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Financial Sponsors Group

Working with private equity firms

What is the Financial Sponsors Group?

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

 

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
  • Builds relationships with principles and partners at large private equity firms
  • Learns about different industries based on what types of portfolio companies the clients have

Industry Group:

  • Focuses on a specific sector (e.g., financial institutions group (FIG), consumer retail, technology, media and telecommunication (TMT), oil and gas, etc.)
  • 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.

 

LBO model for the financial sponsors group

 

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.

To learn more, explore CFI’s Career Map.

 

Additional Resources

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 out your skills as a world-class financial analyst.

Additional relevant resources include:

  • Investment banking interview questions
  • Resume templates
  • Salary guides
  • DCF modeling guide

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