LevFin product group vs. Fin. Sponsors coverage group
So the bank I'm joining appears to have its LevFin product group in a different division to the one I have interviewed for. I may still have the option of joining the Fin Sponsors coverage group, depending on whether I ask for it and they choose me for that group.
Anyway the question I wanted to ask was how the work differs between those two groups. From my limited understanding, LevFin will be more modelling intensive (not sure what kind of modelling though), and that Fin. Sponsors will be more about generating ideas for PE firms etc and valuing potential targets' equity.
Any information, anecdotes, first hand experience would be appreciated.
Thanks.





I asked the same question a
I asked the same question a while back, although I would prefer more input as well.
http://www.wallstreetoasis.com/forums/whats-the-di...
Thanks, that was useful.
Thanks, that was useful.
Is this for a lateral?
Is this for a lateral?
advisory - fresh analyst
advisory - fresh analyst 2010.
new1987 - thanks. Can I ask how you know this? Sorry to be rude but just want to check sources!
It depends on the bank.
It depends on the bank. There are some banks where leveraged finance is just "high yield dcm," as new1987 suggests, but for the most part that isn't true.
Leveraged Finance deals with structuring financing for LBOs, dividend recapitalizations, acquisitions and general corporate purposes. It involves analyzing companies' capital structures in depth and looking for efficient ways to execute transactions. The group also typically leads their respective firms' bank commitment efforts. In my opinion, this is the most interesting aspect of investment banking - committing the firms capital to risky m&a/bridge situations. Lev Fin will be at the front of negotiations between the sponsor, lawyers, and the firm's senior management. It's like chess, but with money.
As for the LBO model, new1987 is half right - the income statement will be often put together by the analyst in the coverage group (who will really just be inputting numbers onto a template). Lev fin will then take the model and use it for its own purposes.
RE: Financial Sponsors and
RE: Financial Sponsors and Modeling...
Does anyone here think KKR / Blackstone is going to let a first or second year analyst at a BB put together a model for them, upon which they will make 8-9 figure investments?
The Sponsors themselves (as in the PE firm) will throw together their own model. From that point, the Financial Sponsors/ Leveraged finance group will take it and run with it. The LevFin group needs to absolutely scrutinize the assumptions, covenants etc, and really understand the capital structure because the firm, under the advise of LevFin, will be committing large chunks of money to the loan/bridge financing deal.
At the end of the day, financial sponsors are just for the most part coverage bankers. And things being how they are, most "modeling" (LBO, M&A, DCF, Comps) are just templates you plug and chug into. I guarantee you the vast majority of bankers do not completely understand how everything links together in those templates, and 95% of them couldn't build one.