by Brian DeChesare Comments (117)

Big 4 Transaction Services: A Saner and Easier Path to $1 Million+ Paydays?

set of american dollar bills as background

Ah, yes: making a million dollars.

It’s one of the most common goals cited by readers, commenters, and random visitors to this site who just suddenly “got interested” in the finance industry.

Everyone wants to be a millionaire, it seems.

The normal line of thinking is that fields like trading, investment banking, and private equity are faster, but much riskier ways to get there… whereas “normal company land” equals decades of toil up the ladder before reaching paradise at the end.

But there might be a “compromise” option: joining a Big 4 firm and becoming a Partner there.

And hey, some of the groups at the Big 4 are even related to banking – their internal advisory groups, valuation groups, and yes – transaction services (today’s topic).

Our interviewee today has worked in Big 4 Transaction Services for the past 7 years, and today he weighs in on just how viable this Partner-track “path” is, what you do on the job, and yes, even why bankers and Big 4 employees like each other secretly want to kill each other (Note: OK, maybe a slight exaggeration there).

Big 4 Recruiting

Q: So how’d you get into this industry?

A: Sure. First, let me start by saying that I’m working in a Scandinavian country so my experiences here may be different from what readers will see in the US, UK, and other markets.

I first started working here about 7 years ago, completing a combination of internships in audit and other departments before moving over to Transaction Services (TS).

I liked TS because it gives you more exposure to transactions and deal advisory, but they favor people with audit backgrounds and you really need to understand how companies report earnings in-depth.

I thought about going into corporate finance as well, but the Transaction Services group seemed like a perfect match for my background.

I called the Partner there, asked if they needed people, and they invited me in for an interview. It went well and they ended up giving me an offer.

The interview process was not very rigorous because I had already worked at the firm, and because they gave me the opportunity to work on a project before I joined, which was used as a “test” to see if I was good enough to work there.

So you might expect that type of “trial run” instead of the case studies, modeling tests, and brain teasers you might otherwise get.

Q: Great. We’re not going to focus on Big 4 recruiting in this interview, but did you have any thoughts on how best to stand out in the process, or what helped you the most?

A: First off, I got into the industry at a time when the economy was better and when everyone could get a job. The competition is much tougher these days and we get a lot of candidates who were clearly going for IB roles initially.

You definitely need strong accounting, project management, and “client relationship” skills, but beyond that you’ll also be tested on your personality and how you react in different situations.

At least in Scandinavia, certifications such as the CA are not helpful / do not exist, though that is obviously different in regions such as the US and UK.

They don’t really use case studies here, but sometimes they do set up “Business School Cases” where people from our firm go to universities and ask students to solve a problem and present their solution.

These are very, very helpful for the same reasons that investment banking case competitions also give you a leg-up, so I strongly recommend participating.

Big 4 Transaction Services On the Job: Got Financial Due Diligence?

Q: Great, so let’s talk about how your group is set up and the work you do in TS.

A: Here, it’s only one department that covers all sectors because I’m in a smaller country; in places like London, Frankfurt, and New York, TS is divided into different industry teams.

Another big difference is that in Europe we look at both historical financials as well as budgets and forecasts to assess whether or not business plans are realistic; in the US, though, TS groups only analyze past results and avoid weighing in on forecasts, due to SOX.

Our work is labeled “financial due diligence.”

Acquirers of companies hire us to dig into target companies’ financial statements, balance sheet items, and more, and alert them to red flags before they hit the “buy” button and lose millions / tens of millions or more on a bad acquisition.

Here are examples of some of the work we do:

  • Analyzing a P&L and determining what has driven revenue growth over the past few years – Currency fluctuations? Additional unit sales? Price increases? A changing product mix?
  • Normalizing metrics like EBITDA and EPS and pointing out non-recurring charges… and weighing in on whether or not companies’ “pro-forma” numbers are legitimate.
  • Running analysis around working capital on the Balance Sheet and determining what a company’s cash conversion cycle looks like, how much they’ve been investing in fixed assets and whether that’s sufficient, and so on.
  • Determining a company’s “true debt” level – for example, are there unfunded pension liabilities, litigation costs, or environmental liabilities that need to be factored in when calculating Enterprise Value and finalizing the deal documents?

We also work closely with legal advisers and the operational due diligence team (usually outside industry experts) to analyze these issues.

For example, the operational due diligence team might look at the company’s CapEx forecasts, see that they’re planning to spend $100 million next year, determine that’s insufficient, and then come back with a higher suggested number… which we would then have to use in our assessment of the company.

The lawyers might investigate the company’s legal structure and find unfunded pensions in a hidden subsidiary, which we would also have to factor in.

So we take into account what all these groups say and translate their findings into financial analysis and our evaluation of the target company, which we then present to the acquirer.

Q: So it sounds like you do a lot of the analysis that you see in IB, but at a much deeper level, and without a lot of the nonsense grunt work that IB analysts and associates suffer through.

A: Yeah, that’s a good way to describe it.

There’s a lot more emphasis on analysis and digging into the numbers and there’s far less writing and presentation/document processing than in IB.

Q: But I’m also assuming the compensation is also far less to compensate for that?

A: Haha, well, let’s talk about the work/life balance first.

On average, I work about 50-60 hours per week here.

Occasionally I’ll have some weekend work, and sometimes we have busy seasons with long hours; this past spring, for example, I actually had my first 100-hour workweek.

But on the whole, hours are far more reasonable than in IB.

Private equity firms and corporate M&A teams in Europe tend to go “on vacation” during the summer, so July through early September is also a more relaxed period.

The short answer on compensation is that you won’t make big money at the Big 4 until you’re on the path to becoming an Equity Partner.

To give you an idea of the numbers, a newly hired “Consultant” (entry-level staff) just out of undergraduate might earn the equivalent of a $60K USD base salary with a $10K bonus.

Then, as you move up to “Senior Consultant” (which takes ~2 years), you might earn a $80-90K USD base salary with a $20-30K USD bonus.

The next rung on the ladder is “Manager,” which takes another ~2 years; you might earn $100K+ there, with a bonus of $20-30K.

After that, you become a “Senior Manager” after another 2-3 years, then a “Director” after another few years, and then a “Junior Partner” before you become an “Equity Partner” and receive a percentage ownership in the firm (after a “buy-in” period).

I am not sure about the exact base salaries and bonuses at all those levels, but they grade your performance each year and your bonus is linked to a certain number of months’ salary.

On average, you can expect 2-3 months’ salary for your bonus – so this is completely different from IB, PE, or hedge funds, where your bonus might be a multiple of your annual base salary.

I can also tell you that the average, fully-vested Equity Partner here earns around $900K – $1 million USD in total compensation each year.

Note, however, that the numbers can actually be higher in major centers such as Frankfurt or London; I believe Equity Partners there can earn the equivalent of several million USD per year, and I’ve heard of one Partner who allegedly made $10 million USD (but that’s the rare exception rather than the rule).

Q: Wow, thanks for that data dump.

How hard is it to actually move up the ladder?

A: It’s very difficult beyond the “Manager” level.

Sure, the work isn’t as intense as what you see in IB, but people just take more of a “grind it out for years/decades” mentality… whereas you see much more rapid turnover in finance.

Some people just stay for a few years to get the training and knowledge, and then move into roles with better pay.

But among those who stay, it is definitely an “up or out” culture because they’re not going to let you stay on as a Manager or Senior Manager or Director indefinitely.

Some people jump through the levels and climb the ladder more rapidly (extreme high performers).

So sometimes you see promotion times reduced from 3 years down to 1-2 years, but it’s still very rare.

Others stay, attempt to get on the Partner-track, but then find out it’s not possible, so they move onto a career elsewhere.

 

Q: Numbers-wise, can you give us a sense of how difficult it is to make Partner?

A: Sure… in a given year in my country, we might hire around 100 people out of university.

Of those, around 1-2 will go on to become Junior Partners.

And even fewer will ever become Equity Partners – so your chances of reaching the top are less than 1-2%.

Usually, you need to bring in around $2 million USD of revenue to become a Junior Partner; to become an Equity Partner, you have to present a business case around a specific sector you want to focus on and bring in at least $4-5 million USD of revenue.

Again, the numbers may be different in other regions but the basic point is simple: you need to generate sales that are a multiple of your compensation to advance to this level.

We might earn around $200-300K USD on the average financial due diligence assignment for a medium-sized company, so at the Equity Partner level you’ll need to bring in 15-25 of these assignments each year.

That’s very, very difficult and it is arguably even more difficult than what investment bankers do to source deals – because it’s easier to earn higher fees on only a few deals than it is to earn lower fees on dozens of smaller assignments.

Why Transaction Services Staff and Bankers Are Never, Ever, Ever Getting Back Together

Q: Let’s talk more about how Transaction Services compares to investment banking. What are some other differences, and why do the two sides not particularly like each other?

A: Besides the work itself, the key difference is that bankers focus on getting the deal done, getting paid, and moving on.

Here, by contrast, we get paid regardless of whether the deal ever closes. As a result, we have different goals and that inevitably creates tension.

Often, bankers will suggest that we “soften” the language used in our due diligence reports because they want to get the deal done without the buyer pulling out at the last-minute.

In theory, we should ignore those requests and be as truthful as possible.

In reality, often we’ll follow what they say or reflect at least some of it because we want to get hired by that bank in the future.

So that is why the two sides misunderstand and tend to mistrust each other.

Also, sometimes we “look down” on bankers because their accounting and technical knowledge is sometimes not as good as ours.

We dig into the numbers in greater depth than bankers, which sometimes results in them “offloading” work onto our team to save time.

The Transaction Services group is definitely more respected in Europe than in the US, so the exit opportunities are also better here.

Lots of guys here have gone into PE, some have joined large banks, and some have gone into corporate development.

Q: Another difference might be the way bankers and Big 4 employees view money and “models and bottles.”

A: Definitely. Even the Partners earning $1 million+ here can be stingy and they don’t like to spend money on luxury goods, clubbing, expensive cars, etc.

Here’s a story for you: a Partner here was once out with friends at a café near the office. They were going to get a cup of coffee that cost around $10 USD, which is exorbitant, but hey, it’s still just $10 USD… and this guy was making $1 million per year.

Instead of paying for the coffee, he actually went all the way back to the office, got coffee there, and then came back to join his friends.

And many Partners will drive cheap / old cars or live in smaller places to save money. They don’t skimp on clothes quite as much, though they probably wouldn’t spring for $3,000+ suits, either.

Q: Can I slap that Partner? Wow.

Given the lower fees and higher technical rigor, do you think there’s a chance that Big 4 advisory / transaction services groups will become competitive with the large banks?

A: No. The problem is that much of the work that Big 4 firms do is skill-based, as opposed to relationship-based.

Anyone can reconcile bank statements and trial balances, so competition in areas like audit and even financial due diligence is brutal.

In the post-financial crisis world, competition for TS assignments among the Big 4 has been heating up as well, so even our own assignment fees and hourly rates are under pressure.

Think about a banker setting up a deal, though: he might be the only person on the planet that can connect a particular buyer and seller.

Sure, the technical skills required are far lower, but bankers earn much higher fees because of their access to so many buyers and sellers and their ability to make deals happen.

The two fields are so fundamentally different that it’s unlikely the Big 4 will ever become competitive with large banks.

Q: Yeah, that’s what people don’t seem to “get” when they wonder why bankers get paid so much… as much as I’ve explained it before.

Are you planning to stick around for the long-term?

A: I’m thinking of staying for a couple more years and then moving into private equity or equity research.

I’m actually leaning toward ER because it’s more of a team environment, whereas in PE you’re more isolated – especially at the smaller firms.

There are also advantages to the networking opportunities and events offered by the large banks.

Most Big 4 firms are very, very social with frequent happy hours on Friday, weekend trips, and group dinners – and I don’t want to lose that aspect even if I have to work longer hours.

Q: Great. Any final thoughts on who would fit in best with the Transaction Services group at a Big 4 firm?

A: Ironically, a lot of candidates get rejected from IB, come join the TS team, and then find that they like the work more than the work in IB since it’s more analytical.

So if you like to dig into the numbers, analyze the financial statements in-depth, and take on more of a “detective” role, and you dislike the presentations, written documents, and administrative work you have to complete in IB, this is the group for you.

I’ve seen people who have worked at bulge bracket banks for 2 years that don’t even know how to build a 3-statement projection model – whereas you get immediate exposure to the technical side here.

Of course, you have to be fine with more of a hierarchy, slower advancement, and lower pay until you reach the very top (if you reach the top).

Q: Awesome. Thanks for your insights!

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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Comments

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  1. Hi Brian, great interview! Give me a lot of new perspectives. One thing that I feel curious is that in the interview it said bankers didn’t dive the technical parts as deep as TS guys. So in the real work, how technical complicated it is required for IB/(or even PE)? Seems to me during the interviews they are all required to do a modeling test. Or is it just high bar to enter but the daily work is much easier? Thanks.

  2. Hello Brian,

    What are some good books and periodicals about TAS ?

    1. Sorry, I don’t know offhand. Maybe find a corporate finance or M&A-related book.

  3. Hi Brian,

    I’ve spent hours on your article and want to thank you for the information you provide us.

    I wanted to ask if I made the right choice: I accepted the FDD in a big 4 fresh out of undergrad in Singapore, but had sell side ER offers in Indonesia from CLSA and Macquarie. My sister and all my friends who are working in ER told me NOT to work in Indonesia, but to take the Singapore offer because I intend to go back to Canada in the future.

    Do people in America and Canada see work experience in Indonesia as poorly as Indonesians themselves? I understand the work ethics here aren’t great, but do people abroad see Singapore work experience better than countries like Indonesia? Did I make a mistake? (Salary for ER is only 800 usd per month in indo and living expenses are high now)

    1. Singapore gives you an advantage over Indonesia, but I’m not sure that Big 4 FDD was the best option if your long-term goal is IB. It’s probably easier to move from ER to IB than it is to move from a Big 4 firm. But I don’t think there’s a huge difference either way.

  4. Hello
    I am currently working in audit in one of the big 4 in India.
    I have offer to move to M&A Taxation in other big 4.
    For M&A I.B. will they prefer my current audit experience or M&A Taxation offered role.
    Pls guide I have only one day to accept the offer.

    1. I don’t think there’s a huge difference, but M&A Tax might be marginally better just because it has “M&A” in the title. But both tax and audit are still perceived as being distant from IB.

  5. The interview mentioned that the work he did in big 4 was more technical than that in IB, then why PE still prefer to hire from IB?

    1. Because of all the non-technical skills you gain in IB: Coordinating different parties, dealing with crazy people, working 100 hours per week while a deal is closing and not dying in the process, understanding how deals work from beginning to end, etc.

  6. Here in India, one of the Big 4 TAS division has three sub divisions: Due Diligence, valuation and Lead Advisory. Lead Advisory is what is commonly known as front end M&A and is more or less likened to IBD. I know many people who moved from Lead Advisory, TAS to PE firms, but would love to know if anyone here can share some experiences about the same. This interview is with someone from Due diligence team, would like to know more about Lead advisory in terms of work and exit opportunities.

  7. Hi Nicole/Brian,

    In quite a conundrum, at the Big 4 TS right now and need some career advice albeit wish I could take this offline as my situation is unique and several colleagues and friends are always on this site (great job btw!).

    Anyway I could get some advice offline?

    1. Feel free to reply to one of our newsletters. However, given my current schedule (roughly 200 emails per day, 10,000 words of content, and constant emergencies), it is unlikely I will be able to respond quickly.

  8. Actually, I am student from Hong Kong who receive the offer from EY for assurance as well as PWC for risk assurance. And I am still thinking which one I should go for. As I found great interest in TS. I know that EY assurance will be easier to transfer to TS. However, it seems risk assurance is difficult to get in compared with assurance. Is it possible to transfer from risk assurance to TS later on because I know that PWC risk assurance mainly focus on 1. internal audit, 2. Compliance 3. Technology Service like cyber security and IT audit

    1. Not really sure about that one, unfortunately – other readers with Big 4 experience may be able to advise you on it.

  9. Hi Brian,

    Great post! Just a quick question, I just started in the audit practice with one of the big 4 and I want to move to the FDD practice. As far as I know, they usually take in senior with at least 3 years of audit experience, but I am trying to make the move ASAP if possible. In terms of networking, when do you think its the best time to start reaching out to the TAS team?

    Thanks!

  10. Hi.
    I’m glad for the info sharing in this post.

    I at the middle of my career crossroad;
    Currently I work as an Internal Auditor in a big group of companies.. Within my 2 years of working here.. I get to audit subsidiaries across 4 different industries. From my exposure, I began to realize that the only function that I love in Internal Audit is Business Advisory role (process efficiency), definitely not risk and compliance assurance part.

    I am thinking to apply to Big 4 advisory role. From this post I realize that I am also interested in TS. I am an accounting background who is currently pursuing my professional paper CA and I have about 1 year experience in financial reporting.

    if I join TS, will the Big 4 consider my 2 years of experience in terms of salary offer? or is it better for me to join Big 4’s internal audit instead?

    1. Yes, they will consider your 2 years of experience. But it’s probably easier to join the Big 4 firm in an audit role first and then move into TS since they always consider internal candidates first.

  11. Hi Brian/Nicole,

    I’m currently working in group FP&A for a bulge bracket UK bank (background in big 4 FS audit) I’m in my fifth year of employment after uni and I’m looking to move into something different

    I have interviews for FS TS at a big 4, technical accounting advisory internally at the bank and potentially ER within the bank although job openings are slim

    My real question is, is it worth it moving into TS at this stage of my career (I’m 29) or shall I move internally to other finance roles in the bank? (Pay is somewhat higher in finance and usually caps out at £120k at VP level)

    1. I’m not sure what benefit you would gain from moving into TS at this stage since the pay is lower and TS won’t necessarily help more with moving into IB/PE/ER/other fields if you want to do that. So I think you’re better off moving around internally into one of those types of roles if you want to do that eventually.

      1. Sorry just to clarify, I am not currently on that salary, that is the ceiling for the kind of role I am in. My salary is more in line with what a TS manager would receive so would be similar if I moved

        I’m more concerned with whether doing TS now is risky given I’m 5 years in my career with no discernible IB experience or whether a few years in TS will help me break into a boutique or mid market PE house. ER is a lot more flexible in London if you have the ACA

        1. I think it would be tough to get into PE if you already have 5 years of experience in FP&A without working on transactions. You could still do it, but you would have had a better shot after 2-3 years of experience there.

  12. Thanks for the links.

    I got the idea that internal M&A would be great. One of those interviewers mentioned that as a part of the internal M&A team, you would get to work on a deal from start to finish, including the modeling and valuation (which is what I really want). Then what does the Business Valuation and Modeling team do? And what about the TAS team then?

    I read somewhere else that the Financal DD that one does at a part of the TAS team is more valued by PEs. Does the internal M&A team also participate in financial DD? It would be great if you could throw some light on the nature of the work that the internal M&A, modeling and TAS teams do.

    1. M&I - Nicole

      I believe the internal M&A team does participate in financial DD, though I have not worked in TAS so I’d leave this and the other questions for other readers to answer.

      And if you go to the links below, you should have more insights on your questions:
      https://www.mergersandinquisitions.com/transaction-advisory-services-to-investment-banking-mba-level/
      https://www.mergersandinquisitions.com/big-4-transaction-advisory-services-corporate-development-financial-institution/

  13. What’s the best team within the Big4 deal advisory division to get into PE. I understand that they have multiple teams called M&A, TAS (which I understand is financial DD), Valuation and modelling, Strategy (Commercial DD) and Restructuring. From what I understand so far, it should be the first three, but what’s the difference in the work (more importantly between M&A and TAS) and which would provide the best platform to get into a MM PE shop? (Regional focus: Germany)

  14. Hi M&I!

    I have received offers from two different subdivisions within TS at one of the big 4s in Scandinavia.

    1. Financial Due Diligence
    2. Valuation & Business modelling

    Of the two above, which one would be more ideally to choose if I want to maximize my exit opportunities (going into either PE, HF or IBD)?

    1. M&I - Nicole

      I’d probably go with 1.

  15. Manager TS PWC LATAM

    That was a great article!

    I currently work in PwC Chile as a Manager in Financial Due Diligence

    Your experience was really interested, and I found specially interesting your mention about professional qualifications.

    I am currently planning to move to a TS Big 4 in Europe (ideally, to a country where I have to speak English to work). The problem that I am facing a huge barrier with these professional qualifications, that in Spain (where I am from) and Chile are not even taken into consideration at these jobs.

    I would really appreciate your honest opinion regarding how this move can be done at Manager level, without any ACCA, CA, etc. in your CV.

    Thanks and congatulations for your blog!!

    1. Nicole Lee

      It depends on whether you have the relevant working visa or not. Otherwise its probably best to transfer internally.

  16. Hi M&I,

    Im in TS at the moment at one of the big 4 with 2 years of work experience here in the Middle East, due to the job requirement I’ve completed my exams towards becoming a UK chartered accountant. However I am torn on what the next step should be, since I am in a good situation I’m considering pursuing my MBA in another 3 years. Therefore I am between the CFA or a Masters in Finance (distance learning -> Penn state, Boston Uni, SOAS in London), my thoughts are: I don’t want to appear confused and have two designations next to my name with the CFA and it’s a long commitment. Everyone has a masters, i need one to remain competitive + leverage for a better MBA program. What do you guys think?

    1. M&I - Nicole

      I don’t think having 2 is a problem if you can handle the time commitment. I’d say if you can get into a target MF that would be useful but a distance one wouldn’t be terribly relevant. Otherwise a CFA is useful for buy side roles

      1. Thanks for getting back Nicole.
        Following up, what is the difference between a full time or distance MF (are you thinking on campus recruting?) on your CV?
        And which of the two (CFA vs. MF) do you think would be better to leverage for a target MBA?
        Seems like im asking you guys career counselling questions not related to IB, therefore in that case, which of the two is better for IB?? :)

        1. M&I - Nicole

          A full time program is likely to be regarded more highly vs a distance MF. I’d say it depends on the name of the school (MF programme).

  17. Hello

    I am in a bit of a situation and unsure how to proceed.

    Basically, I work for a big 4 in tax, an area I don’t really want to be in, ideally I want to be in corporate specifically m&a advisory.

    I’ve just progressed with an application for a role within corporate finance restructuring, in the solvent liquidaton. Ideally the role is quite junior, not requiring a degree or chartered qualification (which I don’t have) but the is paying quite low (early 20s) and job spec didn’t specify any training involved, I am concerned the role isn’t quite what I think.

    Does anyone have any insight, I know that from my exp within the big 4 even if it isn’t mentioned, training for qualifications are almost certain.

    As someone without the right qualifications finding a junior opportunity in corporate finance has been incredibly difficult, is it foolish of me to not go for it ? I know within tax a transfer (ie corporate to hnw) is quite common, is that the same in CF, could I see myself from solvent liquidation (restructuring) to m&a (advisory) with a charter in 5 years time ?

    I really want to ensure I make the right decision before approaching my manager for transfer approval

    Many thanks
    jobo

    1. M&I - Nicole

      Yes this is doable. I’d say move into corporate finance restructuring first and see how that goes. It is still one step ahead of being in big 4 tax.

  18. Hi,

    Thank you for this great article!

    I have a quick question.. What about the management consulting division in big 4 firms? Is that irrelevant experience if I have my eyes on banking in the future? Is it hard to transit from management consulting division to banking/buy-side funds (e.g. private equity, hedge funds, etc.) in general?

    Thanks you!

    1. M&I - Nicole

      I wouldn’t say it is particularly relevant, but people usually get a degree from target and transition from MC to buy-side/banking roles.

  19. DeloitteCFA

    Hi Brian, Hi Nicole,

    Many thanks for the fantastic article.

    In terms of exit opportunities I can add McKinsey Corporate Finance.

    I refer to their own job posting, which states as requirement:

    – 3-4 years leading IB or Transaction Services.

    Website: https://mckinsey.secure.force.com/EP/job_details?jid=a0xA0000006GWnu

    I have an offer for Deloitte Corporate Finance Advisory. Do you think my exit options are similar to Transaction Services, or very limited? I appreciate an honest and direct answer since I have to decide on the offer within one week. :)

    Many thanks and have a great weekend!

    1. M&I - Nicole

      Yes, I’d say so.

      1. DeloitteCFA

        Yes, exit opps are more limited,

        or..

        Yes, they are similar to TS?

        Could you please clarify? Thank you :)

        1. M&I - Nicole

          I am not 100% sure but I’d say they maybe similar to TAS depending on what you’ll be doing there.

  20. Hi Brian,

    I have been following M&I for 3 years now and it has been very helpful! I had one question – How does Big4 M&A advisory differ from M&A advisory at I-Banks?

    Thanks!

    1. M&I - Nicole

      In terms of transactions, I believe you’re likely to be exposed to larger transactions and more established corporate clients at I-banks, at least the top few ones. In terms of day to day, I believe your hours at a big 4 would be better than in an IB though the pay may not be comparable

      1. Thanks for the reply Nicole! A quick follow-up: will the day-to-day work that an analyst / associate does differ in anyway?

        1. M&I - Nicole

          In comparison to what roles?

          1. An IB M&A analyst / associate role vs a big4 analyst/associate role… will the day-to-day work differ?

          2. M&I - Nicole

            I believe the exposure and caliber of work will be different, though I may be wrong. In terms of day-to-day work, I think it is somewhat similar though your hours are probably less in an Accounting firm. I’d leave readers who’ve worked in both to comment.

  21. TS Intern

    I’m currently only an intern within the TS Valuation group at a Big 4 firm but I will share some of my experience and perspective from what I’ve seen (keep in mind I don’t have much knowledge of the financial due diligence perspective). In the past TS groups have primarily recruited people from other areas within the firm or outside of the firm, but in recent years there has been more recruiting straight from undergrad programs. TS associates recruited from undergrad have to be the best performers at their respective schools to be considered for the positions since there are very few open positions in a given year. Most, if not all, of the associates I’ve worked with who’ve come straight from undergrad had offers at boutique or middle market investment banks and a couple at bulge brackets but they chose TS because they believed they would learn just as much in TS as in IB but not have to work the insane hours or do as much meaningless work. In other words they wanted to have lives outside of work. The caveat is they sacrificed the IB paychecks and relationships.

    Next we have to look at exit opportunities (I’m going to focus on associates and senior associates because that’s where I’m familiar). In my group 4 people had left in the past year, 1 moved to a corp dev position, 1 moved to middle-market PE firm, 1 moved to a middle-market IB, and 1 moved to a bulge bracket analyst position. From what I’ve seen, TS positions you well to enter middle-market IBs and PEs because of its strong technical and analytical skills emphasis. If your end goal is to work at a small to mid-market PE, go to business school, or work in Corp dev, TS seems to set you up very well without having to suffer through 2-3 years of IB analyst hell. If you want to work for a large PE, a large hedge fund, or work for a bulge bracket above analyst level though, this seems to be much much harder from TS than from a bulge bracket IB. No movement from TS to other finance areas is a cake-walk though; at times you still have to go out of your way to make the right connections.

    Overall, from my perspective becoming a TS associate seems to be a very good alternative for those who want to enter high finance but want to have work-life balance, and want to focus on learning and developing very good technical and analytical skills. It doesn’t seem to serve as a complete substitute for IB though as I stated before you won’t have as high a level of finance exit opportunities, as much of an established network, or get paid as much as an IB analyst.

    1. M&I - Nicole

      Thanks for your input!

  22. How can i jump into TS career? does big 4 aubit have any relevant to this? which competencies are required to work well with TS?

    1. M&I - Nicole

      Yes that would help. Analytical and valuation skills would be useful

  23. Hey Brian

    Am a newbie here, but I should confess the articles here have been enlightening.

    I need help in deciding between two career opportunities. I have offers from two of the Big 4 advisory firms. The details of the roles and and factors to be considered in decision making are as below:

    Option 1: Big 4 firm with the biggest TAS team in the country. But I have been offered a role in the transaction support (financial due diligence).
    – Marginally higher rewarding
    – same location as my current city (so nil opportunity cost)

    Option 2: Big 4 with relatively smaller TAS team. I have been offered a role in their investment banking team (I believe the role would also include debt syndication).
    – Requires me to relocate from my current city (opportunity cost would be ~30% of my CTC)
    – End to end role; this gives me more scope for learning

    While for most obvious reasons I am cringed towards the latter option, I would like to get your views on the same and also know about exit options for both of the above. You could also let me know if there are other factors I should consider in making my career choice.

    1. M&I - Nicole

      Yes if you want to work in IB in the long run, I’d choose 2, especially if you like the city. I’d make sure you are clear re. your duties, responsibilities and tasks if you decide to relocate just so there are no surprises. Make sure things are written down clearly and that your contract states your responsibilities. You don’t want to move and be shifted into doing something else.

  24. Hi everyone, have always been a fan of the site and have a question regarding transitioning out of TAS into banking.

    I’m coming to the end of my first year in TAS at a big four in London, where graduates are hired into training contracts for 3 years. During this time they get their ACA qualifications (similar to CPA, but not just auditors do it in the UK), and training fees get clawed back if you exit before 3 years. I have my eye on exiting into investment banking, but am unsure about the timeline of my efforts.

    So far I get a lot of technical exposure (valuation, accounting, tax, etc) through my ACA studies and my self-study with online materials, and my boyfriend who works in M&A. I also make an effort to get to know people widely at my firm. I went to a well-known school in London for my Master’s and often spend my free time with friends who work in BBs and elsewhere in finance. But I’m not sure when to start networking efforts where the job intent is more obvious? When should I start “informational interview” type interactions given my contract (which would require my having to explain why I’m interested in a new job just one year into the big4)? Thanks in advance for your help.

    1. M&I - Nicole

      I think the best time to start networking is now. It takes months or sometimes years to transition so having a list of contacts would really facilitate and expedite that process I believe. In terms of explaining your interest in a new role after one-year you should just focus on why you want to do banking and what you have what it takes. Don’t need to stress on the one-year experience. Interviewers may ask you, but if they select you in the first place, this means they’re fine with you transitioning after one-year. And it may be better because it is always easier to transition when you’re younger; you can start off again as a first year analyst and don’t have to sacrifice too much (just one year at TAS) for that first year title. If you transition later, they may give you a lower title after a few years and you have to “compromise” more then

  25. So is Banking(including PE/HF) still the “sanest/easiest” way to that $1 mill paycheck dream? What about options like Quants or prop/HF trading?

  26. This is just what I was looking for! Always wondered how Big 4 TS/FAS teams differed from IBs because in Korea, big 4 firms appear in the M&A financial advisory league table along with other BBs. I had a chance to ask several former employees from these big 4 TS teams in Korea but they couldn’t really tell what was the difference. Thank you for such a valuable insight!

    1. M&I - Nicole

      Thanks for visiting.

  27. Hey guys, I’m an associate in TS Valuation (NY)… if anyone has any questions on the group, feel free to shoot me an email. jckund1@gmail.com

    1. Thanks for volunteering to answer questions!

  28. Baker’s paid high as compare to other professional jobs, hence the banking course is the first choice of financial courses students in Bangalore.

  29. Hello Brian and everyone,

    Great article! It’s actually relevant to a dilemma I have right now, and I thought that maybe you can help.

    I live in an emerging market and I have one year of experience in business valuation. My plan is to find a new job, work there for few years, get an MBA in the US, do IB, and then transfer to a value HF.

    I’ve already been interviewing for few jobs and have some different offers lined up. Which one of them do you think is the optimal, given my career goals?

    1. Global fixed income analyst for a local AM
    2. BIG 4 M&A / Due Diligence team (pretty similar to the one described in the article)

    Thanks a lot!

    1. M&I - Nicole

      Perhaps 2 maybe more relevant to IB. In terms of getting into business school, it depends on your experience, application and references so finding a good fit is very important

  30. Hey there, very new to all this but am loving the site and have one question.

    I am getting a masters in accounting at a large school which the Big 4 heavily recruits out of. I usually only hear of people going tax or audit, so is it possible to recruit for TS out of school?

    Thanks

    1. M&I - Nicole

      Yes I think so. I’d suggest you to speak with the recruiting reps for more details

  31. Hey Brian –

    A quick question: when it comes to MBA recruiting for IB/PE, would you recommend Duke (Fuqua) & Kellogg over Cornell?

    Also…according to the BusinessWeek ranking, Yale SOM is ranked at 19th in 2012 – personally I don’t think is a true reflection of the school. Do you know if banks/PE firms recruit a lot from Yale MBA graduates?

    Thanks!

    1. Some do, but I think the issue is that class sizes at Yale are just smaller in general so that limits opportunities. A good percentage still go into IB/PE, but both the percentage and absolute # are probably higher elsewhere.

      Yes, I would probably take Duke or Kellogg over Cornell, at least for IB/PE recruiting.

  32. Do you think the long-term trend on Wall Street is that there will be much fewer front office jobs due to all these financial regulations going on? Basel 3 will decrease the profit margins on market making. Many OTC financial instruments, such as CDSs, will be exchange traded. Automated trades are increasingly common. Higher lending standards and covenant-heavy debt would set the stage for a smaller leveraged buyout market. Hedge funds are under heavier compliance standards as the largest HFs have to reveal all their long positions to the SEC. IPO volume has never recovered to 1990s level, particularly for small firms. Stock prices have completely recovered but after adjusting for the higher demand for compliance, IT, and risk professionals, NYC securities employment is at 2009 levels.

    1. Final point: More people are choosing ETFs rather than mutual funds.

    2. Yes, but isn’t that what has been discussed on this site for years now?

      All your points are true, but the main issue is that the entire financial system is unstable and has been for decades. So everything from finance to normal jobs will come crashing down, the only question is when.

  33. Big 4 M&A Manager

    Ok first time poster; but frequent reader. [Actually come to think of it, I don’t think I’ve ever posted on a website before]. I discovered this website not too long after breaking into M&A, and have found a lot of the information on here to be useful throughout the years.

    I thought the interviewee gave a pretty good depiction of Big 4 M&A, but I thought I’d chime in as a Big 4 TS/TAS Manager in a large market U.S office. For purposes of background, I actually broke into Big 4 M&A from F500 CorpDev. [FYI : Non-traditional (CPA) / Non-target (MBA) background – It’s not as crazy as it sounds as there are others at my firm that have a similar background].

    Like I said, the interviewee touched on most of this, but I thought I’d add a little color from my personal experience, specifically in areas where I have seen things a little differently.

    While its typical to hire select individuals who are top-rated auditors into TS/TAS, Partners actually like to hire from outside the firm as well. External candidates bring either competing firm or specialized industry knowledge that can either better the practice or serve as a value-add to clients. Out of CorpDev, I was specifically told that they liked the fact that I have worked on the entire transaction cycle, have an understanding of what clients find useful from M&A advisors (having sat on the other side of the table), and most importantly my contacts in the field – lawyers, bankers, potential clients, etc. – that can be leveraged to generate business.

    As far as services go, I would like to clarify this misunderstanding that TS/TAS folks in the U.S. don’t work with financial projections. While that’s true to an extent (i.e. we don’t actually work in the financial model per se), but we certainly spend a lot of time understanding the assumptions used to build them and the validity of the assertions made. We take this information back to our clients and try to help quantify a range from any value enhancers and/or key risks that should be factored into the purchase price and/or purchase documents. So in other words, we advise on the projections, we just can’t build or modify them.

    There is a TON of client exposure in the job. From Staff through Partner ranks, there is heavy interaction with Target CEOs and CFOs, Strategic Client CorpDev Teams, and Private Equity MDs. Not only is the learning experience uncanny, it leads me to my next point…

    …Exit opportunities. I know a number of people that have transitioned from TS/TAS to Corporate Finance, CorpDev, PE, IBD, and Equity Research partly because of the experience gained, but also the contacts they have made along the way. [Note: For reference, I put those in the order of where I’ve seen most people take jobs].

    What else…I would say I end up working about 70-80 hours a week, but I am in an industry-specific M&A group. Most of the generalists work 50-60 hours a week (must be nice). I can also confirm the salary is on par with what the interviewee said (at least at the Manager level). However, our group tends to make a lot more Partners each year [1 in 100 is low in our group]. And by the way, the Partners in our group are definitely not cheap. When we travel, we stay at the nicest hotels, dine at the finest restaurants, and drink (a lot) at the swankiest bars, clubs, and lounges.

    [Note: I know a lot of colleagues who visit this site and I request that you keep my name / firm / industry anonymous].

    1. Thanks for adding all that!

      Yes, I wasn’t sure about that point on financial projections but I left it in since I wasn’t sure exactly what the interviewee was referring to re: SOX.

      No worries on your name / firm /industry – if you did not post any of that information here, it is impossible for any of us to retrieve any of that.

    2. Thanks for the great input “Big 4 M&A Manager”. I am currently working in the M&A / Corporate Finance Department of Big4 company in Central Europe.
      I’m wondering how the M&A advisory services of the Big 4 are rated by the market?
      In Central Europe the Big 4 have positioned themselves very well in the middle market.
      So I’m wondering how the Big 4 M&A advisory is positioned in the US market and how well their deal flow is?

      1. Big 4 M&A Manager

        Honestly, deal flow is pretty voluminous, especially in my particular industry focus. I would say from what I’ve seen across our firm, we have a steady set of high-end private equity clients that use us for their deal work on a recurring basis. The same can be said for a select group of F500 strategics as well, one of which I’ve heard uses our firm to shadow the CorpDev team on all deals. But for the most part, we are a strong play in the middle market. I have colleagues at other Big 4 firms that would echo that last thought as well. Hope this helps.

  34. Big 4 TS gone to MM IB

    It’s definitely easier to move into TS once you’re in the firm rather than joining directly from outside. Networking makes it much easier too, I’ve seen people move directly from audit and have to go through a lot of tests and internal screening and others move straight over by just getting friendly with the right partner/director.

    I moved from audit to TS before leaving for MM IB, TS gives you a lot more exit opportunities than audit-it’s worth the time to get in. Like Brian said it took me about a year to organise the move.

    1. Thanks! Will work on it!

    2. Yup, agreed. We are actually running an upcoming interview on this topic of how to move into TS if you’re already at the firm.

  35. Hi,

    I am currently working at Deloitte audit in U.S. I am just wondering is it possible for me to jump over to transaction services within Deloitte or other big 4s?

    Thanks,
    Regards,
    Gilbert

    1. Yes, it’s possible, but it’s pretty tough – an upcoming interview covers this transition, actually. The key is to get started networking at least 1 year in advance with people in TS / internal advisory (most firms recruit internally in the spring) so that you’re ahead of everyone else applying. They usually only accept a few each year, but if you get started early and prepare more than everyone else it’s doable.

    2. Get 2 or 1 ratings consistently, network, and let your counselor know sooner than later.

  36. Hi,

    I have an internship 2nd round interview at the major healthcare provider in my area. The internship is for accounting and finance.

    One of the things I am required to bring is a printed excel file that I distribute during my interview to the managers and seniors interviewing me.

    The problem is that my internship last year was at a bank and I couldn’t take anything I worked on due to privacy and confidential reasons.

    Any ideas about what would be a good document that I could make that would be both relevant to the healthcare industry while demonstrating my knowledge in excel?

    thanks! great article by the way.

    1. Maybe show a simple revenue model or DCF for a biotech or pharmaceutical company and explain how you project revenue and profit streams by specific products… for more ideas, take a look at:

      https://www.mergersandinquisitions.com/healthcare-investment-banking/

      https://breakingintowallstreet.com/biws/healthcare-dcf-3/

  37. Big 4 TS gone to MM IB

    On the size of client query I think it’s important to separate TS and CF in the big 4.

    In the UK big 4 TS are the best at what they do, so any large deal requiring diligence will go through them, meaning they work with very large clients and on headline deals.

    Big 4 corporate finance (their version of IB) are considered pretty low on the ladder so will only work on MM deals and even there are losing out to other MM competitors now a days.

    1. Yup that is a very good point. There is a big difference between TS and CF at the Big 4 and CF will generally deal with smaller clients.

  38. Not bad info. but let’s have an interview with someone in Big 4 TS in the United States, to provide us with more relevant data.

    1. Thanks, that one is on the list.

  39. “At least in Scandinavia, certifications such as the CA are not helpful / do not exist, though that is obviously different in regions such as the US and UK.”

    Kinda disheartening to know cause im studying to be a CA and might go to scandinavia lol but yea its more valued in US UK etc

    The author said hes working in Scandinavia and is in a small country , so i think it could be Denmark or at the most Iceland.

    The nature of work described is very good i must say and sounds more technical than I-Banking and also sort of matches my interest.

    Maybe Brian you could have elaborated more on recruiting and talked about language barrier in Scandinavia?

    And not buying suits and cars is common up there , i have a couple of friends in scandinavia and they live a very simple life , dont believe in showing off.So what to some maybe cheap, in scandinavia it could well be called being careful

    1. I didn’t want to get into it because the interview was already quite long, but I’ll see if we can feature something else on Scandinavia in the future. From what he said, recruiting sounded relatively standard. Not sure about language requirements, but in some countries such as Denmark I think you can get by with English.

  40. thanks for the share! but i don’t quite get idea of the relation between SOX and the forecasts. would you explain more?

    1. Actually not sure of the specifics there since you don’t really deal with SOX in finance, but I think its falls under Section 2 of the law “Auditor Independence” (http://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act) where auditors cannot provide “non-audit services” for the same clients.

      So Big 4 firms could audit a company’s historical financials but could not create or weigh in on future forecasts… I believe.

      Anyone else feel free to correct that because it is just a conjecture.

  41. Abhinav Venkatesh

    Hello Brian,

    As usual a very good article on banking/financial services..I have followed your previous posts especially regarding the case where I banks will make money. Your primary reason that the Big 4 cannot eat into the I banks’ bread and butter is that the big 4 work more on technical expertise and not on a relationship basis..Wouldn’t you give importance to the fact the big 4 pretty much provide all kind of services ranging from IT solutions, Audits, Taxes, Management consultancy etc etc…Wouldn’t this allow them to build a relationship with client over a period of time?? and compared to the I banks the big 4 have’nt faced bad press/negative publicity…

    Many Thanks for your time and please keep the great posts coming

    Regards

    1. That is true, and those added services can cause companies to pay for services via the Big 4 rather than going through traditional banks.

      But when all is said and done, most of those services are still “skill-based.”

      So if a company really needs to get a deal done and only 1 person in the world has the connections to do it, the company will still hire that person (usually a banker).

      1. Abhinav Venkatesh

        THank you Brian..Would love to see an article from you sometime comparing the relative strengths of bankers, accountasnt and CFA’s (I know you hate em!!)in terms of who is/can be the rainmaker..

        1. Thanks, will see what we can do for that one.

  42. Hi,

    I am a junior in Pittsburgh PA at one of the top 2 schools in the area.

    Currently, I have an offer to go work for a Big 4 in their Wealth Management Tax Services during the winter in their busy season (Jan.-April).

    This summer I received an offer from a Top 5 firm in the area to go do accounting for them in tax and audit. But I am also waiting to hear back from the largest employer in Pittsburgh, a non-profit group that owns hospitals and insurance in the area. That is geared more towards finance and accounting as opposed to the summer firm which is just accounting.

    I am talking to this accounting firm and trying to get in with their Wealth Management service during the summer and gain some experience there.

    If I can get into their Wealth Management service during the summer and work with them, do you think that would be better than the hospital finance opportunity?

    thanks

    1. I would say so, yes, but it’s hard to say without knowing more about the finance/accounting internship at the hospital. The brand name of the Big 4 firm will help you quite a bit vs. the hospital, but the work itself at the hospital may be more relevant.

      1. thanks for the quick response.

        that is what I was thinking. but what would be the type of things that wealth management does at an accounting firm and what do you think an intern could do?

        1. Hard to say, but most likely helping with reporting, checking financial statements and tax calculations, and doing any research they need on those. It’s less relevant than something like budgeting / forecasting / valuation, but if you spin it properly it could still help.

  43. Ex-Big 4 TS

    As an Ex-Big 4 TS in Canada, I would say the above interview is fairly accurate. You really have to love the deal related work because the compensation along the way isn’t nearly as lucrative as IB. TS probably dives deeper into the deal than IB though from an analytics perspective.

    As with any partner related promotion in a Big 4 setting, it comes down to your timing and ability to bring in business more than anything.

    I would say the title is a bit misleading since probably 1 out of 1,000 people in TS make it to equity partner. To say this is an “alternative” path to seven figures is not accurate.

    1. Thanks. Right, that is why the headline was a question rather than a statement of fact. The purpose of the article was to answer that question and see if, in fact, it is a saner/easier path to 7-figure income. And the conclusion is that it is not, although it is easier in superficial ways such as the # of hours worked initially.

  44. Also heard that most of the Big 4 advisory clients are mid-market size companies (<$200M enterprise value) – is that true?

    So the interviewee mentioned is more analytical than typical IB – what about client exposure? Do juniors in advisory at Big 4 get any of that at all?

    1. Ex-Big 4 TS

      The size of the deals that you work on will depend on the office size. For example, look at the $15.1 billion CNOOC-Nexen deal which KPMG provided financial due diligence for.

      Client exposure for juniors is generally higher or equivalent in TS as compared to IB.

    2. Yes, the clients are generally smaller (with some exceptions). Client exposure: What “Ex-Big4 TS” said.

      1. Well, we have to differentiate here.

        For Financial Due Diligence, Big 4 TS will work on the same deals and with the same clients as big banks do, since FDD as a service is generally provided by audit companies, not banks. Then again TS work is different from banking. Obviously you will also work on smaller deals with smaller clients, which are usually not handeld by BBs but by smaller banks. Since a FDD is only a part of a deal, the teams can deployed over much more deals than banks can.

        Taking a look into the Big 4 M&A teams, you will see what you described. Mid-market deals and competion with mid-market banks, not BBs.

        1. Yes, agreed. I’ll see if we can publish something on TS vs. FDD vs. M&A at the Big 4 in the future to further clarify those differences.

  45. DbagBanker

    Nice try trying to play up Big 4. Noone will be impressed by “i work at Deloitte” vs. “I work at J.P. Morgan”. It’s banking or bust baby

    1. I don’t think he was “playing up” anything – it was an accurate description of what you do at these firms and how it differs from IB. When you say “JP Morgan” most people these days would think of the legal troubles, the settlement, or the London whale… not the most impressive image.

      1. hahaha, well said Brian!

        1. I also kinda think he was sippin a bit much of the big 4 kool-aid…
          I am also not sure what PE exit opps really exist for someone with almost a decade of TS experience, even though he wants to do ER.

          1. Some of those years were part-time / school-year internships so I think it’s possible – but yes, definitely more difficult than for someone about to graduate.

          2. I know someone who was at big 4 due diligence team moved into private equity after two years. You’d be surprised how transferable the skills you develop at TAS are.

          3. M&I - Nicole

            Thank you for sharing.

  46. great article!

    one question. how viable is it to use this Big 4 TS experience and lateral into BB IB positions?

    Thanks!

    1. Thanks! It’s doable but not easy. One interview with a reader who did something similar: https://www.mergersandinquisitions.com/big-4-restructuring-to-investment-banking/

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