UK/London product groups with the most unlikely Private equity exit opps
This topic might have been bludgeoned to death elsewhere on WSO in contexts that only concern America. But since PE recruiting in London/Europe is a lot different from America, I would like to know what product groups have very significantly lesser exit opps than country/industry coverage, M&A and LevFin in UK/Europe asides ECM & DCM. How do origination groups compare to execution groups? How do the following groups fare in relation to the above in terms of UK/European PE exit opps: special situations group, structured finance, Private Funds groups, Private capital advisory, Financial sponsors groups, groups specializing in private debt & equity placements, mezzanine and private secondary share trading, groups specializing in infrastructure & project Finance.
People tend to think M&A groups are perfect for PE exits because they are very technical and M&A guys are very good at modelling. Financial Sponsor groups are groups focused on developing relationships with PE funds and liaise between clients and M&A and LevFin groups, but beyond that they are pretty useless, and for ECM/DCM groups I prefer not to comment, I have bumped into very few people who moved from one of those groups to the buyside. I would say the best product groups to land something in the buy-side are Financial Restructuring and LevFin (they place very well in Special Situations, Distressed Funds, and Private Credit groups).
The truth is that everybody with enough training can learn how to model. Compared to IB, Private Equity is not so transaction driven, to succeed you need the business acumen and the operational knowledge that you only learn at an industry group. Funds are not interested in people who are experts in how to value leases, or when to write down deferred tax assets, they want to hire people that understand what drives value in retail businesses, or how to turn around an underperforming industrial asset, or who can predict which trends will disrupt healthcare in the next decade, for that people from top industry groups are much well placed. Buy-side and Sell-side processes are just a tiny part of Private Equity, and for that you will have an M&A advisor, in between there are 3-7 years of having to take care of the companies in you portfolio, so operational knowledge is key.
To what extent is pre-banking non-finance (and NON-CONSULTING) work experience in a role RELATED TO A PORTCO's business model going to give you an edge in recruiting? How would the value of such a previous experience compare with a rival candidate with Consulting experience that seems equally important to certain Portcos? This is splitting hairs in the context of competing for limited PE spots with a rival candidate whose CV is being reviewed / also being interviewed like yourself
You're gettting this wrong. You don't get hired based on your CV, if it's good enough you get an interview. After which it's all based on your performance in the interview. All this consulting vs. non-consulting shit doesn't matter my friend. Nobody cares if you have no experience in consulting, I bet if you show up with a well thought out 5-page memo on and fully built model and pitch why the fund should buy a company, you would be better placed than any McKinsey consultant.
The key to getting hired is convincing people that if they hire you today, you can start tomorrow and not be an idiot.
Curious
PFG - haven’t seen anything bar IR
PCA - don’t know many people in the space but my guess would be secondaries at best
“Groups specialising in private debt & equity placements” - that’s the same as the above
Sponsors - wouldn’t call it a product team. It’s a product/industry agnostic team. You can work on LBOs, IPOs, bolt on M&As, recaps, refis for companies in any industry…emphasis here is you’re doing the work for sponsors (The extent of your involvement in the technicalities of these processes will vary by bank). Common exits are PE and PC
Structured finance - again really depends on what exactly you’re doing but most feasible exits would be liquid/structured credit funds (have seen less move to the liquid side)
SSG/RX - don’t know many people personally but this one seems more varied in terms of exits. Common ones are PC, (illiquid) special sits/structured equity type funds. Then there’s other people who may have moved to anything from deep value PE seats, to distressed hedge funds
Notice the use of the words “common” and “most common” - I’m not saying “this will be the exit and this only”. No clue on infra/project finance
Fully agree with all of this and can weigh in on Infra PE - industry coverage is best (energy / power / natural resources, whatever your bank calls it), but really they look at all coverage groups. Have even seen FIG bankers transition to infra. Very rarely see any product groups - Infra is extremely modelling intensive and typically coverage analysts are just better modellers as they are usually the ones who build full operating models, as opposed to product groups which may just be plugging numbers into templates (cough JPM ALF cough).
I also strongly disagree with the widely held view that lev fin is great for exits in London - the vast majority of lev fin bankers I see end up in capital markets roles at funds, not deal teams. By far the most overrated group.
What are these "capital market roles" exactly? Where do they fit into the PE picture in terms of function? Are they like in charge of capital markets advisory for portfolio companies or for the PE firm itself? Why do they exist (since capital markets teams of IB firms could be hired, just like normal companies reach out to IB firms for IPOs/bond issues)?
How does the comp for capital market roles at funds compare to deal teams?
Capital markets is focused on raising and syndicating acquisition financing for deals - exactly what you do in lev fin. At MM/UMM funds this is mostly done by the deal team and they may have a small central team to help. Not a bad seat by any means but definitely not what the vast majority of people expect/want to do when moving to PE.
They’re the guys who negotiate the financing with underwriting banks/debt funds. I guess more recently a part of the job also involves working with banks to market the debt at syndication. For portcos it’s more a combination of portfolio management, and making sure the companies continue to operate under a “good enough” capital structure in line with the view of the deal team. They will also be actively monitoring their credits and the market to get good terms when it’s refi time. For things affecting equity returns (what the deal team is concerned with) like recaps or incurrence of additional debt, this is usually a conversation between the deal team and the capmarkets team but the main job of the capmarkets team is to go out to market and get the best terms possible (or just find debt these days lol).
If you’re asking “why not hire an ib capmarkets team” I don’t think you understand the distinction between the 2 jobs. Hopefully the above clears some things but feel free to ask anything else you don’t understand.
Re comp - have no data points but I wouldn’t care about comp if I didn’t know the job…right now you don’t know the job, what does it matter how much they get paid?
I was just wondering if comp was part of the reasons why @Pepper Jack said that capmarkets in PE "is not what most people want/expect to do when entering PE"
Comment from Pepper Jack was AFTER you asked about comp lol
Does anyone have comp info on Capital markets PE teams?
What is ALF?
bump
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