BB Summer Analyst, Do I go for Lev Fin or a Coverage Group?

If someone had an SA offer to a LevFin group that doesn't do much modeling, do you think that's a big setback? Would you recommend switching groups to a coverage group for FT?

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Here is an exercise for you. Go to 15 PE firm websites(large, medium and small) who openly list their investment professionals. Record the number of folks you see from a coverage vs. a product group(excluding M&A). You will have a clear answer to your question. Having recently done recruiting and advising several current 1st/2nd year analysts who will recruit this coming Q1 2016, I will tell you that more often than not, you will be at a disadvantage when it comes to receiving interview opportunities if you're in a product group(excluding M&A). I was a BB IB analyst in a top group(GS, MS, JPM) for 3 years before moving to PE. Every year at my bank coverage/M&A analysts always had better interview opportunities.

Please don't take my statements as absolute. I've seen Lev. Fin. analysts go to top shops, so it's possible. I'm also well aware of what aspects of a Lev. Fin. skillset transfer well to being a PE associate. However, at BAML Lev. Fin. you will not be as sharp on the modeling/technicals unless you work hard to close the gap in your spare time. I personally know folks in that group that want to move to a coverage group to be more marketable for buy-side recruiting. I'm also certain it would be harder for you to convince the headhunters that you could own a model like a coverage/M&A banker. Again, please don't take my statements as absolute. There are always outliers. I'm simply telling you what's more common in this wild and sometimes biased game of buy-side recruitment.

If your PRIMARY goal is PE recruitment, the decision most in line with that goal is to join BAML coverage/M&A rather than BAML Lev Fin.

What are you talking about? OP this couldnt be more incorrect, please take this with a grain of salt... M&A guys do not spend anytime building lbo models, and neither do coverage bankers with the exception of a few banks having Lev Fin practices only as a capital markets function. In a BAML-type Lev Fin shop, you will be building LBO models on a daily basis, rather than something that comes across once in a blue moon on other teams. Lev Fin at these banks place much better on the buy side for this specific reason. I am an Associate in Lev Fin at a BB, and we have almost 100% turnover every year amongst the Analyst class. A Lev Fin analyst role prepares you for the buyside WHILE you are doing your job, whereas in the other teams you will have to dedicate time to learn the stuff that Lev Fin is doing on the side. It is much easier to be prepared for the recruiting cycle coming from Lev Fin, and headhunters view it this way as such. Of course there are other banks (Goldman and MS for example), where Lev Fin will not have this specific function, however since you are speaking about BAML, everything I said above applies as their Lev Fin shop runs the internal LBO execution process.

If you are set on PE, I would absolutely gun for Lev Fin if that is a possibility. In my opinion, being in an industry group puts you at a disadvantage simply because of the lack of modeling and understanding of the buyside process. Rarely will you find an industry team holding the pen on a major LBO financing unless it is at a bank where Lev Fin serves as a capital markets function.

In all honestly, stay out of ECM/DCM if you can but DCM > ECM. Many people try to switch to IBD or just go on to bschool or another industry altogether. Yes, capital markets being seperate from IBD should tell you that you should stay away from it if possible. IBD or nothing!

From what I understand, BAML has CM set up as an entity sitting somewhere between IBD and Global Markets.

For training purposes, CM (Both ECM and DCM) are part of the IBD training, and go through almost all of the same training modules (Accounting, modeling, valuation). However, they also get Bloomberg training while IBD does not really.

So should you be concerned that CM is not part of IBD, only if you want to specifically do banking. The two are not the same thing, and the fact that BAML does not have them joined, while others do, is simply do to the way the bank is structured. CM is CM no matter what heading goes above it.

Are you sure that LevFin is not part of IBD? I knew someone in Merrill LevFin a few years ago, and he definitely claimed to be part of IBD (or rather, IBK as it's called at ML). Has it changed since the BoA merger?

That's very helpful.

However, do you guys have an opinion on Leveraged Finance group? Traditionally, LevFin/Financial Sponsors are both part of IBD and some of the most sought after groups if one's goal is to end up @ a megafund PE.

Does BAML's DCM Leveraged Finance group = Leveraged Finance/Financial Sponsors IBD group at other BB's?

Capital Markets

In the United States, the Bank of America Capital Markets Group is comprised of two distinct teams: Equity Capital Markets, Debt Capital Markets. In Europe, this group is comprised of Debt Capital and Leverage Finance/ Financial Sponsors. As leaders in loan origination and syndication, each team provides a wide range of equity and debt products:

(from website)

It says Lev/Fin being part of DCM is the norm in Europe and doesn't specify for US. But my interviewer was certainly based in New York, and stated definitively his group (LevFin) was part of DCM. They are actually on several of the PE deals going on recently.

Also, he mentioned that his group does do a lot of modeling and sits in cubicles much the same way as IBD does. This struck me as strange as I know most of DCM sits in trading floor setups.

...that is part of IBD.

"our Capital Markets team delivers creative solutions for issuers and investors across all asset products, including Equity Capital Markets, High Grade Capital Markets, Debt Advisory Services and Leveraged Finance, which includes High Yield Bonds and Leveraged Loans."

from the website (Americas capital markets internship)

Do any of you actually work in a BB?

1) Lev fin is never part of IBD ... why would it be? its a loan / fixed income origination group .... it's not a pure advisory group

2) ECM > DCM unless its in Lev Fin ... investment grade flow DCM is the most boring sht in the world

The advisory you do is product based - its the leveraged loan / etc high yield type debt advisory - its not sponsor advisory - that's what I was getting at (separating Lev Fin from Sponsors)

As for BAML their lev fin group is good b/c frankly they have the balance sheet that they can throw around behind the loans when originating and syndicating

Can you please post some of the questions you were asked...I have a SD in Lev Fin (DCM) next week in another bank and want to prepare for it. Thx

The leveraged loan and high yield markets are currently on fire! Issuance is up 30% yoy, despite 2009 being a very strong year in issuances. Bank of America was leading the charge in market share, beating JPMorgan and taking 24%.

Debt Advisory