Which finance groups are "leveraged finance?" Forum

[Anonymous User]

Lev fin has taken a beating recently re exits and lifestyle on this site and others. But how do you tell which firms' finance/banking/credit groups are actually doing lev fin? Very few firms actually name a specific group "leveraged finance." Interested in finance work and understand that "normal" finance practice can be a much tamer choice.

For example, Skadden has a general "banking" umbrella and Simpson has a general "credit" umbrella so is it just going to depend on what partners you work for at those firms? And I know KE has a specific debt finance practice, which sounds identical to lev fin, but could also see how it differs? Likewise know LW does a lot of lender PE work under its "finance" group but don't know how much of that is lev fin. Is it safe to assume that if it's PE it will be lev fin brutal?

[Anonymous User]

Uh, check out the webpages for the groups you're looking at and see what their representative transactions are. If an acquisition is involved, chances are it's levfin (especially if the firm represented the banks in the transaction). If they represented a F500 blue chip company in refinancing their revolver, that's not levfin.

You mentioned Simpson - their finance group's webpage screams levfin.

[Anonymous User]

"Normal" finance is just doing syndicated revolvers and huge term loans for blue chip credits - doesn't take much sophistication, the docs are not creative, structures are simple, it's just F500 companies hiring white-shoe V10s that they've worked with since the Truman administration to do this stuff.

If that's what you want to do, go for it, but partnership prospects aren't great, it doesn't build a good skillset, and there are only so many firms that do it.

[Anonymous User]

"Normal" finance is just doing syndicated revolvers and huge term loans for blue chip credits

I cannot tell whether it is hilarious or terrifying that we are both in the legal industry but I have absolutely no clue what any of this means.

[JustLurking46]

Generally speaking, “leveraged finance” refers to acquisition finance in the context of private equity buyouts. Groups that focus on this tend to have worse lifestyles than groups that do run-of-the-mill corporate finance. Firms that handle commitment paper designations (i.e. representing the process whereby investment banks and debt funds bid to arrange financing for these buyouts) (DPW, L&W, and maybe STB) have it the worst.

Good rule of thumb - if your finance group regularly works across from K&E, it’s going to be rough.

[Anonymous User]

Uh, check out the webpages for the groups you're looking at and see what their representative transactions are. If an acquisition is involved, chances are it's levfin (especially if the firm represented the banks in the transaction). If they represented a F500 blue chip company in refinancing their revolver, that's not levfin.

You mentioned Simpson - their finance group's webpage screams levfin.

So basically if you're going to a firm with a top finance practice you should expect to be doing at least some lev fin? Just very confused bc when I've networked with ppl across the v10 in finance/banking they don't make practice seem as soul crushing as people paint lev fin here...

[Anonymous User]

Uh, check out the webpages for the groups you're looking at and see what their representative transactions are. If an acquisition is involved, chances are it's levfin (especially if the firm represented the banks in the transaction). If they represented a F500 blue chip company in refinancing their revolver, that's not levfin.

You mentioned Simpson - their finance group's webpage screams levfin.

So basically if you're going to a firm with a top finance practice you should expect to be doing at least some lev fin? Just very confused bc when I've networked with ppl across the v10 in finance/banking they don't make practice seem as soul crushing as people paint lev fin here...

A top finance practice that has institutional relationships with banks (i.e. lender-side) will absolutely be doing a ton of levfin.

For borrower-side, you should ask somebody from a place like Kirkland how that is or if it's its own special kind of hell.

As to the people you've networked with, well if you're not taking that with a grain of salt then I've got a bridge in Brooklyn to sell you...

[Anonymous User]

Generally speaking, “leveraged finance” refers to acquisition finance in the context of private equity buyouts. Groups that focus on this tend to have worse lifestyles than groups that do run-of-the-mill corporate finance. Firms that handle commitment paper designations (i.e. representing the process whereby investment banks and debt funds bid to arrange financing for these buyouts) (DPW, L&W, and maybe STB) have it the worst.

Good rule of thumb - if your finance group regularly works across from K&E, it’s going to be rough.

Appreciate the input. Is it just as rough if you are at K&E? Know they are more borrower (more like STB, less like LW).

[Anonymous User]

Generally speaking, “leveraged finance” refers to acquisition finance in the context of private equity buyouts. Groups that focus on this tend to have worse lifestyles than groups that do run-of-the-mill corporate finance. Firms that handle commitment paper designations (i.e. representing the process whereby investment banks and debt funds bid to arrange financing for these buyouts) (DPW, L&W, and maybe STB) have it the worst.

Good rule of thumb - if your finance group regularly works across from K&E, it’s going to be rough.

Appreciate the input. Is it just as rough if you are at K&E? Know they are more borrower (more like STB, less like LW).

I’ve never worked at K&E, but the general consensus is that sponsor (i.e. borrower) side is better than lender side. You have more control over the deal timeline, and you get to stick the banks with unreasonable deadlines (vs. the other way around). K&E does sponsor side exclusively, though I hear there are idiosyncrasies that make K&E a difficult place to work (lean staffing, lots of responsibility as a junior, etc.). Can’t speak to those.

[Anonymous User]

Generally speaking, “leveraged finance” refers to acquisition finance in the context of private equity buyouts. Groups that focus on this tend to have worse lifestyles than groups that do run-of-the-mill corporate finance. Firms that handle commitment paper designations (i.e. representing the process whereby investment banks and debt funds bid to arrange financing for these buyouts) (DPW, L&W, and maybe STB) have it the worst.

Good rule of thumb - if your finance group regularly works across from K&E, it’s going to be rough.

Appreciate the input. Is it just as rough if you are at K&E? Know they are more borrower (more like STB, less like LW).

I’ve never worked at K&E, but the general consensus is that sponsor (i.e. borrower) side is better than lender side. You have more control over the deal timeline, and you get to stick the banks with unreasonable deadlines (vs. the other way around). K&E does sponsor side exclusively, though I hear there are idiosyncrasies that make K&E a difficult place to work (lean staffing, lots of responsibility as a junior, etc.). Can’t speak to those.

Thanks, this is very helpful. How difficult is the commitment paper process on sponsor side? Or do you even have to deal with that?

[Anonymous User]

Generally speaking, “leveraged finance” refers to acquisition finance in the context of private equity buyouts. Groups that focus on this tend to have worse lifestyles than groups that do run-of-the-mill corporate finance. Firms that handle commitment paper designations (i.e. representing the process whereby investment banks and debt funds bid to arrange financing for these buyouts) (DPW, L&W, and maybe STB) have it the worst.

Good rule of thumb - if your finance group regularly works across from K&E, it’s going to be rough.

Appreciate the input. Is it just as rough if you are at K&E? Know they are more borrower (more like STB, less like LW).

I’ve never worked at K&E, but the general consensus is that sponsor (i.e. borrower) side is better than lender side. You have more control over the deal timeline, and you get to stick the banks with unreasonable deadlines (vs. the other way around). K&E does sponsor side exclusively, though I hear there are idiosyncrasies that make K&E a difficult place to work (lean staffing, lots of responsibility as a junior, etc.). Can’t speak to those.

Thanks, this is very helpful. How difficult is the commitment paper process on sponsor side? Or do you even have to deal with that?

Sponsor side generally involves finding a precedent set of papers, getting input from your PE client on initial terms, distributing the letters to the bank “trees” and collecting / comparing submissions. You might also do some finance diligence for the M&A team. The timeline is still compressed, but you won’t regularly get hit with a massive amount of time-sensitive work on Friday night (the soul crushing part of the job).

[Buglaw]

Generally speaking, “leveraged finance” refers to acquisition finance in the context of private equity buyouts. Groups that focus on this tend to have worse lifestyles than groups that do run-of-the-mill corporate finance. Firms that handle commitment paper designations (i.e. representing the process whereby investment banks and debt funds bid to arrange financing for these buyouts) (DPW, L&W, and maybe STB) have it the worst.

Good rule of thumb - if your finance group regularly works across from K&E, it’s going to be rough.

Don’t forget to add Cahill to this list (I think W&C does a bit as well). The middle market commitment papers aren’t nearly as bad as the bulge bracket, but still pretty rough (I.e. Cahill is way worse than Katten).

[Anonymous User]

Generally speaking, “leveraged finance” refers to acquisition finance in the context of private equity buyouts. Groups that focus on this tend to have worse lifestyles than groups that do run-of-the-mill corporate finance. Firms that handle commitment paper designations (i.e. representing the process whereby investment banks and debt funds bid to arrange financing for these buyouts) (DPW, L&W, and maybe STB) have it the worst.

Good rule of thumb - if your finance group regularly works across from K&E, it’s going to be rough.

Appreciate the input. Is it just as rough if you are at K&E? Know they are more borrower (more like STB, less like LW).

I’ve never worked at K&E, but the general consensus is that sponsor (i.e. borrower) side is better than lender side. You have more control over the deal timeline, and you get to stick the banks with unreasonable deadlines (vs. the other way around). K&E does sponsor side exclusively, though I hear there are idiosyncrasies that make K&E a difficult place to work (lean staffing, lots of responsibility as a junior, etc.). Can’t speak to those.

Thanks, this is very helpful. How difficult is the commitment paper process on sponsor side? Or do you even have to deal with that?

Sponsor side generally involves finding a precedent set of papers, getting input from your PE client on initial terms, distributing the letters to the bank “trees” and collecting / comparing submissions. You might also do some finance diligence for the M&A team. The timeline is still compressed, but you won’t regularly get hit with a massive amount of time-sensitive work on Friday night (the soul crushing part of the job).

Oh wow, sponsor side sounds way more tolerable. Do you have a sense of how it compares to PE M&A in terms of unpredictability?

[Anonymous User]

Generally speaking, “leveraged finance” refers to acquisition finance in the context of private equity buyouts. Groups that focus on this tend to have worse lifestyles than groups that do run-of-the-mill corporate finance. Firms that handle commitment paper designations (i.e. representing the process whereby investment banks and debt funds bid to arrange financing for these buyouts) (DPW, L&W, and maybe STB) have it the worst.

Good rule of thumb - if your finance group regularly works across from K&E, it’s going to be rough.

Appreciate the input. Is it just as rough if you are at K&E? Know they are more borrower (more like STB, less like LW).

I’ve never worked at K&E, but the general consensus is that sponsor (i.e. borrower) side is better than lender side. You have more control over the deal timeline, and you get to stick the banks with unreasonable deadlines (vs. the other way around). K&E does sponsor side exclusively, though I hear there are idiosyncrasies that make K&E a difficult place to work (lean staffing, lots of responsibility as a junior, etc.). Can’t speak to those.

Thanks, this is very helpful. How difficult is the commitment paper process on sponsor side? Or do you even have to deal with that?

Sponsor side generally involves finding a precedent set of papers, getting input from your PE client on initial terms, distributing the letters to the bank “trees” and collecting / comparing submissions. You might also do some finance diligence for the M&A team. The timeline is still compressed, but you won’t regularly get hit with a massive amount of time-sensitive work on Friday night (the soul crushing part of the job).

Oh wow, sponsor side sounds way more tolerable. Do you have a sense of how it compares to PE M&A in terms of unpredictability?

Pre-signing, kind of shitty. Post-signing, not as shitty. M&A will be much more stop/start, you have to do LOIs, and diligence on an intermittent basis, you might go pencils down a few times. Once you rev up the finance machine, you're likely to actually pursue the deal.

Problem with finance is that once you're finally going to pursue the deal, client gives you a call on a Tuesday afternoon saying they want to flip docs to lenders by Friday evening. Means you then have an evening (and next morning) to spin up papers, send them to the senior/partner, who then likely won't really review until Thursday AM, at which point you need to incorporate their comments by Thursday afternoon/EOB, then flip to the client so that you can have a call with client Friday AM, incorporate their comments by noon, flip back to the partner, get their signoff, and then fire off to lenders' counsel at like 7pm. These "papers" are ~30-100 page documents (depends on your client, bank, etc.) and are dense and technical as all hell, so it's not a matter of adding MAE qualifiers everywhere or something easy like that. Repeat this process next Wednesday evening after lenders' counsel begrudgingly sends you their turn of the commitment papers after you absolutely bushwhacked their weekend. Repeat ~1-2 more times, do a bunch of diligence and tax structuring discussions beforehand, and voila, you have now signed up a debt commitment for levfin.

[TheoO]

Generally speaking, “leveraged finance” refers to acquisition finance in the context of private equity buyouts. Groups that focus on this tend to have worse lifestyles than groups that do run-of-the-mill corporate finance. Firms that handle commitment paper designations (i.e. representing the process whereby investment banks and debt funds bid to arrange financing for these buyouts) (DPW, L&W, and maybe STB) have it the worst.

Good rule of thumb - if your finance group regularly works across from K&E, it’s going to be rough.

Appreciate the input. Is it just as rough if you are at K&E? Know they are more borrower (more like STB, less like LW).

I’ve never worked at K&E, but the general consensus is that sponsor (i.e. borrower) side is better than lender side. You have more control over the deal timeline, and you get to stick the banks with unreasonable deadlines (vs. the other way around). K&E does sponsor side exclusively, though I hear there are idiosyncrasies that make K&E a difficult place to work (lean staffing, lots of responsibility as a junior, etc.). Can’t speak to those.

Thanks, this is very helpful. How difficult is the commitment paper process on sponsor side? Or do you even have to deal with that?

Sponsor side generally involves finding a precedent set of papers, getting input from your PE client on initial terms, distributing the letters to the bank “trees” and collecting / comparing submissions. You might also do some finance diligence for the M&A team. The timeline is still compressed, but you won’t regularly get hit with a massive amount of time-sensitive work on Friday night (the soul crushing part of the job).

Oh wow, sponsor side sounds way more tolerable. Do you have a sense of how it compares to PE M&A in terms of unpredictability?

Pre-signing, kind of shitty. Post-signing, not as shitty. M&A will be much more stop/start, you have to do LOIs, and diligence on an intermittent basis, you might go pencils down a few times. Once you rev up the finance machine, you're likely to actually pursue the deal.

Problem with finance is that once you're finally going to pursue the deal, client gives you a call on a Tuesday afternoon saying they want to flip docs to lenders by Friday evening. Means you then have an evening (and next morning) to spin up papers, send them to the senior/partner, who then likely won't really review until Thursday AM, at which point you need to incorporate their comments by Thursday afternoon/EOB, then flip to the client so that you can have a call with client Friday AM, incorporate their comments by noon, flip back to the partner, get their signoff, and then fire off to lenders' counsel at like 7pm. These "papers" are ~30-100 page documents (depends on your client, bank, etc.) and are dense and technical as all hell, so it's not a matter of adding MAE qualifiers everywhere or something easy like that. Repeat this process next Wednesday evening after lenders' counsel begrudgingly sends you their turn of the commitment papers after you absolutely bushwhacked their weekend. Repeat ~1-2 more times, do a bunch of diligence and tax structuring discussions beforehand, and voila, you have now signed up a debt commitment for levfin.

Papers are dense but if you're at a commitment churning firm you're probably only focused on like a handful of items (EBITDA/financial defs, baskets, financial deliverables, EOD, mandatory prepay/excess cashflow, then add a bunch of flex items and done). Problem is that almost every fucking set of papers seem to come on thurs/fri and have due dates by sat/sun. And these could be knocked out fast but calls with clients and figuring out their time delays everything.

Just avoid all finance generally. but especially avoid levfin. Seriously... there's a reason why they are always hiring..

[Anonymous User]

Appreciate the input. Is it just as rough if you are at K&E? Know they are more borrower (more like STB, less like LW).

I’ve never worked at K&E, but the general consensus is that sponsor (i.e. borrower) side is better than lender side. You have more control over the deal timeline, and you get to stick the banks with unreasonable deadlines (vs. the other way around). K&E does sponsor side exclusively, though I hear there are idiosyncrasies that make K&E a difficult place to work (lean staffing, lots of responsibility as a junior, etc.). Can’t speak to those.

Thanks, this is very helpful. How difficult is the commitment paper process on sponsor side? Or do you even have to deal with that?

Sponsor side generally involves finding a precedent set of papers, getting input from your PE client on initial terms, distributing the letters to the bank “trees” and collecting / comparing submissions. You might also do some finance diligence for the M&A team. The timeline is still compressed, but you won’t regularly get hit with a massive amount of time-sensitive work on Friday night (the soul crushing part of the job).

Oh wow, sponsor side sounds way more tolerable. Do you have a sense of how it compares to PE M&A in terms of unpredictability?

Pre-signing, kind of shitty. Post-signing, not as shitty. M&A will be much more stop/start, you have to do LOIs, and diligence on an intermittent basis, you might go pencils down a few times. Once you rev up the finance machine, you're likely to actually pursue the deal.

Problem with finance is that once you're finally going to pursue the deal, client gives you a call on a Tuesday afternoon saying they want to flip docs to lenders by Friday evening. Means you then have an evening (and next morning) to spin up papers, send them to the senior/partner, who then likely won't really review until Thursday AM, at which point you need to incorporate their comments by Thursday afternoon/EOB, then flip to the client so that you can have a call with client Friday AM, incorporate their comments by noon, flip back to the partner, get their signoff, and then fire off to lenders' counsel at like 7pm. These "papers" are ~30-100 page documents (depends on your client, bank, etc.) and are dense and technical as all hell, so it's not a matter of adding MAE qualifiers everywhere or something easy like that. Repeat this process next Wednesday evening after lenders' counsel begrudgingly sends you their turn of the commitment papers after you absolutely bushwhacked their weekend. Repeat ~1-2 more times, do a bunch of diligence and tax structuring discussions beforehand, and voila, you have now signed up a debt commitment for levfin.

Papers are dense but if you're at a commitment churning firm you're probably only focused on like a handful of items (EBITDA/financial defs, baskets, financial deliverables, EOD, mandatory prepay/excess cashflow, then add a bunch of flex items and done). Problem is that almost every fucking set of papers seem to come on thurs/fri and have due dates by sat/sun. And these could be knocked out fast but calls with clients and figuring out their time delays everything.

Just avoid all finance generally. but especially avoid levfin. Seriously... there's a reason why they are always hiring..

I feel like I had the wool pulled over my eyes as to finance practice as a SA. Was interested in it until reading this... My only other thought is that M&A can be just as grindy. Is the choice essentially whether I want to slog through less exhausting diligence in M&A as opposed to the labyrinth that is the credit agreement?

[TheoO]

At the bulge bracket level it is entirely based on precedent and not deviating. Terms as so sponsor-favorable that for lenders its basically take or leave it minus some minor quibble. All of it is "did we get this in x number of deals or not?" The changes then become rote (copy and paste from the plethora of precedents) and all about making the document look as much as possible like the last one. I did work in a smaller shop and actually it was more interesting. More idiosyncratic deals meant more drafting, more interesting complications (figuring out appropriate guarantors and corporate entity, actually having discussions re: company needs for EBITDA and other covenants). But when youre dealing with powerhouse sponsors it goes out the window and you are basically just doing volume work. It's highly commoditized and cheap.

[Buglaw]

At the bulge bracket level it is entirely based on precedent and not deviating. Terms as so sponsor-favorable that for lenders its basically take or leave it minus some minor quibble. All of it is "did we get this in x number of deals or not?" The changes then become rote (copy and paste from the plethora of precedents) and all about making the document look as much as possible like the last one. I did work in a smaller shop and actually it was more interesting. More idiosyncratic deals meant more drafting, more interesting complications (figuring out appropriate guarantors and corporate entity, actually having discussions re: company needs for EBITDA and other covenants). But when youre dealing with powerhouse sponsors it goes out the window and you are basically just doing volume work. It's highly commoditized and cheap.

I disagree with this take. I did my share of bulge bracket papers before switching to M&A. I never did a deal where the bill was less than $1 million. The hours were infinitely worse. The negotiation, much more intense. We’d agree to use “precedent” where the sponsor would pick 5 separate credit agreements for different parts of the deal and the client would ask me any issues with these, and I’d usually have to read at least 2-3 of them during the first turn. Papers were 100 pages long. Sponsor was constantly shoving in stuff we had never seen before on any deal with them and being told they were getting it in every deal and it was clearly market. Would have to run all this new stuff by various experts and get on calls with them/clients, etc. I found bulge bracket deals to be Wayyyyy not complicated. They were definitely not commoditized and had wayyyyyy higher legal bills.

[Anonymous User]

At the bulge bracket level it is entirely based on precedent and not deviating. Terms as so sponsor-favorable that for lenders its basically take or leave it minus some minor quibble. All of it is "did we get this in x number of deals or not?" The changes then become rote (copy and paste from the plethora of precedents) and all about making the document look as much as possible like the last one. I did work in a smaller shop and actually it was more interesting. More idiosyncratic deals meant more drafting, more interesting complications (figuring out appropriate guarantors and corporate entity, actually having discussions re: company needs for EBITDA and other covenants). But when youre dealing with powerhouse sponsors it goes out the window and you are basically just doing volume work. It's highly commoditized and cheap.

I disagree with this take. I did my share of bulge bracket papers before switching to M&A. I never did a deal where the bill was less than $1 million. The hours were infinitely worse. The negotiation, much more intense. We’d agree to use “precedent” where the sponsor would pick 5 separate credit agreements for different parts of the deal and the client would ask me any issues with these, and I’d usually have to read at least 2-3 of them during the first turn. Papers were 100 pages long. Sponsor was constantly shoving in stuff we had never seen before on any deal with them and being told they were getting it in every deal and it was clearly market. Would have to run all this new stuff by various experts and get on calls with them/clients, etc. I found bulge bracket deals to be Wayyyyy not complicated. They were definitely not commoditized and had wayyyyyy higher legal bills.

I think this depends more on the sponsor than the lenders. If it’s Carlyle or Blackstone, they’re probably going to get whatever they want.

For purposes of this discussion, this doesn’t really mean any less work for the lender side associates grinding through papers in the middle of the night. The client (read: the partner) is still going to want a fulsome issues list with comps to precedent, etc.