Less-desired group at BB or RX Consulting -> RX IB
Hey all,
Hypothetically, if you had a SA offer from a BB but for a less desirable IB role (FIG, DCM etc) and an offer from a T1 RX consulting firm, and you wanted to get into a good RX IB firm down the line for FT, which would you choose? I want to say the BB offer, but a couple of people that I talked to in RX IB advised me to take the RX consulting offer. Don't really care about pay. Some background: lower semi-target / upper nontarget, if that matters for anything.
Really would appreciate any guidance.
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I think there is a big delta between DCM and FIG. If FIG IB I would go banking, if DCM I would go Rx consulting. Most DCM is IG and you won't be modeling much or working on deals (yes, financings/refinancings are "deals" but not in the traditional M&A sense). Rx consulting seems like it can be a lot of fun, especially considering that you are the one helping to make the determination as to whether the business model is truly "broken" from more than a financial perspective. Also, if you end up going Rx consulting and eventually lateral to Rx banking, your pitch to do Rx PE will be rock solid and you will be seen as a valuable asset since you have both an operational and financial understanding.
What would you say are the chances of lateraling into RX IB from say FIG or M&A vs from RX consulting? I know both have pros and cons like relatively more banking experience vs more RX knowledge in consulting. Assuming top firms for both. Can relate with op where guys in RX IB have advised to take the consulting gig over the banking one
If your end goal is RX IB, RX consulting is the clear choice.
First, you’ll be dealing with RX on your job on a daily basis - understanding how RX works and participating in relevant transactions (whilst being able to network with bankers doing the exact thing you want to do) is massive. I’m currently conducting interviews for lateral analysts, and the knowledge gap between those that have exposure to restructuring versus those that don’t (and have to rely on online sources to fill the knowledge gap) is insane.
There is just no way that you can talk about debt baskets, cap structures, covenants, advanced waterfall modelling mechanics, creditor dynamics, etc. without exposure to doing RX deals.
There is also timing. If you decide to make the move four years after consulting into RX IB, no one would bat an eye. People understand the motivations behind the transition and you have been building a relevant skillset. Would argue that the transition would be near impossible after 4 years of FIG. I have seen / interviewed multiple people who did 5/6 years in big four insolvency groups that made the move and are now doing very well. I also work with A&As that have made the transition from firms like FTI - they are in multiple instances better than the generalist we recruited out of uni. Effectively, consulting gives people the optical illusion that they can discount you in title, so you keep getting opportunities year after the year. This alongside appropriate networking makes a move very possible.
Source - worked at PJT / HL RX
Do you get a lot of RX consultants applying for laterals, or are they relatively rare? Does it matter what 'tier' of consultancy they're from (i.e. what do you look for in an ideal candidate)? Also, would you say it's easier to lateral earlier or later when talking about consulting, ie SA to FT IB or as an analyst vs senior consultant / VP?
This is to your point about FIG, but is it the same for other IB groups except RX IB (M&A, TMT, etc), when going up against RX consulting or is it just because FIG is a relatively less desired group, and other groups would be preferred over the consultant?
Do you get a lot of RX consultants applying for laterals, or are they relatively rare? - I got more apps from other banks vs. consultants. I guess if you get paid decently and the work is interesting, you might not want to jump to IB in the first place
Does it matter what 'tier' of consultancy they're from (i.e. what do you look for in an ideal candidate) - As usual, the better the firm the more likely you'll get pass screening. Big 4 / FTI / Ankura / AP would suffice. After that, its your interview / model test that matters
Is it easier to lateral earlier or later when talking about consulting - I'd say 1.5 - 2.0 years in you can make the move to be an A1 (and crush the fresh grads given you have more experience)
This is to your point about FIG, but is it the same for other IB groups except RX IB (M&A, TMT, etc) - Its more about exposure (or the perceived exposure) than the group itself. Its hard to convince people you know RX if you spent 3 years in TMT. FSG / M&A may fare better - FSG because you deal with LBOs and M&A because its considered to be more technical. In any event, any group could work if you get actual relevant experience. Point being that an RX consultant is likely to know much more about RX than an industry banker. Taking a step back, if you get into a different industry group (a desirable one) at a BB, just do your 2/3 years there and go for PE - not sure why you need to come to RX thereafter
this is a pretty common point brought up by rx consultants but linkedin shows single digit numbers across PJT/HL/EVR rx from rx consulting.. is it really a lack of interest in rxib that consultants tend to say? i feel like the move is considered alot easier than it is
Decided to hop on here, but to your question: I'd believe so. Keep in mind that across all RX consulting firms, there's probably 5-7k consultants, which is a very small population. Most of them want to stay or exit into C - Suite. Of the ones who don't, I'd warrant that most don't want to get into RX IB, because let's face it, you get absolutely run to the ground when it comes to hours worked in RX consulting, so why move to IB where the exact same thing will happen, even worse, the work is less interesting, and the culture is much more crappy. That's like taking 1 step forward and two steps back. Not to mention, you get paid almost the same or better than banking in good RX consulting groups. For people who look at all that and say idc I'm still applying, now you're up against guys from GS, JPM etc trying to lateral into top RX IB. You do have an edge when it comes to technical knowledge & connections, paired with a solid amount of banking experience from acting as a banker on smaller deals, but it'll be competitive nonetheless (being an axe man doesn't by any means guarantee that you'll get into a top RX consulting firm). One more thing: RX consulting is considered an exit, not a stepping stone - most of the guys in the field are either former senior ppl in Big 4, or formerly in IB / PE / CF / HF.
TL;DR - It's not a cakewalk, but I really doubt it's as hard as you're thinking. The reason people exit / lateral is to either get a better WLB, better pay, more interesting work or because they're prestige whores. Exiting to RX IB satisfies almost none of this; you're just about at the top of the food chain in RX consulting, with hedge funds, MF / UMM PE, and C-Suite being really the only careers that reliably pay better, but HFs and PE have their own demons, so they're on the same level as RX consulting. That leaves C-Suite as really the only avenue which has any significant value exiting into, which 🎊big surprise 🎊 is where most consultants aspire to get into, either as CROs or straight up being recruited by corporations. You also never know, the guys that made the move to IB might've forgotten to update their LinkedIns; the more experience you get, the less this sort of stuff becomes a bragging / prestige contest, and the less your LinkedIn profile matters. As Wayne said : Real G's move in silence like lasagna.
Would be happy to see others weigh in.
This topic has been coming up a lot lately and there are some good threads about it on the Consulting (CO) discussion forum with more detail. But PinkMonkey and wall.street.desert both have great answers in this thread which I agree with.
I am in Rx Consulting and the only reason I would voluntarily leave would be due to travel/family reasons (although travel has been lighter post-covid) or if a C-Suite opportunity came up. I am a little further along in my career and have had a handful of Rx IB opportunities at MM banks through the years. But all of them involved taking a step back in terms of title/responsibilities, the hours would almost certainly be worse, and the pay only marginally better assuming a 100% bonus in IB (I am not at Alix/FTI/A&M). If you are earlier on in your career, the jump probably makes more sense if that is what you are interested in. I only point this out because many in the Rx Consulting industry are in the middle to late stages of their career, so taking a step back to join an IB as an associate doesn't make a lot of sense. As another poster said, this is another reason you don't see that many on LinkedIn making the transition.
This is probably a really vague question, but, how do you see hiring trends changing for RX consulting in the future? Specifically:
I think the answers to your questions are the following:
More undergrad recruitment is happening as the industry becomes more well known. Rx consulting will likely end up in some role similar to IB/MBB. The exposure you get is almost unmatched at the age.
I think comp will also get upwards pressure. Top firms charge close to lawyer rate cards. Check out some of the bigger engagements for fees and see what these firms are pulling in.
It seem like we are in the early innings of a talent war (brought on by Portage Point / other boutiques) where people are starting to see pretty high comp.
Exit opportunities also seem to be opening up that were not there before (private credit, Rx banking, top mba programs). I think the industry will continue to get better as more talented people enter. In many ways, I think the golden age is just starting for rx consulting.
1- This is a good question that I need to break into two categories. [1A] The first being larger firms like the Big three (Alix, FTI, A&M), which hire more out of undergrad, but still not a lot. The reason these firms can do this is due to the size of their deals and deal teams. When they send an army of consultants to work on a large restructuring, the large group can essentially "cover" for inexperienced hires and train them on the job. Until you get to a more senior level at these firms, as a junior hire you are going to be responsible for a very narrow portion of the deal and if you screw up it is easy to fix or not a big deal to begin with. So there are enough people staffed on these large deals to allow hand-holding of junior hires. [1B] For mid-sized or boutique firms, it is much harder to hire someone with no experience and train them on the job. The deals are generally smaller, as are the deal teams. As a result, a junior person typically has more responsibility in these situations. When a company is on fire and you are tasked with righting the ship in a short amount of time, you don't have time to train someone on the job with zero experience. This is why most firms not named Alix/FTI/A&M generally only hire juniors with atleast a couple years of transferrable experience (IB, Audit, Valuations, TAS, FP&A, Commercial Lending, etc.) So if you need to train them on the job, they atleast have a baseline understanding of real-world (not academic) accounting and finance concepts. I don't see this changing any time soon. To your point about IB, think about the work a junior i-banker is doing right out of undergrad that is covered all the time on this forum ("monkey work"). This is not meant to denigrate the work of IB or the value of that career or skillset (it is very very valuable), but at the junior levels you can throw a 22 year old in a desk and ask them to spend their first couple months aligning PowerPoint presentations and maybe building some models. You can't throw a 22 year old into a situation where a company might not have enough cash to make payroll next week, the lender is banging down the door, there is possible fraud involved, and the management team has their own agenda and may not want you there. Obviously there are exceptions to all of the above, but that is my general take.
2- I definitely see early career Rx Consultants use the experience as a stepping stone to Rx-IB, especially MM firms. It is harder to go to a PJT, but it can happen, especially if they go the Rx Consulting--> MBA--> PJT route. Sometimes as a stepping stone to distressed PE or distressed credit, but that is less common. Beyond the junior levels the career is typically more of an exit for reasons others have mentioned (less hours than IB, similar pay, interesting work, etc.)
3- I cant speak for intern class sizes. I know very few firms outside of the Big 3 that hire interns. But that doesn't mean it can't happen.
4- I don't think increased hiring, if that happens will dilute the career path. Firms in this space can't afford to hang onto dead weight and it is a tough job, so people you see that have been in the industry for 3+ years have generally made it through the crucible so to speak, there are plenty of people who leave or are let go before that point. Increased hiring also depends on the economy, which I will touch on below.
5- Everyone knows the state of the economy from 2010-2020. Because of this, Rx was not necessarily booming. Many work-out groups at banks were repurposed. Many Rx firms slowed hiring or downsized. There was almost a lost generation of Rx professionals which led to a weird demographic gap at a lot of Rx Consulting firms, and also at lenders. The majority of professionals in the industry, especially the middle market, are 50+. There are not a lot of 30-40 year old professionals in the space. For this reason I see compensation going up as time goes on because there will be a fight for mid to senior level talent in the next 5-10 years as senior level employees retire. If there are any significant prolonged downturns, this is even more likely. This also means there is opportunity for junior hires in the space. This has even come across in the press, I believe a recent WSJ article that discussed how may big PC shops are hiring Rx professionals in their work-out groups, which is something they never had to do before in times of easy money and low rates.
Ex MBB here. The thing with "RX-consulting" is that it has a wide range of actual day 2 day work content. It could be more on the implementational side (i.e., getting procurement savings) or it could be more on the restructuring side (i.e., writing statutory reports/assessment for lenders).
Just adding my 2 cents from Europe: RX consulting is a very niche space that typically does not hire directly from undergrad. Lots of consultancies who do RX (e.g., also the MBBs but also more specialized firms like Roland Berger) are doing more "performance-improvement", which essentially is doing a 1) full diagnostic/analysis phase to identify potential performance levers and 2) making sure those performance levers are achieved (painstaking PMO).
The big RX player over here is of course also Alixpartners, but they have a completely different business model than typical consultancies. Most of the RX consultants I know of Alix have either previous IB experience (e.g., HL or other MM players) or Big 4 corporate finance/restructuring experience.
I have seen the exit from RX IB -> RX consulting hundreds of times. And that also makes a lot of sense. Those people are getting crushed in banking and can effectively reduce their hours by ~30-50% (incl. much much less weekend work) while still having a very cushy salary + other perks (e.g., company car, etc.).
I rarely, if all, have seen the exit the other way round. Just be aware if you work for 2-3 years a 50-60h work week it is not that attractive to take a step down in hierarchy at an IB and get crushed at 80-100h weeks.
rx consulting, especially if it's fti, alix, a&m, etc. - culture at those places is v similar to rx banking and a lateral move is v doable, as much of the work will be similar
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