Lateral into private credit: what changes when you move from banking or leveraged finance

Hold, not distribute

In investment banking and leveraged finance, much of the work is arranging financing and placing it with investors. Banks may keep part of what they arrange, but success is often measured by whether a deal closes and sells. In private credit, the lender usually keeps the loan until it is repaid. That single difference changes what good work looks like.

When you will hold a loan for years, the questions shift. Not 'will investors buy this at this price?' but 'what would have to happen for us not to be repaid, how likely is it, and what in the documents protects us if it does?'

“In syndication, the question is whether the market will take the risk. In private credit, the question is whether you will.”

What transfers

• Modeling. Three-statement models, debt schedules and returns analysis are the same tools; private credit uses them to test repayment rather than to market a deal.
• Documents. If you have worked on term sheets, commitment letters or credit agreements, you already know the vocabulary of covenants, baskets and security.
• Sector knowledge. A view on how an industry makes and loses money is valuable on both sides of the table.
• Working with sponsors and management. Private credit lenders talk to the same people you did; the conversations are just longer-lived.

What's new

• Underwriting the downside. A credit memo lives or dies on a specific, plausible stress case carried all the way to covenants and liquidity.
• Documents as protection. Terms are not just negotiated; they are what you rely on in a bad year. Every covenant has to bite before you are impaired.
• Monitoring. After closing comes years of quarterly reporting, covenant tests and conversations about performance.
• Amendments and workouts. When a borrower needs a change, you are the counterparty deciding what to ask for in return.

What the first year looks like

Expect your time to split between new deals and the existing portfolio. On new deals you will build the model, draft parts of the memo and sit in on diligence calls. On the portfolio you will read quarterly reporting, check covenant compliance, update the model when results come in and flag anything that looks off.

The portfolio work is where the job differs most from banking. A loan you helped approve stays on your desk, and its performance is a running report card on the underwriting. Analysts who learn quickly are the ones who go back to the original memo when a borrower misses its plan and ask which assumption failed and whether the documents gave the lender the protection it expected.

Telling your story

Interviewers want to see that you think like a lender. For each deal on your sheet, prepare three sentences: what the credit question was, what you did on it, and what you would underwrite differently if you were the one holding the loan. Talk about risks and protections rather than fees or rankings.

Prepare for the case study

Most private credit processes include a case study: a packet of financials and a term sheet, a few hours or days, and a memo or model at the end, followed by questions from the people who would sit on your committee. The best preparation is repetition: write memos on real-looking deals, get honest feedback, and practise defending the numbers out loud.

Start with a Foundational case, then move to sponsor buyouts and asset-based deals. Use the interview prep tool to build answers to the fit and technical questions you are likely to face.