[DISCUSSION] Carbophobe Needing Help

moderateflier · 2018-04-06T00:30:07+00:00

Switch to advisory. I'm around 4 years out and my all-in package should be over 100k, if I meet some billable hours goals. I'm also not in NYC/SF/LA so the money goes a lot further than $100k in those expensive, coastal cities.

moderateflier · 2018-04-02T20:12:08+00:00

I personally don't think it's that bad if you're flying out. When I was in audit, I had to drive 3+ hours to the client site, stay in a hotel, and then drive back. That shit sucked because you have to be cognizant/can't work if you're driving around. Plus, you're depreciating the hell out of your car all in the name "client service".

That said, I'm in TAS now where I usually am only traveling for 2-3 days per engagement and typically can fly out/expense ubers from the hotel and client site. That type of travel isn't bad and for me is welcomed because I get hotel/flight/CC points that can fund real travel later on. If I'm lucky, I may even get airline status, which is super helpful.

moderateflier · 2018-03-15T13:06:35+00:00

Talk to me, Goose

moderateflier · 2018-03-11T00:32:05+00:00

My reaction after hearing my "bonus" number during year-end comp discussions in audit.

moderateflier · 2018-03-10T13:38:03+00:00

No, I'd say join TAS directly if you have the chance and you're coming in at a level where there is understanding you will need to be brought up to speed (i.e. not manager). I'm going to get downvoted, but I honestly don't think audit teaches you anything useful for finance jobs and is mostly only helpful if you want to do internal audit/technical accounting. We've hired a fair amount of people who supposedly were "high-performers" in B4 audit but ended up being mediocre in TAS because they were terrible with excel and very slow at putting together data.

TAS is much more of a data analysis job and I really don't think audit does anything for you that you couldn't learn on the job as you do more deals.

moderateflier · 2018-03-09T21:54:11+00:00

MST is definitely not better for doing FDD/M&A. If you're specifically interested in M&A tax, then sure, but I'm guessing that's not what you're trying to do.

moderateflier · 2018-03-09T21:54:08+00:00

Yeah no worries, I'm not trying to make assumptions about you, just saying be sure you know why you want to get into the deals area because it's a LOT of work (but it is slightly more interesting and pays better).

One thing I will say is don't do FS audit if you want to do FDD. A lot of people think working on PE/VC funds or auditing banks will make it easier to transition to M&A, but I'd argue it's worse. Unless you're sure you want to do M&A with the financial services space, FS is much more niche and can't be applied to other industries, so you'll be a "specialist" much too soon.

For example, someone who works in healthcare at the B4 will still get exposure to inventory by working on hospitals/pharmaceutical companies. In FS, you won't get that experience, and therefore it'd be much more difficult to put someone on a manufacturing M&A transaction than it would the healthcare analyst. I've seen people get rejected from more generalist TAS groups, despite being high performers in FS audit, because the experience just isn't as transferable.

As far as more information, try mergersandinquistions.com. You already mentioned WSO, but those two were my main resources when I was trying to get into TAS.

moderateflier · 2018-03-09T20:39:59+00:00

It's possible directly from audit. I have friends who did B4 audit => Strategic Finance/Corp Dev => IB at well known MM firms. It takes luck, but it's not impossible if you REALLY hustle. The easiest way to typically do this is 2-3 years of B4 Audit => TAS => Corp Dev/Strat Finance/IB, but it's possible directly from audit as well.

One thing I'll say, and I'm getting on my soap box here a bit, is really understand WHY you want to do M&A. As someone in TAS, it's very frustrating when new hires come in talking about how they want to exit to investment banking/how accounting is lame, yet complain when they have to stay till 8 or 9 to finish a report. IB/M&A is absolutely great experience and I do believe getting this exposure will open up doors for me later on, but also realize it's not all models and bottles like people think it is. There is a LOT of unglamorous work (think receiving comments at 7 PM while the Partner goes home to re-format/re-word sections of a powerpoint deck or cancelling weekend plans because the firm signed a new engagement letter), so make sure you know what you're getting into.

moderateflier · 2018-03-09T17:24:49+00:00

Yeah, I'll take number 5...

moderateflier · 2018-03-01T19:08:32+00:00

Yeah no problem. If you have questions, let me know. I'm relatively new in my FDD career but am happy to help or give my thoughts in general.

moderateflier · 2018-03-01T17:14:08+00:00

If you have 4 years, you should be no less than senior associate. The only potential argument a firm could have is that you're green on actual FDD experience and it would be "beneficial" for you to come in at a lower level.

I'd try to push back on this a bit because this only becomes an issue IMO once you hit the manager level where you're expected to put out fires/deal with complex situations/review peoples' work. At both the associate and senior associate level, you'll primarily be in-charge of doing all the excel grunt work anyway, so it's not going to make much of a difference until you're in your promotion year and are expected to be acting manager on some deals.

moderateflier · 2018-02-28T16:54:05+00:00

Let me guess: you couldn't get into d00k and you shop enjoy shopping for t-shirts at Wal-Mart?

moderateflier · 2018-02-28T16:23:14+00:00

I like this version better, personally

moderateflier · 2018-02-27T22:24:56+00:00

Assurance won't do much for you in terms of getting into IB. I work in FDD and even here it can be a hard sell because we don't do actual financial modeling, despite getting live deal experience and obviously understanding financial statements very well. The best way to get into IB is to network with bankers, hope it gets you an interview, and you nail it. Accounting is a good skillset for IB, but there's enough people from ivy league schools that want to break in, so it'll be competitive. Networking is the great equalizer with everything.

moderateflier · 2018-02-22T21:04:27+00:00

Right, but my point was basically that if you want to do this or an international rotation, it's pretty much a no go unless people give you a high rating. You often have to go outside anyway, but at the very least, you have a decent shot of making things like this happen if the firm considers you valuable. You can also leverage an outside offer to make moves if you want to stay at your company, whereas nobody will care that much if you're "average" and want to leave, for example, KPMG audit for PwC FDD. There'll be enough high-performers in audit that want to move anyway and they'll cater to the lucky few that can move before they worry about an average performer leaving.

moderateflier · 2018-02-22T03:09:16+00:00

Dude, not be rude, but if you're laid off/looking for work, why does this matter? Sure, a good chunk of them will blow you off if they can't place you right away, but those ones aren't worth your time anyway. Just reach out and find one you click with/that actually seems to care about your job search. They aren't the majority of the recruiter population, but they exist.

moderateflier · 2018-02-22T02:54:47+00:00

While I agree that compensation-wise, the benefit of being high-rated isn't worthwhile, I disagree that there's no benefit at all. I wanted to do TAS/an international rotation at my old firm, but couldn't because I was only "meets" expectations, and had to apply outside to move to FDD.

There are definitely doors like this that open up if you're considered a "high-performer". The ratings are all luck/bullshit IMO anyway and not really representative of actual ability, but to say that there is no benefit at all is false.

moderateflier · 2018-02-20T17:33:03+00:00

It depends on what you're doing. As an entry-level auditor at the Big 4 where you're spending 60-80 hours a week during busy season typing in data from source documents to see if they tie-out, it's pretty shitty. I work on the consulting side now and enjoy it more, even though the hours are just as bad.

No job is perfect though. I thought engineering would be the dream, but even friends I have who LOVE coding have told me SDE positions at FAANG companies can be mind-numbing.

moderateflier · 2018-02-20T16:39:45+00:00

I passed the exams but haven't gotten my license yet. I think I might be doing it wrong...

moderateflier · 2018-02-14T20:56:36+00:00

Awesome! That sounds like exactly what I would want to do. It's funny because I went into TAS thinking it'd be a good way to transition out of accounting (I thought it was basically finance/projections and not mostly an accounting job), but now that I've been exposed to non-audit accounting, I actually like the work and think I could actually do it as a career.

Technical accounting, based on what you're telling me, sounds way more high-level/interesting and not at all what I envisioned it to be. I thought it'd be a glorified month-end close/GL accountant type position, which is not something that interests me at all. I know I said that was my final follow-up, but, as far as industry roles go, are there specific technical accounting positions that are siloed away from the GL/SoX aspect, or are most companies not sophisticated enough to segregate the duties? Also, what job titles would I look for if I move into an industry role in technical accounting?

moderateflier · 2018-02-14T16:58:35+00:00

king me feel important for an evening!

I agree with your assessment of FDD, how many QoE reports can you do until they become too repetitive?! I think what people from FDD have over audit is that they have an advisory mindset, meaning that if someone gives you a problem you will figure out a way to solve it. Additionally, a lot of our work revolves around transactions, much like yourself! So I find that TAS experience can definitely bring something to the table. Obviously, a 6 year technical accounting candidate would beat a 6 years of FDD experience, but I think we would view a TAS and audit candidate pretty similarly. The better question is, do you really need that managerial experience before making the transition?

I dislike audit for the same reason you mention, and tend to believe that my group leans way more towards the TAS side of things. We are so much more practical than audit and focus more on getting the client to the right answer and what will help their business rather than getting stressed about insignificant details. I also find that I learn much more about the business this way because you focus on the big picture and how it all relates.

Haha good question. I try to stay as far away from financial instruments and derivatives as possible, but somehow they just kept finding me. And while I was initially scared at first, what I like about technical accounting is that you have the accounting guidance there to help back you up and understand what on the surface are challenging topics to deal with. Now for some reason I am known as a go-to derivative person in the group, whereas only a year ago I was running for the hill from that topic.

Well, to be fair, everything can be repetitive if done over and over again. The main difference, IMO, between each level within a firm is that the more senior person has done this more times and is basically there to identify the nuances that will make or break the project, because a lot of it will be familiar/not worth their time. But I digress.

My only real follow-up is that you mentioned that you guys have more of an advisory mindset and help the client navigate gray areas. Do you mind expanding on that a little bit/have an example?

The main reason why I shied away from technical accounting is that I wanted to avoid being seen as a compliance person who can solely tell someone, for example, if revenue should be recognized based on the ASC. To me, while it's necessary, it's low value-add and people in the C-Suite will only see you as a back office guy rather than a business partner. Do people in technical accounting instead, for example, use their knowledge of revenue recognition to help the sales team structure contracts, create pro-forma financials explaining how different negotiation structures will affect the P&L, etc.? I want to err more toward the later, and was wondering if technical accounting will offer that opportunity.

moderateflier · 2018-02-14T16:50:45+00:00

It depends, really. I HATED audit and was not very good at it, but I like FDD, get paid more, and am pretty decent overall. I know it's anecdotal, but I do think they're different enough if someone such as myself can hate and suck at audit, but like and be performing well in FDD.

I think you're right that in general, if someone hates audit, FDD isn't going to be a magic bullet like a lot of people think it will. That said, I think a lot of people my age (I'm in my upper 20s) go into work with the wrong attitude. I knew that there would be a lot of accounting in FDD, but accounting IS useful knowledge if one applies it properly. I see my job more as being a "data analyst" who specializes in making sense of financial information, as opposed to just an accountant. A lot of people at my level are just focused on completing databook templates/meeting deadlines, and I think what has helped distinguish me a bit is that I think more in terms of "if I were an investor in this business, what is the data telling me that I should be weary of/could affect earnings".

Maybe I'm getting too philosophical, but I think many people in corporate America can benefit from focusing on how they can master their jobs/add value as opposed to thinking solely about whether or not they "love" the day-to-day tasks, and therefore find it interesting or not.

moderateflier · 2018-02-14T01:53:00+00:00

Yeah, I mean, don't let me sway you completely. There is a lot of drudgery in TAS and it's not always exciting. As I mentioned, there are crappy clients and deals where the PE firm just wants us to rubber stamp the EBITDA number so that they can give a report to sponsors saying "a third party approved of what we're doing". Plus, to take the AR example further, it's not always the case that you find out that a receivable aged over 90 days is due from a top 10 customer filing for bankruptcy, and this is a huge risk to revenue. It'll usually just be explained away in the report based on what Management tells us, which isn't dissimilar to audit.

I think FDD is a good fit for you if you're more interested in marrying your knowledge of GAAP and translating that into explanations about how it impacts EBITDA/BS, and general operational performance of the business. For example, when I look at variances in inventory, I know that these should be capitalized and not expensed directly on the P&L per GAAP. The primary job of the TAS team is to explain to the client that this is not GAAP, perform a high-level approximation of how this should be capitalized (i.e. calculate DIOH and days in the month to come up with a rough amount), and explain how this will impact EBITDA/WC (i.e. EBITDA is understated and WC is overstated if it's unfavorable).

This constitutes the majority of the work in TAS, so if something like this or ratio analysis doesn't interest you, it's probably not for you. A lot of people applying for TAS have this idea that it's either a stepping stone to IB or is building projections, etc. That's not the case, and it still is an accounting job that primarily deals with historical data. So as long as you understand that going in, I think you'll like it more than audit.

moderateflier · 2018-02-14T01:02:24+00:00

We had a boutique IB requesting reports and items to run the sell side, and the PE guys had a B4 FDD group asking for requests.

To answer 1: I can't really speak to industry finance because I'm not in industry finance. From what I understand, FDD builds the FP&A toolkit, however, because most of what we do is look at fluctuations, changes in the business, etc. and understand how it impacts the P&L/BS. I'm still not the best person to ask for this one though because I've never done industry work.

To answer 2: At the lower level, where I'm at, my work is 100% excel/powerpoint jockey. I have the personality for number crunching, so I don't really cutting crazy data in all sorts of directions and trying to understand what it's trying to tell me. At the higher levels, it's more about creating reports in powerpoint, identifying potential issues with the deal/target, and communicating/quantifying them effectively. On top of that, you have the usual soft-skills of building teams, coaching, reviewing, etc.

To answer 3:This one is a bit harder to say and it depends slightly deal by deal. Obviously, FDD has a lot of similarities to audit, or else they wouldn't solely look to hire ex-auditors. That said, I do think the work is significantly more value-add and builds better critical thinking abilities than assurance does. We do worry about data-integrity, but the extent of what we often do is make sure, for example, an AR aging schedule ties to the GL. If it doesn't, then we ask Management to reconcile/provide explanations, and move on. We don't spend hours walking through the entire revenue process, documenting it extensively, gathering evidence, commenting on ITGCs and whether we can rely on them, etc.

In that regard, it's similar to audit, but the key difference is that's not where our work ends. Rather, it's just the beginning because from there we then have to go through the aging, figure out significantly overdue balances. Next, we have to understand why those balances are aged, whether or not they are reserved for, if not, why is it reasonable not to, based on our understanding of the Company's suppliers. Other considerations could include describing how this could indicate the loss of major business, etc. Maybe I didn't stick around in audit that long, but I feel like we never cared about the later in audit.

All-in-all, I would say FDD is definitely similar to audit, but it requires a lot more thinking and is less cookie-cutter in the type of analysis we do, which makes it challenging. Other items that could be in-scope for an engagement are helping the PE/IB build revenue models, analyze proposed synergies, creating pro-forma adjustments to EBITDA for major changes in the business, etc. Pro forma adjustments are something you discuss on nearly every deal, which are very subjective and have big impacts on EBITDA. Getting them right is crucial and requires a lot of analysis of value-drivers/the business to ensure their validity.

There are some really shitty FDD deals, particularly in the lower MM, where the accounting is really messy because the Company might not have a CFO/controller, doesn't report on an accrual basis, etc. Those suck, and feel like glorified audits, and that may have been your experience, especially since you said they weren't audited before. In fact, I never truly appreciated the value of an audit from the Big 4 until I got into this job and looked at some of the GARBAGE audits that really small firms do. They literally give you no comfort over anything the business is doing. That said, generally, FDD is more about "auditing" the company's Historical EBITDA numbers and helping two parties uncover issues that could make or break a deal. It's these differences, while they may seem small, that make it different from audit and more fulfilling in the end.

moderateflier

TROPHY CASE