What “learning” in IB will be most important for PE success?
I feel like every analyst rationalizes the bad hours and senior bankers rationalize their career choice by talking about how you can always be "learning" in IB. In my first few months on the desk it seems a lot of this "learning" only makes you a better banking analyst, and not a better PE associate, hedge fund investor, or any other investing/corporate role. To those that have gone on to other roles, especially PE, after their analyst stint, what things did you learn that were worth leaning into/ getting really good at, and what is mostly BS that we analysts can mostly go through mindlessly for our two years?
You absolutely are learning, you’re just not paying attention. Pay attention to the things that buyers / senior leadership are most focused on. A few things that come to mind are:
1) what business diligence items are buyers digging into
2) what investment highlights do you see reoccurring in each industry, and how are buyers dillgencing these
3) what are the most common reasons buyers are passing on opportunities
4) look into internal deals and compare companies in the same industry that went for 10x vs 15x.
This was very helpful. Thank you. Is there a way to learn about these points without being in an analyst program?
True – but isn't this group dependent? ie if you're in M&A or sponsors, sure you'd get exposure to the reasons why buyers are passing on opportunities, but in other groups this isn't the case.
I went from IB to MM PE to BB IB.
To be totally honest, I think working in PE teaches you WAY more about how to be a better IB employee than IB teaches you about how to be a better PE employee.
I actually hate it sometimes when a boomer, career I-Banker starts talking about "Investors are going to look at it this way...." when discussing how to best format a market data slide. It's like bruh, trust me, investors have their own market data they're going to use. NOBODY is going to look at this shit. Personally, when I was in the acquisitions chair, all we really gave a fuck about was historical financials in excel and the general info that CIMs provide (employees, product/service info, etc.) It also makes you realize that you can spend 6-12 months preparing to go to market and iterating on a bunch of schmancy-fancy materials all you want but at the end of the day none of the little sell-side bullshit tricks that the MDs love actually have any effect on how the buy-side is going to underwrite your deal. Truly, everyone involved would be better off if bankers spent way less time cherry-picking and formatting info in silly/cartoonish ways and just focused on providing the essential data in the simplest and easiest to manipulate format possible. Seriously. Save yourselves the time of trying to guess how and what precisely "investors want to see" and just give us the essential info in the simplest format. Investors don't want to see shit. We are just trying to understand the business and purposely obfuscating certain things, "positioning" in banker speak, is just a waste of time for everyone.
Some would feel their egos hurt and on other threads they will emphasize how important it is to deliver pretty slides and help clients position themselves.
Love this so much - my Partners love ripping on CIMs for fun and how fluff and useless the marketing language in marketing materials are...can't believe I did my banking years drinking the koolaid...
This is the truth. In PE we never gave two flying shits about what growth positioning the bankers layered into a CIM. All we cared about was making sure we could layer in the financials and the KPIs into our sales build/model so we could form our own assumptions around the business. No one ever gave a shit about the rest of the CIM other than a few points on the business here and there as we always did our own diligence anyways.
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