Credit Suisse Lev Fin Origination & Restructuring (LFO&R)
Who can speak to the culture of the CS LFO&R group? Curious to hear from those who have been in the group or are close to someone who’s been in the group. Hours, attitude toward PE recruiting, etc.
Thanks
It’s a top Lev Fin group, so naturally the hours are pretty tough. But from what I’ve heard, there are groups at CS with much worse hours (M&A, GIG, etc).
LFO&R is very technical, probably moreso than any other Lev Fin groups on the street. Very execution focused with strong deal flow, so you get a lot of reps working on unique transactions.
Great PE placement, free to recruit (common within CS). Im not in the group, but have a couple of close friends who went through it and left to great funds.
Sure. Again, this is 2nd hand knowledge from good friends I’ve had within the bank, so take it for what it is.
Sponsors & Lev fin (Two separate groups but I’ll put them in the same bucket) — Have heard Sponsors hours are slightly better (hard to confirm but probably true because Lev Fin has a smaller headcount). Have also heard Lev Fin bonus slightly higher on avg due to high revenue generated / low headcount. Both groups seem to have good ppl/less FaceTime and more focus on meritocracy. Both have great placement into top PE shops/credit funds.
TMT — Don’t know anyone that’s been in this group, but have heard it’s usually considered a top group at the firm.
M&A — Know some people that went through this group. They all got absolutely destroyed. Really tough hours, (obviously) unpredictable schedule, and very intense culture and upper management. But, that being said, you’ll leave with a strong skill set. If you can take the punishment for 2 years, you’ll be very marketable. Most go MM PE
I’m looking specifically at Core Lev Fin League Tables (DealLogic), which account for institutional leverage, high yield bonds, etc (most directly associated with the responsibilities of IBCM Lev Fin Groups).
CS was #1 in both total revenue and # of deals from 2010-2017. #2 in 2018, behind JPM in total revenue, but not deal volume.
Again, Core Lev Fin also accounts for institutional leverage and is specifically tailored to represent the efforts of IBCM Lev Fin groups. Keep in mind that your internal deck league tables may be showing whatever rankings make your bank look the best lol. Our internal deck uses a different league table “Lev Fin” category as well to make our bank look better. But, it is known that core lev fin is a more accurate depiction.
Also tells you why Wells would be shown in your top 3, whereas in core lev fin rankings, they are nowhere near the top. If you’re familiar with Lev fin (strictly within IBCM) at Wells, you’d know that they are definitely not a top 3 group on the street lol. Not that they are bad, but the firm is extremely conservative and has very strict leverage caps that keep it out of competitive processes.
If you have access to deal logic, you should look through those ranking. Also forgot to mention that CS Lev Fin’s SoW has been between ~9-13% over the past 10 + years — which is huge
Wells, BofA, and JPM are consistently in the top 3 for Lev fin because 1) they have huge balance sheets and 2)these league tables count everything non investment grade as Lev fin (which is not inaccurate). However, this means that while they do a high dollar volume of deals most of it is for their publicly traded BB rated clients which are significantly easier to execute than your classic lbo financing which they will be nowhere near as strong as CS. CS Lev fin traces its roots back to DLJ the pioneers of leveraged finance. It is a legit top Lev fin group.
I'll the second part of your question first. There are two ways a Lev fin origination group "uses the balance sheet". 1) when it holds a piece of a debt instrument which will usually be a) an asset based revolver b)a cash flow revolver and or c) an a fully amortizing term loan (aka a term loan a). When b&c are in the same structure it's called a pro rata loan. 2) second way and more critical to a Lev fin platform's ability to originate business is using the balance sheet to "underwrite" a transaction". In this case the Lev fin banker is guaranteeing to it's client that it will extend to the client a set dollar amount of debt at certain minimum terms at some point in time. Usually this debt will NOT be held on the bank's balance sheet at the end and will be sold off to institutional investors as a term loan b or high yield bonds. But the underwrite is needed because it is usually to finance a merger or lbo which means the client needs financing lined up for the merger to close. This underwrite is risky to the bank because if it can't syndicate the debt off to investors at or better than the terms it guaranteed to the client the bank will either need to hold the debt on its balance sheet or sell it at a loss. This means that full underwrites are both more lucrative to the bank as well as riskier even though the bank does not intend to hold any of the debt except for the revolver at the end of the transaction assuming all goes well. It also is why Lev fin is highly dependent on sponsor and merger activity.
As far as the difference between CS and what say Wells does. Wells finances a lot of mergers between say a BB rated corporation buying another BB rated company. CS is underwriting say Apollo's latest lbo rated at B. as you can imagine CS's transaction will be lot riskier to successfully syndicate but will ear much more in investment banking fees if it can pull it off.
(Burner account)
One other thing to note here... very important to consider the implications of Credit Suisse being a top Lev Fin player, despite not having a massive balance sheet like JPM and BAML.
The fact that CS kills the lev fin league tables without being able to completely throw money around and provide endless committed financing like JPM & BAML do, implies that they are adding significant value elsewhere. That value comes from the groups ability to execute extremely complex and unique processes. The group understands the product better than any other group on the Street and has an incredibly impressive track record. The fact that they can beat out BAML and JPM with a fraction of the balance sheet says a lot about the caliber of the CS Lev Fin