The financial sponsors group (FSG) is a team within the investment banking division (IBD) of an investment bank that covers private equity (PE) firms and investment funds (referred to as “financial sponsors”). This group differs from industry-focused groups that work with operating companies in a specific sector, and instead, covers buy-side firms across all industries.
Financial Sponsors Group vs. Industry Group
Here is a quick comparison of the key differences between the FSG and a typical industry group.
Financial Sponsors Group:
Covers a wide range of industries
Works directly with private equity firms and other types of investment funds
Works directly with CEOs and CFOs of public companies
Develops deeper industry-specific knowledge and more intense financial modeling
Financial Modeling Work
While all groups in the investment banking division will perform financial modeling and valuation work, there are some differences between the various groups.
The mergers and acquisitions (M&A) group is brought in for M&A deals and gets some of the most intense financial modeling work.
The financial sponsors group has relationships with PE firms but will often work in conjunction with an industry group or the M&A group, depending on the transaction. If a PE firm has a portfolio company in retail e-commerce, for example, the FSG team often works with the consumer retail or e-commerce team on the transaction.
Careers in Private Equity
For anyone looking to make a transition to the buy-side and work with a PE firm, investment banking is generally the best way in. There is not necessarily a more direct path to private equity by working in FSG versus any other group.
Industry groups get a lot of specialized knowledge and the M&A group gains a lot of heavy modeling experience. At the end of the day, having lots of deal experience combined with lots of networking is the best path to the buy-side.
Thank you for reading the CFI guide to the financial sponsors group in an investment bank. To help advance your career, consider CFI’s FMVA™ Financial Analyst Certification, to prove your skills as a world-class financial analyst.
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