The PC Recruiting Guide.
Everything you need to know about private credit recruiting — the volume game of direct lending, how PC funds make money, and the credit lens that distinguishes lender thinking from sponsor thinking.
Section 01
The Associate Role.
Traditional PC is incredibly similar to working on a leveraged finance desk. Here's what the job actually is.
PC Associate Responsibilities
Writing Investment Memos
(Making pretty powerpoints / word docs)
Modeling Investments
(Digging deep into LBO from a credit lens)
Taking Notes on DD Calls
(Still can't be automated in 2025)
Portfolio Work
(Negotiating with sponsors, sizing covenants, and conducting annual reviews)
Mile wide, foot deep.
Traditional PC is incredibly similar to working on a leveraged finance desk. You're originating loans to support the capital structures of different transactions — specifically LBOs. Once again, most PC associate roles are incredibly similar to your experience as a banking analyst. However, unlike PE and depending on your shop, the hours tend to be a little more chill and you're not focused on operationally enhancing a business. Your job is really to help sponsors juice their investments in cash flowing businesses.
Unlike PE, you see a ton of transaction volume in PC. The classic saying is that in PC, you go a mile wide and a foot deep on deals vs. a foot wide and a mile deep in PE. This is important because the beauty of PC is that you can stack deals one after another to deploy capital and generate returns without incredibly intensive maintenance of the underlying deals. After all, you do not hold the equity and do not have the vote to dick around with a business's operations.
You're doing the grunt work. However, just like PE, these are investments that your bosses may have substantial money invested via carry. So, they care about every little detail and rely on you to do things right without being told twice / needing hand-holding.
Seniors do most of the sourcing and legal doc negotiation. Associates do most of the slide creation and modeling.
Again, the reason to go into PC is because you want to take meaningful risk. It's definitely more of a financing role than a pureplay investing role; however, unlike banking there is no advisory work. Your analysis is strictly focused on making money-good loans. Politically, you're working with demanding sponsors to negotiate favorable outcomes for all parties involved.
Section 02
A little about PC.
Brief by design — anything you can Google, we'll keep tight.
The business model
The nature of private credit is lending to businesses and holding these loans until maturity. Unlike public credit, these loans are typically not sold to other investors. PC loans are bilateral transactions between the lender and the business; also broadly known as ‘direct lending.’ There are many firms that engage in direct lending including: banks, fintechs, loan sharks, private credit firms, etc. What separates private credit from other direct lenders is that private credit involves lending capital out of a fund structure.
Similar to PE, a PC fund raises capital from Limited Partners (LPs) such as insurance companies, endowments, and pension funds to originate loans within a 5-7 year horizon. PC funds usually deploy a 1.5/15 model (1.5% management fee on all AUM, 15% on excess returns from investments). PC funds generate a return on their loans by lending at a spread of SOFR (usually 450 - 800bps for your average term loan).
Everyone tries to make a 13-20% IRR on their investments.
“If you can make 12-13% on bank loans, what else do you really want to do in life?”
— Steve Schwarzman
Section 03
Different types of PC.
Segmented by AUM, then by strategy.
Fund sizes
Mega-Fund
$100bn+ AUM
Upper-Middle Market
$500mm – $1bn AUM
Middle Market
$250mm – $500mm AUM
Lower-Middle Market
Less than $250mm AUM
Different credit strategies
Some strategies are more public credit in nature.
- 1Traditional PC (originating term loans for sponsor-backed LBOs) — most PC roles are traditional
- 2Non-Sponsor Backed Lending (originating term loans for non-sponsor backed businesses)
- 3Junior Capital (greater focus on investing in junior debt across transactions. Senior notes, convertible debt, 2nd lien term loans, etc)
- 4Opportunistic Credit (investing across the debt cap stack to achieve an optimal risk / return; typically dealing with riskier businesses)
- 5Distressed Debt (investing in the debt of failing businesses, typically buying debt at tremendous discounts; sometimes working out a loan-to-own strategy)
- 6Fund Lending (lending to other funds: NAV loans, subscription lines, and back-leverage warehouses)
- 7Infrastructure / Real Estate (originating loans for infrastructure / real estate projects)
- 8Asset-Backed Finance (lending against a specific pool of assets in bankruptcy-remote structures)
- 9Venture Debt (lending to venture-backed businesses / startups)
Section 04
PC returns analysis.
Net Gain, MOIC, and IRR — how the math actually breaks down on the lender's side.
The four components
- 1Your ‘purchase’ is the (principal balance of your lend × OID) − financing fees
- 2Cash flows are: cash interest + principal payments + prepayments
- 3Your ‘exit’ is the repayment of your outstanding principal balance
- 4Some important considerations: OID is a mechanism to enhance the return of your lend, PIK interest accrues to the debt balance and is not a cash flow, lenders typically target ~15% IRRs
Practice on real cases
Real credit case studies from MMs and direct lenders.
Real PC modeling cases from actual recruiting processes — each with a complete answer key. Available to Premium subscribers.
Other Sectors