Non-target hardo (mid-tier State University; e.g. U of KS/U of AZ/U of UT), non-traditional undergrad (older, dropped out of mid-tier Private, Liberal Arts College for family reasons and went back to school later), made it into top-bucket private credit/direct lending team with a broad investment mandate and which focuses on distressed/RX and/or generally "hairy" deals across all industries. The Cliff's Notes summary of how I got there is:
1 worked my nuts off with tons of self-study to prepare for both interviews and the role (e.g. WSP modeling coursework-the "premium package" and RX modeling course, read anything I could get my hands on, researched previous deals in the space to understand the mechanics of how the process works and sat for the CFA level one exam before graduating)
2 hit the bricks networking until I wore holes in my shoes (I landed the interview that got me my gig through a referral from a longtime contact who'd become a close friend)
That said, ask me anything and I'll do my best to field your questions. If I don't know the answer, I'll at least try to point you in the right direction.
Also, good luck to all the monkey's grinding out on-cycle recruiting rn; I know it's tough out there, but patience and persistence are imperative for success in this space, might as well start developing those skillsets now.
@AndyLouis"
@WallStreetOasis.com
It's my pleasure; having experienced the reality of being the "non-target trying to break in," always glad to lend a hand where I can. Regarding technical prep, I predominantly used the following:
In terms of the types of questions, that's going to vary dramatically firm by firm, as the private credit/direct lending space has expanded dramatically w.r.t. the strategies employed (e.g. venture lending, syndicated, clubs, mezz, sr., jr., unitranche, SSG/RX, etc...) at the fund where you're interviewing. That said, generally speaking, for most of these strategies, the nature of interview questions you'll likely encounter will intersect significantly. Strong knowledge of accounting topics, especially anything/everything cash flow related will be foundational to success in any such interviews. For me, the interview process was great; that said, my group has a really exceptional culture - very flat, broadly defined roles (e.g. origination/portfolio management are not bifurcated) - and, in hindsight, that there were clear ways in which that manifested itself in the interview process. I had three "standard" interviews (one-on-one with members of the investment team) followed by a case; the case resembled a paper LBO in terms of how it was presented, but rather than modeling the equity, the deliverable included:
In the interviews leading up to the case, the questions very very overweight behavioral w.r.t. technical in two of the three. The most technical interview (notwithstanding the case) was comprised of briefly shooting the shit and then jumping right into three hypothetical investment scenarios where I was given the generalities of an opportunity and then asked to compile the questions I'd was answered, key risks/opportunities, propose a structure/pricing and provide a determination as to whether or not I'd invest then defend my conclusions. The other two included intermediate and a select few advanced accounting questions on the technical front.
Generally speaking, I found that having an understanding of what the fund's objective is/how that manifests itself in their strategy, how the process works mechanically, all the way down to a really granular level. There are nuanced. differences to be factored in here from one sub-strat to another (e.g. there are material differences between that of single-digit billion $ fund that lends sr. secured w/ focus on writing paper for MM SSG/RX facilities and that of a shop with >$25bn AUM which focuses on syndicated facilities; lots of reasons for that dynamic, but most simply in that there are material differences in the risk profiles of these sub-strats). Understanding the way a group thinks about investing is also helpful (some will lend cover-lite, some won't touch that paper; some will compromise on economics to hold strong on docs, others would prefer to give on docs and take on the economics); this will allow you to craft open-ended, situational questions re: investment process/decision making/analysis to align with approach of the group you're interviewing with.
Also, I have a bunch of PDFs of some of these prep materials; I'll touch base with Patrick and see if there isn't some way to make those available to anyone who is interested in them.
Re: exit opps, that's a great question. I think that, generally speaking, the opps are going to depend a lot on the organizational structure of the fund (e.g. are origination and portfolio management responsibilities carried out separately, on distinct teams, or collectively with everyone making contributions to all the various aspects of the investment process). In funds that manage those two core competencies separately (e.g. Churchill) the opportunities may be more limited, within the parameters of the responsibilities you had previously held; whereas folks coming out of firms that do not bifurcate their investment process at all tend to have fewer constraints on their exit opps.
Specifically re: SSG/RX private credit/direct lending, there are definitely prospects for spinning out to distressed PE (or PE generally), RX/LevFin IB and/or credit hedge funds. Generally speaking, I tend to fall among those who believe that the limits on exit opps (within reason) are derived more out of self-imposition than anything else. At the end of the day, the world of Wall St. still runs on relationships above all else (despite what your quant would have you believe); so long as you're working in a front-office IB/buy-side investments role, if you hit the bricks and network till you wear holes in your soles, there's no reason you can't land the roles you want, especially earlier on in your career.
Comp varies a ton. That being said, (est.) median entry-level range:
* as one might intuit, bonus structure is effectively entirely discretionary and, depending on the firm, you might have find that you're getting higher/lower base and that leads to greater/lesser upside opportunity to crush it on the bonus front.
Progression outlook is going to vary shop to shop. Generally, VP is at least 4 years in, Director/Principal at least 6 to 7 years and MD usually 10+. The same is true for MBA/CFA/CAIA/any other alphabet soup designations. My group doesn't really give a shit if you go to grad school; if you want to, they'll support you, but it's in no way a prerequisite for advancement within the team; the same is true for any/all other designations/professional credentials from the perspective of sr. members of my team.
I have thought a lot about starting my own fund (somewhere way down the line); stay tuned, WSO will be the first to know, lol
Good questions.
1. There are really two or three main categories here:
2. The backgrounds are pretty diverse. In my group, we have people who cut their teeth in HY/LevFin IB, discretionary Private Capital (think Kelso), ABS, Mezz, Project Finance, PE, HY Credit Investing, as well as some who went directly to Private/Alternative Credit and/or Direct Lending. MBA is about 50/50. Some have CFAs. I did find the RX course to be a solid value, in terms of what I gleaned from it. I would say it's less about the individual variables in particular and more about conditioning yourself to think about the process in a way that will consistently produce analyses which, themselves, effectively depict the situation at hand thoroughly, accurately and objectively. Remember, gotta interview well to get the job; and for roles like these, there's an expectation that folks come in with a general understanding of the process.
3. see above for more detail. Cliff's notes version, lots of variance. All-in for entry level roles will range from (roughly) $125,000 to $175,000. Lot of factors at play. Something I neglected to mention above that acts as a significant driver of comp (esp. bonus comp), is the fee structure of the fund; for instance:
If returns blow the fund's hurdle rate out of the water, and your colleagues perceive that you're adding significant value, even as a jr. you can totally have blowout years; but a lot of things need to materialize in a synchronous manner for that to be the case.
So a couple of broad stokes re: "why SSG/RX Private Credit/Direct Lending?":
In terms of the deals we do, we're:
The basis, broadly for the attractiveness of alternative credit investing, writ large, comes down to a few core tenets:
Similarly, dealing in "hairier" alternative credit strats is, in essence, allows investors to drive even more attractive returns and, as it pertains to private credit/direct lending, for those funds which have a bias toward lending into the senior secured slot within the broader capital stack (assuming there is sufficient operational competence across the funds investment professionals) the risk is much more muted than the yields would suggest as, when things go sideways, we just take the keys and send the equity to zero, fund a DIP and/or hold a 363 sale, we become the equity, then sell the fucker.
TL:DR, yes, some of the inefficiencies Moyer references exist in this space (or, at least, some close replicas do)
I hope this is somewhat helpful.
suffered a serious headache reading this -- seems like you prepped for a d day landing brother
Jamie_Diamond lol, I just love what I do and know how hard it can be to break-in out of anywhere but a target school and from anything but a traditional background. Being single, and staying home 99% of the time due to the pandemic, leaves me plenty of time to be a resource to the kiddos.
Insofar as white papers, I posted the pretty much all of the stuff I've got saved on my desktop (*read* that I could find on the literal clusterfuck that is my harddrive/cloud drives). Re: books, I’d say, Dalio’s Big Debt Crises is a solid read (he’s lost his marbles now insofar as BW/how he interacts with the world, but he does know his shit when it comes the nature of credit over the course of the entirety of recorded history. Beyond that, I think it would be a worthwhile endeavor to read things that’d help develop a strong foundational working knowledge of capital markets/the Wall Street complex (esp. IB/AM industries) on the whole and anything re: Economics (esp. behavioral economics) or quantitative/scientific topics. To that end, I’d recommend the following:
Markets, Finance, Economics, History of Finance/Markets/Economics, Investing
Jordi Gali
History, Politics, Society:
Science, Math, Statistics, Game Theory:
If you have specific areas of interest, feel free to reach out; I've built a small "personal library" of over 300 titles and would be happy to take a look for further recommendations on a specific topic.
In my experience, a broad knowledge base is, albeit not imperative, among the "assets" which proves most valuable in minting great investors. I can't tell you how many times one of my colleagues has alluded to a literary reference or something they read/learned previously which, in and of itself, is entirely "ad acta" w.r.t investing, but that were incredibly useful in providing a framework/lens/perspective/etc... for thinking about a specific deal we were screening or existing credit we were doing damage control on. Being well-read, well-informed, "learned," if you will, is literally never a bad thing and will in no way, shape or form be harmful to your success in this industry or elsewhere. That being said, starting by developing a strong understanding of the mechanisms which drive markets is more urgent than reading on other matters. Hopefully this provides some ideas and/or a good starting point for you all.