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).

If you want to learn more about this topic, check out our tutorial on how to calculate Goodwill.

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.

2. 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.”

2. 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.

The post From Regional Audit to Investment Banking: How to Break in *Without* the Big 4 Pedigree appeared first on Mergers & Inquisitions.

“Help! I hate my accounting job and want to move into banking, what do I do?”

“What group should I transfer to if I want to get into finance?”

“My Big 4 salary doesn’t give me enough cash for bottles!”

If you’re at a Big 4 firm right now, you’ve had one of the thoughts above before – maybe multiple times.

We covered how to move from accounting to investment banking before, but this time around there’s a different twist – an interview with a reader who moved from a Big 4 restructuring group to investment banking.

Here’s how he made the leap, and how you can do the same:

Background & Culture

Q: Let’s start with your background – how’d you end up at the Big 4 firm, and what did you do before that?

A: Sure. I actually started out as an athlete, and played at the college level for a few years before I got a serious injury that ended my career.

Then, I transferred to a smaller and lesser-known school in the Midwest, and got more interested in finance once I knew that being a professional athlete was no longer an option.

The investment banking industry is smaller in the Midwest, but there are still a few local banks there and they were doing a lot of distressed M&A deals for the auto industry, so I started contacting them and asking about internships each week.

After a ton of networking, one bank finally caved in and decided that they needed an intern – so I joined and got to help out with a few live deals there.

As graduation approached, I continued networking and found a few guys who used to work at a very well-known PE firm.

They had just started a lower middle-market fund just for family/small-business investments, and they needed some analysis done on Project Finance-type investments (power plants and such). I volunteered to do the modeling for that, and they were impressed with my work and turned it into a full-time internship.

Since I had so much experience in restructuring, I went to a restructuring group at a Big 4 firm after my internship at the middle-market PE fund. I stayed there for around a year, and then recently moved to a bulge bracket bank.

Q: That’s a great story – before we jump into it in more detail, I think a lot of readers might wonder what it’s like working at a Big 4 firm in their restructuring group.

We’ve covered the work and culture in IB and PE before, so how would you say the Big 4 firm compared to those?

A: There was definitely a skill set overlap – we did lots of cash flow modeling, presentations to lenders, and distressed M&A deals where we advised the company on selling, restructuring, or bankruptcy options. We also worked with the big auto companies, so you got good exposure to their finance teams.

The financial modeling and deal skills were similar, but there was a big cultural difference because we only worked on 1-2 projects at once and the hours were very, very tame. I only worked on one weekend, and a “late night” was staying to 8 or 9 PM.

So it was quite a bit different from the “work hard, play hard” culture of banking where everyone works to the point of exhaustion, and then drinks to the point of passing out.

Q: Why do you think there’s that cultural difference? Deals are still deals, so I don’t understand how you could “choose” to be less busy if you’re working with Fortune 500 clients all the time.

A: It’s mostly because financial advisory services were a very small part of what the firm did. At an M&A boutique bank, 100% of revenue comes from advisory, but at this Big 4 firm advisory accounted for maybe 2% of revenue.

Their focus was accounting/audit and consulting – they had investment banking and restructuring services, but they were an afterthought next to everything else there.

Q: OK, so it sounds like they consciously chose not to take on as much business as they could have since it wasn’t their core focus.

Obviously you did well moving into banking from restructuring, but what other groups would be good if you wanted to make the Big 4 to IB move?

A: As you’ve mentioned before, Transaction Advisory Services (TAS) can be good since you get exposed to bankers in some scenarios.

But I don’t think it’s necessarily the best group all the time because many TAS groups focus on accounting and due diligence, and you may not get exposed to valuation, financial modeling, or other aspects of the deal. They may also spend a lot of time on tasks that bankers don’t care about, such as making sure that working capital requirements are met when a deal closes.

So I would recommend looking at the internal middle-market banks that all Big 4 firms have – they do mostly sell-side advisory, and while it’s not comparable to the experience you’d get at a real bank, it’s closer than most other groups at the Big 4. Here are links to each firm’s internal bank:

• Deloitte – Corporate Finance
• KPMG – Corporate Finance
• PricewaterhouseCoopers – Corporate Finance & Investment Banking Services
• Ernst & Young – Transactions

And then anything transaction-related – like the restructuring group I was in – could work as well.

Networking & Interviews

Q: Can you talk about the networking you did to get the bulge bracket offer? What was the best source for finding contacts and meeting bankers?

A: Keep in mind that I had been networking all along, ever since I got my original internship via aggressive cold-calling.

So it was just continuing what I had already started – I took the Big 4 offer knowing that I still wanted to move into banking and would have to continue networking.

It was difficult to find bankers at first because few alumni worked in finance, I didn’t have co-workers I could reliably ask, and headhunters were useless unless you had at least some full-time work experience.

Q: So where did you find bankers if not through the usual sources like your alumni database?

A: A couple ways:

1. High School Contacts – Even though my university had few alumni in finance, there were quite a lot from my high school who worked in the industry.
2. Random Online Contact – I would just go through LinkedIn and look up bankers in the Midwest and start reaching out them like that.
3. Cold-Calling/Emailing – This is how I got my first internship. It’s time-consuming and has a low hit rate, but it does work.
4. Upscale Gyms – I joined a few higher-end gyms in my area and ran into a bunch of financiers there. I met a few bankers, people in private wealth management, management and turnaround consultants, and even a PE Partner like that.

All of that helped, but the most helpful thing for me was always asking, “I’m interviewing with this group / interested in this area – do you know anyone else I could speak with?”

I got tons of referrals with that line at the end of each call or meeting. It sounds very simple, but you’d be surprised at how many people are too afraid to make simple requests in a conversation.

Q: I really like the tip about upscale gyms; it reminds me of Gordon Gekko playing racquetball.

So it sounds like your strategy was pretty similar to what we’ve covered here before with investment banking networking, setting up informational interviews, and then following up aggressively.

How did you spin your resume when you were applying, since the Big 4 firm was your only full-time experience?

A: I actually downplayed the Big 4 experience, because I felt my banking internship and my work at the middle-market PE fund were both more relevant. So I focused on those and described my transaction experience using the template you’ve suggested before.

For my Big 4 experience, I focused on the valuation and modeling work and left out anything that was closer to accounting/audit.

Even though I had worked in restructuring there, I was interested in moving to industry or M&A groups in investment banking, so I didn’t want to make myself look too specialized by writing 100% about restructuring or distressed deals.

Q: That makes sense, and it’s great advice for anyone who has worked in a more specialized group and wants to move elsewhere.

What about the interviews themselves? Were they mostly technical or deal experience-focused?

A: They focused a lot on my deal experience – and more my experience at the bank and PE firm rather than in my restructuring group.

There were technical questions, but they were more curious about why certain deals happened, potential complications, and what I thought of the valuation and the process for different companies.

For some of the industry groups, a key question was “Why this industry?” They get a lot of people who don’t know why they want to work with financial institutions or industrial companies or whatever they cover.

Q: We covered a few possible answers to that one before, but what did you say?

A: In my final year of university I had completed a finance course where we valued companies in different industries, so I used that as my “spark” to show them how I got interested at first.

It didn’t work for every industry group, but by using that I could at least talk about my interest in the more common ones, like energy, financial institutions, and industrials.

I also used a few of your industry-specific modeling courses to demonstrate my interest and they were really impressed with that, since hardly anyone else had gone to the effort of completing entire case studies on these companies.

Q: I’m surprised by that one, because we generally tell customers that the industry-specific courses are more helpful once you’re already working – but you found them useful for interviews as well?

A: Yes – even just seeing real examples of NAV or Dividend Discount Models for different types of companies was very helpful, because then I could walk through them in interviews.

And these were lateral interviews at the top bulge bracket banks – even there most other interviewees still hadn’t done as much as preparation as you might expect.

Q: Well, glad to hear the courses were helpful!

It seems like the interview process was straightforward for you, but I’m sure bankers had at least a few “objections” to your background. What were the key issues, and how did you overcome them?

A: Their main concern was that my academic experience looked very spotty.

I had taken a year off after I got my injury back in college, and then had to enroll in another school and ended up missing another semester, so it looked like I had taken forever to graduate and had been to school twice.

Some bankers just focused on that for 100% of the interview – they asked about all my gaps in education and why I had gone to schools they never heard of.

I answered those questions by explaining that for my first 2 years in university, I was practicing constantly, still doing well in school, and working 1-2 part-time jobs at the same time. So I spun a negative into a positive, and pointed out that I was working crazy hours a good portion of the time and could therefore handle the hours of a bulge bracket bank.

And then I also had my previous IB and PE internships, so they weren’t too concerned by the end.

What If? And the Future

Q: Since you had those internships, you had 100% relevant experience when applying to larger banks.

But what advice would you give someone who’s at a Big 4 firm in some other role, like audit? What should they do if they have no transaction experience and want to get into IB?

A: First, get out of audit immediately. Do something – anything – more stimulating.

People make fun of investment banking for being mindless work, but in my opinion audit is even worse because it’s so mundane.

At least with deals, you witness drama as different buyers and sellers express interest, back out, make different proposals, and negotiate. In audit you’re staring at numbers all day unless you happen to uncover the next Enron.

Most Big 4 firms are fine with internal transfers – it’s often easier than it is at a bank. Sometimes the Partner you’re working for may take it personally, but that depends on your group.

You should reach out to the other group you’re interested in first, contact people there, and make sure they know what you’re interested in doing before you even run the idea by your current boss.

The Big 4 firms all have lots of events and internal mixers where professionals in different areas can meet each other, so it’s easier to get to know other groups than it would be in IB – most people don’t work more than 50-60 hours per week, so they have the time to help you.

You really have no excuse not to move to a group that’s more closely related to banking – I would recommend restructuring, valuation, internal M&A, and TAS as your best options.

Q: It’s interesting to hear that the internal transfer may be easier at Big 4 firms, but I guess the culture is just more relaxed across the board.

So now that you’ve won this bulge bracket offer, what’s next for you? Will you stay at your new bank for some time, or are you thinking about moving to the buy-side?

A: Unlike most other bankers, I’m actually interested in staying in IB for the long-term.

Back when I was interviewing for this role, a number of distressed investment funds also approached me, but I wasn’t interested in PE back then and I’m not interested now, either.

My key issue is that you must put your own money to work to progress in PE.

It’s not just Partners investing the fund’s capital – they also put in their own funds, so a poor investment could wipe out a good chunk of your personal savings.

Yes, the pay ceiling is higher and you could make mind-boggling money – but let’s be honest, at the MD/Partner-level, the average is about the same in both industries. The outliers in PE make far more, but for me the risk isn’t worth it.

The other issue is that private equity is much less of a team environment than banking, and coming from an athletic background I enjoy working in teams more than the solo work that you see in PE.

Q: That makes a lot of sense, and that point you raised about putting your own money to work is a great one that often goes overlooked. Thanks again for taking the time out to chat, I learned a lot!

A: You’re welcome, it was my pleasure.

The post From Big 4 Restructuring to Investment Banking: How to Make the Leap appeared first on Mergers & Inquisitions.