Jeffrey Wong, Vice President at RBC Capital Markets, brings a wealth of expertise in business valuations and financial transactions to his role. Jeffrey’s unique skill set enables him to wear the hat of a valuator when evaluating investment opportunities. This involves a holistic approach, considering not only financial aspects but also operational segments to ensure that valuations align with the desired objectives.
His journey underscores the practical application of CBV principles and the designation’s value in navigating complex financial landscapes.
We asked Jeffrey about his journey as a CBV, including his takeaways from the CBV Program of Studies. Here are some of the highlights from our conversation:
How has the CBV designation supported your career development?
So, I began my career in the assurance practice at Ernst and Young. During one of my engagements, my exposure to private investments piqued my interest in valuations. I believed it was crucial to comprehend the underlying business comprehensively – not just from a financial perspective but also operationally. This foundation, I thought, would make me a better finance professional.
Understanding financial statements alone wasn’t sufficient; grasping valuation aspects was equally vital. As I contemplated my career path further, I realized that valuations played a key role in transactions. Parties needed to negotiate on the valuation, essentially determining the purchase price and its impact on negotiating terms.
After completing my CFE, I transitioned to the valuations business line at Ernst & Young. I found the material in the CBV program of studies to be highly practical and relevant, mirroring the work I was engaged in. Evaluating companies under different growth profiles enhanced my understanding of how equity behaves. It also involved analyzing comparable or relevant precedent transactions and public companies.
Supported by my colleagues, this transition has laid a solid foundation for my career so far.
Can you share a particularly challenging yet interesting valuation analysis that made you realize you had chosen the right career path?
While working in the valuation group at Ernst and Young, I had the opportunity to be part of a team involved in a butterfly transaction, focusing on spinning out an existing business segment of a company. This segment comprised multiple underlying entities, each requiring a distinct valuation approach.
This task proved challenging due to limited precedents, and we had to meticulously review legal documents to determine the appropriate methodology. Credit is due to my colleagues; we were all navigating unfamiliar territory, but collectively, we were able to step back and think through a thoughtful approach.
Ultimately, at the end of this engagement, the client was thrilled with the results and our approach. This particular opportunity allowed me to apply my valuation principles while also considering accounting and tax implications. It revealed to me that business valuation is akin to an asset, serving as one of the tools for a finance professional. Working in the valuations field at that time made my CB core studies much more practical, emphasizing the importance of a holistic approach that I hadn’t fully appreciated before.
What differences do you see in your current role as compared to your previous roles?
In my previous role with Ernst & Young’s Valuations Group, my focus was primarily on business valuation, like individuals you’ve interviewed before. In my current position, I work within a group responsible for originating business, which is essentially akin to marketing and prospecting. We underwrite deals, conduct due diligence, and craft investment memos, essentially building a business case.
Our responsibilities extend to monitoring subordinate debt or equity investments, primarily targeting mid-market companies for various scenarios. Whether it’s acquisition financing, supporting private equity sponsors in acquiring Canadian companies or providing growth capital for management or shareholder buyouts, we play a pivotal role.
In evaluating investment opportunities, I often put on my valuator hat, delving into the business intricacies and understanding its operational segments. This involves assessing whether the valuation aligns with our objectives. Additionally, my current role involves negotiating credit and shareholder agreements.
Reflecting on my experience, I find that the CBV course material, which briefly covered equity and shareholder agreements, combined with my previous positions, has provided me with a foundational experience. Most importantly, it has cultivated a critical-thinking mindset, enabling me to tackle new challenges effectively in my current role.
Do you have any tips for people looking to become a CBV?
Networking for Insight:
When contemplating whether the CBV designation is of interest, engage with fellow CBVs, whether they are colleagues in your field or professionals profiled in the spotlight. Cold-calling and seeking firsthand experiences from others can offer valuable insights. The reality of being a CBV often differs from the information on the CBV website, making personal conversations essential to grasp the nuances of the role.
Practical Exam Preparation:
For candidates enrolled in CBV exams, practical preparation is crucial. Practice exam writing, paying special attention to typing speed, as it becomes second nature. This not only aids in structuring responses efficiently but also ensures effective navigation of the answer key. This aspect might not be immediately apparent to those without prior experience in exams like the CFA or a background in accounting.
Celebrate Successes:
In the journey of pursuing the CBV designation, remember the importance of celebrating each success with every exam pass. Acknowledge and savor these achievements, as they mark significant milestones in your professional development.