Is it true that in Secondaries advisory (Evercore / PJT / Jefferies / Lazard / PJT / Campbell Lutyens / Houlihan Lokey’s etc) you have no exposure to asset level modeling or modeling at all? Grateful if people who work in the industry can share their views
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Currently on a deal where the GP’s internal model is shit. We have models from prior deals that we are leveraging to build a new one. It’s not modeling from scratch but we are very much holding the pen. To say you get no modeling experience in these seats is not accurate.
A more typical scenario is the GP has an existing model that we’ll work closely with them to get it deal ready. So in that sense, we know the model inside and out and on every deal are making changes (w/ GP sign off) to make it more defensible from secondary investor questions. We know what secondary investors look for better than the GP does, but the GP is going to know the business and industry better than we will. We’ll then layer in the deal specific terms… most teams will have template waterfalls set up but every deal has nuances where you’ll need to tweak it.
So yes, you get modeling experience. Is it the same as M&A? No. But it’s definitely not zero. This also fluctuates deal by deal. Some deals our industry team is involved and they do the operating model and we’ll add the waterfall. Other deals, we want more of the fee and the industry team isn’t needed and so we are more involved. Note, the above is in reference to GP-leds. My understand of LP-led advisory is there is zero modeling.
Thank you for this detailed response. It makes a lot of sense!
Based on the most helpful WSO content, here's what you need to know about modeling in secondaries advisory:
Modeling Exposure:
Proprietary Models:
Industry Insights:
Challenges and Preferences:
For more detailed insights, you can refer to the Q&A with a PE Secondaries Principal on Wall Street Oasis https://www.wallstreetoasis.com/forum/private-equity/qa-pe-secondaries-…</a">here.
Sources: Q&A: PE Secondaries Principal, Secondaries PE - Any insight on work and lifestyle?, PJT Secondary Advisory Super Day (Modeling Test), Secondary PE Modeling, Q&A: PE Secondaries Principal
Generally speaking, secondaries sellside is much less model oriented and much more syndication oriented - as such, most people on the team don’t need to be great at modeling.
That said - secondaries is very much model intensive. Buyside knows this well, and sell side bankers worth their salt will know how to do it too. Less accretion/dilution and merger models, more LBOs and waterfall modeling.
If I had to paint with a broad brush - average M&A banker does a decent amount of modeling, however that modeling is also pretty cookie cutter. Average secondary banker doesn’t do much modeling, but the ones who do (and every deal needs at least a few who do), do pretty complex and bespoke modeling for which there is not really a template. There’s various reasons for this ranging from differences in fund structures, lack of readily available info on CapIQ, etc.
Have a few secondaries docs, pm
Can I pm as well?
Thank you will pm
Can I Pm too please?
This guy is spam right? Always see him commenting this.
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