Financial Sponsors vs. Other sectors

There's nothing special about "merger modeling." What you want exposure to is LBO modeling. And cretain PE firms do a lot of M&A... they acquire a platform portfolio company and bolt on additional companies to the existing platform to create value.

And your thinking is a bit confused... no one is hiring you because you know "merger modeling" or can build an LBO model. If you've got solid financial modeling skills, thats what their looking for. And modeling is for the most part just a very basic requirement. Its similar to thinking that since youre an economics major and not a finance major in undergrad investment banks won't be as interested because your Gordon's Constant Growth modeling isn't up to snuff.

There's no such thing as Energy M&A, TMT M&A... as I mentioned above you're either in an industry group or a product group. From what I hear MS M&A is very good for PE placement. And, in addition to what I've heard, I've also seen GS TMT places EXTREMELY well.

Ideally you'd want to get to a group which is consider tops across all of Wall Street. This would be GS TMT, MS M&A, etc...

If you want to go to a megafund (BX, Apollo, KKR) you essentially should have: ivy degree with very high grades and solid work experience in a top group at a top BB firm or elite boutique where you were at the top of your analyst class. A good way to figure this out for yourself is to go to any PE firm's web site and read the team bios. This should give you a good idea as to what you'll need to get in. I'm sure there are exceptions to the above, but this is what I've seen.

I think your picking over small details...

If the goal is to go into PE, Financial Sponsors make sense jsut because you're going to be exposed to PE clients (not uncommon for them to hire somebody they worked with and liked) and will do a lot of LBO modelling, which is what you need in PE.

In the end, it's all about deal experience though. I would pick the team that is most successful and has the most dealflow - if the FS team sucks or is a pure coverage role, you're going to end up with no deal flow at all. Its for you to do the due diligence by looking up at some of the previous deals and ask people who work there aobut which team is the busiest.

Another thing - I know quite a few generalist PE shops that do not like people with energy deals (and things like FIG, utilities, infra) because it is too specific.

There's too much variety to answer that... some Sponsor is combined with LevFin, some banks dont have sponsors (it is done out of industry teams, like GS), some do only coverage and no modelling, etc.

Personally I wouldnt do Sponsors with JP, GS, MS because its done either out of LevFin or out of industry teams. UBS is combined levfin/sponsors.

gs sponsors is amazing u have no idea what you're talking about

I've heard that most of the modelling on energy deals is done by the industry group because the valuation methods are so specific. Does anybody have more insight on this (esp. regarding MS Energy)?

Also, how can the M&A product team be doing all the modelling if they don't know the key drivers of the industry and such (well, not as in depth as the industry teams anyway)?

GS Sponsors? I is a very very very small team of senior guys doing coverage. Basically pitching ideas and making sure PE guys are happy. In GS, industry teams are king. Every deal is executed from industry teams, including PE deals. FS guys originate, and then pass on execution to the relevant industry guys together with LevFin guys. That is why Sponsor is not a good place to be. I'm not saying they suck, just that the structure is like that. MS and JP are a bit like that too, industry focused - so just go for Industry teams with those guys.

My point is - you wont get wrong by going for GS/MS/JP and will get a very good shoot at PE even if you are not in FS. It is a bit more tricky in other places such as CS, Citi and UBS because all the PE deals go into FS specifically. So if you want to do PE, you have to be very clear about the exact structure of the IB department so that you can get the best exposure

re energy and FIG you are right it is most always separate and they keep modelling "in house". Same for utilities and infrastructure.

wow - you're mixing up things and generalising too much here.

Recap: You have 1. Financial Sponsors M&A (PE deals) 2. Industry Groups M&A (TMT, Industrials, etc.) 3. Generalist M&A pool (or execution team) 4. Leverage Finance (product team - not M&A)

Financial Sponsors means different things to different bank: either they lump it in with Leverage Finance as a standalone entity or they keep it separate. Also, either it is a coverage group, or it is a coverage + execution group.

Leverage Finance is a separate issue from the above and again means lot of different things to different banks. Either it is a sepate product team that only does structuring, or it is mixed with Financial Sponsors, or it is the team that handles the whole deal execution.

i heard that at jpm and baml sponsors does more than lev fin?

DB, UBS, and WF all have good FS and LF groups with the former doing modeling and originating and probably having a greater role than the levfin team. However at UBS the FS and LF team is combined into FSLF.