Lifting the lid on the Big 4 Corporate Finance teams - Financial Due Diligence

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 first 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 “Financial Due Diligence” line of service (AKA Transaction Services or Transaction Advisory Services).

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:

"Financial Due diligence is analysing and validating the key financial, commercial, operational and strategic assumptions being made. It uses past trading experience to form a view of the future and confirms that there are no 'black holes'."

What's great about it:

  • Develop a strong understanding of accounting principles and financial statement analysis,
  • Build a good understanding of key value drivers including normalised EBITDA, working capital, capex etc.
  • High level exposure to SPA’s ("Sale Purchase Agreements") and how key value drivers impact this
  • Build high levels of professional scepticism
  • Develop a strong understanding of "what is under the bonnet" of a business and will develop your ability to quickly articulate strengths and weaknesses
  • Develop a strong operational understanding of the sectors you work within
  • TS teams generally work on large, nameplate transactions (unless you’re in a mid-market focussed TS team) meaning you will likely gain the most exposure of any Big 4 teams to large, significant trasactions
  • Build a good professional network (mainly investment banks) and the clients you undertake the work for

What to be conscious of:

  • Minimal exposure to corporate finance theory / valuation (if any)
  • Minimal exposure to financial model development/ financial analysis (i.e you populate financial models but do not build them)
  • FDD is a work-stream within a broader mandate / deal hence the sentiment is you "don't often get to see the bigger picture or the outcome of the deal"
  • Minimal exposure to the capital spectrum (i.e. debt or equity analysis / raisings)

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

  • Commercial / Financial Business Partnering positions within a group finance function / business unit within a Corporate
  • Finance Manager / Financial Controller (often when there is a need for a commercial background who can interrogate and push-back on the numbers)
  • Corporate Development / Business Development (if complementing an existing team with M&A backgrounds)
  • Investment Banking (on rare occasions if coupled with exceptional academics and corporate finance subjects)

Our advice to TS professionals wanting to move into a corporate finance or M&A environment

Compliment your strong levels of commercial acumen and financial rigour with practical exposure to corporate finance via a secondment to a sister team such as M&A, Valuations, Financial Modelling or potentially Debt Advisory.

Demonstrate to the market (i.e. employers) that you're committed to transitioning into a corporate finance environment by committing to extra-curricular studies such as the CFA designation, a Master of Applied Finance or even short courses such as Wall Street Prep or Training the Street.