The world of corporate finance is a tricky one. It cannot be easy to navigate through its nitty-gritty.
Couple this with a heap of complicated terminology, and you are bound to get confused. Many people wish to make a career out of transaction advisory services but don't know where to start.
Entering any field requires knowledge of its exit opportunities as well.
Fear not, because we’ve got you covered. We’re here to help.
Here’s an overview of transaction advisory services.
What are transaction advisory services?
Transaction advisory services (TAS) are groups that help firms evaluate business transactions.
They are third-party services outsourced from accounting companies or investment banks. Transaction advisory services can manage your business' transactions inside out.
They offer advice on valuations, business modelling, mergers and acquisitions (M&A), and so on. Since they handle all transactions-related, a business can run smoothly.
Most accounting firms divide their transaction services into categories. This is because they offer such a wide range of services that it becomes easier to categorize.
In large accounting firms, transaction advisory services are split into categories:
- Valuations and Appraisals – This is done to estimate the worth of a company’s assets.
They also work on analyzing liabilities and purchase-price allocation.
- Financial Due Diligence – This group analyses the company’s financial statements and looks for risks.
- Integration Services
- Business Recovery Services
The last two categories are not strictly a part of the transaction advisory services.
The company has been investing heavily in transaction advisory services in recent years.
The following are the main cases handled by transaction advisory services:
- Tax structuring
- Transfer pricing
- Tax planning
- Tax compliance
- KYC checks
- Feasibility study
- Credit enhancement
- Creditworthiness reports
- Trade finance advisory
- Structuring of debt/equity model
- Credit restructuring
- Closing and post-closing assistance
Transaction advisory services as a career
A career in TAS gives accountants a chance to move on from pure auditing to more interesting domains.
Since auditing can get repetitive or boring for several accountants, transaction advisory can prove to be a much more rewarding career choice.
It is also a more highly paid job. Entry-level consultants can earn up to $90000 a year. This figure rises with the seniority of the position.
Entering this career also opens up opportunities to enter other areas of corporate finance. TAS offers a variety of services.
As a result, a career in transaction advisory services has a wide scope for versatile roles.
An accounting degree with a financial modelling minor/specialization course will be helpful if you want to enter transaction services. Accounting, analytical, and Excel skills are essential in this field.
Despite the perks, it is not without its shortcomings. Just like investment banking, transaction advisory service jobs are stressful.
They involve long work hours and hectic schedules. A person working in this field must be ready to face a challenging and competitive work environment.
It also requires highly ambitious individuals with great attention to detail. (However, I think we can all agree that the latter is a trait most accountants already possess!).
Additionally, this job entails good critical thinking skills and business acumen. A willingness to enable the client to succeed.
It is also important to be a good team player and work collaboratively. Effective communication and presentation skills are also important. A few other behavioural skills include:
- Good interpersonal skills
- Language fluency
- Leadership skills
- Willingness to learn
- Effective written communication skills
Major responsibilities of this role would include:
- Reviewing accounting records
- Communicating directly with the senior management of companies
- Assessing trends that impact cash flow
- Identifying issues for deal structuring
- Helping clients achieve their business targets through strategies
- Performing industry and company research
So you’re working in transaction advisory services. Perhaps you're planning an exit after a couple of years of experience.
You may now be wondering what your exit opportunities are. How do you exit this domain? What areas can you explore further? What career choices can you lean into? What are the options available and not available to you?
Transaction services make for a good stepping stone toward investment banking.
If you have been dreaming of a career in investment banking, transaction advisory services is a good place to start.
This is also useful for those who wish to work in private equity. A direct jump from transaction advisory services to private equity may not be possible.
But, using investment banking as a bridge will make the shift much easier.
Your exit options also depend on how long you’ve been working in transaction advisory services.
For example, a person with 1-3 years of experience in the field may be able to get into corporate development or consultancy.
But a person with over 6 years of experience can run for a Partner-level role. From a long-term point of view, there is always the risk of automation.
But this is true in the case of almost every existing industry today. Reviewing a company’s financial history can always be done by machines or robots.
It does not need excessive human input. So there exists a risk of being replaced at the job.
Needless to say, transaction advisory services will still need human brains involved in the process at some step of the way. So we’re not going to get replaced altogether!
Altogether, transaction advisory services are a great career option – for those who are bored of auditing, looking for better pay or stellar exit opportunities.
Why does a business need transaction advisory services?
It is favourable for businesses to hire transaction services because it gives them a stronger foundation.
Entrepreneurs build businesses through years of hard work. Sustaining a business requires effort and good decision-making skills.
One key aspect of a business’ functioning is related to its transactions. Thus, it is critical for a business to work with transaction advisory services.
This also helps with risk management and dealing with uncertainties. Transaction advisory services have experts to guide you while making decisions related to business transactions.
Many entrepreneurs enter the world of business without any idea about corporate finance.
Transaction advisory groups offer due diligence (legal and financial) and working capital analysis.
These are fields that businessmen may not know much about. Hiring experts to advise them on these matters will help sustain the business.
Transaction advisory services are thus integral to a business's overall success.
Outsourcing expertise in transactions is highly useful, especially for new entrepreneurs. Transaction services will allow a business to run at its maximum potential.