by Brian DeChesare Comments (13)

From Valuation to Corporate Development: How to Skip Investment Banking Altogether

Valuation to Corporate Development

Can you move from a valuation role into investment banking?

Yes, but a better question might be: Would you want to?

Bankers tend to approach recruiting with tunnel vision: Even if you have the right skills, you may not have any luck in the recruiting process if your experience doesn’t look correct.

If that happens, a great alternative is corporate development, as our reader today found out.

You get all the benefits of an exit without months or years of 100-hour weeks spent changing font sizes:

IB Recruiting, or Mission: Impossible?

Q: Can you walk us through your story?

A: Sure. I went to a small, non-target school in the Midwest of the U.S. and had strived for an investment banking role since high school.

However, most finance students at my school went into FP&A or wealth management, and IB roles were far from plentiful, similar to most non-targets.

I was interested in M&A roles, but the recruiting environment and the fact that I graduated in the middle of a recession made them tough to get.

I did a corporate finance internship, and then I accepted a full-time role in valuation and business analysis at a non-Big-4 accounting firm.

We did a lot of work on purchase price allocation and post-deal matters, and I spent a few years working with PE and VC firms to value their portfolio companies.

That experience solidified my interest in IB/PE, but I knew I’d have to move over ASAP to get there: They don’t hire 40-year-old analysts.

I recruited extensively and won over a dozen interviews split between 5-6 banks, but eventually decided to accept a corporate development offer at a multi-billion-dollar public company instead.

Q: You mentioned previously that the IB recruiting process was quite frustrating.

What happened?

A: When I began recruiting, I had ~4 years of valuation and business analysis experience, and I was applying for Senior Analyst and Associate roles.

Most banks looked at me and said, “You have too much work experience to be an Analyst – even a Senior Analyst – but too little experience to be an Associate.”

But my biggest frustration was that banks cared about complete nonsense.

For example, they gave me “modeling tests,” but the tests had nothing to do with financial modeling.

Instead, they wanted me to fix formatting inconsistencies such as incorrect font sizes and colors.

Valuing a company or evaluating its ability to service debt seemed secondary.

I pointed out that I had ~4 years of experience working with CEOs and professionals at VC and PE firms, but few bankers cared.

They also didn’t care that I knew about Black-Scholes and other, more advanced modeling techniques for valuing options and other derivatives; they were more concerned with my ability to change the font color in Excel.

Based on that, I said, “Maybe this is not the right industry for me. Time to start looking into alternatives.”

Q: And how did you decide on corporate development?

A: I figured corporate development might be a better fit because they cared more about my ability to work with executives than my formatting skills.

I also knew that it would be almost impossible to move into private equity without doing IB or another transactional role first, so corporate development seemed to be a good step in the right direction.

I told the recruiter I was working with, “Don’t send me any jobs unless they are in corporate development.”

After two months, the recruiter showed me a role that matched up perfectly. It seemed too good to be true, so I initially turned it down!

Q: Are headhunters common for corporate development roles?

Previous interviewees have given mixed reports.

A: It depends on the company.

Headhunters are more common for PE-backed portfolio companies that may not have dedicated HR resources; they’re also more common when the corporate development team has many former bankers.

In my experience, large companies almost always prefer to hire internally. A lot of people in my current team have moved here from other departments within the company.

It’s worth speaking with headhunters, but you should not rely on them.

Q: What should you watch out for when working with headhunters?

A: Many recruiters are not familiar with the industry, so they assume that any finance job at a normal company is “corporate development.”

Recruiters often sent me accounting jobs because they didn’t understand the difference.

Sometimes they also sent me Integration Analyst jobs, but I wanted to work on M&A deals – not the aftermath of M&A deals.

There are relatively few corporate development jobs, and they offer good hours and pay, so it’s quite tough to win these roles.

Banks always need to hire people because the turnover rate is high, but many large companies do not actively recruit for corporate development year-round.

For all those reasons, many headhunters are not helpful with referrals to these roles.

Q: I see.

What were the biggest challenges in the recruiting process for this role?

A: Honestly, very little.

Interviews were informal; we mostly spoke about the company’s strategy, the types of acquisitions they wanted to focus on, and my work with PE and VC portfolio companies.

Since it is a small team, they focused on fit (i.e., determining whether or not they could spend days at a time working with me). They understood my experience and were comfortable that I had the skill set to do the job.

They were planning to give me a modeling test, but they skipped it because I was a better personality fit than the other candidates, and they needed to hire someone ASAP.

Their biggest concern was whether or not I’d be willing to travel a few times each month. That was an easy “Yes” since I had already been doing that in my valuation role.

My biggest takeaway from the process was that you have to be honest with yourself.

If you’ve interviewed at dozens of firms, and each interview seems like torture, you’re not applying for the right jobs.

On the Job at a Multi-Billion-Dollar Public Company

Q: Thanks for that summary.

What has the job been like so far?

A: Overall, it’s great. My time split looks something like this:

  • Deal Modeling/Analysis: 30%
  • Due Diligence: 10%
  • Integration: 30% (Working with acquired companies to report their financial results, connect key people, and make sure our systems work together)
  • Sourcing: 10%
  • Miscellaneous: 20%

The last category might include anything from finding information on past divestitures or acquisitions to researching industry trends.

When I first started, I spent most of my time modeling potential deals and doing due diligence, but I’ve shifted to more integration and deal sourcing since then.

There is pressure to get things done, but everyone has a positive attitude.

No one cares about facetime, and we all work from home occasionally.

As long as you’re reachable and get your work done, no one cares about your physical presence.

Q: Great. What is the hierarchy like?

A: Since it’s a bigger company, people in the group do have well-defined roles.

At the bottom are the Financial Analysts, and above them are the Directors, then the VPs, and then the SVPs.

There are also a few other distinctions, such as Senior vs. Junior Analysts and Integration vs. Financial Analysts.

One of the two SVPs in our team is the “Group Leader”: He focuses on acquisitions and reports directly to the company CFO.

The other one is the “Special Project Guy” and looks into divestitures, joint ventures, and non-acquisition deals.

Below the SVP level, peoples’ responsibilities are flexible: Even as an Analyst, you might end up running deals if other team members are busy or you ask for the opportunity.

Their general attitude is “We will give you your shot as long as you do it well.” In other words, you have enough rope to hang yourself.

If you continually succeed, they will allow you to take on additional responsibilities, giving you a de-facto promotion and helping your cause come bonus season.

But the best part of the culture is that they’re very supportive if you have an interest in other industries.

For example, one team member mentioned to the SVP that he was thinking about private equity in the long term, and the SVP encouraged him to do it and gave him additional deal exposure.

The SVP viewed it as a win-win: It would mean less work for him, and the younger team member would gain more deal experience.

Q: Everything sounds positive so far. What are the drawbacks of this role?

A: Well, you do earn less than in IB/PE roles: For example, total compensation might be around 50-60% of what a post-IB Associate at a PE fund earns.

Also, it can be tough to advance because executives have been here for so long – one SVP here has been with the company for over 20 years.

He might retire in a few years, but if he doesn’t, it would be very difficult for anyone else to take his position.

Finally, it’s rare to move into C-level executive positions from corporate development.

You might become a company-wide VP, but you’re unlikely to move into a CFO position from this team.

Q: Great. And what are your long-term plans?

A: I’m not sure; I like my current job, but I am still interested in more of a dedicated M&A role.

I might go back for my MBA and use that to transition into private equity, but I’m not sure how feasible that is.

Another option might be to stay in this role, advance to a more senior level, and then move into PE or VC, also at a more senior level.

Q: I see. Keep us updated! And 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. Ryan Mitchell

    Hey Brian,

    Thanks again for another excellent interview. I worked on transactions as a salesperson in my junior years, and I found it exhausting rather than exciting (even on large deals with big names). As such, I have very little interest in I-Banking… However I am *very* interested in value investing.

    Is banking as necessary for IM as it is for PE? I’ll be able to get into a top Canadian MBA, however I definitely did not follow “the track,” so I wonder how likely it is I’ll be able to score a classy IM gig?

    Thanks for your help!

    1. Thanks. No, banking is not necessary at all for IM. It’s 100% possible to get into IM by following the CFA / IM internship route. Also, most firms recruit from a much broader set of MBA programs than banks do. See:

      https://www.mergersandinquisitions.com/hedge-funds-institutional-asset-management/

  2. Brian,

    thanks.

    How would you compare working hours in ECM and DCM vs M&A?

    Is it correct to assume ECM and DCM roughly 60hours a week and M&A roughly 80hours a week?

    1. ECM hours outside of convertibles are generally better, though 60 may be too low; DCM might be a bit better than M&A, but it depends heavily on what you do… some DCM groups are more markets-based and others are more deal-based. I’ve heard many stories of people doing 100-hour weeks in DCM, so 60 is probably too low.

      Of course, you also put yourself at a disadvantage for traditional exit opportunities such as PE by joining either of these groups, so there is a trade-off.

  3. I’m in Big 4 financial due diligence role in M&A transaction advisory team. As my experience in M&A is more due diligence related, it’s more difficult to move else where (either IB or PE) than the modeling and valuation guys.

    Wonder what exit opportunity could there be and any successful case?

    1. If you can’t get more transaction experience, one idea might be to move to a valuation role either at your firm or at an independent firm so you can at least say that you’ve done something more relevant than due diligence. You’ll need some type of valuation and/or modeling experience to move into roles like IB, PE, and corporate development. But you already have the brand name of a Big 4 firm, so you should get that required experience any way you can, even if it means going to an independent valuation firm to gain skills that look more relevant.

  4. Thank you for this post! I have just entered B school and I did valuation role at a Big 4 as well. I focused on instrument valuation and worked across industries. I want to transition into corporate development as I identify/see a better fit for myself in that area. I am an international student at a top 20 business school in the US. Could you kindly advise how I can leverage B school to break into corporate development?

    1. I think the biggest issue is that most companies don’t recruit for corporate development roles on campus, as structured recruiting for corporate development roles is very limited to begin with. So, if you want to use an MBA to win those roles, you’ll have to do a lot of networking on your own and focus on the biggest companies so that they can more easily sponsor your work visa.

      You don’t necessarily need prerequisite internships or pre-MBA internships as you do for investment banking, but you also need some type of story that illustrates why you’re making this move into corporate development, ideally linked to a client you worked with at a Big 4 firm. You might also be able to use MBA classes and case studies to show your interest in M&A deals.

      1. Thanks a lot Brian. I’ve been working on my story and using MBA classes! But you are right, there is very limited recruiting on campus.
        Could you suggest what my next steps should be? Networking with F500 companies and find roles for the summer internship?
        Thanks again for the advise

  5. CorpDev07

    Great interview, as someone who has also transitioned from Valuation to Corp Dev its good to hear other people’s experiences.

    1. Thanks! Glad to hear it.

  6. Thank you for the great post! I have always wondered about the exit opportunities, now having an offer from a Big 4 Valuation practice and having worked at a top BB’s internship (but no offer since they overhired), I have been evaluating my options as I really want to work in private equity.

    Would love to be able to connect with this reader if at all possible.

    1. Thanks! I can put in a request and see.

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