Investment banking - Private Equity Secondary Market - SA
Hey monkeys,
I was just wondering what you guys thought of this area of banking for someone looking to break into M&A in a bulge bracket. I could have an opportunity to do an internship with a market leader in IB Secondary Market. I don't know a whole lot about this world, I just know that the secondary market is growing very fast (double digit growth % every year for the past few years).
Would undertaking a SA gig in such a place be beneficial towards landing a M&A BB position? or is it too "alternative" and looking for an IB boutique might be a better idea.
Thanks
Yes definitely. As long as you are getting transactional experience. This is arguably a better job than the IB job you aspire to. Why would you want to do private equity to do banking even if with a BB. Investment banking is in a sense a 'sales' job. You'd prefer to be an investor, that private equity or hedge fund that the investment bank is pitching to and trying to win mandates from. In M&A at a bank you are an advisor. You will not be using the bank's balance sheet on these deals which is the realm of 'Merchant Banks' or PE.
Try to look past the mystique of working in BB IB. It ain't all that flash. You're doing true M&A in private equity with your own balance sheet, so a way better opportunity.
This does make sense. Thanks for that.
Yeah perhaps I am a bit obsessed with the mystique of working in a BB. It's just that you always hear about how the initial training you get those first couple of years in a BB is worth it in itself (+brand name).
Do you happen to know where I could find good material on the IB Secondary Market?
Maybe I'm confused here, but to me working at an IB in the secondaries market won't be about doing transactions with your own equity as the sponsor (not balance sheet), it will be about taking current LP's interests in any fund (not your fund-it will be third party, hence IB) and selling them to other investors because the original LP's need cash, need to rebalance their portfolios (happens with endowments and pensions when they alter their allocations or one part of their allocations goes up or down significantly and they need to rebalance the overall portfolio) or just don't like that manager any longer. Yes, it would be transactional, but it wouldn't be about buying/selling companies. It would be about third party selling LP interests from one investor to another. There's nothing wrong with it, but I believe you're confusing it with actual private equity investing as a financial sponsor.
I don't know much about the secondaries market other than having to approve the transaction at the GP/management co level or what the exits are. I'd imagine if it was a full time gig it would be leaning more towards fund of funds or placement agents. You're not locking yourself into anything as an intern but others can comment more wisely than I can on FT recruiting.
Good luck.
Ok. Got my wires crossed. Thanks Dingdong08 for the clarification. I was thinking secondary was referring to transactions involving the purchasing of portfolio companies from other private equity sponsors.
In which case, I would consider M&A at an IB more relevant to working in PE as a principal investor. That being said, if an opportunity arises for the op to try on different areas of the finance industry, wouldn't hurt to get some exposure and making some contacts in the process.
now what you said is the correct one.
@"actiblue41" try looking at Cogent Partners website. You can request some materials from them by giving them your email. It was pretty useful when I was looking into it.
Keep in mind that at places like cogent you are also advising. You will advise PE investors on how to sell their investments before the stipulated time horizon is reached (i.e. the investment has matured).
It would be interesting to see how exit ops to PE compare between places like cogent vs BB IB or Boutique IB. Anyone have any ideas?
If you take a sample size of ~20 MM PE groups and look under their "Associates" tab, I can guarantee you that BB IB experience will make up at least 95% of those guys. Some boutique IB guys may make the cut if the PE group is regional but definitely no Secondaries guys over there
I'm guessing you're probably thinking UBS/Evercore/Coller for their secondaries markets team? Depends what your whole "end goal" is. Trying to break into PE? If so, you need transactional experience (M&A, LevFin, or even industry-specific coverage groups that PE firms like - as long as you're also getting deal exposure). Secondaries is basically fundraising and advisory for LP assets. There's a thread on WSO about this topic. Again, just depends on what you want. I don't think secondaries will help you get into a BB M&A role b/c it's not as "technical" a role
If they're advising on the sale of LP assets, will they not need some technical skills, similar to what would be required in a financial sponsors coverage group?
n/a
Cogent
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