LevFin or Sector Coverage to better PE chances
Hey Guys! I am writing this from the back of my uber on the way home from the office... I did it. I got a return offer from my internship at a BB. As I think about the future, I face a dilemma. My return offer is for the graduate analyst programme so I technically do not have to be in the same team. I interned at a top LevFin team in EMEA and my end goal is to end up in PE down the line. Should I stay with the team I interned at (love the culture, worked on some massive deals, learnt a lot and no facetime) or should I go for a sweaty team like Industrials or TMT to better chances at PE? I am not too sure what PE look for so if they like LevFin then I will deffo stay.
Based on the most helpful WSO content, here's what you need to know:
LevFin vs. Sector Coverage for PE Chances
LevFin (Leveraged Finance): - Preference for PE: LevFin is highly regarded for PE recruiting, especially for distressed shops and mezzanine funds. The skill set you develop in LevFin, such as structuring deals and understanding leveraged buyouts (LBOs), is directly applicable to private equity. - Headhunter Bias: There is a strong preference among headhunters to push candidates from LevFin into PE roles. - Deal Experience: Working on large, complex deals in LevFin can be very attractive to PE firms.
Sector Coverage (Industrials or TMT): - Industrials: This sector is a favorite for LBOs, making it a good choice for PE recruiting. However, it is often considered a "sweatshop" with long hours. - TMT (Tech, Media, Telecom): While TMT can lead to opportunities in VC/Growth Equity, it is less favored for traditional PE roles compared to LevFin. TMT at top shops like GS/MS is an exception, but at mid-tier BBs, it might not be as advantageous for PE.
Recommendations:
Conclusion:
Staying with the LevFin team you interned with seems to be the best option for optimizing your chances of breaking into PE. The experience and skills you gain in LevFin are directly aligned with what PE firms look for, and the positive team culture is an added bonus.
Hope this helps, and best of luck with your decision!
Sources: Picking the Right Group, Was it a mistake? A confused Private Equity junior., Accept CS early offer or roll the dice?, Very Tough Decision - Short-term Comp vs. Long-term job, [Experience] Road to PE - Investment Analyst in a MegaFund
bump
Well done on the outcome and hope you get yourself a well-earned drink.
I don't think that it will make a huge difference to be honest. At the junior levels you aren't particuarly specialised and if we are honest with ourselves, life as an AN1 in a coverage team includes a lot of comps maintenance and strip profile building. In LevFin you'll be certainly doing modelling which is a plus for recruiting.
LevFin may even open up doors to more specialised teams if you're into that kind of thing (special situations, etc.)
So, if you were someone I cared about rather than a random internet person, I'd advise you to stick with LevFin and not roll the dice on culture.
Similar boat, now at a MF. Among the 20-30 juniors in the investment team, no one came from levfin. All sector coverage or M&A product. However it’s common in the capital markets team
Cheers guys for your input! When it comes to modelling, we do not handle the operating model or full blown LBO, we are given it from sector teams and we ink it into our own FCF model, hence my thought. Would you still recommend LevFin?
LOL congrats on DB mate!
Anyway, this is how most BB handle LBO modelling, although there are exceptions.
I agree that it shouldn't be impossible to exit to PE, but seems like it's becoming extremely uncommon. All the people I know in LevFin, from top groups, exclusively went to PE Cap Mkts team or Credit roles. I assume this is due to a more relavent skill set, lack of modelling experience, and probably also headhunters bias.
If you want to go to PE, a sector team can give you better positioning. You will be disadvantaged in LevFin.
As for Industrials at DB, I've seen they made some questionable hires at the junior level in the past year and a half and I am wondering how can that be considered a good team...
LevFin = better for credit investing opportunities and Capital Markets at megafunds. If you're set on PE in an investing team, I would recommend trying to lateral into a coverage team.
Whether or not it helps, in my immediate network 3 people spent >50% of their An years in LevFin and are now at Ares/Apollo/KKR
Hmm seems like a mixture of both experiences would be good - the whole package in that case. Cheers all!! Will probs make my move dependant on how easy it is to transfer / secondment into a sector team after a year in LevFin perhaps…..
Very hard to move from one team to another because of all the politics. Usually people need to lateral when they want to change sectors/products
Dude just go to a sector team, I don’t know anyone at my shop (double digit bn latest fundraise) who came from LevFin, all were sector teams from either EBs (Rothschild only I think? But I doubt we would have a bias against guys from e.g. Lazard) or BBs (GS, MS, JP, Citi, BAML, a couple from Barclays)
I wouldn't overthink it. The most important thing for you is to stay up to date with headhunters, be very prepared for interviews, and get your modeling up - this should be way easier at a group where the people are good and dealflow is good.
Yes, some funds like certain groups - for example, some TMT groups are known to be more "prestigious" so headhunters may prioritize them, or they focus on specific industries where coverage could help. But I wouldn't say this is the norm. Plus, you'll see so many analysts completely changing coverage (I've seen so many Nat. Resources -> Tech investing it's weird) that it's honestly not gonna affect you on average. if your group is active and does deals, that's what counts. No need to sweat your balls off unless there's really a specific fund or industry you like, or if you're deadset on MF. Finance is a long career, and too many kids get burnt out chasing clout that they don't make it long term.
Depends on the coverage group. Some are obviously better than others. I would say coverage can put you in certain industries a lot easier. For instance, let's say you are in the P&U team at a bank and you are doing lots of the modelling and technical work (tends to be the case for P&U since so specific), then your odds of getting an offer from a infra fund (esp with a renewables angle) are higher. Same applies to some other industries like comms with digital infra funds popping up everywhere. You also get exposure to clients in these industries so overall the effort and story of are much easier than if in levfin.
To share a story for better clarity, I was at a BB and in coverage. We basically did everything on buy-side mandates in our group (generally speaking) while levfin arranged meetings all day and nothing else. I did everything from constructing the complicated model to drafting the client's IC deck to assisting in due diligence requests and more. I was calling and messaging the client more than my girlfriend for over 3 months. The client was keen to recruit me after the deal but I was not interested (wanted more general PE than infra).
But if you are just doing slides and market stuff in your coverage group while M&A does the model then a completely different experience. Either way, you can get in somewhere in whichever group.
I am in levfin and have been contacted only 2-3 times the past 5 years by headhunters for pe roles. Don't got for levfin if you want pe, go if youre fine with credit investing. Even then as special sits they hire more m&a or coverage or rx
Lev fin is nice regardless
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