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What are you going to do with the bonus?
I figured this questions would come up, haha. I will put a good portion of it into the market, as I also run my own investment fund on the side. The other I may reward myself with a new watch, as I am huge into watches.
No questions. Just wanted to say that you sound like a total tool in your post.
Opening up a discussion to offer my insight to prospective students and people wanting to get into private equity is considered being a "tool." My apologies..
I'm not trying to put you down for your accomplishments, you should obviously be proud. Just giving you the hint that you should be more humble in the way you frame your posts. The deal's not even closed yet and you're touting about how you're "closing" it as if you did everything. You're an analyst.
Congrats ! -How did you source the deal ? -Can you detail the multiple paid ? EBITDA interest coverage ratio ?
These are fantastic questions.
1.) The deal was sourced through an investment banker that I have a good connection with. A large portion of my job is calling brokers to source and analyze as much prospective deals as possible. The deal was brand new to the market and I found relative interest in it based on our funds' criteria and the amount of projected EBITDA increase I saw for the following years based on a lot of growth opportunities
2.) The multiple I tagged it with initially was put in the range of 6-7x. After being provided with more financials from my preliminary valuation and IOI I set the multiple at 7x, which the broker and the rest of our firm found to be a win win. The EBITDA interest coverage ration came in around 1.94 - which is good for the industry of the company.
Graduates and moves into PE firm internship. Pulls in $2bn deal 2 months later. Seems legit.
I have interned with the firm for 2 years prior to accepting a full time offer and have had a great deal of responsibilities since. This is by no means the first deal I have worked on. My job consists of bringing in the deals that my team and I further analyze, so I don't seem to understand the confusion behind your comment.
Thanks for taking the time to do a Q&A. I'm sure there is alot that prospective's can learn from your experience as a student working at a private equity fund that is not considered "bulge bracket" (your words). Although I understand the "fake it to you make it" and "punch above the belt" mentality, there needs to be a hint of realism or at least a sense of self-worth.
It's great that you want to help others and that's something we should all seek to emulate, but you're selflessness is masked with a central, narcissistic component... the need to feel important.
You have a team. You determined the preliminary valuation. This is not your first deal. I get it, I really do, we've all had that desire to feel important, but we weren't. The comments you see aren't people against you, just people with experience that have been where you are and know this business. They know that ego and arrogance can ruin a career and want to provide unsolicited feedback in the hopes that maybe you will listen. You can view this as criticism, it's not. It's constructive feedback, take it for what it is.
Best of luck and don't take the comments too seriously.
I agree with the above poster in that you seem like a tool. You're making it seem as if you did everything yourself, from sourcing the deal to diligencing it. All as a first year analyst. If that's the case, congrats. I have a very, very hard time believing that, though.
So the deal is "potentially the most profitable deal in the firm's history?" You sound like an idiot when you make claims like this. A partner at my firm said something to the same effect when he closed on a deal for a company that ended up in Ch. 11. Your deal may be larger, but I doubt the risk/return characteristics are so different from the characteristics of other deals your firm has done that it justifies making such a dumb claim. Maybe you managed to find the only risk-free 5.0xer that your IB friend decided to toss you instead of broadly marketing it to increase his fee, but I doubt it.
Still a great accomplishment. I assume you will not be involved in the monitoring of the operations of the company post-close? As an analyst, I don't know how you'd have time to source, diligence, and monitor existing portfolio companies/new deals. But what do I know? Maybe you're just a super-analyst that eats, sleeps, and breathes private equity.
There are so many ridiculous things in OP's nonsense post. I can't do the whole thing justice but hope to bring up a few points. Others, please follow.
You (an analyst) are NOT overseeing, nor will ever oversee, an entire LBO process, let alone ANY process (maybe updating a financial model, albeit with some oversight). Even a senior associate does not oversee an entire LBO process. If so, why even have MD's/Partners? Have you ever managed M&A bankers, financing parties, negotiated covenants, managed transaction lawyers, financing lawyers, consultants, tax, accounting and insurance experts, regulatory matters, negotiated SPAs, structured management equity programs, appease your LP's, get board approval, etc.? Do you have any clue how difficult that is? THAT is the entire "LBO" process. That shit falls on the MD/partner and even for them it is a collaborative process. So the answer is NO. No serious firm will leave that serious shit to some analyst, no matter how good you are - and from the way you communicate, you don't even remotely resemble how a high performing analyst/associate comes across. What you are most likely referring to is the firm encourages proactive "sourcing" by the junior staff to screen / identify potentially interesting targets. Maybe they gave you a nice pat on the pack and asked you to do a "further look" into it to keep you busy, ie. create a model, do some research, make a returns model, etc., while they tend to more important matters. Do you have any clue how those seniors think? Let's say that they also believe (they don't) that this deal of yours will be the 'most successful deal in history' - although people rarely make statements like that as any semi-rational person will downplay expectations - you think they'll leave it up to an analyst to do manage the entire process? (that they know you can't do)? Nevertheless, this probably got to your hubris leading you to make a ridiculous no value-add post. Analysts and junior associates do not negotiate with any of the important decision makers, sorry.
"creating a lbo model with a debt schedule that will maximize projected cash flow for the highest return on investment possible".
- HAHAHA I'm sorry but what the fuck does this mean???..."debt schedule", "maximize projected CF", "highest ROI possible"? What the fuck does a debt schedule directly have to do with "the highest return on investment possible"? You're just throwing some nonsense combination of finance jargon you memorized on a WSO hoping that some of it sticks and makes sense. But in fact you come across - as others have pointed out - as a complete tool and out of depth. MANY things drive return. Some shit debt payment waterfall you got working after the 10th iteration (congratulations, btw) is NOT the basis of what drives returns. What about the cash flow that will service that debt? What drives that, topline growth/margin expansion, inventory management, financing arrangements, etc? How do you think about recap/dividends? A 7x EBITDA deal is NOT a high growth company. The bankers give you the CIM and literally make up numbers to make it appear enticing. You went up to 7x from 6x after they provided you more information...you are getting played. You say "maximize projected cash flow" through your "debt schedule"? Sorry it's late on a Sunday and I'm having a little trouble digesting the hilarity of your sentence. You want to maximize projected CF with a debt schedule? Your "debt schedule" which includes take into account interest, amortization, possibly prepayments - actually minimize cash flow. (Unless your going leverage-lite, but based on your 1.9x interest coverage it does not seem like it"). Have you even given a thought to the exit horizon? How will the refi market look in 5-7 year exit horizon? Your elementary knowledge is embarrassing.
I don't mean to be so harsh but posts like this do more damage than good when good natured people looking for real advice actually take what's said as good advice. Maybe originally well intentioned (or possibly a bored troll post), but this is a joke. Next.
It's been a while since I've seen this level of savagery in a post. Well done.
poseur
This whole thing made me chuckle. No one who actually had any responsibility on a deal this size would do this. Daft.
7x EBITDA for a $2bn transaction? Seems way off in today's market, at least from what I've been seeing.
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