Feel like I have learned nothing in banking…
Hi All — I am second year analyst in a top group at a BB. I am going to a very technical UMM / MF known for investing across the capital structure and hairy deals. However, I feel like my experience in banking has not prepared me for PE whatsoever… have other people in similar situations felt the same way? If so, are there any ways to prepare before I enter the buyside this summer? Or will all the learning happen on the job? Would really appreciate any advice / resources on how to best prepare.
Bump, I’d also like to be more clued up than I am… I feel confident with basically any cap structure, and accounting technicals are fairly solid. But would really appreciate any advice on how to practice for hairy deals and getting technically stronger.
Resources/recommendations would be much appreciated. Tia.
Bump
perhaps change title to something positive so people will want to click on the thread and help.
Ignore title, IB 2 headed to similarly technical shop this year. Would also appreciate materials, resources, recommendations on this; I did a search for similar conversations on WSO a month ago and was shocked I couldn't find anything on this as I imagine so many people go through this.
The one thing I can't stand is when someone says "you learn it on the job" - just illustrates they weren't forward thinking enough to ask the right questions. I was met with this in banking and subsequently found a boat load of materials that would have been extremely helpful for me early days. I now push them on all my interns/analysts.
Thanks to anyone that has some suitable suggestions.
@PrivateTechquity 🚀GME🚀 @m_1 @NuclearPenguins @Pan European Monkey @SSits @Restless
These guys tend to have some good takes, even if not all in PE.
Heading into a FT IB role, would greatly appreciate if you could push those materials to my DMs 😂
Hi, could you please send me those materials?
Going to an eb in the summer
PE is really banking 2.0. You'll learn 90% of the job on the job. You don't need to worry yourself over whether or not banking "prepared you" enough because you got the job. That's what it was meant to prepare you for, the rest of it is just a box checking exercise to filter for competence. Frankly, most of us in PE constantly joke about how bullshit banking is (IMO the only exception I've consistently observed is the RX guys because they build such a specialized skillset from their exp), so if anything making fun of how little it actually prepared you for will probably be a common occurrence. Congrats on the gig.
The only thing I got from this is that some RX knowledge is helpful in PE?
If anyone could rattle off a list of advanced things to look at in prep for PE ie that surpasses all the basic valuation and transaction processes. I think that’s what this thread is looking for.
Eg how commonly do you look at 13 week cash flows in PE, obv common in RX?
Lot of equity value bridges
More detailed and real ad hoc analyses tracing ANYTHING to equity value
Yes, focus on cash flow
If you are comfortable with understanding how any change in the business may impact equity value, what else is there from a technical conceptual perspective?
If you can be comfortable with modeling, very comfortable, that would be good as there is a lot of that.
Not that RX is specifically valuable to PE (unless you're going into distressed obv) but that most people's banking exp isn't universally a difference-maker when interviewing given most folks these days are only like 6mos into the job when they're recruiting on-cycle. The only time people (in my exp) really laud their banking exp as having given them supremely useful skills they use on the job is when they came from RX, but that's because RX is very specialized vs if you were just at an M&A/coverage group sure you may have covered the same sector but the real "PE learning" will come from being OTJ. XLS/PPT skills are just table stakes and those technical skills are really the big takeaway from banking IMO, it doesn't get you to "think like an investor" just because you sat in a chair all night hammering away at an appendix none of us really read unless it's coming down to the wire in a very competitive bidding process.
Bump
i'm at end of e2 and feel so dumb. i can use excel quick and make presentable little stupid analyses with green checks that show i do it right and drag logos and send some emails and calendar invites. that's about it
There’s a bit of a difference between trying to be prepared to perform well as an associate and trying to learn more about investing.
As with both being a banking analyst and a PE associate, there will be an obvious learning curve. You’ll start with fairly simple tasks and you’ll find your responsibility grows as people begin to trust you. My advice would be the same you may have heard as a new analyst; start by making sure you do the simple stuff right. Make sure your numbers are correct. Communicate well. Take good notes, and circulate key takeaways. No one expects you to offer compelling qualitative takes or pontificate on industry nuances at first, but they do expect you to have answers to simple financial / data-related questions.
When I finished banking, I had essentially zero investor acumen. This obviously comes gradually as you learn on the job, but I think I would’ve have been better served by doing the following sooner.
1) Think critically about the work you’re doing now. It’s easy to go on autopilot, but try to ask questions and understand why you’re doing the analysis you’re doing.
2) Pick a basket of companies to follow in a similar industry. Whether it’s consumer, hospitals, autos, or anything relevant to the fund you’ll be joining. Just follow earnings, read the transcripts, and try to understand the key drivers of each business. Have takes on which do certain things better and why.
3) Related to the above, I think finding a Tegus login and reading expert call transcripts on companies or industries that interest you is a helpful tool. Diving further into a specific industry is a great way to learn. Read a few books
4) Good to learn how to think about value. I think Valuation by McKinsey is a good resource. What are the keys drivers of a company? Also just thinking more about capital structures is a helpful exercice. What is interplay between UFCF yield and cost of debt?
This is a super helpful comment, thanks. Just wondering if you could explain how to think about the “relationship between UFCF yield and cost of debt” you mentioned at the end?
Bump
I personally had the basics from banking, ie basics accounting and rudimentary modeling and business evaluation frameworks.
The vast majority of how I showed up prepared was by being a somewhat obsessed finance nerd and interview prep. So reading the Tuck white paper on PE and LBOs for fun, way back when. Building LBO models for deals I had nothing to do with and then doing all sorts of sides analyses to understand the moving pieces. And then nuts and bolts interview prep, figuring out how to talk about my deals, being super sharp on lbo math, having a bunch of mental models I could use to evaluate a business/investment on a verbal case, etc.
Excellent answer. Would you have any other suggestions like reading the tuck white paper, any other resources you could point us in the direction of, or anything else specific to look at now you’ve been in the role?
Much appreciated.
Hi I would appreciate any resources you found helpful too. Have been struggling to take things a step further in my prep. Thanks!
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