Blackstone Restructuring vs. Houlihan Restructuring

Blackstone

This is boilerplate but should be useful -

(assuming you got your HLHZ offer a week or two ago, and not a month ago or longer)

• Contact HR and ask for an extension. Explain you'd love to come work there, but you are looking at one more firm first. If they shoot you down, call the people you interviewed with, and explain to them that you'd like more time to make a decision.

• If both are unwilling, have your B-school call them and try to get it worked out. Get on this ASAP - you want to be calling people today, or tomorrow at the latest. By Saturday you're too late.

I am not sure how many rounds BX has for its restructuring group, but it might be more than 2. If you're going to turn down an offer from one of the best restructuring groups on the street (regardless if it isn't as much of a brand name), for the opportunity of an offer at BX, then you're an idiot. Of course, you, your university, and HLHZ HR should be able to work this out to give you the time needed.

Also make sure to let BX know that you have an outstanding offer from HLHZ and need to make a decision quickly.

if your assuming Blackstone the Blackstone

but i wouldn't assume anything

Buck2210's advice above is good. Politely ask HLHZ for an extension and also try to get BX to speed up the process. Worst comes to worst, accept HLHZ and continuing interviewing with BX (obviously, don't tell BX you accepted the HLHZ offer). If you get BX, then reneg on HLHZ. It sucks to have to do that, but at the end of the day, you've got to do what's best for you. HLHZ restructuring is very good, but BX (and Lazard) are far superior.

I agree with the above. Try and get an extension, but renege if you have to.

HLHZ restructuring is extremely good. i wouldn't say Blackstone and Lazard are "Far superior." HLHZ did the 3 biggest bankruptcies after all. The only problem with it is that it is relatively weak in other attractive areas (who cares about middle market companies or fairness opinions?). Blackstone has the much better overall brand name, but the two restructuring groups are equally good.

HLHZ restructuring and BX restructuring don't even compare. HLHZ does mostly creditor work. Blackstone focuses on debtor advisory. Ask any restructuring MD if they would rather be on the creditor or debtor side of a bankruptcy deal and 9 out of 10 will say debtor.

Debtor restructuring powerhouses are Blackstone, Lazard and Rothschild (and to a lesser degree, Miller Buckfire). I would hands down take Blackstone over HLHZ.

schlepp is correct, though i wouldn't put Rothschild in the same league as Blackstone and Lazard. Not since Wilbur Ross left.

Fair point, ex-banker, I didn't know that.

To the OP: You MUST let Blackstone know that you would absolutely choose them over HLHZ. They definitely look down on HLHZ... and if you appear indecisive about which firm (and subsequently, which type of restructuring advisory) you want to go to, they will ding you. Don't get me wrong, HLHZ has a great creditor advisory group, but the sentiment at Blackstone is that no BX MD would stoop to the level of doing a creditor assignment; most would rather sit and do nothing and wait for the next big debtor deal.

Look where that got them, on one of the highest profile debtor side jobs around these days.

BX or bust.

You should just take HLHZ if you can't get an extension, and reneg. I made the mistake of taking an offer while on hold with Laz, and when I should have kept that open (though I'm not sure of my chances).

Guys

I would love to hear your opinion on my dilemma, which is directly related to the OPs post.

It is exactly the same as the OP, except I am applying for a full time analyst role. I have had 3 interviews so far with one of the above mentioned and have signed with the other.

Do any of your opinions change when it is for a full time role? I know both are fantastic places to work - but if I am signing up for 2/3 years - what should I do?

plus1 - Are both positions for London or would the Blackstone opportunity be for NYC?

Prescott, The reason that debtor work is more desirable is because you are driving the process. Representing the creditors, you are usually merely reacting to what the debtor proposes. There are exceptions but they are few and far between. On the debtor side, you will work extremely closely with the company, which provides an infinitely better understanding of the company's business and finances. On the creditor side, all you typically do some basic due diligence, in terms of learning about the company. While you are correct that the types of work are the same (valuation, modeling and lots of presentations) the level of detail (hence the level of learning) is far greater on the debtor side. Plus, representing the debtor you have experience with other important investment banking activities such as capital raising (e.g. DIP and exit financing) and M&A (you often run sell-side processes).

I am not saying that creditor side work is bad at all. You do learn good skills, you do have the opportunity to potentially form relationships with distressed HF and PE, and you do tend to have good exit opportunities. However, there is a big difference and the vast majority of restructuring bankers would agree that debtor-side is a better experience especially at the junior levels.

With regards to HLHZ, most of their debtor-work is on middle-market restructuring deals. Not that there is anything wrong with middle market deals, as often smaller deals provide a better experience for analysts and associates. But people should understand that HLHZ is not competitive for the debtor-side on most large restructurings.

MMmonkey, those Mirant fees are success fees only and are misleading. BX's total fees for the case (including fees billed prior to the Chap 11 filing) were around $17 million while HLHZ's were about $14 million. That HLHZ's success fee was greater than the debtor's advisors is highly unusual and was a function of HLHZ's fee being tied to creditors' recoveries while BX's was flat. Moreover, the bankruptcy court found HLHZ's success fee (relative to other advisers) somewhat objectionable but correctly approved it nonetheless. Finally, you might be interested in noting that both KPMG's and Deloitte's fees were each about $30 million, but does anyone on this board really want to work for an accounting firm?

ex-banker: Regarding the Mirant case, HLHZ received ~ $17 million in fees and Blackstone received ~ $12 million. Also, I'm not totally sure where you got the KPMG/Deloitte numbers, but I believe they received ~ $1.5m/$6m respectively (this doesn't really mean anything, though - auditing and tax consulting work are very different animals than financial restructuring advisory and rely primarily on the fact that once they are retained by a company they can rest assured that their services will be needed every quarter, which is hopefully not the case for a restructuring advisor).

Regardless, you are correct to say that this was an unusual case in that HLHZ's fee was greater than Blackstone's. Generally speaking, due to the fact that the debtors will often retain financial advisors before the creditors' committee is even organized, the debtors' advisor will generally work on a given mandate for a longer period of time than their counterparts on the creditors' side (this isn't always the course, however, as demonstrated by the case of Northern Rock, in which HLHZ was hired by the creditors committee in September, months before the company itself eventually hired Blackstone). This is also one of the primary reasons why Houlihan completes significantly more deals in a given year than does Blackstone (the other being that Houlihan FRG is simply larger). Still, let's say this means HLHZ is retained for one year and Blackstone is retained for 18 mos. I would say that, given the high levels of diminishing marginal gains in knowledge from each additional week of advisory work put in for a certain client, one would probably learn about as much as they need to about their client's operations, financials, industry, etc. long before they reach the 18 month (or even one year) marker. Let's face it, there always comes a certain point in the engagement when (barring the occasional large material changes) the lawyers are the ones who are doing the bulk of the work and all the bankers are doing is plugging some new assumptions into the models and trying to convince the bankruptcy courts that they warrant that $X million fee.

Anyways, if you think that a creditor-side junior guy learns far less based on the fact that they don't spend as much time on a deal as a debtor-side junior guy, I would hate to hear what you think of a typical M&A banker who only works on a transaction for perhaps a couple of months. The fact is that an M&A banker will generally know a little about a lot of companies/industries/deals (they might have five to ten deals in various stages of completion on their plate at any time) whereas a debtor-side restructuring banker will generally know a lot about only a few companies/industries/deals (a function of working on one to three deals at any time). I like to think of the creditor-side as a sort of happy medium between the two.

As to your argument that the debtors (and hence the debtors' advisor) are driving the process, I would say that more often than not in a bankruptcy that isn't the case. Often, the statutory committee assumes a principal role in the decision-making process and at the point of bankruptcy they always effectively maintain the right to veto any major reorganization measures.

Lastly, let me just say that guys like Jeff Werbalowsky, Eric Siegert, and Andrew Miller are about as big a hitter in restructuring than anyone...they could easily bounce to Lazard or Blackstone if they so desired. Other Houlihan FRG guys have gone on to start boutiques, found the restructuring groups at Greenhill and Perella Weinberg, and head the distressed groups at Oaktree, Carlyle, and Equity Group (Sam Zell's funds). Point is, barring the name, Houlihan FRG has just as good, if not better, a reputation than Blackstone and especially Lazard. At the very least, to say that they are "far superior" and will offer "an infinitely better" experience is simply incorrect, and to say so offers a highly misleading opinion on the restructuring industry.

prescott, mirant fee figures come from the bankruptcy docs. my point was that the fees are irrelevant. never did i say that you get a better experience on debtor-side due to the length of time spent on a deal. you get a better experience due to the work that you do. with regard to driving the process, you made my point: debtor proposes, creditors "veto" (technically they object; only the judge can truly veto).

houlihan's a good firm. let's agree to disagree on the rest.

really depends on where you stand with BX. I'd try contacting them as well and express your serious interest in joining their group and such. This really sounds like something you'll have to work out w/ a number of parties. Good luck. Let us know what you do.

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"HLHZ restructuring is very good" and "houlihan's a good firm.". these are both direct quotes from me. it goes without saying (but i'll say it anyway) that anyone who has important career decisions to make should try to get as many different viewpoints as possible.

are you kidding? Blackstone of course

So what did you end up taking? Update us.

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In terms with BX vs HLHZ in the UK and Europe I can say that out of the top 5 Restructuring guys Houlihans has 2 of the big swingers and BX only has 1.

In terms of name and prestige there is no doubt that BX is top and HLHZ name suffers from dilution - however if in the restructuring industry (from talking to both teams) the reputation and experience from either firm is equal - in fact in the uk there has been laterals from HLHZ to BX and from BX to HLHZ.

If you have the chance and want to exit the industry after a few years - BX will do you and your resume the world of good, however if you want to stay in the industry then I think that either firm will position you well.

mschutzy, i have no desire to debate you as it would serve no purpose for the readers of this thread. i'd prefer to let the quality and maturity of my posts speak for themselves. i will, however, extend to you the following invitation: if, after you've gotten a few years of full-time restructuring experience under your belt, you would like to revisit this discussion, then by all means look me up. in the meantime, i do hope that houlihan's recruiting dept is contributing to your signing bonus as you certainly deserve it.

Ex Banker - I have to say from a mere reader I am curious - How long have you been in the restructuring industry?

plus1, i worked in restructuring from 2001-2004 and then moved to the healthy side (M&A)

Am also interested in hearing what happened with this guy.

Hey Gundamfung

The two other guys are in Roths and in GS - not sure who you are talking about in ML??? name?

Big players in UK and Europe are HLHZ (very strong on Debtor and Creditor), previously close brothers but most of the team have moved to BX so in a sense BX, Roths are hot, Laz used to be hot but not as strong now - and GS are actually building up a strong practice in Europe.

Who have you applied to?

What Did you end up doing, and what city was the HLHZ offer for?