I'm a recent grad from a lower level target school or maybe semi-target and I'm several months into an analyst job (was a summer analyst at the same place last year) at a MM credit fund (think golub, churchill, varagon, antares, twin brook, ares credit, monroe, audax, madison, etc.). But I'd rather be doing PE -- I like the work I'm doing but I'd rather be investing from an equity standpoint than a debt one (I don't find debt very interesting at all -- and I'm pretty sure my pay scale would be better long term in PE in most scenarios). Do you think I could move from my current role to a PE firm in the next 2 years as a lot of the sell-side M&A IB folks do? Should I consider trying to switch to IB now in order to have a better chance getting into PE?
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How deep is your firm investing in the capital structure? Are you doing senior only or are you also touching unitranche and mezzanine opportunities? Are you mostly doing sponsor backed or non-sponsored deals? Are you piggybacking the Sponsor’s diligence or are you doing your own diligence alongside them? Can you articulate both the equity story and debt story when you see a deal?
I guess the proximity to sponsors will be appreciated, given that you do seniors lending, you will have to show true understanding of equity upside and risks when trying to move. I know that buyside roles out of UG are positively viewed by both headhunters and funds as you already have experience in putting money at risk and are often more comptetitive than the wider IB BB thing (maybe less than top BB though). MFs are a stretch but MMs are definitely within reach, but move fast - if you stay more than 2 years you'll usually be seen as a credit guy vs equity guy.
No problem.
Definitely good to see that you are touching some unitranche as the deeper you go in the cap structure the more cognizant you have to be about risk / return. Obviously would be great if you guys are doing equity-coinvests and mezz as well, but that's besides the point. The difference in diligence between credit and equity is usually the largest discrepancy between a credit guy and equity guy given that the equity guys has to be much more comfortable in that subordinate position in the capital structure than the credit guy as equity obviously has little recourse. My recommendation would be to start developing equity theses / equity risks in addition to debt theses / debt risks for every deal that you are staffed on. Not only will this provide you a better understanding of equity, HHs and PE shops will value your understanding of both credit and equity. Also, as another comment alluded to you will want to reach out to HHs over the next few months and try to move ASAP as the longer you are in credit, the more difficult it makes it to move to the equity side. I'd target LMM and MM firms, as UMM and MF will be out of reach.
Super helpful, thank you. I'll start reaching out to HH and PE shops.
Good to hear that you guys do invest even a sliver of equity, something you can def mention during interviews, “we liked the equity story because x,y, and z and decided to invest $x million along with the sponsor. Our equity returns analysis yield that we’d make x IRR and x MOIC.” Being on the buyside def helps coming out of school, but ngl its a tough sell to get from the credit side to the equity side because the two mindsets are just different. Much easier to move from equity to credit. Your public equity experience while good, may not really help if I’m being completely honest. I mean similar analysis, but in the private markets, you’re working with imperfect data and the extrapolation is often left you to you so it requires much more analysis and thinking. If I were you I’d hit up HH really soon in the next couple months and cast a wide net. Lmk if you have any other questions, but please keep us updated in your process. Best of luck dude!
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