I know this has been touched on before but can't find anything super specific / recent.Which LevFin teams actually hold the pen on the model? Aware there's a pretty large variance
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This question is frequently asked on this forum and brings me a lot of confusion as someone who works at a “top” and “modeling” levfin group.
there is no 3-statement / operating modeling done in LevFin at any bank for LBO financings. You will get a model from the sponsor which will be far more superior and accurate than anyone on the sell side will put together. You will take that model and sensitize it for different scenarios for internal credit committee memos and leverage reads (sometimes you don’t even need to sensitize depending on your bank).
It’s not particularly difficult. You are largely taking numbers and hard coding into the paydown /LBO template. That being said, you still need to make sure everything is being calculated correctly and flowing through (it sometimes gets hairy), it’s overall a light lift and not the same as what the M&A team will make for the CIM projections where you are doing a revenue build from scratch at # offices or salespeople type level of detail.
levfin modeling is still a great experience if not among the best for PE as the modeling tests are at times the exact same thing as a single tab LBO / paydown that are done for leverage reads / CC memos. In general, I am of the opinion that modeling on the sell side and this forum particularly is intensely overrated. i do think it is important to be at a bank where the levfin team is driving the process (including paydown model) and handling diligence though, otherwise you won’t learn nearly as much.
Good banks where LF holds pen on process in no order:
BofA, RBC, Jefferies, CS (sponsors and levfin), UBS, DB
Good banks where LF does not hold pen on process but is high in LF league tables:
GS, JPM, Citi, Barclays
balance sheet banks that appear on league tables because of right side commitments but don’t actually lead deals and therefore have a relatively poor analyst experience with little client exposure:
Key, SMBC, Nomura, Mizuho, Truist, SocGen, BNP paribas, etc etc
in my opinion, the best analyst experiences and corresponding exits for levfin would be BofA, CS (sponsors), and Jefferies.
Thoughts on MS Levfin?
One of the worst of all major banks
Could you elaborate on somewhere like GS pls? What does that regarding learning experience and exit opps going somewhere that’s high on the tables but doesn’t drive the process
Yes GS does a lot of deals and their RX and private debt teams are built in to LF. Learning experience is not as good as coverage. Exits are primarily to direct lenders, but it’s goldman so PE is still possible and does happen.
Thank you for the detailed post but just want to clarify where’s your source of info of which banks hold the pen and which don’t
I am the source. Ik someone who works or who has worked at each bank
+SB but not entirely accurate. At CS, Sponsors runs the full operating model for LBO deals.
For M&A sell side model i would believe that, but for financing as I mentioned above that makes no sense. There is no operating model in LBOs
So from what I understand is it beneficial to be in a LevFin team that holds the pen (from a PE exit perspective) or not?
It is critical for good PE exits for the LF team to run the process primarily for
(i) running diligence is how you really learn how the business works and is ultimately how the deal gets done. Lenders will grill you on the business and answering those questions will make a pro interviewer without even having to prep because it’s a large chunk of your job already.
(ii) the paydown models are the exact same single tab LBO models that are in modeling tests with the exception that there is no IRR / MOIC calc
For those two reasons, levfin at a top group that runs the process is among the best for PE recruiting. You also are working side by side with the sponsor / client in LF, you are more so working together than the sponsor just telling you what to do. The sponsor wants the deal to get done as much as the bank does, this gives the levfin banker (at a top group) leverage and the sponsor might treat you a little nicer…
Macquarie LevFin hold pen on model and DD process
Fine but don’t see them leading much
how hard do you think it wold be to lateral from one of the BS banks to the "good banks" ?
Not hard at all, but you will have to start over
Thoughts on wells levfin?
i answered this below last year, and someone gave me MS, but the comment remains accurate. average at best shop for LF, primarily right sides and revolver holds for corporates. you will very rarely see them lead sponsor backed lbos
How’s Wachovia/Wells Fargo Levfin rank?
Not good. Primarily do B1 / B+ or even BB. Will come in for revolver holds. Business is primarily corporate refi’s not LBO financing. They are too conservative in their commitment practices to be able to compete
Thoughts on Truist LevFin and the types of deals they get exposed to. Is there some sponsor/LBO exposure or is it just mostly corporate refinancing?
Doesn’t matter, it’s 95% right side deals.
How easy/hard is it to lateral levfin groups? I'm incoming FT in CLT but might look to switch to NYC in 1-2 yrs.
It is very difficult if not impossible to go from coverage to levfin and retain your analyst 2 or associate 0 title depending on when you make the move. They will 9 times out of 10 make you start over.
My bad I wasn't clear, I meant how difficult would it be for me to switch from levfin CLT->levfin NYC?
Is it possible to move from a top levfin group like BAML or JPM to a EB M&A given the market right now?
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