IB to PE modeling experience
I am a second-year analyst at a top BB (GS / MS / JPM / BAML) and want to eventually exit to PE (name brand MM / UMM) but don't feel that I am getting the modeling / technical experience that I hoped for. I have been on multiple live deals and know the transactions well, but have had limited modeling experience on those deals compared to what I was expecting.
I am able to do the modeling tests that PE firms use during the interview process but worry that longer-term my performance could be impacted. Do others feel this way? Any suggestions? Is this the experience I should be expecting?
When you say you are not getting exposed to it enough, what level are we talking?
A good example is the most recent process I worked on M&A ran with the model. The rest of the work was done by my team (coverage) (i.e. CIM, dataroom, management presentation etc.)
The modeling is easy. Don’t worry about it if you can ace the portion of the interview. For long term, it’s more important to build industry specific knowledge and understand why deals are structured (rationale behind the transaction and its mechanics).
for example: why M&A at this time? At these multiples? Consolidation in this sector TAM? Divestiture of non-core asset? Synergy play? Move towards aggressive roll-out? Carve-out? Conglomerate discount? Brand dilution?
Also important to understand how the balance sheet and capital structure play into moving a business through growth versus profitability stages, especially if you want to work C-suite / bizdev one day.
why finance in this way? Why bonds instead of xyz or equity or bespoke stuff? The drivers and risk-tradeoff of a company’s cap structure are not so easily learned or articulated as how to forecast operating leverage effects on some saas company, for example.
modeling is a mathematical exercise at the end of the day. It is easy to learn under training. What is more difficult is understanding industry trends and becoming “an advisor” — as to why banks and consultants are often hired, beyond the scapegoating/prestige plating, there is a modicum of actual advice given, and that’s probably what you should try to pick up on in 2 year banking stint, not an excel rev build, M&A proforma, promote, or waterfall. Imo those are easier to learn if you understand math. The real thinking takes time. But take my 2 cents as you’d like as I’m clearly just a prospect
Yes, I agree that longer term it is more important to have industry knowledge / structuring expertise but as an Associate aren't you still spending a majority of your time building operating models? Do PE firms have training programs or is it more mentorship from Sr. Assoc / VP?
Laka can I PM you for a bit of advice related specifically to my career and what you just wrote here?
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