Jefferies PCA Exodus

Heard rumblings through executive recruiters that there is about to be massive turnover at Jefferies for their PCA team as people look to move elsewhere. When I asked why they stated that the M&A team are pushing for the economics in the GP-led deal flow.

I personally hate this firm and many of the people that work there.

 

Already happened

who left?

Anecdotally, in our coverage group at JefCo (healthcare / energy), we split fees 50% on the GP-led deals because PCA hardly does anything. The modeling is ours and so are the industry contacts. The most I have seen the analyst on the PCA team do is send emails back and forth. They also routinely screw up the pages created by coverage that they have no business knowing.

 

I’m a little dense so not fully tracking. I used to work one floor above HC / same floor as Energy if that helps. When I was there, PCA seemed like they did nothing related to IB. We never talked to them. Only interaction was at firm lunches. I always thought they were wealth management advisors to HNW families but seems like I was wrong.

Would you mind explaining what PCA actually does?

 

Interesting, you guys building the waterfalls too? Our coverage teams have zero clue how any of that works nor how to assess transaction sizing.

That said, we never attempt to chime in on the industry specific stuff where we have no clue. Our industry teams have varying levels of involvement but when they are involved we still have a lot of input on what content we need to show / structure of the marketing materials.

 
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Can you be more specific? Genuinely curious.

When you say opining on transaction sizing, are you just referring to GP-led secondary type deals? Are you helping the GP decide where to try to price the SPV? Are you trying to help size the amount of new equity going into the SPV?

For waterfalls, are you just referring to sources & used + a PF cap table? Maybe some pref tranches in there to add a couple modeling mechanics?

Again just trying to figure out what PCA does vs. what I thought they did. Could be off-base as I was an analyst in a coverage group and was a rookie broadly.

 

Have also heard this. Comp has been good for the top guys and shit for everyone below. Their deal flow tilts LP-led where the fees are smaller and then losing fees to the M&A teams on higher fee GP-leds.

 

All of these shitty, lower tier banks need to stop wasting money on acquiring and then building out PCA and PFG groups. Just because primary fundarising was a lucrative, high margin business once upon time doesn't mean it's the case currently (far from it, as everyone can see). And everyone keeps wanting to hop on the secondaries wave but it takes tons of brand-building, hustle, relationships and luck to get it right. Just because Evercore got it right doesn't mean Houlihan Lokey, William Blair, Raymond James, Harris Williams, Greenhill, Moelis, etc. will. I could go on. So much waste and fight for talent in a space that's gotten way too crowded. Many of the head guys at these shops are absolute clowns. 

 

Am genuinely curious what Evercore did right to be so big in secondaries. Was it just a first-comer advantage? It doesn't seem likely given that that Greenhill (ig in theory Jeffries now since, their team went over) used to be the big player in the secondaries field.

 

I think it was both first mover advantage and staying power. Pretty sure PJT used to dominate in GP-leds but they couldn’t keep their people (Casperson arrested, Costello left for Stone Point, etc.)

To a certain extent, I agree with the above comment. At the current size of the secondaries market it is over banked but that doesn’t mean it will always be the case. Banks are also going to be willing to keep these teams around if it keeps them in front of clients (already know of a few deals that pivoted to succession M&A transactions or where the bank advised on both the CV and a minority sale).

Realistically, there’s just gonna be even more consolidation going forward.

 

There is one one MD in PCAat Jeff whose last name literally rhymes with "DICK" and he is the biggest dick in the industry. Awful to LPs, GPs, Buyers, and service providers.

 

I think the issue is that secondaries even just a handful of years ago was a tiny, niche industry that really didn’t attract the best talent. So you end up with seniors that aren’t the sharpest, can be a bit strange, and not the easiest to work with. Even the Evercore PCA leadership isn’t really composed of the traditional rainmaker-type of senior banker. They can be quite off-putting to talk to sometimes.

Secondaries is still where M&A was in the 70s / early 80s. Just starting to blow up, and the arms race has started, but it’ll eventually become fully mainstream as just another product. Probably just a lot of growing pains in the interim.

 

Yea can confirm this happened — not a 3 year non compete but 1 year non compete with 3 year full clawback on retention cash 

 

From what I understand EVRs PCA team has full discretion on bonus pool / dollar sizing independent of how the rest of the bank performs so JEF locked everyone up to figure out how to compete against that 

 

lol everyone’s B tier compared to EVR’s GP led team but think it’s telling that EVR only went after JEF PCA GP led bankers — heard JEF PCA ate into their market share on the GP led side and they launched a broadside to poach a ton (hence the off market retention agreements) 

 

They poached one from M2O for their LP business and it doesn't look like a good hire.

 

Guess things aren’t going well at Blair. Tough cuz they’re one of the only new entrants that’s gotten some things done.

 

Secondaries insider just released an article saying JEF PCA poached 2 from WB PCA to bring total new hires in 2024 to 8… also thinking about the original post more here, not sure why someone hiring a recruiter would tell them when they’re about to go to market to find talent that the groups falling apart. It’s like telling an M&A banker “I want a premium valuation multiple but just so you know, we’re going to miss budget by a lot”

 

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