In Need of Advice- IB Restructuring
Hi All,
I am a sophomore with BB IB internship this summer.
Long term I am interested in Distressed Debt/Securities Investing and I understand that Restructuring Investment Banking is the best platform to jump to this field. However, from the news and various conversations I have had the future for Restructuring looks bleak for next 18 months to 2 years with M&A deal activity picking up. After that, Restructuring could pick back up.
Is it possible to move to Distressed PE from a traditional banking role (non-restructuring)? If you are not doing restructuring what is the best group to be in if you want to pursue Distressed PE?
Would you suggest trying to summer in a Restructuring group even if business is slow? Does that hurt chances of a return offer?
Or would you suggest trying to move into Restructuring during FT recruiting after doing a couple summer in a traditional banking role when it is picking back up?
I know this is a lot, but just curious! Thanks!
My first advice would be to avoid worrying too much about macro trends in picking a place to start your career. If you're passionate about distressed situations and not passionate about M&A, then you are better off in RX even if more M&A deals are getting done.
Secondly, the restructuring environment is not purely dependent on economic ebbs and flows. The macro environment can give a "nudge" to a company teetering on the edge, but will rarely be the actual cause itself. As long as you have poorly run businesses, businesses that take on significant leverage, and cycles within industries (shipping, energy), you will have distressed businesses even in favorable macro climates. If oil stays as low as it is or goes even lower, you will see a wave of restructuring activity in that space even if the rest of the economy continues doing well.
At this point in a career, you still have a lot of mobility if you're smart and can show you are passionate about the industry you'd be going into. That said, the best background for distressed investing will obviously be a good RX group. Even if the deal flow isn't like it was in 09 (and trust me, you wouldn't want to wish that on yourself), there are still deals to do and you will still acquire a valuable skillset. The basics of distressed investing are valuation and figuring out how value gets distributed. You are definitely going to learn a lot more about distribution of value, capital structure and corporate structure, in a RX group than in M&A or elsewhere. On the asset side, I think you also generally get a more rigorous understanding of valuation than an M&A analyst will; a valuation fight in chapter 11 forces all parties to defend their assumptions in a way you don't find in an M&A deal.
Thank you very much for the advice!
That said, in your opinion, what are the top RX Groups on the street?
I often hear Blackstone, Lazard, and Houlihan Lokey.
However, Blackstone is going through some changes with PJT Partners taking it over and I read an article the other day that some of its top bankers may be departing due to a problem with their share count changing after the acquisition (something along those lines I cannot remember the exact details).
The point is, with this volatility is Blackstone Restructuring (Or PJT Partners Restructuring) going to be as strong in years to come?
Those are probably the best three, in terms of dedicated RX groups you can join as an analyst.
I wouldn't worry about things like that yet. If in a year you have an offer at BX R&R and another very good group, then maybe you revisit the question of how the spinoff is affecting things. But either way, I am not aware of any significant personnel leaving. Stock compensation if anything would probably be subject to a longer vesting period which would discourage turnover.
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