Trying to get some basic info on FIG M&A. Don't need / want to become an expert, but beyond knowing that FIG corp fin is "different," I don't have a great sense of what the key metrics are, how synergies are estimated, etc.
If anyone can PM me and potentially answer a few questions via email or live, I'd be eternally appreciative.
Many thanks.
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Hi! Could you PM me with what you've found? I'm looking for the same thing
I'm happy to answer any questions but post here.
Bump, honestly don't know where to start. Whether could you help as well? Have a lateral interview for FIG from non-FIG. Have the guides and stuff, but nothing FIG specific, so anything you have can help.
Ask some specific questions here and I'll try to answer some for everyone. For a general guide, this post is fantastic. Working in FIG (Financial Institutions Group) - An Overview. | Wall Street Oasis.
Bump have a FIG interview. Why do Fig groups tend to stay busy during the high interest rate environment. Know they are sensitive to interest rates but it’s been hard to find a solid answer. Would love some input.
I would say historically FIG groups are less busy during high interest rate environments. Banks are very rate sensitive and interest rate hikes often lead to lower NIM and cash flows being returned to the Hold Co. This makes banks less attractive to purchase and often leads to a lack of M&A activity as target banks think they are worth more (intrinsically probably are) and acquiring banks think targets are worth less (justifiable based on current metrics). Hope this helps.
It really depends on what type of financial institution. I view there to be three main types of financial institutions: (i) banks, (ii) insurance companies, (iii) non-bank lenders (specialty finance companies, BDCs, REITs, etc.). I'm not very familiar with insurance, but banks and non-bank lenders valuation is focused around earnings (pre-tax and after-tax net income, not EBITDA) and tangible book value. Synergies are generally same concept as regular M&A deals with some exceptions. Revenue synergies: cross sell customers, new geographies, etc. Cost synergies: reduce duplicative back office; increase operating leverage. Exceptions: there is a large focus on cost of capital synergies. If Company A can fund its loan book with 5% debt and it buys Company B that is funding its loan book with 10% debt, then there are immediate interest cost synergies. You have to remember that interest expense is basically COGS for lenders. A lot of bank M&A is also driven by regulatory cost synergies. Instead of thinking about the P&L driving the balance sheet as you would a normal business, the proper framework is to drive the P&L with the balance sheet for FIG financials.
What's a good way to build your "why FIG" story? I don't have any direct experience related to FIG. I did CB in DI, so I'm not sure how to build my story for why FIG and how I would be a good fit.
Adding on some more.
1. What are some interesting trends happening within the industry, some you I found from observation/conversation, consolidation between the regional banks, fintech, and insurance consolidations?
2. What kind of work do FIG teams do for credit unions? I remember when I spoke with a associate in FIG she mentioned one of the interesting things for her was the endless work and deal flow because there are thousands of banks and credit unions, which is still true, but hasn't there been enough consolidation that this is starting to become less and less relevant?
3. How are boutiques like Ardea relevant? Wouldn't the very nature of the industry and what you mentioned above about cap raised mean that any potential deal would require some balance sheet making working with larger banks more attractive than boutiques?
4. Kind of zeroing in on the deal flow aspect of it, it still doesn't explain why there is so much, or I don't get it. Yes, there are capital raises and cost and regulatory synergies, but there are only so many banks and they are all highly regulated, meaning they are planning out what they can and should do. So, wouldn't it be more stable and predictable? And given that most banks have FIG teams, it just seems like a lot of deals, proportionate to how busy almost every FIG team across the street is and the amount of work they do. I think in most banks it's usually the top 3 that generate the most revenue.
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