RX IB vs Sell-side Distressed Desk Analyst for Special Sits Fund
Please ignore the seniority tag - I am just coming in as an associate from 3 years of being analyst in M&A (quite a few deals under my belt but no actual distressed experience).
I have offers from two sell-side banks. First one is from a Top 5 RX shop. Typical sell-side RX IB opportunity at associate 1 level.
The other offer is from another bank but focused on being a sell-side distressed analyst. Also have an offer from one of the workout groups of a BB but I feel like it will be between these two to get where I want.
The eventual goal is to end up at a special situations fund. Which offer will place me better for this?
RX banking
If your definition of top 5 is PJT/Moe/LAZ/HL/EVR it’s a no brainer
Can someone actually elaborate here? In a similar boat but slightly junior.
Won’t the distressed research role allow for more direct analysis of capital structures, distressed assets and also avoid some of the IB admin that inevitably comes with sell-side IB.
Pure distressed "loan-to-own" shops will prefer someone who has RX experience over a desk analyst. The desk analyst role opens up doors to more trading focused funds such as long/short and event driven funds. The roles are very different with RX being more deal focused (long hours and tight deadlines, so similar to IB) whereas desk roles are markets roles (think 7am to 5-6 pm). You will have direct impact on desk P&L and, if you work with good traders, will develop a much better understanding of how credit actually trades. Also, as a desk analyst, you spend a lot of time talking to the buy side about trade ideas and to provide color on how other funds are positioned. If you're a good desk analyst you get poached by the clients you are working with.
Thanks for the response, greatly appreciated.
Will distressed or special situations shops prefer someone from RX due to strongly technical or legal analysis rigour or purely due to the nature of deal-making deadlines etc.? If it is just the latter, then I feel I may not lose as much by going to a distressed or special situations research role. I have a few years of rigorous M&A experience across most sectors (barring O&G and FIG) so feel comfortable with that aspect. But if it is about superior technical and legal nous then happy to consider RX.
Edited: typo
There is no substitute for actually leading a restructuring or representing a creditor class through a restructuring, hence the value of the RX experience. As someone who deals with RX advisors on a regular basis, I find their job really interesting and the work they do really helpful when it comes to thinking through how a process will play out. Also, RX guys get a lot of exposure to the big distressed debt funds due to the nature of the job (every buy side guy wants a copy of the deck you pitched to the company). A trading desk is much more mark-to-market focused which can impact how/what you trade. Check with the desk and see (i) can they provide new money in distressed plays, and (ii) can they take post re-org equity, which would allow them to play debt-for-equity situations. Overall the desk analyst role will be much more fun/exciting and the vibe of a trading floor is really great when things are going well. If you're 100% certain that you want to do classic loan-to-own distressed debt, take the RX job. If you're open to event driven/special sits/long-short mandates, the desk analyst role will be a better path.
Do you need brand? If so, desk analyst 100%. If not, up to you but still recommend desk analyst.
- Much, much better seat for networking than restructuring - people picking resumes out of a hat will already know you
- Much better prep for the case study and interview process
- About the same quality prep for the actual job but it doesn't really matter because of the significant advantage from an interview perspective
I am OK with it not being BB brand or something. Brand doesn’t hurt obviously but at this point I have ~6 years of experience of which M&A is just under 4 years at decent names.
I may be wrong but I feel like not a lot of people here may have done or hired from both roles so it’s good to hear from someone who has. Did you start as DD desk analyst? How did your skillset compare to RX people? If I want to gear myself more towards special situations funds rather than pure hedge funds will I still be at a disadvantage (talking in terms of skillset rather than perception or headhunters’ inclinations)? I just want to get an idea if my previous deal-making experience will stand me in good stead should I decide to go for more PE style special situations or distressed funds instead of HFs. Thanks a lot!!
That's actually not what I meant by brand. HL is a better brand for distressed than a desk analyst seat at a BB, but if you also need to overcome school, the BB desk seat will give you a much larger network to actually land the interview.
If you want to do PE with a distressed tilt, would lean towards just recruiting for KPS and the like as opposed to SVP. If you like being able to influence your investments from a HF seat, there's always activism.
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