momentum of Rx groups
current SA trying to lateral into rx ib. can anyone tell me their thoughts on where all the groups are heading in the next 5 years?
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Don't think it'd hurt to lateral, but feel like the playbook is kinda shifting away from the trad LME centric mindset. My 2 cents: predict there's gonna be a massive return to traditional deleveraging where sponsors finally just have to toss the keys to the creditors. LME's while good for sponsors wanting to avoid a total wipeout and buy time, don't really fix the companies. Think it was something like 70% of companies end up defaulting on their restructured debt within three years of an LME (don't quote me on this). Given the massive amount of debt maturing around 2028, assume the next few yrs will be heavily focused on "second-step" restructurings; cleaning up the messes that the initial LMEs couldn't fix.
All of which means the RX lawyers and RX consultants have opportunities to absolutely print money. It's been said a million times already on here, and above, but LME's generally ignore the underlying operational dumpster fires, and the companies are still bleeding cash. That's where the RX consultants come in, and the lawyers too. In addition, we're already seeing A&M, Alix etc aggressively expanding to get their fingers in the LME action as well (have personally had a couple of large LMEs with them on). On top of that they have their own RX IB groups, so it can make more sense to have A&M RX IB and RX Co on the deal as opposed to PJT RX and A&M RX. Obv this doesn't apply to large deals, but for small - medium deals.
So tldr, the market is definitely gonna be there for RX IB, and arguably even grow, but the actual weight may shift.
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Think this comment is half right. The pendulum has already swung back towards traditional deleveraging. This isn’t something that will happen in the future, it’s already happening.. The reasoning An-1 gave isn’t the main one however. Sponsors will always continue to pursue LMEs to buy time regardless of whether or not they actually work. But there has been a big institutional shift where credit is a large part of these large cap sponsors’ businesses and there has been more relationship pressure on said sponsors to treat lenders “fairly”. Oftentimes I see sponsors opt not to LME the business to preserve relationships because the juice isn’t worth the squeeze. Also, for the top RX groups (PJT, EVR, etc.), the RX consulting IB arms are a non-issue. Deals they work on are too small and the consulting teams have always had their hand in the LME pie, although admittedly that is growing.
Anyways, to answer the original question, career-wise I’m most impressed by PJT, EVR, and CVP RX bankers. I assume that translates to career development. You probably want to be at one of those firms. RX is a top heavy industry where rainmakers will take all the deals, because the industry isn’t that big to begin with. I don’t think you want to start at a Greenhill / Ducera type shop just because you think there’s growth opportunity. You most often see MDs from the first set of firms move down market into the tier 2 RX shops if they can’t cut it there.
HL is imo generally trending downwards. Most of the talent there is older / retiring and there is a large amount of dispersion in quality of people there.
The final thing I will add is that all RX shops are not the same. In M&A, there are probably RBC and Blair and Lincoln groups that are far better at execution and dealmaking than groups at BofA and UBS. This is not the case in RX. The top shops are so far ahead of the lower tier shops in terms of quality, talent, and experience, that it is a massive boost to be at one of the highly regarded firms I mentioned above.
Regarding the top RX IB groups (PJT, EVR etc), agree that RX consulting eating into their business is a non issue. But, would argue that for the small RX IB firms, it's an issue, or could turn into an issue shortly.
80%, it was from a FT article from some months ago
Gotcha, thanks for the correction. At face value, that's even worse.
Yup - not at A&M but have personally worked on a LMEs on the RxCo side. And notably, that same company ~2 years later will likely be spinning off assets or going through a formal RX in the near future.
Any insight on where moelis sits? Seems to have some cool names as mandates but not sure how relevant
They are very solid in rx, would put them at the same level as HL. Unfortunately there have been alot of senior bankers poached (most notably derrough, but also some other MDs have left to start up the rx groups at other banks) so TBD on how it shakes up.
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