Commercial Banking vs. Debt Fund
I saw a post recently about debt funds and what people thought of them. I am interviewing for a few commercial banking roles and have recently gotten in touch with someone at a debt fund in the city I go to school in. I'm not passionate about a certain asset class and I see working on the debt side of the business as a good way to get exposure to a wide variety of transactions in different asset classes.
I'd like to know what people see as the pros and cons of working for a traditional lender vs a debt fund are. The commercial bank I have been interviewing with is located in New York while the debt fund is in the large west coast city I go to school in (still a strong secondary market but not NYC). My perception is that I might get better training at the larger commercial bank but that I would probably get to work on more interesting transactions at a debt fund.
Additionally, what kind of exit ops might I get from either of these options and would I be able to transition to an acquisitions/equity role in the future? or am I starting in the wrong place? Thanks everyone.
bump
Do you want to live on the east coast or west coast?
I cannot speak to working at a debt fund but I did not enjoy the regulatory environment that came with commercial banking. If you’re talking to top groups, it might be worth it. A couple years of institutional experience in NYC will open doors and exit ops all over the country.
If you know you want to stay on the west coast and the debt fund is well respected, might as well just do that.
I'd prefer to live in NYC, especially for the first few years of my career (its also home for me), but my philosophy has been to go wherever the best opportunity takes me, so deciding what is "best" is most important to me, but also subjective. I've heard the same complaints about regulation in commercial banking from a number of people, how would regulation impact your day to day life as a credit analyst (for example)?
If you want to be in NYC, go to NYC unless the debt fund is highly sophisticated and the bank is a no name like the comment below explained. If two jobs are close in quality of experience, your exit ops will be similar. At that point you’ve gotta factor in quality of life, regional culture, distance to family/friends etc. Don’t take a job that has marginally better exit ops if you’re going to hate your life outside of work.
Only other thing I could think of is if the debt fund group also manages equity funds, that could make your goal of switching to the equity side a lot easier. Just kick ass and internally transfer after a year or two.
Regarding regulatory environment - at the analyst level, it’s a lot of paperwork, menial tasks related to reg compliance, and boring portfolio management. At the production level, it’s losing deals because your bank’s buckets are full and/or policy is too strict, and pissing off customers.
also - LA vs SF would make a big impact on advice from most people. Which one is the debt fund in
Located in LA, not sure I'd want to go to SF
If it's Mesa or Thorofare then I recommend it.
As with everything, without much info it’s hard to give a real concrete answer. That said, if it’s a situation where you’re looking at a debt fund like a Mesa West vs. some no-name bank I think it’s debt fund all day. On the flip side, if it’s JP Morgan vs. some debt fund with $100mm AUM, probably better off doing JP Morgan.
MM is dominated by debt funds like Antares and Ares where as banks like JPM and GS lend to any size or form (on the upper end side)- just a difference I’ve observed.
^ this. MM LevFin is dominated by these debt shops. Plus work life balance is generally better than traditional banking (no pitching) but generally less prestigious than traditional banking/PE (if you care about that). Disclaimer: chose a debt shop over Corp Banking and a few lower MM IBs.
Does anyone have sample case studies for debt fund interviews you can share please?
Is comp relatively similar in production roles? Anyone have any figures?
I work as a Commercial Banking analyst (middle market group,$20M - $2Bn) with a BB. Bigger Midwestern City. Training-wise, I don't think you can beat a couple years in commercial banking. My bank has a 2-year training program (biased but have heard from many outside the bank that it is the best so maybe you could have a different experience). Confident I could hang with any IB/DF analyst when it comes to financial analysis.
CB is also less stuffy. I rarely do any admin work. Always underwriting. Always contributing. Always learning.
CB pays less, but has better work-life. I'm at $67K base + 15% bonus for 40 hours a week. 20 days of PTO. Off at 4 on Friday. Appointments whenever I need. I'd guess for NY it's probably closer to $80K base.
I'm starting to interview for associate roles at Debt Funds in Chicago simply because better prestige, better pay, better chance to get into top 25 MBA. Yeah I know, I'll probably regret this.
I've had plenty of traction which is a good sign for all.
CB gets shit on by other industries, but a well-trained analyst shouldn't have an issue moving into a "higher finance" role if they desire.
My advice would be to go the CB route. Learn as much as possible and impress everyone. After a couple years if you want to leave, then do it.
Damn, what does your large loan group look like???
There is def some overlap when it’s north of $1Bn, but we don’t have corporate (large) offices in all cities with a MM office. So we get to take them.
How are you defining large loan?
second this
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