LevFin hours? Do you like the work?

Appreciate the info!

Another couple of Qs: 1. What is the difference between Financial Sponsors Group and LevFin? 2. Where do you currently work? PE? 3. How many LevFin jobs are out there, comapred to M&A? What is the ratio? 10:? =M&A:LevFin 4. If exit opps are solid, why isn't it more popular than M&A? After all, what comes down from this forum, is that everyone (or nearly), who starts in M&A, has the intention to move to PE. 5. Are analysts encouraged (forced) to go to MBA after 2-3 years just as much as in M&A? 6. How common is it to return to LevFin after MBA? And how many moves to buy-side?

Thank you again for the info in advance!

ibleedexcel:

1. Generally yes. Slightly. It depends on deal flow (relates to #2 below) In the current market, for sure yes (this is an assumption since I don't work in levfin anymore but not a hard one to make).

2. I really liked levfin. Generally speaking, everything you work on is a real transaction. Your sponsor client may not win the deal or your bank may not win the financing mandate, but you're not spending your time putting together reams of pitch books for "potential" deals or "ideas".

I also like that levfin has the partial feeling of being on the buyside. (Not just because you're supporting your buyside client). In order to underwrite a financing, you need to evaluate a deal from a buyers perspective. (Buyer of the debt). How much your team likes a deal will drive how aggressive you'll get on leverage and terms.

3. Exit opps to PE are excellent. Many firms like to hire levfin/sponsors bankers. You get great exposure to the buy side since PE firms are your clients. You become very proficient with the lbo model. And you do really well in interviews because you can talk the language.

Lev Fin will always be a good group to be in - LBOs and HY financing in strong economic periods, and DiP financing during recessions.

Lev Fin is a fine group. It's nice because it's one of the few groups where you can get modeling experience without committing to a specific industry. The only problem with Lev Fin is that you're only going to be exposed to very specific types of deal.

No group is perfect though, in Lev Fin you will develop good technical skills, get exposure to financial sponsors, and work in a variety of industries. That's attractive to a lot of people, and in terms of exit ops, lev fin groups tend to do well as far as buy side recruiting is concerned.

I spend the bulk of my time modelling and writing credit reports. We look at a lot of deals and work across all sectors so I don't spend any time really maintaining comps except on serial issuers.

We interact to a reasonable degree with industry teams, tends to depend on how much we are going to underwrite and the size. Work pretty closely with financial sponsors (they sit next to us) when they've got something on.

No ideas about macro trends - but I think you're going to get continually high flow of HY paper due to the refinancing needs of corporations as well as continuing expansion of the market.

Exit opps solid, anything debt/credit focused.

I recently posted a thread, I know exit ops from here is probably bar none the best for PE and buyside exit routes. Lots of modeling and heavy work.

lev fin does similar sort of things to m&a except you focus more on the cash flows since there is a lot of debt involved. also there are credit docs to be dealt with and more exposure to pe players.

1. A Company / Sponsor ("Acquirer") engages your Bank (UW, stands for underwriter) to purchase a Company ("Target")

2. Acquirer & UW do Due Diligence on Target

3. UW comes up with optimal capital structure for a Acquirer + Target or just Target (If Acquirer is a Sponsor or if this is a Silo financed deal).

4. Acquirer bids & wins

5. UW markets the deal to Investors

6. Investors buy into the deal through bank financing and / or high yield markets

7. As soon as all the t's get crossed and the i's get dotted, deal is done.

So like M&A, LevFin is very process driven, thus why Sponsors like to hire M&A and LevFin / Financial Sponsor bankers.

let's cut to the chase. you will do excel, excel, excel, excel and then move to a private equity shop after 2 years. thats all you need to know

"Living the dream 24/7 on http://theallnighter.blogspot.com"

are credit analysis/cash flow skills difficult or useful?

Cash is king and understanding how it's generated and used will definitely be useful!

Other leveraged finance functions:

Recapitalizations

Ratings Advisory

any levfin functions or M&A execution should be preferred above industry sector teams or capital markets team in IBD if you like modelling was told to me...

is it beneficial to know Visual Basic for Excel for M&A exc. / Lev Fin or Lev Fin functions?

In terms of league tables, the pure plays like GS, MS and LEH do not do very well. ML however does pretty well though.

I understand that they are not the top in the league tables. I was more or less trying to understand if the league tables were all that mattered as far as measuring the quality of these groups. I didn't know if people considered the fact that these banks are not set up to do the same kind of volume as the universals, or if they just get no respect at all .

League tables certainly is a measurement of quality, as it ranks deal flow and fees inputed. However, it is not all encompassing.

However, in the space of Lev Fin, firms like GS, MS and LEH do not do as well as other firms like JPM, CS, ML and DB as these other firms have captured the market of Lev Fin. So, in answer to your question, GS/MS are not as good as the lower bulge firms which have proven to have a solid track record in Lev Fin.

Where does UBS fall in terms of Lev Fin?

• Slams

My understanding is that UBS merged leveraged finance with their sponsors and restructuring groups. Furthermore, UBS remains a Swiss bank and like all swiss banks they have a legacy of shying away from risk. Thus, they sit out on many profitable deals because they prefer not place such risk on their albeit large balance sheet.

mrbubba that's about right.

Is JPM's lev fin group considered the best on the street? How about Citi?

I think you're partly right about UBS. They do tend to shy away from holding risk, so they may not participate to a great extent to levered bank deals. But UBS loves to underwrite and distribute sub, so in that sense their high yield is very strong. I've been in LBO deals where the structure changes from sub to senior and UBS backs out because they don't see the upside. The deals they do underwrite are still very profitable for them, though.

Game Theory, How do you think this will change your experience in the group? Less valuable per say? At a bank like UBS, would you aim for an industry group say health-care instead of their lev fin?

What's your take?

• Slams

This risk aversion is what I had heard about MS's and LB's LevFin as well. Is that true?

No, I don't think it's less valuable. If you're originating and structuring highly levered transactions (by nature, alot of sub is highly levered) you'll still get a great experience. I think within UBS though, you really want to aim for sponsors over lev fin. Healthcare is very reputed at UBS so if you have a personal interest go for it. My only warning is that people are absolutely miserable in healthcare.

UBS Lev Fin is absolutely not known for doing deals. In the league tables, they are 10th spot.

If you want to join UBS, the more established groups would be Healthcare, the LA office, and M&A. Lev Fin ain't their strong point.

A warning about JPM Lev Fin. They might be best on the Street, but in there, you are sub-divided into industry groups. So you might only specialize in healthcare high yield for example, which in my opinion is too specialized. You would be better off working in real lev fin groups like CS, DB and ML where they work across all industry groups.

League tables in lev fin reflect both lbo driven financings as well as pure refinancing transactions. Therefore, they may not be as accurate in reflecting the type of work the groups are doing.

Also, though firms like GS/MS may not be as high in the league tables, I have no doubt that they have as good if not better exit opportunities as lev fin groups at lesser firms.

League tables definitely reflect the amount of lev fin work done by banks, so I would disagree with your point that they fail to capture this input. Lev fin work is gonna be the same across all firms; the difference is in examples like JPM where they subdivide analysts into specific industry groups, which generally tarnish the learning experience of a real product group.

While it is true that GS and MS have great branding, it only works on folks who do not have a real sense of group quality. I would dare say that a CS lev fin kid would have a stronger advantage than a GS lev fin kid if they are going for PE jobs. Trust me, the PE folks know who are the better deal, and they do not depend much on overall firm prestige.

bump

• Slams

Not much going on in Lev Fin now, except layoffs...

CS DB??

Absolutely - the most interesting group IMO. JP are very hot levfin players in the US and to a certain extent Europe.

Been in levfin for a while now and love it.

2

sure but the hours are terrible

Worse than M&A?

any opinions on rbs lev fin?

In Europe they are excellent - less so in the US but I believe they are trying to build up a better presence.

that you're more interested in how debt is structured to acquire a company using leverage

You like both markets and working with companies. It's a synergy of both.

Tell them you want to be Michael Milken. You'll be sure to turn heads...

depends on the firm...where?

CS FinSpon - very quant focused BarCap LevFin - got massacred with cuts UBS LevFin/Restructure - at least you would be doing restructuring work Citi LevFin/High Yield - few sr bankers left JPM SFL - hit with rounds of cut every single time there was a cut

Lev Fin is prestigious in terms of the opportunities it offers ie PE. In general, the top 5 lev fin shops are JPM, Citi, CS, ML, DB (according to Thomson Financial HY League Tables).

That said, industry groups can be prestigious, but it is bank specific. GS and MS may not be top in lev fin, but they have solid industry groups.

removed, someone just happened to be rating down all of my posts - not just this one. :(

Pros: more technical, see a lot of industries, arguably best overall exit ops (barring the groups that are discussed here 100000x a day), more execution, less pitching, quicker deal time/more deals

Cons: no deep expertise in industry or valuation - only in cash flow modelling and process management. More volatile than industry groups.

pros:

Let's hope you are lucky to be in one of the banks that have LF as the group that models a lot deal flows due to the need for capital right now hedgefund not so much unless you go to distressed guys, but exit oppos to PE/credit funds are pretty damn good

cons: no industry expertise, will be tough to break into industry or growth/vc/start-up unless you have an engineering background of some sort

What about Structured/Project Finance to LF in the future? I'm an intern now doing a lot of cashflow modelling. A lot of models that we get are from PE firms because they're the sponsors who want to borrow $ from us.

I learn a lot about the industries of the deals that I'm currently working on because part of my work is to write economy / sector analysis for the loan agreement, etc.

www.leveragedfinancenews.com

Just Googled it... seems decent though you have to register to see their monthly newsletter

Interesting timing, i was literally talking to a buddy at a BB levfin group. Seems like hy market is heating back up, deals are starting to flow in... may be correlated to rallying equity markets and overall investor sentiment and perceptions on risk

Creditflux.com is a good source though partially pay-walled

Hunter's Distressed Debt blog (http://www.distressed-debt-investing.com/) is more distressed focus (obviously) but very good.

WSJ's PE blog (http://blogs.wsj.com/privateequity/) is sponsor focused but does give you an idea on deals getting done.

Curious about this as well if someone has on the ground info. Thanks for the links already posted.

Market turned really hot over the past 3 or so weeks. New issue volume is starting to pick up again (though not yet close to what we were seeing 6 months to a year ago), and the secondary HY market has been rallying. HUGE inflow to HY funds this week and last, and it only looks to get busier through the rest of the year and into 1Q12. That said, anything is better than the past few months we've had (1-3 issues a week if lucky, HY indexes moved vastly lower). Leveraged loan market looks to be picking up as well, but not quite to the same extent.