Direct Lending Workouts Role
I’m currently in a vanilla DL seat and exploring an internal move to our firm’s workouts/restructuring team. It is a solid team with high IC confidence.
Before committing to the move, I wanted to see if anyone could provide some additional insight into the role. How do hours tend to compare with vanilla DL (I currently average ~70 hours per week)? How is comp? I assume base salaries are the same, so I’m more interested in the bonus side of the equation. Is it closer to 50-70% of base since the team doesn’t exactly source new deals, rather clawing-back lost capital?
Last, if it turns out I don’t see myself in this seat long-term, how is mobility to opportunistic/distressed credit at the associate level? Would the restructuring, equity control, and management experience get looks from the PE side? Thanks for any insight.
Based on the most helpful WSO content, here’s what you need to know about transitioning to a Direct Lending (DL) Workouts/Restructuring role:
Hours: Workouts/restructuring roles tend to have a more variable workload compared to vanilla DL. While your current ~70 hours/week is typical for DL, restructuring can involve intense periods, especially during active deals or distressed situations. Expect cycles of heavy weeks (e.g., 9 am - 11 pm, with some weekend work) followed by lighter periods, depending on deal flow and urgency.
Compensation: Base salaries are generally aligned with your current DL role. However, bonuses in workouts/restructuring teams can vary. While they may not match the higher end of DL bonuses (which are tied to sourcing and closing new deals), they often range between 50-70% of base, as you mentioned. This reflects the focus on recovering capital rather than originating new transactions.
Exit Opportunities: A workouts/restructuring role can provide strong mobility to opportunistic/distressed credit funds. The skill set you develop—navigating distressed situations, equity control, and management involvement—aligns well with what these funds value. Additionally, the experience can open doors to private equity, particularly in distressed or turnaround-focused PE shops, though this may depend on the depth of your equity and management exposure.
If you’re considering this move, weigh the potential for a more dynamic and specialized skill set against the possible trade-offs in bonus structure and lifestyle. It’s a solid stepping stone for those interested in distressed investing or transitioning to PE with a focus on operational turnarounds.
Sources: BB Workouts / Special Credits Groups Pay & Hours?, Alvarez & Marsal Restructuring, Private Equity vs. Private Credit, Restructuring --> Direct Lending / Private Credit, Q&A: Non-Bank Commercial Lending
If you’re moving internally you should have an idea of what the workout / portfolio bonus is
let us know and somebody will tell if you if it’s at / above / below market
Lol not sure why you got MS. Does the 50-70% range seem on par/above/below market? I know deal team bonuses and have an idea of PM bonuses, and this range is somewhere in the middle of the two.
bump
Yeah the team does a full re-underwrite and manages the company after the restructuring. All of the mid-to-senior team members either sit on multiple boards or observe multiple boards of the companies that get acquired, and do so until the companies are sold.
Do you have any insights into WLB in comparison to DL or opportunistic credit? Any idea what bonus targets might be for teams like this?
I appreciate the feedback you have provided.
Makes sense. Do you all have ops support or are you basically just keeping tabs on/ finding a good management team? Do you all have ability to inject additional capital?
WLB in any distressed scenario is probably going to suck. TBH it’s why I left RX. You’re dealing with a melting ice cube, underwriting a business with likely limited liquidity, and people on at least one side of the transaction are pissed acting on emotion.
I imagine bonuses or carry-like component are based on principal recovery or gain from what the mark was when you all
Underwrote.
Hope this helps
Ut magni asperiores ducimus sit atque alias ut. Ut voluptas cum vero est aut iusto qui. Et architecto ratione est ex labore.
Ratione maiores suscipit occaecati itaque. Reprehenderit et asperiores totam optio non.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...