Ambition fulfilled

Vlad Klenikov, Vice President, Investment Banking Division, Goldman Sachs, talks to Colette Steckel about how his accounting experiences in Moscow led him to a career on Wall Street

Ever since his senior year at the State Academy of Management, a prestigious university in Moscow, Vlad Klenikov had wanted to carve a career in investment banking. The difficulty was finding a position to fulfil his ambition in early 1990s Russia. ‘Back then, the economy was starting its transition from socialism to capitalism. People were starting to realise the value of business skills, but investment banking was only just emerging in Russia; there were very few merchant banks doing very little business.’ He sought out full-time job opportunities as he neared graduation from the Department of International Business and Economics, but to no avail. ‘It was then that I started to see accounting as a stepping stone that would ultimately get me to Wall Street.’

Klenikov explains that the State Academy of Management was a recruiting ground for the Big Four firms, which were rapidly gaining a foothold in Russia in the early 1990s. Firms such as PwC visited the Academy giving lectures and advice to budding business professionals, while scouting educated Russians to train as auditors and, later, qualify as accountants. Klenikov joined PwC on graduating in 1995. ‘At the time, it was the blue-blood of professional services in Moscow. And it was a fantastic place to work, not only for gaining a professional education and qualification but for the diversity of experiences and the investment the firm makes in developing its staff,’ recalls Klenikov.

He spent four years with the Moscow office, working with clients in banking and financial services as well as natural resources, two industries that were flourishing in the new, business-focused Russia. After a two-year stint as an auditor, he moved into corporate finance as a senior consultant, helping to develop a mergers and acquisitions effort in Russia that saw him build and manage relationships with owners and managers of Russia’s pharmaceutical, oil and gas, pipeline and metals companies. ‘That was a good route for me, offering the kind of exposure I needed to get into investment banking at a later date,’ notes Klenikov, adding: ‘I can’t overstate the importance of a professional qualification as well. I value ACCA very much; a lot of the concepts I picked up – business management, corporate finance, tax – were as relevant to my work then as they are today.’

Crisis

Klenikov may well have stayed in Russia beyond his four years with the Moscow office, but for the serious financial crisis of 1998. The Russian economy, in its efforts to move towards a free market system, suffered as it attempted to implement fiscal reforms, relying on short-term borrowing to finance budget deficits. The result of the crisis was a rapid decline in the value of the rouble, the flight of foreign investment, an inability to pay debts, and the threat of runaway inflation. The crisis shook the professional services industry in Moscow, leading many foreign nationals to leave the country. Similarly, local professionals started considering their livelihoods. ‘Things really started to slow down in 1998 and its aftermath,’ begins Klenikov. ‘I realised that if I didn’t do anything, my professional development would probably stall. There was too much uncertainty. With little investment in the country and the threat of financial collapse, Russia was considered a place to steer clear of. My Western colleagues started leaving in droves and I found myself caught up in this.’

He moved to the US, where, with the assistance of a colleague and friend, he found a position as a senior associate in the business turnaround division of the PwC office in Dallas, which progressed his goal of moving away from pure auditing towards business advisory services. He also notes that, culturally, Dallas could not have been more different to his life back in Moscow. ‘Of course, I had a different role in the Dallas office, but I found that there were more defined tasks and responsibilities compared to the engagements I undertook in Moscow, which were very diverse. There was much more specialisation. Also, the interaction with clients was a little different to what I was used to.’

He stayed a year before deciding to put his career on hold to pursue a two-year, full-time MBA course at the Ross School of Business at the University of Michigan, one of the leading business schools in North America. Klenikov admits that the decision was partially down to the prestige that an MBA offers in business, as well as the issue of recognition of accounting qualifications other than CPA in the US. ‘Unfortunately, there is no middle-ground in the US – either you are able to sign off financial statements and move on in your career, or you don’t. From that perspective, recognition is an issue. But I feel that the quality of education, knowledge and understanding of business and finance you receive as an ACCA is on par, or even superior, to what you receive in the US. I think the efforts of ACCA to reach recognition in due course will pay off. In the meantime, markets are becoming increasingly global and, as ACCA offers such an international perspective to accounting and business, it will gain strength in the US.’

Klenikov admits that the MBA helped to broaden his business knowledge and, equally importantly, introduce him to his future employer, Goldman Sachs, the leading global investment banking, securities and investment management firm with a staff of over 22,000 worldwide and net revenues for the financial year ended November 2006 of US$37.7bn. The school arranges summer internships for its prospective MBA graduates, which is how, in the summer of 2001, Klenikov found himself in the firm’s headquarters on Wall Street, New York, for three months. By the end of that summer, he was offered a full-time job as an associate in the Natural Resources section of the Investment Banking Division.

He remarks that his work ties in with the role of the classic investment banker: advising corporate clients or investor groups with respect to transactions such as mergers and acquisitions, asset divestitures, or helping to access capital markets through IPOs. The Investment Banking Division contributes a sizeable chunk to net revenues of Goldman Sachs (US$5.6bn in 2006) and is witnessing a spurt of growth, which the firm puts down to a renewed confidence in mergers and acquisitions and increased corporate activity, both of which have been fuelled by favourable global market conditions.

Promotion

In December 2005, Klenikov was promoted to Vice President at the age of 32, an achievement that the Russian downplays. ‘As an associate you mentally and professionally prepare yourself to become a VP within three or four years time. By then, the firm is really counting on you to take forward the business. But it is not a hierarchical position; everyone is working towards the same goal. It’s not uncommon for me to work very long hours modelling spreadsheets if it needs to be done for a client.’

Looking back on his four-year stint at Goldman Sachs, Klenikov says that his working day is anything but routine. ‘Since I joined Goldman Sachs, I have been on a very steep learning curve. Every single project I’ve worked on has had a unique aspect to it. It’s a fast-paced job with events sometimes changing hourly.’ He won’t go into specific projects he has been involved in, noting that Goldman Sachs has a strict media code that does not permit him to reveal client deals. According to the firm’s website, recent transactions executed by the New York office include IPOs of Hertz’s (US$1.3bn), KBR (US$0.5bn) and Freescale Semiconductor (US$1.6bn), as well as a US$2.5bn follow-on equity offering for Halliburton.

Klenikov remarks that working in the high-octane world of high finance presents a myriad of challenges, but that his daily task is ensuring he is able to tackle the kind of requests put forward by his clients. ‘It’s really about keeping up to speed with what’s going on in business and finance and being excellent at what you do, knowing that the client will want to call you back for advice later because the work you have done has proved very helpful or relevant. That’s part of building a reputation for yourself and the firm.’

After a seven-year extended stay in the US, four of which has been spent on Wall Street, Klenikov says he is thankful he had the opportunity to fulfil his ambition of becoming an investment banker. Although he does not rule out the possibility of returning to his homeland – ‘I’m not opposed to the idea of going back; one morning I may wake up and say this is probably the best time for me to ever consider returning and making an impact’ – he appears perfectly at home in New York’s financial district. ‘I truly believe my career would have turned out very differently if I hadn’t ended up working for PwC in Moscow and studying ACCA. Readers should be encouraged by that.’