work we did at my firm, which often included complex spreadsheets for valuing royalties and trademarks.

I also pointed out that we were effectively valuing entire companies, though the focus was more on individual assets.

And I answered the second objection by explaining that it was my plan all along to get into investment banking, and I had intended for the valuation job to be a part of my path into IB.

Q: Were there any surprising questions in interviews, or anything that caught you off-guard?

A: Not really – most of the questions in IB interviews were behavioral once they had verified that I did, in fact, know accounting and valuation quite well.

They did ask a few basic technical questions (advantages and disadvantages of an LBO, a DCF, etc.), but the toughest questions were all “fit”-based.

In particular, the Managing Directors seemed skeptical that I could handle the hours.

The perception is that accountants work long hours for a few months each year and then go back to normal 40-50 hour weeks after that… but in IB you need to be in “burn the midnight oil” mode year-round.

So I explained the relatively long hours in my valuation role, and pointed out that I had worked 60-70+ hour weeks for extended periods before – namely, when I was completing my CPA and also when I was learning valuation and financial modeling independently.

But my main concern was coming across as too technical and not passing “the airport test.”

So unlike a lot of other candidates, I spent 75% of my time reading up on the news and sports, and thinking about recent trips I had taken and other fun things outside work.

Anyone from an accounting or audit background could be perceived as “boring,” so I think it was correct to focus on non-work discussions.

On the Job: Valuation vs. Banking

Q: So what has the banking job been like so far?

And has your CPA/accounting/valuation background been helpful?

A: My experience has been valuable, because whenever we’re speaking about different line items I can immediately visualize their impact on the financial statements.

Surprisingly, many bankers have a weak understanding of accounting.

I’ve seen even VP-level bankers get tripped up over the Cash Flow Statement and how items there flow from and into the other statements.

If you get this inter-linking wrong, it could distort your valuation by a material amount… so you have to master these concepts.

In terms of the work itself, I’ve been spending more time in PowerPoint than Excel so far.

That’s because I’m juggling quite a few deals that are in different stages, and also because some of the companies are earlier-stage and don’t require extensive modeling.

Q: What has been the biggest adjustment so far?

A: Although you need top-notch attention to detail in both fields, the type of attention to detail is different.

In banking, you spend a lot of time on formatting, colors, font sizes, etc., and making sure presentations and written documents look 100% perfect.

It’s also tough to juggle 5-10 deals and keep track of the process, which deliverables are outstanding, and which client requests haven’t been fulfilled.

In the beginning, I tried to finish work quickly just to get it done, but I wasn’t prepared for the detail required in client presentations, CIMs, and so on.

By contrast, at my previous valuation firm I spent almost 100% of my time in Excel.

To value a trade name, I might have to research royalty rates for 20-30 companies, find the median, and then link that rate to 7-8 different schedules.

It wasn’t rocket science, but there were a lot of interlinking schedules and it was easy to enter conflicting information.

But those schedules get heavily scrutinized since they appear in a company’s public filings, so your attention to detail has to be outstanding: if a number is incorrect, the company might have to restate its financials and its stock price might tank.

So they cared a lot about the numbers, but no one ever asked me to fix colors or font sizes.

Q: Thanks for that breakdown.

What tips would you give to someone who wants to move into IB from an accounting or valuation background?

A: Write everything down!

Over-communication is better than forgetting to note important details your boss has requested.

Bankers appreciate over-communication far more than accounting/audit professionals do, partially because you’re always juggling multiple deals and potential deals.

So you have to be a lot better at managing processes than you do in a pure accounting/valuation role.

And the best way to do that is to ensure that everyone knows what’s going on all the time, even if it means a bit of over-communication.

Q: Right, and I think that point applies regardless of your level.

Analysts may not have as much client interaction, but they still need to communicate with their team members.

Speaking of that, at what level did they bring you in?

A: I started as a first-year analyst, despite nearly two years of previous experience, because I had never done investment banking before.

After one year on the job, they’ll review my case and see if I should be promoted to a Senior Analyst (i.e., a third-year analyst) or just become a second-year analyst.

This practice is also quite common for hires at the Associate and VP levels and beyond: if you’re coming in from another industry, they’ll start you out at a lower level and then see how you perform in your first year.

If you do well enough, you might skip a few years; if not, you might be promoted just like anyone else at your level would.

Q: Thanks for clarifying that one.

Now that you’ve been on the job for some time, what are your long-term plans?

A: I gave my boss a verbal 2-year commitment, so I plan to stay at least that long.

I’m interested in doing private equity afterward, but only if I can get there without grad school or yet another job hop.

Q: Yeah, I don’t think you’ll need an MBA with your background… though it will be somewhat easier to get into PE coming from a large bank.

Is there anything else you want to mention that we haven’t already covered?

A: I’ll make two other quick points:

  1. It’s easy to get discouraged because the recruiting process takes so long. You have to go into it with the mindset of: “I won’t get a job tomorrow, but it will work out eventually.”
  1. If you’re from an accounting or CPA background, the non-technical side may pay more dividends than your technical skills. They know you know accounting, so focus on proving your abilities in other areas.

Q: Great. Thanks for your time!

A: My pleasure.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Hi Brian,

    I currently work as an auditor at a top 5-6th accounting firm in the UK. It’s not Big 4 but it is a pretty recognizable name globally. I am placed in a regional office near London, so it is not our central office, although I work on their audits too. I am in the middle of my 3-year graduate scheme but got an offer from CF/TAS group in a much smaller firm with a not known name. So I am trying to decide if it would be wise to move to their CF or stay where I am right now with a goal of getting into IB boutique in the medium-term horizon. This smaller firm seems to have pretty strong CF/TAS for its size with deals between 5mln and 100mln. and majority around 40mln. Just as a comparison my firm works on deals between 5mln and 500mln. with most being around 50-70mln. This smaller firm is also led by partners who are ex-BB bankers. From internal networking at my current firm, I learnt that it will be very difficult to transfer to TAS/CF in London office and if successful may take up to 3 years from now, meaning I am stuck with audit for good 4-5 years. On the other hand moving to the other firm means I will have immediate hands-on experience of fin. modelling on a wide range of deals (they have very high deal flow) but I am worried their name and size may damage my chances of getting into IB later. I would appreciate your advice on this as I find it really difficult to decide what would be the best option of breaking into IB.

  2. Great post Brian! Just a few quick questions, I just started with one of the big 4 audit in US, but I am originally from Asia and my ultimate goal is to land an IB role over there (Sibgapore, HK, China, etc). As far as I know, CPA and a big 4 experience carry a lot more weight over there. So my question is should I get into TAS or IB over here before I move back? Or move back right away with my CPA/Big 4 audit experience?

    Thanks!

    1. It would be better to get into TAS or IB before you move back. I wouldn’t say Big 4 experience really carries more weight in Asia, it’s probably more helpful in EMEA. It’s still a bit easier to get in than in the US, but your chances would be better if you got into something relevant than audit before moving.

  3. Just a general question. I am in regional accounting also right now. I had the opportunity to join a BIg 4 but loved the regional firm that I interned at and like the author of the article said, you get more experience and more responsibilities at a smaller firm.

    Would it make more sense to make the transition from regional audit to transaction advisory services at a Big 4? Would that be a good stepping stone if you wanted to jump in IB or something similar?

    1. If your ultimate goal is IB, yes, I think it definitely makes sense to go into TAS at a Big 4 firm. The usual problem is that it can be difficult to move in there directly without working at the Big 4 firm elsewhere first. But it can and does happen. So if you’re thinking of moving there first, I think it’s an equally good, if not better, steppingstone than working at a valuation firm as the interviewee here did.

  4. I assume the job hopping took place within the same city? Where about is this interviewer located? How long did he spend with the valuation group?

    1. Yes, it was within the same city. We don’t disclose locations or firm names, but it was a major financial center in the US. He was in the valuation group for about a year.

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