1/10/17

I got a summer associate offer with JPM NY office and have the choice to pick between Industrials, Energy or LevFin group. I am an engineer with no background in finance, but have completed all 3 levels of CFA. I want a group that does more technical (finance) work, modeling and transaction exposure. Industrials and Energy suit my background, but I'm slightly inclined towards the LevFin group.

I am generally hearing very positive things about JPM LevFin group, but I want to make sure all I do there is not just loans, loans, loans and loans. I am expecting their LevFin group does extensive credit analysis of a company, whether it a take on the debt and meet debt obligations, LBO modeling, syndicating a loan, pitching to FI investors, etc. Is this true?

Comments (7)

Best Response
1/11/17

Depends on what you mean by "technical". If by technical you mean credit analysis, thorough due diligence and running the model, that will be done by coverage. On the other hand, if you're talking about deep analyses of credit agreements / bond indentures (aka. really understanding the levloan/HY bond product) and structuring the debt (although final shots will be called by their syndicate group), then LevFin would do that for you. That's how it's run at JPM.

Generally speaking, you will work across a lot more deals in levfin but will only touch on your main part (which really is about drafting the commitment papers / terms / running internal credit committee memos), whereas you will work on a fewer # of deals on an absolute basis (relative to LevFin) in coverage, but will really dive deep into each of them (pitch, rationale, model, due diligence).

You will do a lot of grunt work in either group so don't fuss too hard over that - however the type of grunt work differs a bit. Grunt work in coverage consists of endless company profiles, KYC, and full-on pitchbooks containing company overview, industry, historical EBITDA reconciliation, etc that you know will never come to fruition (but your VP asked to do it anyway by tomorrow morning). Aka. a lot of qualitative stuff involving copy and pasting onto powerpoint.

Grunt work in levfin consists of endless cap tables and term sheets, recent loan/bond transactions based on specific rating issuers (aka. filtering, pivot tables, basically "capital markets" stuff), covenant comparables between deals/sponsors, and assisting in drafing the memo which (thank god) coverage handles most of it anyway (any internal committee memo is basically grunt work since noone really reads them and the actual committee consists of senior coverage/levfin bankers arguing with credit risk & portfolio over why their assumptions are overly pessimistic.) The memo barely gets touched, trust me (all a waste of paper, but kept so that in case regulators ask for proof on whether we did proper due diligence on a transaction we'll have something to show them). In the case that you are lead-left (which JPM will be frequently on), Levfin will hold the pen on the LP, but thankfully it's mostly reusing/rewording most of the stuff from the RAP (which coverage holds the pen on and will likely spend countless late nights on) so it's not TOO bad.

Do you like really understanding a company's business drivers and strategic rationale for transactions? Go Coverage.
Do you like delving in legal papers, and really understanding the ins & outs of your 2 debt financing products? Go LevFin.

Are you more of a "corporate finance" type of person? Go Coverage.
Are you more of a half "markets" half corp fin type of person (leaning more towards markets)? Go LevFin.

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1/11/17

This is so incredibly accurate and well put.

1/11/17

Thank God someone finally got it right on here. I'd also like to note that from what I've seen exits from the LevFin group tend to be towards cap market roles rather than PE.

1/11/17

This is an incredible reply. The responsibilities that you list are a very accurate representation of what hires should expect on the job. I am an incoming BB coverage analyst. My summer internship consisted of building a few models, taking notes, and making PPT deck turns - but I heard frequent talk of the duties that you have described (credit analysis, thorough due diligence and running the model, that will be done by coverage. On the other hand, if you're talking about deep analyses of credit agreements / bond indentures (aka. really understanding the levloan/HY bond product) and structuring the debt (although final shots will be called by their syndicate group), then LevFin would do that for you) . One of my great fears for the upcoming year is that I will be unprepared to handle those tasks - as I have neither any academic nor professional exposure to them. Could you (or someone else) please either (1) explain the tasks in more detail (2) suggest some supplemental resources or (3) point me to memo templates.

Thanks for your time.

Best,
Prospective Monkey

Array

1/11/17

Bump - could someone please respond to this?

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1/11/17

JPMorgan LevFin does not do LBO modeling. So PE is not a likely exit. But in it's own right, it is the top LevFin group on the street.

If by technical you mean mathematical work in excel, I think they would be similar, but I am inclined to give the edge to LevFin. But if you mean the specific corporate finance modeling that college kids jerk off to, you'll only find that in Industrials although I would argue that work is not really "technical" at all, especially for someone with an engineering background.

1/11/17
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