All,
I need some advice... I have been a credit analyst at a BB for just about 2 years now, and am now looking at different exit opps. I would like to move into PE at some point, but am slightly concerned that my non-IB experience may be a hurdle I just can't jump over. Let me start by explaining my position...
I went through about half a year of formal credit training, and performed at the top of my class (Apparently it's highly valued but I have yet to see it pay off). Since then, my current role has been to support bankers on credit fundamentals and portfolio management in anticipation for new revolvers and term loans, simple stuff right? . So my experience basically boils down to in-depth analysis on mid-market companies from a long-term (3-5 yrs) investor's standpoint, a similar skill set to PE.
Now I understand that PE firms recruit IB analysts, and credit analysts are probably an after-thought. However, my formal credit training and portfolio management background may set me apart, giving me a slight advantage if some firm is looking for something different.
Would it be better just to jump into an IB role and then PE, or is it possible to make the jump now?
Articles about HFs launching mid-market "loan" funds as they see a huge opp in middle market business loans... shoot for that? - seems like a great fit:
http://www.finalternatives.com/node/25396 http://www.moneymanagementintelligence.com/Article/3216320/Direct-Lendi… http://www.finalternatives.com/node/23725
I see challenges going into PE. I would advise you look at middle market loan funds. Might be a better bridge to PE in the long term. Maybe if your modeling skills are up to snuff you could try and sell yourself to a mezzanine fund.
The modeling experience isn't really there. I moved from BB credit to IB at a different firm for that reason. Was I'm credit for ~8 months and not once was the time value of money brought up. Different side of finance for sure.
Thanks for the responses. There are some aspects of lending that interest me, but in the end the structure and deal type is too rigid for my liking. Not saying I'm a master at loans by any means, but the deal process gets repetitive fairly quickly. Do either HF loan funds or mezzanine funds see this repetitive deal flow as well, or is it closer to the actively-managed investment structure like in PE?
I mean if you are a lender there will obviously be a measure of repetition. Try and find a firm that does more than just senior debt. You'll have more variety and work more with PE in solving their financing needs. Plus you'll have more of a portfolio management function depending on the lien position of your investment.
There's another topic on this forum about breaking into PE from the lender side. However I'd like to add to this:
I work at a lender with a strong PE Sponsor Coverage group (though I'm currently a credit analyst for strictly senior debt). There's a pretty clear opportunity for me to get into the biz dev/relationship management/front office side of this group within the next 12 months. Are there exit opportunities into PE from this? Or AM I effectively locking myself into the lending side by doubling down
I'd ask yourself why you want PE? I think you might have an aversion to lending because of your role within it. If you do accept this role you might be going further down the rabbit hole. Not that it is bad, just something to know.
Basically I want to be an active investor. I'd like to be a private or angel investor later in life when I have the capital. Securities investing doesn't appeal to me because there's no aspect of operations improvement or strategic management.
You can market yourself to a mezz fund, I know folks who have done it. PE is a significant reach - but the first step would be to get exposure to LBO financings in your current group, and articulate about your deals well with HH's.
Don't preclude yourself from any category. If you're top ranked, switching to an IBD group that gets more attention should be fairly easy for you.
Shoot me a PM if u want.
Johnny Quest makes a good point about being open to a wide range of career progressions; a lot of people on here who have been out of school for all a few (or even no) years have very specific and narrow ideas about what they want to do.
I'd also say that the trend of PE funds growing their debt arms, which started with the mega-cap funds as a way to keep growing the platform, has started to creep into mid-size and smaller sponsors. Those are the ones where working for an internal debt fund will give you a better chance of flexibility to do a range of stuff-working in GSO's CLO group probably isn't a great path to sourcing a BX PE deal, but doing mezz and middle-market unitranche work for a mid-size fund could be. For example, one of my favorite sponsors, a large mid-cap I'd say, with an industry focus has a growing debt fund with the same industry focus that does slices of the senior and mezz. They source deals via a lot of the same sponsor, banker, and industry contacts as the PE arm and they win a lot of deals at wider levels than some on-the-run mezz fund by offering real operational/strategic value-add (internal consulting arm, joint sourcing, industry experts). Not a bad gig, and at a place with ~50 investment professionals that can write equity checks from $25mm-$1bn a debt investor could conceivably find some gem of an equity investment and make it happen.
A new opportunity popped up since I last posted this thread, and I need some guidance from you guys again.
2nd or 3rd year analyst spot in my BB's special situations group. They do junior debt and mezz products and deal primarily with sponsor groups in a few verticals like energy, healthcare, and TMT. Normally I wouldn't consider it since it's similar to senior debt lending (I mentioned above that commercial banking was not at all what i want to do). However, I'm assuming the work has gotta be pretty similar to PE or HF work, which is the end goal here.
Now here is where I need some advice... Would two years in a group like this open the door to PE or HF, or am I pigeonholing myself into credit?
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