Detailed information for Lev Fin IB group?

Paul_Allen_620's picture
Rank: Chimp | 5

I am an incoming first year analyst in IB and am trying to get into the Lev Fin group when I start (I will start as a generalist) - I am not a finance major so I was wondering if anyone had any recommendations for preparing for this group (i.e. leveraged finance books, websites, classes to take next semester, etc)? I have already started trying to network with members of the group but I don't want to embarrass myself if they start asking me technical questions.

Comments (24)

Dec 31, 1969

In my interview, they focused on trends in the debt markets as well as the spreads, etc. It was fairly basic and they also asked questions regarding modeling and areas that are going to affect EBITDA.

Dec 31, 1969

Okay cool thanks. And just to be clear, what exactly do you mean "areas that are going to affect" EBITDA?

"An investment in knowledge pays the best interest." - Benjamin Franklin

Dec 31, 1969

Just like other IBD interviews with more focus on capital structure and types of debt, and LBO valuation, maybe recapitalizations and refinancings

Dec 31, 1969

Could you guys recommend any material in which I can read to prepare on some of these topics? I have a ton of IB guides, but they really focus on traditional banking and valuation/accounting type questions. Nothing like you noted above

"An investment in knowledge pays the best interest." - Benjamin Franklin

Dec 31, 1969
StudentLoanBackedSecurities:

Could you guys recommend any material in which I can read to prepare on some of these topics? I have a ton of IB guides, but they really focus on traditional banking and valuation/accounting type questions. Nothing like you noted above

https://www.lcdcomps.com/d/pdf/hyprimer.pdf

https://www.lcdcomps.com/lcd/na/2012/09/07/2012%20...

http://www.macabacus.com/valuation/lbo/overview

http://www.macabacus.com/terms/original-issue-disc...

http://www.macabacus.com/terms/payment-in-kind

Dec 31, 1969

Handbook of Fixed Income Securities - Fabozzi

'Before you enter... be willing to pay the price'

Dec 31, 1969

anything related to debt. LBO questions are bound to come up in interviews. Try to understand the overall picture with LBOs. Some shops ask you to create a paper LBO model, but I didn't come across any that asked me to do so during summer recruiting, only during FT. Paper LBO model is nothing crazy - given 5 year projection, you just list out some assumptions, spread out cash flow over few years, and exit. Do some quick math to get to a ball park IRR number. That's the most technical lev fin interviews would get in my opinion.

Dec 31, 1969
BepBep12:

Handbook of Fixed Income Securities - Fabozzi

Do you, or anyone, have a PDF copy that you could PM me?

"An investment in knowledge pays the best interest." - Benjamin Franklin

Dec 31, 1969
goblan:
StudentLoanBackedSecurities:

Could you guys recommend any material in which I can read to prepare on some of these topics? I have a ton of IB guides, but they really focus on traditional banking and valuation/accounting type questions. Nothing like you noted above

https://www.lcdcomps.com/d/pdf/hyprimer.pdf

https://www.lcdcomps.com/lcd/na/2012/09/07/2012%20...

lbo/overview" href="http://www.macabacus.com/valuation/lbo/overview" target="_blank" rel="nofollow" sl-processed="1">http://www.macabacus.com/valuation/lbo/overview

http://www.macabacus.com/terms/original-issue-disc...

http://www.macabacus.com/terms/payment-in-kind

These are very helpful, thank-you

"An investment in knowledge pays the best interest." - Benjamin Franklin

Dec 31, 1969

Are you actually on a desk or in a group with cubicles? I always find it interesting when some banks have groups and some act more like traders.

Dec 31, 1969

Did you meet any analysts while you interviewed? If so, reach out to them to see. That is what I did when I lateraled. Chances are, given your background, they will not be expecting too much from you, but like you have suggested, it will not hurt to be prepared.

Dec 31, 1969

I didn't have any individual interviews with an analyst. In the two super days I had, it was mostly associates or an associate + analyst. Here the associate would lead the discussion and the analyst would mostly observe.
So, I didn't get to build much of a rapport with them at the time. Plus, the entire process was drawn out over nearly three months, and I can barely remember who I spoke to.

Dec 31, 1969

Personally, I think Moyers book is good for understanding the capital structure but may be overkill for you. How long have you been in consulting out of interest?

Dec 31, 1969

2 years. So it's kinda a late start in banking. But that doesn't really bother me. Everyone's got their own path in life.

Dec 31, 1969

Brushing up on your general accounting skills is always a good idea.

Other than that, read through some leveraged finance debt primers. If you can, do your best at familiarizing yourself with the basics of the diff instruments (Pro rata, TLBs, HY, etc) and where they fall in seniority within the capital structure (essential for LBO modeling).

It would also be helpful to learn the various pros and cons of each piece of financing (costs (interest rates and amortization) and flexibility (prepayability, maintenance vs incurrence covenants), etc.

It's helpful to learn the basic differences between positive and negative covenants but really this will come after many fun hours pouring through OMs and credit agreements.

If the above is already old news then congrats, you're in an awesome spot. If it only sounds vaguely familiar (or completely Latin), then don't stress it, you'll pick it up fast.

Feel free to PM me with any questions.

Dec 31, 1969

Thank you for the insight. Much appreciated.
A lot of it is familiar to me as I did some serious reading up for my interviews. Especially on lbo models, different tranches of debt / their properties etc. I'll do some more research and hit you up if I've got more questions.

Cheers mate

Dec 31, 1969

Catch up on the markets.

GS/MS LevFin is much more of a capital markets oriented team than other BBs. Most of the modeling is done by the industry groups.

Dec 31, 1969
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