Coverage IB —> Private Credit. How Realistic is it?
Is there a well-trodden path for a IB coverage junior to transition to private credit? Interested if this is a fairly common move for a coverage banker who has performed well in banking and demonstrates interest during interviews - not “it’s possible if you hustle… my uncle’s cousin’s hairdresser’s friend networked his ass off into a niche credit fund.”
The vibe I get from recruiters and the few interviews I’ve had is they really are looking for LevFin bankers who have run multiple debt processes. In coverage you help with that, but don’t get the same exposure/insight as a LevFin junior would get.
Any thoughts or suggestions on how a coverage banker could frame their experiences would be much appreciated.
C’mon dude, just lie and say at your bank coverage works super close with lev fin, or you were staffed on a few levels financially deals because lev fin was light juniors and you showed interest.
What answer are you looking for considering you said you were not interested in hearing personal stories of people breaking in?
No, there is no “well trodden” path. Barely anything is in life. If you’re just looking for encouragement, just say so and don’t mask it by asking a silly question like is it possible to go junior position a to junior position b in finance. Of course it’s possible.
My question is if you took a sample of X people in private credit, what percentage would come from LevFin vs Coverage as a general rule. And then a more detailed explanation on how you would frame your experiences if you were in coverage beyond “I worked closely with LevFin.” Aka there is value in experience learning a specific industry, why peers trade where they trade, explanations for business/margin trends, etc.
Don’t appreciate the condescending nature of your post. Don’t do that again
Most of the MS I sent is 90% towards Smoke Frog :) lol.
You're aware that you're soliciting free advice from total strangers, correct? You sound like you've paid for something
At first I was like why is this comment getting hella MS? Then I saw the last two sentences and cracked up. “Don’t do that again” or what?
To answer, I think it’s very possible if you come from a decent name recognition bank. Private credit is less competitive than PE, and not super picky on what IB group you come from (unless it’s something random like ECM). Private Credit actually is all about understanding each company, their industry, and credit risks. Basically it’s private equity but from a more risk averse credit perspective, and lighter diligence since you’re usually attaching yourself to a reputable buyer. LevFin is cool but private credit deals are not syndicated so many LevFin skillset (understanding TLB market, marketing road shows, lender presentations and rating agency presentations) are not applicable.
As a coverage banker you can totally do it, in terms of technical gaps you juts need to know a) LBO modeling b) study up some key covenants and what a credit agreement is, c) generally what is a unitranche vs senior secured vs mezzanine etc and just know what you’re talking about.
At the end of the day junior coverage banker skills still highly applicable, because youre simply investing debt in acquisitions. The most fundamental thing is understanding the companies and their industries, random technical debt stuff is icing on top.
“Don’t do that again” 😂😡🤡
How have you lasted this long in banking being this sensitive?
"dont do that again" lmao OP is either trolling or suffers from severe autism. This industry is full of clown nerds with mental issues. Bring back BULLYING
“Don’t you ever do that again, you naughty bow-wow!”
Smoke frog the other guy lil bro'd you, u gotta respond
Lol, I never heard that term before “lil bro”. Thats a good one. I’m stealing to use that.
What’s to respond to? He’s archetype this forum has now become infested with.
Asks a silly question that anyone with one year of living experience post college should be able to answer. Literally, study lev fin deals for a week and then embellish on your resume that you worked on some deals. That’s it. There’s nothing to frame. And there is a plethora of info on lev fin on the internet and this site for a coverage banking junior to convincingly pass an interview sniff test.
But do you know why we get so many of this ridiculous questions from people like this guy asking can a high functioning coverage banking junior get a private credit junior role?
Because they have no actual friends or support in real life to offer encouragement or friendship or counsel. So they come here and ask such a soft ball to get a responses like the guy below gave where he was like, yea! I did it dude! It’s totally possible!
I basically said the same thing. I just didn’t act like a little puss about it.
As someone who spent 2 years in coverage / M&A banking and then switched over to private credit, it's absolutely possible.
Term loans are a technical product that perhaps you might not have paid too much attention to as a coverage banker - you take the pricing and debt quantum that LevFin tells you to, and run it through an LBO model. Would encourage you to really understand some of the minutia (e.g., incremental / ratio baskets, covenants, etc.), all of which is totally manageable. When you're papering a deal, you have legal counsel that's pouring over the fine print plus a senior analyst who's done it before.
That said, you're hopefully bringing a perspective and familiarity on an industry you spent your time in, which is value additive to the credit underwriting process. Having an intuition for general trends, competitive dynamics, business models, valuation multiples, etc. is extremely helpful. LevFin juniors often don't have that toolset because they're product executioners and it's not their primary focus. Plus, a lot of the financial analysis and technical / excel skills you spend 2 years developing in banking are super valuable.
In short, both backgrounds (coverage / LF) are valuable - you just need to show an interest and capability in learning the other. It's no different than banking analysts switching over to PE - most of them don't know their ass from their elbow on private equity underwriting, despite them telling you otherwise (can't wait for the MS from the An2 with a BX summer 24 offer).
Thanks for the insight. A couple of follow-up questions for you:
1. Has your life improved from a WLB perspective since switching to Private credit? Both from an hours standpoint and from a control of hours standpoint (i.e. on a normal day, hoping most days are normal, you can step away from 7-9pm to have a life then log back on afterward)
2. Would you say that your answer to #1 is specific to your firm and their mandate or a general PC industry trend?
3. How does comp look (base and bonus)? From the few job postings I’ve seen, if a current ASO makes the switch from IB to PC they are taking a decent paycut in base at least ($175-200k down to like ~$150k). If the hours are more manageable then this makes sense but I’m unsure.
4. Lastly, you think its possible to move over from a second year ASO in IB to a senior ASO in PC?
(1, 2) Yes. Generally speaking, deal activity is relatively low, so work/life balance could very well change on a dime. That said, I do think this can be firm-dependent; similar to PE, there can be a pretty wide spectrum on how "sweaty" certain places are; however, I do think on the whole PC WLB is better than banking and PE.
(3) Comp generally looks similar to banking from an all-in perspective (again, depends on what bank you're coming from, and what PC shop you're going to). It's true that buyside salaries are generally lower than banking now; however, bonuses are somewhat better in my experience. Would say this is completely anecdotal and I don't have a bunch of data to back that up empirically.
(4) Yeah, I do think it's possible but potentially a more up-hill battle the farther out from your analyst years you are (or, perhaps the bigger "step back" you have to take in corporate grade).
Not difficult, doesn't require much hustle and you will get plenty of credit opportunities from HHs. Surprised you are getting pushback as this is a decently common exit out of coverage for those who don't want to do banking 2.0 with corporate PE hours.
Yes, lev fin is more relevant, but there's more credit seats than lev fin juniors so they take plenty of credit bankers. if you have been on a debt deal or two and studied your debt technicals/industry, you will be fine. Interest and self-studying go a long way. Of course make sure you have a "credit resume" highlighting your debt deals and not just M&A.
Have seen a few ppl from coverage move to credit investing. It should be doable if you have some exposure to lending
There is a big push to private credit and apparently not enough people to fill that growth. I’m sure you can get interviews with your background, but whether or not you get the role will come down to your own ability. Firms are literally poaching banking analysts left and right to fill private credit roles and banks are getting squeezed from a human capital perspective and from lending opportunities.
Which firms are poaching IB Analysts left and right? I have not had that experience. Ignore username.
I work in private credit and I came from a non-LevFin IB background. It's totally doable. While LevFin is a very common background for PC folks, if you can teach yourself (1) how to build an LBO model and (2) how PC investors evaluate a deal (understand key investment strengths and risks), then you should be good to go.
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