Direct Lending / Private Credit interview

I have an upcoming first round interview at a direct lender and would greatly appreciate any advice others could give. I am applying from a debt advisory role and I am cognisant of the fact that this likely puts me at a disadvantage in comparison to those applying from Lev Fin or another direct lender.

Would be grateful for any frequently asked question examples or pointers when talking through past transaction experience.

Thank you in advance.

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (7)

May 14, 2020 - 3:59am

Thank you for your response. Firstly, I have read some of your other posts and I would be thoroughly interested in purchasing the course you are preparing!

I understand the basic fundamentals / terminology through my work in debt advisory and have had exposure to legal docs, albeit I won't say I know them inside-out but I do understand commercial aspects of baskets and covenant definitions etc.

I would say my fallback is that I don't necessarily have the full picture of a lenders' mindset when analysing an opportunity.

  1. What are the core features that a lender looks for in an opportunity? If I were to be asked I would say: In a sector with market growth prospects, strong competitive positioning, sticky customers/ large proportion of recurring revenue with visibility, asset light / NWC negative, strong sponsor/management backing, sufficient debt service cover and deleveraging and any downside protection through security on assets (even if a cash flow lend)

  2. How do those working in the lending industry usually structure their Investment Committee papers? If I get through, I am aware that there will be a case study and I will not have had exposure to this.

  3. Regarding capital structuring, how does a (direct) lender determine whether to do a straight unitranche vs unitranche with a Holdco. PIK or warrants element?

  4. How does a lender analyse their metrics / returns when modelling this out? Whilst I'm aware of covenant metrics (ICR, DSCR, Net Leverage), we do not focus on analysing lender returns / IRRs (or any other metrics they may look at)

May 14, 2020 - 4:59am

@Snooker10 - appreciate the support for the course! And honored you have read thru some of my posts! If you would like - PM me your email and i'll get us on an email thread for any further Q&A. And for the course (now courses)--i'll keep you posted when its live.

While I am knowledgeable in the space, these questions may be a bit out of my wheelhouse. While I could go through whats in the investment committee / credit committee memo, the other questions are a bit out of my league / very specific. My strength is more on the loan capital markets / product side (structuring, pricing, and syndicating), I'm not as strong on the credit side / buy-side, but not weak. Just I'd feel more comfortable to punt those ones to someone else closer to the space.
but on
1) company due diligence / credit analysis, etc
--i'd say its deal specific and industry specific
2) Credit / Inv Committee layout **-
I can look at 1 in my files and get back to you. Others can weigh in tho
**3) Structuring
I can weigh in on more TLA / TLB / 1L/2L TLB / vs. Unitranche, but less familiar with Unitranche / PIK / warrant
**4) Metrics **-
do you mean financial covenants? (Leverage, Int Coverage, FCCR)--otherwise for metrics / returns when modeling - not as confident in that Q as others would be.

May 14, 2020 - 10:08am

yeah I gave a poor answer, I should have just said nothing. was up all night cranking out course content and was hungry & tired when i responded - that's on me that you feel that way, I'll own that.
but would love to change your mind in the future and show you that I'm a guy that is passionate about helping ppl. challenge accepted

Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
May 14, 2020 - 1:28pm

Thanks for this, will drop you a DM. Any further guidance others could provide would be greatly appreciated too!

Start Discussion

Total Avg Compensation

June 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (35) $364
  • Associates (202) $234
  • 2nd Year Analyst (115) $151
  • Intern/Summer Associate (97) $145
  • 3rd+ Year Analyst (27) $145
  • 1st Year Analyst (420) $131
  • Intern/Summer Analyst (338) $82