What I Learned: Corporate Finance

What I've learned about corporate finance through conversations and research.

Generated by DALLE-3.

In a previous What I Learned This Week (WILTW) post, I alluded to the fact that I have recently been engaging in a plethora of coffee chats with various partners and managers within the firm. In fact, I’ve had so many at this point that I am now needing to consciously cut back. Not only for the sake of my bourgeoning addiction to medium americanos, or because we are now in the busiest period of the year and I need to be fully focused on my key clients. But also, I believe I am starting to form a clearer picture of what I want to learn next after obtaining my CPA designation in the upcoming Spring.

Of the conversations I’ve had, two fields have stood out in terms of a career path where I can see myself learning, providing value, and ultimately finding success, hopefully fuelled by some inherent level of interest and enjoyment.

The first is corporate finance (CF), a notoriously popular and thus competitive line of service (LoS) at the firm, and the other is Technology Strategy and Transformation (TS&T), or in other words, tech consulting.

The two fields are significantly different and as such, difficult to compare. So in this post, I’ll try to briefly outline what I’ve learned about CF, and in another, I’ll discuss TS&T. Getting my thoughts down in this way will not only help me think through which one I want to pursue but also potentially help summarize the considerations of a strange dichotomy for anyone who may need to make a similar decision.

I’ll outline my thoughts through the following areas:

• Basic Overview

• Career Outlook

• Compensation & work-life balance

• Further education

Corporate Finance Overview

At the firm, Corporate Finance is part of the Deals group, which spans a wide domain of specialized services aimed at helping our clients through every stage of the deals process. This ranges from using data to help a founder improve their business for a better exit, valuing a business or asset group, due diligence, and more. Corporate Finance, in particular, is focused on the sell-side of deal interactions. The team generally works with business owners to help them find favourable exits to either private equity or large corporations making strategic acquisitions.

From what I can tell, the work at the associate level is similar to what might be performed by analysts in investment banking, using financial and non-financial information to understand the business holistically in order to build a Confidential Investment Memorandum (CIM) which acts as the main information source provided to potential buyers. The goal is to help the business owner get the best price for their business as possible.

Career Outlook

Moving to corporate finance would be a more natural fit than moving to tech consulting from a financial audit background. The core financial skills would still be required on a regular basis, and the soft skills like teamwork, communication, and project management would also be relevant. The main change, and therefore skills available to learn, would be pivoting from understanding historical numbers to looking forward at how the numbers might change in the future. Also, getting to consider non-financial elements such as the business’s backstory or role in the wider marketplace would be needed. This is interesting to me. I really enjoy reading about businesses, founders and strategy, even in my free time, and I also think I may be able to offer a more unique skill set to the team due to my background in economics.

Outside of the firm, experience in corporate finance would potentially open doors to join a business in the Financial Planning & Analysis department as a Financial Analyst, roles private equity, or investment banking.

Compensation and Work-life Balance

Compensation for the role is more difficult to determine and it’s not something I am comfortable asking in a casual coffee chat - although I do think greater pay transparency would be a good thing for the world.

Based on a quick search, the average salary for corporate finance in Canada is between $63-92k per year. This a big range, but seems in line with what I’d expect from the firm without any other background information. Ultimately, the move wouldn't require a pay cut, and the range above is a good thing to keep in mind should I decide I want to leave the firm at some point down the line.

Work-life balance is interesting with CF. The world of deals is known to have poor work-life balance due to the fact that once a deal is close to being closed, it requires all hands on deck to get it done - working weekends or holidays with short notice is not uncommon. From conversations with some friends in the area, this is true, and the intensity of the environment is much higher than in financial audit. However, the intensity also comes with deeper lulls where there is little to do and overall, the field apparently requires fewer hours than audit.

Further Education

Apart from the CPA, no further education is required. However, with a greater emphasis on finance and valuations than with accounting, other designations and specializations can help set someone apart. The Chartered Business Valuator (CBV) designation is apparently respected, as well as the Chartered Financial Analyst (CFA) designation. 

Personally, this is the biggest detractor for me. While I’m very much open to taking courses and continuing my education, I’m also reluctant to commit to any other multi-year education-experience blended designation.

Summary

In summary, Corporate Finance offers a fast-paced and dynamic environment, akin to audit but with a heightened emphasis on understanding the business narrative and the broader context. Learning to identify key business drivers and making forward-looking predictions that influence business transactions would be fundamental. Transitioning to corporate finance might be more seamless than venturing into an entirely new field, yet this shift could be tempered by a potentially unpredictable and demanding schedule. While further education isn't immediately necessary, pursuing it proactively could distinguish me from other candidates. It’s a very interesting subject area that presents a compelling, yet challenging career trajectory.