Supposedly these groups do no modeling compared to a BofA/JPM LevFin group, but they are still groups at two of the top investment banks and have super strong deal flow from their heavy hitting M&A counterparts.
Do these groups still have access to strong exits? Is there a difference in the type of exits between modeling and non-modeling LF groups (ex. more credit exits vs. PE exits)?
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(i) JPM LF also does not model
(ii) GS LF is much stronger than MS LF; GS LF is actually a good business, but coverage holds the pen on the process and model. You should try to get into the coverage groups at GS. GS LF exits are primarily in private credit and direct lending but MM PE exits do exist although it’s much more difficult than coverage. MS LF is notoriously weak.
(iii) PE exits are difficult from non modeling LF groups but still possible. For non modeling groups, typically people will stay in LF and go to PE Capital markets or go to private credit. Private credit is most common.
(iv) best LF groups that model are BofA, Jefferies, CS (Sponsors), in no particular order. Probably could add RBC to this list as well
(V) strong levfin groups (appear high on US LBO league tables) that do not model and therefore have much weaker exits than the above groups (if PE is the goal) include: GS, Barclays, JPM
(vi) very good, but not the best LF groups that do model include UBS, DB, BMO, Citi
(Vii) groups were it really isn’t worth doing levfin at and you should just recruit for coverage or M&A: everywhere else
thanks for the insight! I’m curious: Why is MS levfin notoriously weak?
They just have never been strong in the space.
Would you say that the groups mentioned in (V) have strong exits to credit, or do non-modeling LF groups hurt your chances for strong credit exits as well?
Yes you’ll still have good credit exits. Modeling is overrated. You’ll just need to teach yourself it’s fine
What does it mean exactly when these groups do not do any modeling? Does that mean they don’t build out any financial statements and conduct any stress/downside scenarios as part of their underwriting?
It means that those items are performed by the coverage/sponsors teams rather than the LevFin teams
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