restructuring?

Financial restructuring is different from typical banking in several ways:

1) In bankruptcy, you work within a legal framework (the Bankruptcy Code)

2) Restructuring is often a zero sum game, that is, different creditors are fighting over a fixed pie - versus M&A where you theoretically are creating a bigger pie

3) Restructuring is countercyclical. When typical bankers are getting small bonuses or being laid-off, you're busy. This is actually a very positive thing as you do well and get paid when other jobs are scarce, and when you are slow, there are usually many other options. Also, since restructuring groups don't want to be caught flat footed in a downturn, they tend to keep people and pay a little better, even when slow. Often they are part of larger firm and are a smaller part, so when restructuring is down, the rest of the firm can subsidize compensation.

4) You often work with demoralized, disorganized companies, there is little glamour or glitz and client employees aren't always giving it their all. While this gives you the opportunity for more leadership and to have a bigger impact, it can also be frustrating.

5) Due to the legal framework, zero-sum game, and other unique attributes of restructuring, you develop a very specialized set of skills that are not easily or quickly replicated. However, you often have to engage in distressed M&A and perform analyses that typical bankers perform, so you maintain the ability to jump back to the healthy side with little adjustment.

Would the hours for a restructuring analyst differ from an M&A analyst? Lets Assume they work at a top restructuring shop (Lazard, Rothschild, Blackstone).

I also understand restructuring engagements are on average considerably longer than M&A - some even enduring an entire year. Would the restructuring analyst's odds at landing a solid exit be impaired for having worked on only 2-3 deals during his/her entire tenure?

If you get a job at Lazard or Blackstone restructuring, rest assured you will have no problem getting the absolute top HF jobs after your two years.

That being said, though, those positions are extremely difficult to get. Blackstone recruits for its restructuring group separately than its other groups, and analyst class size is tiny - like 5-6 people. I'm pretty sure most of the class is Harvard and Wharton, maybe a little from the other ivys. Lazard recruits for its restructuring group through its general banking program, so once you get into the program (which is very difficult as well, given its small size - roughly 20-25 people) you then need to be placed into the restructuring group.

Assume one has a platform offer for Lazard / Rothschild and is vacillating between M&A and restructuring. What would you choose to do?

Its been established that restructuring exit opps from a top shop are second to none, but is the lifestyle of restructuring analyst better than that of an M&A's?

I'm not sure if Rothschild's US restructuring practice is as good as Blackstone or Lazard's. I would probably do M&A at a bulge bracket bank over restructuring at Rothschild if I was interested in restructuring nonetheless.

Personally, I find M&A more interesting so I would go for M&A even over restructuring at Laz/Bstone. But that's just me. It depends where your interests lie. As for the restructuring hours - they'll be opposite of banking. In good economic times, you'll have easier hours than banking. But in bad economic times you'll be working hard. That being said, I have heard that restructuring hours overall (considering the net of bad and good economic times) are somewhat less than M&A hours.

Although restructuring analysts tend to go to HFs after their two years, and the hours at top HFs are usually less than the hours at top PE shops.

Where does Greenhill fall in the restructuring game? I viewed them as another top shop. Are the exit opps worse there?

I mentioned this before on another thread, but I honestly can't emphasize the fact enough: If you want to do restructuring, it really doesn't get better than Houlihan Lokey. It's almost guaranteed that when a Fortune 500 company goes bankrupt, HLHZ will be involved in some sort of capacity. They have done the five largest bankruptcies in US history (think Enron, WorldCom, etc.) and have a special focus on all the airlines. So overall, great shop to be in.

Prescott is right. HLHZ M&A is distinctly middle market, but the Restructuring group runs with the big boys. They are always in the big pitches and frequently win. They tend to work the creditor side on large mandates, but do debtor work on mid to small deals as well.

HLHZ restructuring is really good, but they don't have the "prestige" factor of a Blackstone or Lazard. Prestigious positions are more desirable and harder to get, and I've heard that this translates into analysts at prestigious places getting the best exit opportunities into hedge funds and business schools. Same logic as banking - it's not like a Goldman banking analyst is doing way more complicated and intense stuff than a Lehman analyst, but the Goldman analyst gets much better exit opps because he's a Goldman analyst.

You would be crazy (in my opinion) to go to HLHZ over Blackstone or Lazard.

Another good restructuring firm that also doesn't have the prestige of Bstone/Laz is Miller Buckfire. I went to their presentation, though, and the people were sooo weird...

Why would an analyst from a top restructuring shop join an HF over a PE? Wouldn't the skill set acquired be more applicable to a PE position, particularly in the post-acquisition phase when the portfolio companies needs some sprucing up?

There seems to be a paucity of professionals with the necessary experience to fix-up the lemons acquired by their respective shops.

That's turnaround, not restructuring.

restructurers, insolvency practitioners, turnaround specialists - all very similar, no?

Who would be better equipped to manage a business turnaround - a restructuring analyst or an M&A? Again, I'm not asserting, just fielding for some insight.

I am also interested that why restructuring analysts tend to go to HFs after their two years instead of PEs? Anyone could share? thx!

bump

there are a lot more distressed HFs (by that i mean HFs that invest in distressed assets - not HFs that are blowing up) than there are distressed PE shops.

Exactly. Who wants to own the equity of a company that could potentially file for bankruptcy?

Whats the hours like in restrusturing and how is greenhill viewed? How much better are the hours compared to M&A?

The hours in restructuring are just as bad as M&A, especially at the moment with the downturn in the economy ! The restructuring team I am joining is doing a typical 9 - 3/4 am day. and are pulling frequent all nighters.

Of course in an upturn there would be less hours in comparison to M&A due to lesser amounts or lesser likelihood of bankruptcy.

Also Greenhill is ok for restructuring. Not in the same league as BX, HLHZ, MB or LAZ. These are really the top 4 shops to look at.

how difficult is it to get into restructuring for full time right out of undergrad at a top group? would it be possible without a SA banking stint? i'm really hoping to get interviews with either bx or lazard in the fall but i know its nearly impossible, even with a prop trading position from a top BB

What bank is MB?

miller buckfire

Thanks

restructuring tends to be less hours intensive due to less of a need to pitch, or so i hear from analysts at one of those firms.

that is pretty brutal

would like some info as well

Ok so look at it like this....and note that I am from the UK so I believe getting into top restructuring firms is slightly easier here due to lesser presence - cold hard facts.....

A) I have 1 Energy Derivs Trading Internship - JPM
B) I have 2 UK M&A internships - GS and JPM

I am from a Top UK Uni with an equivalent 4.0 GPA.
I had numerous BB M&A offers.......and here is how I performed for restructuring....

1) Lazard - Submitted a well crafted application - rejected before 1st round.

2) BX - Ignored me for 6 months - through persistence and from what i believe to be a lack of talent in the earlier part of the recruitment season, I was offered interviews.........19 rounds of interviews and 4 tests later I was made an offer.

3) HLHZ - No response from the online application - so I contacted the HR directly. After 17 Rounds of interviews, which was the most technical interview process I have been through (they expected a high standard especially considering my finance background and 3 internships) I was offered a position.

Before applying for Grad roles I thought that I would breeze into a job, with top grades and 3 excellent internships under my belt. This really was not that case and I really had to prove my worth to the firms - it was a very tough task.

Also note that because the restructuring specialists are much smaller than the BB - it makes the whole process more rigorous but what I believe / hope to believe to be more beneficial in the long run.

In reading through the different interpretations of debtor vs. creditor advisory roles, I was curious who the debtor-side really represents. The creditor-side makes sense to me (the claim holders). The debtor-side is purportedly the company, but wouldn't that in effect just represent the equity holders (equity funds, management, etc) - trying to limit secured and unsecured claims and/or maximize value so that the equity holders come out as least impaired as possible?

I apologize for the naivete here, I'm entering B-school soon and will be looking to reposition myself in a restructruing group next summer (currently work in sell-side fixed income research).

I know this is a poor answer. I'm unmotivated.

Estate (typically DIP) exists to maximize value for all claims holders (not for equity via limiting creditor claims). Debtor side is really there to manage the entity itself and take interest of all claims holders into account. "Creditor side" generally (not always!) refers to the committee representing all unsecured claims holders. One can imagine other stakeholders beyond the "creditor side"--labor unions, govt agencies, etc.

Also, read up on the 'zone of insolvency' doctrine (e.g., http://www.cfonet.com/article.cfm/4316005?f=search )

Restructuring is obv an active place to be now.

How long will it be a good place to be? Still a good place for a summer analyst next summer?