This summer I will be interning in DCM and I am keeping my mind open on what to do for FT recruiting. With that in mind, what are the different kind of careers in debt/credit? How do they compare to PE and equity hedge funds (in terms of WLB and pay)? Obviously I will be aiming for a return offer but I am trying to see what would be best for me in the long term.
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Just a few generalized thoughts (I recruited both PE and Private Credit):
PE: Focus on equity (Growth, Buyout, etc), Deeper analysis in fewer companies, Few new transactions each year with good amounts of PortCo work, Financial engineering and/or operational improvements to create IRR, Lifestyle comparable to banking early on but gets better, Very good pay with Carry, Career Move or opportunities include: B School, Other PE, HF, or finance roles, Industry or start-up move, etc.
PC: Focus on various types of credit (1L, Senior Stretch, Unitranche and/or 2L, PIK, Warrants), Less deep/different analysis focusing on credit story and cash flow but look at numerous companies, Several new transactions each year with some work on existing investments, Principal payback and Interest coverage to create IRR, Lifestyle much better (8:30am-8:30pm with some weekend work), Very good pay (generally a little less than PE) with less volatile Carry, More a career move or opportunities include: Credit HF, other debt strategies, maybe PE or industry if you want.
PE and PC are kind of like Yin and Yang, won't exist without the other and are complementary. Though, very different mindsets and strategies. Both great careers.
How did you learn so much about private credit?
PE is very clear to me: VC, GE, LBO, and distressed coincide with companies at different stage of their life cycle. I would like the same clarity of the PC landscape but don’t know where to start.
Also quick question, whats the exact seniority order of debt? I see people always respond differently which is confusing. For example, others might say senior secured, senior unsecured, junior secured, etc. but you structure your order differently (1L, senior stretch?, unitranche?, etc.).
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