Curious what the work would look like when comparing Origination vs. Underwriting at a Direct Lender from a Junior perspective. Origination seems to be more upfront deal screening where Underwriting appears to be more modeling intensive (structuring and executing) - wondering which skill set would be more marketable and transferable to continue in Private Credit with a Special Sits. or Mezz. focus. Thanks in advance.
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Originations is generally a more senior function. You are structuring deals and negotiating legal terms. It takes an expertise and years of transaction activity. Therefore, for any junior role you’re going to need to start in UW
As mentioned before, Originators are typically senior roles and they almost always have UW or banking backgrounds. They bring the deal to the table and execute the transaction. In other words- they are speaking with sponsors/management teams to find opportunities, and once they have the opportunity, they negotiate doc terms, structure, and pricing.
While the Originator is doing this, the UW team is performing due diligence (i.e. risk/mitigants). Once both Origination and UW feel comfortable on the structure and on the credit, a final deck is created to be presented to the investment committee. The deck is typically created by the UW team under the direction of Origination.
Larger firms often have clear delineation between the two roles, but some (like my own) have sort of a hybrid role. This is my preference, because I get to enjoy the entertaining aspects of origination (negotiate deal terms) without having to hit some deal quota.
In terms of transferability, origination is probably easiest considering you can act as a credit analyst and a rainmaker. But I have seen plenty of U/W move into those other roles you’ve listed.
DL senior associate here. I sit on both the underwriting and origination desks. Tbh, a bit of a unique role at the junior level. You're too junior to manage the big sellside DCM relationships (Jefferies, Blair, etc) but your origination desk needs to continue finding deal flow in hard-to-find places and your 55-year-old origination partner doesn't have time or interest in smaller deals that probably won't go anywhere. My comp is not based on capital deployment, although I'll bet it will eventually turn into that. I did 2 years of IB and 2 years of PC underwriting before this new role. I basically help the partners evaluate deals, talk to bankers, run management calls, etc. Hours are way better than underwriting.
I get the sense that Origination is a bit more marketable to other shops, but curious of others' opinions. Anybody can do underwriting once you learn how to run model cases, build IC decks, and manage your portcos. At places with more of a focus on non-sponsor or high yield / mezz, the underwriting team probably has more sway. The deal is usually pretty baked by the time the UW team picks it up post IC screen, so you're tweaking terms or tightening yield to be competitive with other lenders.
Originators can always go back to underwriting, but usually not the other way around. The personality types are different too (outgoing / sales oriented vs. detail-oriented) but that is a broad generalization.
Agreed with all of this. One downside for originations though is you have to deal with cap markets guys at PE shops. Those guys are total cocksuckers that show little respect for anyone
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