Distressed debt career
I recently stumbled upon an alum who is in distressed debt. I tried googling about distressed credit but it seems hella confusing - or I may be stupid. Anyways, I would like to learn more about the following:
1. What do you do in distressed credit? What is the career progression like?
2. How do you break into distressed credit? Do you need to do IB or you can be in AM specializing in FI?
3. What's the comp like? Which shops are great?
4. What skillset is required for it? Is there a lot of math involved?
5. What are exit opportunities from distressed credit? (I know that it is THE exit opportunity but in case if you are tired of dealing with it)
If anybody has some insight, I would greatly appreciate it! (you shall be blessed with more money)
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Given that high-yield has not been very high (until the last 3 weeks), most firms were focused on out-of-court restructurings/recaps etc. With new filings and a looming recession, there's likely to be more bankruptcies in the next 18months. From a firm perspective, there are distressed-to-control buyers (Apollo, Oaktree, Knighthead, Och Ziff, Centerbridge, etc), more nimble HF'/Multistrat groups (Anchorage, SP etc) and a lot of in between. The biggest difference between these shops are the types of deals you can work on. For example, if you have a $10B distressed fund, you aren't deploying 50M checks (needs to be 500+ to make it worth your time). However, there aren't many big filings out there right now which leads to creditor violence (see Envision) for the limited opps that exist.
Most of these firms take analysts who are out of restructuring groups or out of B-school/PE and comp is competitive. Varies if you are at a HF style (lean teams, higher comp, higher vol) or like an Oaktree where there are 6 people on a deal team.
If you get tired of distressed, marketability depends on what kinds of deals you worked on. If it was more distressed-to-control, you should have the same skills as a regular PE guy. Spent the last 4 years in distressed and would say the biggest difference between me and the L/S guys is that I spend more time looking at the downside than the fairytale upside (and I'm also not down double digits this year).
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Talen? Endo?
Funds smaller, returns worse than vanilla for a while now but everyone is 300 IQ. above translates into lower comp. I’d definitely only go that direction if you love it, and it certainly takes a type…
Would recommend reading the Caesar's Palace Coup book if you want a background on the soft / cultural aspects of the space
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