Hello everyone - I'm lucky enough to land a UMM PE gig starting later in 2023.
I've talked to some of the current Associates there, and they talk about their frequent interactions with bankers. Wondering what role the bankers play (Ie. pitching opportunities to us? helping us model? DD?)
Thanks
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Primary interaction will be pitching opportunities to you. Everyday you'll get in CIMs from different banks and will work through the processes trying to buy the companies they're selling.
As a banker I worked with PE associates in a variety of settings. As written above, a good amount is sitting across the table from them helping them DD and buy a business my employer was selling. Other times, it’s helping them restructure a current portco as the company advisor so helping the associate with modeling and getting up to speed on process/deal matters for his/her IC or partner. Other times it’s some buyside advisory / helping them get up to speed on an industry/co they want to invest in by providing them with overview materials, educating them, building a model / helping them with their model. It really depends on situation. Most common may be as a sell-sider trying to sell a PE firm a business
The grunt work you don’t want to do
I'd categoris it into three buckets: (A) pitching, (B) Buyside Advisory, and (C) Sellside Advisory. But an overarching comment here is that each PE shop is different, and some prefer greater or lesser interaction with bankers, so it wouldn't be a silly question to ask whenyou join your new firm.
(A) Mentioned already, but bankers will frequently hold marketing / pitching meetings where they show PE professionals potential acquisition opportunities, share market intelligence, and try to position for formal mandates to advise on buying a particular asset or sell an asset in your firm's portfolio. They'll also, as mentioned, share CIMs for asset's they're mandated to see which your firm may be interested in buying.
(B) When advising on the buyside (and in my experience, here is the greatest variability in how PE and banks interact), interactions could be anything from the bankers doing the modelling, drafting IC slides, performing ad-hoc analyses on the company / market / etc., managing the due diligence and Q&A process (i.e. chasing other advisors for their inputs, etc.). At a more senior level, interactions will be more strategic.
(C) In sellside advisory, bankers will draft the marketing materials, reach out to potential buyers, coordinate the whole sale process (e.g. training and supporting management of the company to present to potential buyers), as well as provide advice and guidance around the process management and which buyers to focus on.
Hope this is useful
This is a very good overview. Only thing I might layer on, and this is related to the variability referenced in (B) above, is that many of the times a PE firm hires a bank on the buyside it's literally an excuse to pay them a fee. PE firms can't completely rely on bankers to do the financial dili for them, the sponsor is the principal risk taker so they have to make underwriting decisions themselves and defend their dili process to LPs; but, they can use it as an opportunity to get a bit of leverage from the bankers, pay them a couple million bucks, and then get an early look or differential access to the next hot sellside mandate that banker has. It's kind of a "I scratch your back, you scratch mine" relationship.
You can always tell a good PE professional by their ability to understand how to manage the street. With debt markets closed right now, it’s relationship banks pushing through financings
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