Why is FDD better than Audit
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Mentor
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For most people it’s better because of money, interesting work, and exit ops.
Coach
FDD is different than audit but not necessarily better. For me FDD afforded me more opportunities than audit as a new partner. I also found it more interesting but if you have an audit client who is active (transactions, registration statements, expansion, etc than audit can be as interesting.
FDD is not for everyone. First off there is a different skill set required for FDD than audit that I don’t feel is explored on FB as I think most of the people posting are earlier in their careers. If you think FDD is being an excel junkie and pumping out EBITDA schedules and data books, you are wrong. To excel in FDD you need to be able to think on your feet and figure out the puzzle that has many missing pieces, be analytical and be able to process data quickly and figure out what it means to a buyer (or seller). You are wearing a different hat than when you are in audit. I always challenge my staff and ask “so what” when they write up a finding. Why does it matter to a buyer? Why do they (or should they care)?
There are certainly audit clients where they value the advice of the managers and partners and look to the team for business advice but as a FDD partner I feel that I am expected to be able to explain everything to my client, from business to cash flows to accounting, and warn them of those things they aren’t even thinking about.
Downsides to FDD: unpredictability of one’s schedule and lack of recurring clients if you’re not serving a meaningful sized PE or highly acquisitive corporate.
K2 not sure what level you’re at, but even at the senior level you should have the capacity to start owning more of the “bigger picture” stuff outside of pure data processing. If you feel like that isn’t the case, be proactive and ask your directors for more responsibility. I’ve had the opportunity to take on sections of the management meetings, own client communications, run weekly check ins with our client and Target, write up reports from cover to appendix, etc at the senior level. I think the onus is on you to some extent to step out of the comfort zone and tell your directors “hey I’d like to take on X or Y and if possible get your feedback afterwards on how I did and where I can improve”. Even on too heavy teams, I’m sure your directors and managers would love to take some work off their plates to give you experience.
Coach
Money
It’s not. It’s the same thing as audit.
Generally speaking IB is much more open to candidates with FDD experience than it used to be. Biggest things that helped me:
1. showing a genuine interest in IB. Being able to talk at a high level about a transaction process and why I wanted to switch. For me, it was that in FDD you are exposed to a very limited part of a transaction and I wanted to gain exposure with the whole transaction process (creating CIMs, identifying buyers, marketing the business, etc.)
2. Nailing technical questions. Nothing I got was crazy hard, but you should be able to talk about valuation methods at a high level
3. Being able to fluently describe the deals I did in FDD, pros / cons of the transaction, interesting issues encountered, etc.
PwC 3 - the only point I’m trying to get across is that FDD and audit are completely different things. I don’t think FDD is insanely glamorous and I’m not saying it’s banking. It’s definitely not. But your day to day work is much different in FDD than audit. It’s important for prospective candidates to know that. As I’ve mentioned a throughout my other comments, there are of course similarities but the work is still very different. When people say “it’s basically an audit of a transaction” I find that to be a very unhelpful comment because it fails to address the work you actually do in FDD, which again, is very different than audit.
IB analyst 2 - I would disagree with your comment that FDD isn’t important relative to other work streams in a transaction. My IB experience has been all sell side M&A, and the QoE is very important for getting an adjusted EBITDA number that you communicate to prospective buyers.
FDD is essentially an audit of a transaction. There is very little value add to be provided when the price is already essentially agreed and the process is basically complete. FDD is a final accounting check before the SPA is signed
@D2, how did you get into FDD and what made you stay 24+ years plus?
Some here are saying it’s the same thing. It is not at all the same thing. An audit is almost entirely internal controls based work now which you won’t touch in FDD. You’ll never have to tie out a 10-Q or a 10-k ever again either. Is it audit-like? Sure when you think of what an audit is definitionally, there are lots of parts that are audit-like in FDD but it’s not the same as an actual audit engagement at all.
Mentor
It’s not
Subject Expert
Found the auditor
FDD won't be better when this recession hits and new hires are furloughed.
Mentor
If this were so true the advisory service lines wouldn’t be trying to spin off/dump audit dead weight
Most of the FDD folks are from audit mainly because of more money, more interesting work, better exits. At the end of the day though, it is just a glorified audit.
After training in audit and and moving in FDD post qualified and confirm that they are both a miserable existence.
All they are good for is learning, key is is to get out before they put the golden handcuffs on, making it all the more difficult to exit as you are too expensive for industry.
I’ve worked in both. The work is value added, and the work is less tedious as audit. Also, FDD teams are smaller so there is direct partner coaching, whereas in audit I barely knew who my partner was
Projects in FDD are more interesting.
The financials bankers put in their CIMs come directly from the QoE.. valuations are based off adjusted EBITDA. So yes FDD is more of a value add then audit.