Hi everyone, With CFA level 1 out of the way and with a CPA I now have some good opportunities in front of me. Some of these are Business Valuation Group such as those in FAS with Deloitte, possible M&A opportunities, and another with a company called Greystone that would be more of a valuation/presentation role of nursing homes (basically). I am curious, to ANYONE that works in these fields what do you see as the +/- of these? What do you like? Just in general…
Personally, I view valuations as a sort of paradox. You’re basically employed to value operating companies, ESOPs etc. If you can truly value something then presumably you can determine whether it is over or undervalued. It seems to me if that if you can determine this then you would want to either buy or sell that asset (or work in private equity for that matter). So wouldn’t you want to be in a position to be either long or short this asset. I’d argue that you would want to be on the buy side in this scenario because frankly you would be compensated for it as opposed to being compensated for your opinion without any performance consequences (i.e. did I value this asset properly). I have heard this same argument applied to credit rating agencies. If they can properly value credit risk (most recently CDOs) then wouldn’t they want to use this knowledge to their advantage? I don’t personally work in valuations (work in management consulting) but work with a valuations team from time to time. Another issue is whether you would be working with a pure play valuations company. Within an accounting firm, valuations is not part of their core strategy so you would run into cultural issues there (accounting vs. finance/investments). That said, if this is your only option then it could be a vehicle to pursue the buy side at some point in your career. Just my two cents.
Thanks for the reply. Yes, if I could get into ER or other true investment fields, I would. But it isnt the end of the world as I think I would enjoy these types of jobs. One concern, is that I guess it wouldnt count as experience towards the charter, would it? Having worked at a Big 4 firm and being friends with people across functions of many, I am not too concerned about the culture clash. But to the main point, of course if I could I would go into ER…but having a CPA and only one level of CFA isnt going to cut it. And I can always continue doing investing on my own (dont have to be hired to do that), so from a satisfaction standpoint at least I have that. I appreciate the comments and any others that may come.
A lot of people in my family are audit partners at big 4 and they all view valuations as subpar, as mentioned above its not part of the core strategy. However, I plan on doing valuations at big 4 just to get the cbv designation and to build some experience right after I get my CA. It won’t hurt you but if you are given the opportunity to do valuations or any investment type in a fund or bank type environment you will be working on much better clients and transactions.
I interviewed at a valuation company several years ago. The conclusion I came to was that valuation work was a lot of IB/PE-like work, had near IB hours, but lacked the IB/PE upside in compensation. Is this a fair assessment of the field or just the (wrong?) impression I got from 1 small firm?
kevinf12, BV definately counts as experience towards the charter. I just earned my charter, and my experience is purely in valuation groups at big accounting firms. The +'s of BV is that it’s pretty stable. The demand for valuation people is still very strong and I don’t expect business to slow down. Also, it’s an exageration to say that that BV is IB hours without the upside in compensation. The hours are not at all IB hours. From January to March, I’ll be putting in 12 hours days or more, but for the rest of the years, it’s not like that. Even in January - March, our busiest season, I don’t work weekends. Another thing I like about BV is that the work can be very interesting. If you have the interest and the initiative, you can get involved in valuing derivatives, intangible assets, and lots of other things. Finally, I have some control over my work/life balance, which means a lot to me. The -'s are the money. Bonuses are laughable compared to rest of the finance world. I’m embarressed to write our bonus %'s on this board, but for your benefit… bonuses are around 5-10%. The bonuses are the only factor that makes me consider leaving this field. but then again, in this economic environment, where people in finance are getting laid off left and right, and since I enjoy the work, I’ll probably just stay where I’m at for now.
I work in REAL ESTATE valuation, which is pretty different in that there are different designations (MAI instead of CBV, CPA, etc.), but John_mc, I’d argue that the reason why valuation pros don’t take advantage of “arbitrage” is information, just like anyone else in investments. Do you have any idea how difficult it is to obtain information? My company employs an army of research analysts just to get the information to value the property. The best information we get is right from the client (detailed financial information, etc.). Basically what I’m getting at is that you can’t just use your superior training to find deals. In most cases, you’ve got to spend enormous sums of time collecting information and having direct, primary information from firms and/or properties. As far as compensation goes, MAIs (real estate valuators) will probably make considerably more money than CPAs working in business (or real estate) valuation for the Big 4. There are so few MAIs and so many CPAs that it is simply supply and demand. For example, in the Baltimore-Washington, DC coridor, there are something like 10 million people and less than 500 MAIs. However, there’s a CPA on every street.
background: 3 yrs in big 4, got my cpa. left the firm for small, valuation only shop and have been there for about 5.5 yrs. i’ve also passed all cfa levels. i can say quite honestly that as far as the day to day work is concerned, there isn’t much i like about business valuation. we do a good chunk of litigation support as well as a decent amount of financial reporting and tax valuations. we don’t do very many fairness opinions. also, b/c we aren’t attached to an accounting firm, we don’t do sas 73 reviews, which i’m guessing nh77 does from jan to march. so much of what we do is filling in templates and making up assumptions when management doesn’t want to make projections. the lit support, i hate b/c so much of it is forensic accounting and posturing as you strategize with the attorneys about the best way to state your case to the judge. the financial reporting is kind of boring b/c with purchase price allocations (ie valuing intangibles) the whole thing is kind of arbitrary and with 123r type work the idea is to just make reasonable assumptions the auditors won’t question that gives the lowest value possible. at the end of the day, the work is always looking backward (in terms of the valuation date) and has almost no incentive to know what’s going on in the world. all you need to keep with are the “best practices” your peers in other firms are doing and the sec is pushing. the interesting part for me is discussing/debating the theory. the drawback is that so many times there isn’t incentive to stand up for a position b/c the auditors can make life hard for you if they disagree and you usually end up losing face to your clients when the auditors make you change it. that or your supervisor makes you change it b/c he doesn’t quite understand it enough to try to defend it. on the good side, b/c we’re independent, the hours are great. we don’t have a busy period, so all times in the year are pretty even. i work WAY less than ib hours. the pay’s not bad, though. anyway, as you can tell, i don’t love it tons. i guess that’s why i’m going back to school.
“As far as compensation goes, MAIs (real estate valuators) will probably make considerably more money than CPAs working in business (or real estate) valuation for the Big 4. There are so few MAIs and so many CPAs that it is simply supply and demand. For example, in the Baltimore-Washington, DC coridor, there are something like 10 million people and less than 500 MAIs. However, there’s a CPA on every street.” don’t you think this is kind of a sketchy way to assess their comp? first of all, not every “cpa on every street” is in business valuation. actually, i’d bet there aren’t near as many cpa’s in valuation as you may think. also, i would also venture that most people in valuation aren’t even cpa’s. of the 10 in my firm, only 2 of us are cpa’s; the rest are asa or cfa. second, this assumes that the supply is static and doesn’t react to the demand. if two jobs require fairly similar skill sets, you’d think that if one paid significantly less than another, fewer people will go into/stay in the lower paying one and move to the other, more lucrative one.
I don’t think there’s really a point in comparing an MAI to a CPA BV person, b/c a CPA isn’t usually enough to get yourself promoted in the BV world. Most directors or partners have MBA’s, CFA’s and valuation credentials like the CVA, ABV, CBA, etc.
Well, here’s a good way of assessing comp–my managers are making $300 to $400K per year. I don’t know of anyone at the Big 4 besides partners making that much, and I know a lot of people at the Big 4 (I live a 5 minute drive from enormous offices of all 4). Half my business department in college works for the Big 4 in some capacity (IT, valuation, auditing, corporate finance, taxation, etc.). The key is specialization–if you specialize in an area of real estate valuation, the sky is the limit in compensation, especially when you start hiring people under you. The fact is, the original poster is a CPA asking about business valuation. I think I’m the one who is making a fair comparison–it’s not fair to say, “oh well, if you become a CFA, MBA, and have 10 years work experience at a bulge bracket IB then you will make more than an MAI.” Of course that’s true, but that’s not the situation.
This is a great deal of information all, I really appreciate the opinions. I do see that the money isnt that great (relative to other true finance roles), but currently I work in corporate finance and am quite sure I dont want to stay. However, I want the trade off to be good from an hours/growth/pay standpoint because I have other things on the side (I have my own business and do some financial statement analysis for a small M&A firm, and I do tutoring as well) that have a true opportunity cost to me. I would actually say money is the lowest on my main criteria for whatever jobs I have in front of me. I do appreciate these thoughts as I need to reach out and get a good feel for it through others I know in the field. Does anyone know aside from the bonuses, what are the annual raises like? I know at Deloitte in Audit it was around 10% when I was there for a lot of levels (sub-manager)…
Also mlh97 - "the financial reporting is kind of boring b/c with purchase price allocations (ie valuing intangibles) the whole thing is kind of arbitrary and with 123r type work the idea is to just make reasonable assumptions the auditors won’t question that gives the lowest value possible. at the end of the day, the work is always looking backward (in terms of the valuation date) and has almost no incentive to know what’s going on in the world. all you need to keep with are the “best practices” your peers in other firms are doing and the sec is pushing. the interesting part for me is discussing/debating the theory. the drawback is that so many times there isn’t incentive to stand up for a position b/c the auditors can make life hard for you if they disagree and you usually end up losing face to your clients when the auditors make you change it. that or your supervisor makes you change it b/c he doesn’t quite understand it enough to try to defend it. " This is very important to me as it sounds too much like audit where you work, but ultimately you know the end resul because no way the partner isnt signing off…
Kevin, This has been a good thread. I work in BV for a regional accounting firm. The hours are good and the pay is alright. Bonus is 10%. I have never worked IB hours. At times the work is quite interesting, at times rather boring. Because the partners in charge of valuation are CPA/ABV, ASAs, our reports have to meet AICPA and ASA standards. This leads to a large portion our reports being nothing but filler that add no real value and call for no real analysis. I guess what I am saying is that I spent a considerable amount of time on nothing but “busy” work. Also, a lot of the companies we value are smaller with less reliable financial statements. Occasionally I have had to work off of tax returns. Large firms probably don’t run into this. I also agree with MLH about having to keep up with the industry “best practices.” I think sometimes our firm does things in ways that are not totally correct, but we do them that way because it is an industy “best practice.” On the other hand, I get to build a lot of DCF and market multiple models for the larger companies we value in various industries. This is one aspect of the job that I enjoy. We do a lot of valuations for purposes of marital dissolution, estate/transfer tax, owner buy-in by-out, and small scale mergers and acquisitions. We also do a lot of advisory work in healthcare due to the requirements such as anti-kickback and stark laws. Overall, I like the job, but I think ER would be more interesting. I think for many of the MBA/CFA type in BV, ER is the end goal.
Govols, would you mind to email me just so I could ask some follow up questions regarding the type of work? My email is kevin_f1@hotmail.com or just leave yours and I will email you (if you dont mind that is). I am basically going all out in search of information to find the best information I can to hopefully make an informed decision when it comes time.
Sent
GoVols, Sent you an email, hope you got it…
hey guys, can experience in BV and M&A at Big 4’s be transfered to the M&A group at investment banks? or McKinzy?
For those with CPA license, is your license the General CPA license? Or the Attestation CPA license? Is attestation experience required to get into BV or Transaction services (M&A)? I have CFA charter and will get my General CPA License in March 2008. However I am having a hard time getting into BV or TS(M&A) work. My background has been mainly credit analysis and risk management for retail/commercial banks. Also currently working at a Big 4.