Leverage Finance vs. Industry Groups
Hello, I was hoping the community could confirm what I had heard networking with several individuals. I was told explicitly that you want to start an IB career (let's say at two comparable banks) within an industry coverage group rather than at leveraged finance subsection of IB. Additionally, some individuals in industry coverage groups were going as far as saying that leverage finance investment bankers were quasi IB and it was something really completely different. Could the community expand on why leverage finance subsection of IB has a bad wrap, is it lower pay and lower exit ops? Should an aspiring undergrad steer clear of leverage finance IB jobs if they have the opportunity to do industry coverage? Should people be taking offers from ''lesser'' banks in order to do industry coverage rather than leverage finance at a larger bank?
bump
Levfin doesn't have a bad rep. They've made great money for years. Depends what you want to do.
very true!
Whoever has told you this information is completely misguided and probably doesn't know what he/she is talking about. Leveraged Finance is an extremely profitable product group in many BB's investment banking divisions. Take JP Morgan for example- Lev Fin sits in IBD, they are investment bankers just like their counterparts in FIG coverage, Corporate Finance Advisory, or the Financial Sponsors Group.
In terms of pay- there is no difference, in fact bonuses may even be higher than some coverage groups since Lev Fin produces a ridiculous amount of revenue for the bank (decent fees and extremely high volume at a place like JPM/BoA).
In terms of exit opps- here there are differences, Lev Fin is best for those who are interested in evaluating the credit of a company- how much borrowing capacity does it have, how to structure different debt raises, what kinds of covenants should be included, and most importantly how to properly price the debt and get the book filled for a full syndication. The skills involved in modeling high yield debt and LBO transactions is not rocket science (same goes for building operating models in coverage)- the real skill set that differentiates lev fin bankers if their ability to analyze credit markets and read through complex credit agreements. At the end of the day these skills translate best for credit fund exits and distressed debt investing hedge funds. Of course PE is still a plausible exit- it's just not the most obvious and many lev fin guys aren't interested in PE (they'd be in coverage otherwise).
If you want the straightest path into PE- look to coverage and M&A, but if you want distressed debt, hedge funds, or credit funds, then Lev Fin is hard to beat- especially at firms like JPM and BoA which dominate the leveraged space.
Quality info relating to lev fin is hard to come by and many people don't truly understand the work so that's why many default to simple groups like coverage because everyone is familiar with how thy work and where they exit to. Hope this helps!
Guys common this stuff is already on the site; Per informational guides and Patrick Curtis himself this is just copy and pasted
Leveraged Finance Group Definition LF departments work on acquisitions (leveraged buyouts), recapitalisations, and asset purchases. Companies looking to do any of those things can do so using debt, and it is cheaper to use debt than to use equity or cash. Although LF and Debt Capital Markets teams both work in debt, the DCM team works more with investors and the markets while the LF team works with the actual company on the structuring of the deal. One of the most prestigious LF departments is within J.P.Morgan in Europe. Leverage is sometimes referred to as 'gearing' in European countries.
Should I Work In LevFin? How does LF compare to the other investment banking groups? For career opportunities, here's how it stacks up against other groups. While M&A takes the cake for best investment banking group for many, LF groups are just as good in many cases and better in others. If you get an offer with any of the top firms we mentioned before, then you've set yourself up for some nice exit opportunities.
Hours, Salary, And Work Of LevFin Bankers Leveraged Finance - Hours Hours are just as gruesome as M&A, 70-80 hour weeks are the norm, and 100+ when it comes to crunch time. As for what you spend your time on in LF, it's mostly credit analysis and modeling - although some firms don't do any modeling whatsoever. Salary is comparable to most investment banking gigs, all-in compensation coming out around $130k.
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