Lev Fin Outlook & Best Groups 2020

Intern in IB - Gen

Outlook of Lev Fin for 2020-2021? What are the top groups on the street that actually get to model? BAML is well-regarded as the best, but what are 5-6 other solid groups?

Comments (40)

  • Prospect in IB-M&A
May 23, 2020

JPM

    • 1
May 23, 2020

JPM, BAML, CS. I believe JPM, GS and MS levFin groups are more capital markets oriented where as baml and CS do hold the pen on their own models. While I think it's great to have the modeling experience, I know of analysts from the more capital markets oriented LevFin groups who have places to great funds. but as far as I know, outside of jpm, both baml and CS have strong LF businesses.

Array

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  • Analyst 1 in IB - Gen
May 23, 2020

If you want to model, go to CS/BAML indeed. JPM is the best LevFin group in the street but more CapMarkets focused. GS/MS are purely Capital Markets - ie you will barely see any model.

For Europe - DB is very solid too.

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  • Intern in IB - Gen
May 23, 2020

Any insight on UBS? I heard from a few in the group that they do run the model as well (obviously dealflow won't be as strong as BAML/CS)

May 24, 2020

so if you aren't doing any financial modeling, then what type of work would people in a more capital markets levfin Group like GS/MS be doing? Genuinely curious.

  • Investment Manager in AM - FI
May 23, 2020

What about Barclays?

    • 2
May 23, 2020

Wondering this same thing. Heard great things from many in the group, but wondering the outside perception of it

  • Intern in IB - Ind
May 24, 2020

bump

  • Analyst 2 in IB-M&A
May 24, 2020

I've heard its one of their best groups in terms of culture

  • Prospect in IB-M&A
May 23, 2020

I think I'd be pretty interested in a credit focused role such as the Credit arm of a MF. Does that change whether capital markets vs. modeling heavy groups are better for me?

Also, overall, would you pick JPM > BAML given there may be a bit more optionality attached to (what I perceive as, correct me if I'm wrong:) the better overall reputation especially outside of finance?

  • VP in PE - LBOs
May 23, 2020

What does "capital markets oriented" even mean. That's literally what the job is.

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Funniest
  • Associate 1 in IB - Gen
May 24, 2020

No one knows what it means, but it's provocative.

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  • Prospect in IB-M&A
May 23, 2020

What about the outlook going forward?

  • Prospect in IB-M&A
May 23, 2020

Any idea as to how easy it is to lateral from SA at BAML in IB to FT at the bank in LevFin? or would you need to work at least a year in IB first before being able to move over?

  • Intern in IB - Ind
May 23, 2020

levfin is in IB lol

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  • Intern in IB - ECM
May 23, 2020

that guy who commented is right, Lev Fin is IB. but if you are placed in any group at BofA you can potentially switch groups at the end of the summer. you have the opportunity to, however, most people don't becUse of course you have the best chance of getting an offer within your summer group

  • Prospect in Other
May 23, 2020

insight on Jefferies? sounds like they do some pretty interesting work

also, do they direct hire (no generalist) did as/an

  • Intern in IB - Gen
May 24, 2020

All Jefferies internships is generalist. And yes Levfin is one of their strongest groups. They structure very unique extremely leveraged deals no one else does. Not really sure on long term sustainability with that tho given corona. Would like to hear some other thoughts on this as well

May 24, 2020

I might be a little bit off here with the terminology but all leverage loans and US banks are regulated by the Fed. There are certain guidelines to doing deals like not leveraging above 6x etc. Jefferies doesn't fall in the category that gets regulated. so they have been able to help sponsors with really aggressive deals and have been able to climb up the league tables in 2017 and 2018. I think they were top 5 from a league table perspective in both bond and LL. Jefferies LF is well known on the street...

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Most Helpful
May 24, 2020

Compehensive list of BB LevFin Groups that model and that do not:

LevFin Groups that DO NOT model: GS, MS, JPM, Citi, Barclays
LevFin Groups that DO model: BAML, CS, DB, UBS

Some misc. notes:
- BAML LevFin modeling is mostly cash flow modeling. The coverage group will build out the operating model (revenue / expense assumptions) and the LevFin group will take those inputs and run it through their debt repayment model, tweaking the assumptions (mainly leverage and pricing) and other cash flow related items (taxes, capex, working capital etc). While the LevFin person does still need to understand the operating model assumptions in order to stress test it, just note that the actual operating build (which I would say is the key part to actually understanding how a company runs) is done by the coverage / M&A group, not LevFin.
- CS splits their LevFin team into 2 groups - Financial Sponsors and LFO&R. Sponsors does all work related to private equity firms (LBOs, refis for portfolio companies, div recaps etc) whereas LFO&R only does work for standalone / non-sponsor backed corporates (mainly refis, repricings, first time new issuances). From what I know, LFO&R splits the model work similar to BAML (coverage holds pen on operating model, levfin holds pen on debt repayment model) whereas Fin Sponsors runs the entire model solo.
- UBS combines both their Fin Sponsors & LevFin group into one. Holds pen on entire model, and they are focused almost exclusively on sponsor-backed deals (they actively avoid regular corporate deals that - while great for HY league table credit - are balance sheet heavy). In my opinion one of the more underrated groups out there, despite the WSO population generally looking down on anything UBS-affiliated for some reason.
- The non-modeling capital markets groups literally do not touch the model at all. The closest you will get to modeling in those groups is building a sources & uses and pro forma cap - the whole model component will be run by your M&A / Coverage groups. Your work at the analyst level will mainly consist of building cap tables, spreading debt comps (pricing / leverage), updating market update slides, and if you're really good, covenant comps, commitment paper negotiations, funds flows (for lead left deals). Note that because of the lack of modeling, the non-model LevFin groups generally have better hours compared to their respective coverage groups.

Hope this helps

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May 24, 2020

Thanks for this comprehensive breakdown. So what would you say are typical exit opps for the non-modelling capital markets LevFin groups (JPM, MS, GS, Barclays, etc)?

Progress is impossible without change...

May 24, 2020

Very varied so it's hard to say, but from what I've seen:

Some pick up modeling on their own, study the model on the deals they've worked on (I've seen some ambitious analysts call up their coverage counterparts who actually built the model and ask them to walk them through) then exit to primarily credit funds, and some MM PE (haven't seen this too often from non-modeling LevFin groups in my opinion).

Some internally transfer to a coverage/M&A group after 2 years, then recruit for typical buy-side roles (most common route if they're targeting PE).

In my personal experience I've seen most of them stay on as A2A promotes as it's a fantastic gig if you think about it. Given no modeling, your hours are a lot more manageable, you focus strictly on executing, and despite it technically being a capital markets role, you still get paid at the same level as the M&A guys.

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  • Analyst 2 in IB-M&A
May 24, 2020

Comment about CS is slightly off.

CS breaks it into 3 groups:

  • LFO&R: see comments above. Also do a lot of buyside m&a financings and general structural advisory. The origination part is important to. They have their own book of business and go out and win deals. It's not like some LevFin groups (JPM) where LevFin only works on deals that they get introduced to via another group that sourced it. On the restructuring end -- DIP/rescue financings and some advisory (when permitted)
  • LevFin capital markets: Not seen as a traditional banking group. As the name implies, the handle a lot of the capital markets support work on LFO&R deals. This group doesn't model or originate and they have fantastic hours lol
  • Financial sponsors: See comments above. Really strong group and the culture is great. Only criticism is that a lot of the processes worked on in this group are very repetitive/similar, so some say you leave without a very well-rounded skill set. Debatable.

General info:
- Great deal flow across the board because LevFin is the core of CS IB
- FSG and LFO&R have the best PE placement of any groups at the bank

    • 3
May 24, 2020

Thanks for clarifying

I left out the syndicate desks (the "LevFin Capital Markets" group in the case of CS) as that is really more a markets / syndication role than a corporate finance one, and is why they have better hours

  • Analyst 2 in IB - DCM
May 24, 2020

I think the comment for DB is slightly off. My roommate works at DB LF and here's what he had to say. the team is split into -
1. Capital markets - Team is small and lean . Mainly MDs and Ds who have relationships with AMs, HFs etc. No modeling at all.
2. Sponsors - they only work on sponsor related work. Hold pen on LBOs mainly. Other Refis, ECM, etc work is split between sponsors and coverage
3. Lev Fin- have relationships with the company. Modeling is very rare ie in 2 years you have model less than 5-10 times. usually for non-sponsor deals, model is held by Coverage.

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  • Intern in IB - Gen
May 24, 2020

Would you know what the differences between those 3 would be for comp and opps? Any significant differences?

May 24, 2020

CrSu, WUSTL and BCLYS are decent. Ask others though before you make the decision.

I think you know what I am doing.

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May 24, 2020

Does anyone know the difference between JPM's Lev Fin group within IB and Lev Fin within CCBSI?

One seems to be lev fin related to IB deals compared to commercial banking deals. Do the exits differ?

Array

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May 24, 2020

can anyone comment on the lev fin ccbsi platform ?

  • Analyst 3+ in IB - Ind
May 24, 2020

I used to work at JPM Lev Fin, can confirm you do not touch any of the modelling / corporate finance aspects. It's very much a capital markets role pricing bonds, reviewing term sheets and assessing optimal capital structures (which involves a tiny bit of modelling).

Still the best LevFin group on the street with great bonuses but terrible for the financial modelling learning. Although you do learn an incredible amount regarding the debt market.

May 24, 2020

Does the lack of financial modeling tilt exits more toward corp dev roles?

Progress is impossible without change...

  • Analyst 3+ in IB - Ind
May 24, 2020

No, exit ops are great. I was constantly being headhunted for top fund including megafunds. Most recruiters don't understand the differences between groups, they just see JPM LevFin and think you're the perfect candidate crunching LBOs daily (even tho you don't). You'll get the opportunities it's just down to you to practise in your own time and self learn the modelling for the case studies in the recruitment process. Regarding debt funds, within this group you build a solid understanding of the credit market and so exit ops into distressed or credit funds is also highly achievable.

May 24, 2020

I heard that levfin (esp at BAML CS and JMP) have good pe exits but am confused why considering it seems like they don't touch the operating, lbo, and normal valuation models. Can anyone shine some light on this?

Also does anyone know if levfin to distress pe is common/possible as an exit?

Thanks.

  • Analyst 3+ in IB - Ind
May 24, 2020

I just replied to another similar question/comment which should answer your queries - feel free to read that.

Re. CS, LevFin is mixed with the sponsors groups and so is slightly more of a relationship management team than other teams, so here is also not as good as other teams for learning modelling but you still pick up some and develop a strong understanding of the debt space so you're fine for exits. Just prep modelling case studies on the side.

  • Analyst 2 in IB-M&A
May 24, 2020

CS Levfin is not mixed with Sponsors. They are two completely separate groups. Both groups model extensively and are not just "relationship managers". Not sure where you got that info lol. They are some of the most technically-demanding groups in the bank. LFO&R naturally will have some more complexity given the nature of the processes they work on

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  • Analyst 1 in IB - Gen
May 24, 2020
Comment
    • 2
May 24, 2020