What is the general current reputation of Jefferies? Are they moving into the lower BB category? I know some groups like HC and Energy are historically very strong and compete at that tier. How are they viewed for PE/HF exits?
Also, does anyone have any input in how they are doing in the coronavirus crisis?
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They are the top MM bank. They won't ever move up to a BB level because that's not where they're looking to go. They currently do a great job within the MM world, that's their niche. They're the top player there. Their employees know how to do MM deals and have experience churning out a ridiculous amount of small to medium sized deals. If they start competing with BBs on multi-billion dollar deals, which they don't have experience in, and start giving up the small deals they used to work, then all they'd be doing is pitching and never making any money. Maybe they'd get a deal here or there, but they'd be making less money than before.
This isn't really accurate. over 50% of Jefferies transactions are on deals above 1 Billion. They close far fewer deals than other MMs like HL or Blair but have much higher deal sizes. They are a top player in leveraged lending as well and beat many BBs on these deals. They have been moving towards the BB level for the past 5 years and they do have a balance sheet.
Look Jefferies is certainly a strong bank, with great deal flow and exits if that is what you like, but they aren't near 'BB level' and will likely never be because that is not their intention.
I feel like people here don't really understand what "MM" means anymore. Calling Jefferies a middle market bank implies that they compete (or are comparable to) your traditional middle market players (e.g. Blair, Baird, HW, Houlihan etc.) when the actual deals they do have a lot more in common with bulge brackets.
Outside of the whole Sage Kelly nonsense, Jefferies is probably best known for bringing absurdly high leverage (we're talking 6-7x+ with super shitty / loose documentation to boot) sponsor deals to market, often after a BB (say JPM or MS) fails to get it done the first time. That's clearly not something a MM bank does.
From an advisory standpoint, sure, they aren't working on $50Bn M&A deals, but they also aren't cranking out $200MM sponsor sellsides. Their typical deal ($1-2Bn corporate M&A) is very squarely in the BB playbook, not your typical MM. All told, Jefferies is clearly differentiated from what's traditionally referred to as "middle market" investment banking and has much more in common with the bulge brackets of the world. Overall, I'd call them a "shitty bulge bracket" rather than a "top middle market"
Comment above me captures Jefferies reputation very well.
A lot of folks asking is it BB or MM. It doesn't fit nicely into either group. As people have already said, its not what we traditionally think about when we think of the BBs. On the other hand, MM is off too, because they're probably more often competing with the BBs. So let's just all agree its between the two. Not everything fits into a bucket.
As the commenter above says, the reputation is a pretty aggressive one. They get done what other banks have been unwilling to get done. If a levered acquirer wants to do a cash deal that will require a convert, some of the bigger banks may say that's too much execution risk for them. Jefferies will not. Any time Carl Icahn wanted to push hard on something like his contingent rights offerings at Clorox and Dell, Jefferies was his go-to. His more recent shenanigans at Hertz probably have Jefferies advising him. Not every bank will work with a guy like that and partner with him on all of his moves. There was a company called Alere ("mini Valeant" I like to call it) that did 100 deals in 10 years. Rolled up the balance sheet like crazy and then went to shit. Jefferies was behind most of those 100 deals. Not every BB would chase that kind of relationship. They'll take the business but they won't chase it.
The bigger groups there will have good shots at PE exits. HC, Tech, M&A, Industrials.
Jefferies are certainly a growing presence - recently started to compete with my BB in Industrials, as well as last couple of years in the TMT and HC sector. Probably biggest strength is that they seem to know (and be happy) with their position - they know that they're not a BB and they don't spunk massive resources on deals that they just can't compete on. But when it comes to the larger MM deals, they're often a first choice firm. Although, from speaking to others in Consumer, Real Estate etc. JEF seem a lot less present on the larger deals in these sectors in EMEA at least.
They only do lower MM in Europe
Not sure what you class as lower MM, but was looking at the Dealogic numbers today... in Europe, Jefferies total deal value was over $62bn with 67 deals which gives an average deal size of just under $1bn. In the UK specifically, the average deal size is over $1.25bn. Given these are averages too, your definition of lower MM must be $5bn which for 2018 was roughly 5980/6000 deals announced. This amounts to 99.7% of all deals being lower MM...