Do any PE shops hire IBs for Buyside Mandates?
Wondering if any funds have enlisted IB advisors to do the grunt work on the buyside. Hadn’t seen it during my time in Banking.
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Not to do the actual modeling but we use buy side firms to make introductions and bring in off market deals.
Saw on it both as advisor and when on the buyside .. IBs help rarely with modelling (even if it was the case in my sellside experience), more with comps, case studies, market intelligence
In infra PE and am on a deal where most of the model heavy lifting has been outsourced to our IB advisors on an acquisition. Pretty common at this firm.
Yep depends on the fund but pretty common in the infra space specifically for sure
A pretty large part of the Moelis model.
Sponsors are a large part of it, yes. But most are sponsor sell-side mandates not buyside.
I would disagree at least recently. Some recent buy-side mandates that come to mind are CD&R, Mill Rock Capital, Standard General, Searchlight, Insight Equity, Ares.
My group does a good amount of these mandates -- it really depends on the sponsor and the amount of support they need on their transaction. From what I've noticed, a lot of sponsors have experience using buyside advisors on select transactions across different industries. Like the comment above mentioned, the advisors rarely get an opportunity to build a model -- its mostly spreading comps and doing market work; ultimately providing guidance on valuation and giving sponsors a sanity check on their bid before they place it.
It also seems like buyside mandates for sponsors are pretty relationship driven. They might sometimes loop on a bank / advisor as a way to "tip" them for the help / information the advisor has provided them in the past (i.e. all those random "discussion materials" that analysts burn midnight oil doing). Given that fees on buyside mandates are lower than sellside mandates (most of the time), its a cheap way for a sponsor to dough out a small amount of cash in the form of a transaction fee to keep relationships with certain banks going, especially in a world where the sponsor hasn't been giving a particular bank a sellside mandate in a while.
The level of work varies -- sometimes when there is very messy data that requires scrubbing, the PE firm might offload that to the analysts on the banking side to handle which sucks :(
We’ll hire for take privates to talk through strategy and the banks will put together a model but we rely on our own models
My group does an absurd amount of these, gives me great insight into what buyside firms one should not join. If you rely on bankers to do valuation and crank through diligence, you’re fucked
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