Joining Alvarez and Marsal out of Undergrad
What is your opinion on joining a firm like Alvarez and Marsal out of undergrad to do RX consulting as opposed to banking? I like the work, but am worried about exit opps, career trajectory, and pigeonholing. How possible is PE from a role like this? Pay is essentially the same at the analyst level.
I don't know about PE straight from RX consulting, but I've seen multiple cases of RX consulting -> RX IB -> buyside
I must say they are pretty good at what they do, quite a few people at the EM/VP level equivalent move to PE to do PortCo Operations and be an operational expert from what I have seen as you may lack the 'brand name' (BB/EB IB/MBB or bust kinda thing) to make it at the associate level in the investment team. Again this is purely from my observations.
You may actually decide you like it and stay. The comp is great and is typically a percentage of your billing. So if you bill $1M and are at a 40% level (upper mgt), you'll get 400k. I'm sure there are bonuses on top of that for directors, MDs, etc. As you climb the ladder, your billing per hr increases so $500 becomes $600 becomes $700 etc..
Are they a /hour like consultancies or % fee like banks?
I’m sure it’s both for Incentives on the upside
I believe in their Restructuring practice, it's about fees billed (which is $/hr). You get a healthy base salary and a bonus based on billable fee less salary. So if your salary is 100k and you bill 1.5Mil in fees at a 40% comp rate (600k), you get 100k base + 500k bonus. That's how it's been explained to me.
That's pretty nice, and appreciate the response. I'm assuming it's a fight for a smaller piece of the pie than say advisory? So on $1B engagements, you're looking at 1-3MM instead of 20mm for example that a RX advisory shop or the bankers would get
Don't know enough about RX Banking comp to advise. I think the work is quite different. in RX consulting works both the debtor and creditor specialties. On the debtor side, you're actively involved in reorging the company. Much deeper than a banker would go. In some cases, your firm is hired as the interim management to execute the plan that will divest, restructure,etc. You're looking at all the revenue drivers, deciding what businesses make sense to maintain, what needs to be sold. You're reworking deals with creditors. A real hands on approach.
This likely develops a different skillset than the banking partners.
I talked with a junior/senior guy at A&M 2-3 years ago. My guess is you must be extremely good or go to one of their target schools, as that guy told me they pretty much only recruit out of MBA programs, looking for ex-bankers. Could also be a location-specific thing.
I've only worked against AMC, their PE arm, but one of the guys from the team there had been in their consulting practice. I'm not sure how common internal transfers are, but they do happen.
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