Lifting the lid on the Big 4 Corporate Finance Teams – Debt Advisory

Navigating the various teams under the “Corporate Finance” (AKA Deals, Deals Advisory or Transaction Advisory) umbrella within Big 4 Chartered Accounting firms can be challenging.

Knowing what each of these teams can and can’t offer you in terms of your future Corporate Finance career and professional skills development might be the difference between securing your dream job or being overlooked time and time again.

In the sixth of a series of articles focusing on the various “Corporate Finance” teams within a Chartered Accounting firm, Numbers Executive endeavours to explain the pros and cons of working in the “Debt Advisory” line of service (AKA Capital Advisory).

Our insights are based entirely on Numbers Executive’s precedent experiences and we caveat that our views represent common outcomes we have seen. As with everything, there can be outliers..

The Elevator Pitch:

Debt Advisory teams are primarily involved in evaluating their client’s creditworthiness and subsequently supporting them in their efforts to source debt capital.

Think of a debt advisory team as a sophisticated mortgage broker used by the corporate sector. Some examples of work debt advisory teams undertake could include, inter alia:

• Supporting a standalone greenfield renewable energy project to obtain project debt

• Support an established corporate with its efforts to refinance its existing debt portfolio

• Provide advice to / support an entity with its formal credit rating process

• Undertake options analysis with respect to funding alternatives across the capital spectrum

What’s great about it:

• Debt Advisory teams put you right in the action, representing equity on behalf of what is a significant event for them

• Develops your understanding of debt capital markets, credit metrics, ratings, treasury functions and the different stakeholders involved in obtaining and maintaining debt capital

• Whilst the focus is on debt, in order to understand your client’s creditworthiness and to seek debt capital, debt advisors need to understand (& present) the whole capital picture which often means developing whole-of-company analysis for the entity (e.g. developing the financial model) in order to understand cash flow serviceability and various return on equity scenarios

• Debt Advisors work across a range of industry types and structures meaning you should hopefully get exposure to everything from greenfield renewables projects, manufacturing businesses right through to supporting an early-stage BNPL to obtain warehouse funding.

• During COVID, we have seen a continued demand for debt advisory, meaning it appears to be somewhat recession-proof

What’s to be conscious of:

• Different teams will likely have different specialisations based on the relationships they have. For instance, it would likely be more valuable to your technical development to work on multiple greenfield project financings than to undertake multiple ratings reviews.

• Like M&A, the lion’s share of fees can be contingent on a successful financial outcome (i.e. successfully procuring debt) hence revenues are not always guaranteed

• Given the focus on debt (the bank’s analysis centres on downside risk and cash flow serviceability and credit metrics), the valuation component may not get touched on as often.

Most common future employment outcomes (with only this skillset):

• Investment Banks, Independant Advisors and specialist Project Finance Advisors

• Debt Investment teams (Funds & Investment Management)

• PPP and other greenfield project originators

• Infrastructure Investment teams (Funds & Investment Management) with a portfolio of capital intensive assets

• Positions within low-margin, capital-intensive businesses such as infrastructure, renewables, real estate, oil & gas, energy generation or transmission which has stable returns that allow for a highly-levered debt portfolio (thus a need for human capital with strong treasury and financing skills)

Our advice to Debt Advisory professionals wanting to move into Investment Banking, Corporate Development or Private Equity

Debt Investment teams are an excellent grounding, offering professionals the opportunity to work across a variety of sectors and mandate types. Often you are supporting a significant capital / corporate event hence in a position of great value to your clients (opposed to some teams that may be seen more as a compliance function).

As with other Big 4 teams, the mandates you undertake will often shape your future employability, hence it’s important to take an active role in working on the mandates most likely to support the work you want to do long-term (where possible).

Further studies such as the CFA designation, a Master of Applied Finance or Diploma of Chartered Accounting will demonstrate your technical capability and may also support further development of your valuation skills which are important for roles representing equity (corp dev. / M&A / funds management).

About the author

Nicolas is a Co-Founder and Director of Numbers Executive Recruitment. He has ~20 years of experience spanning Accounting, Corporate Finance and Executive Search & Recruitment.

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