Pros & Cons Summary - Post-MBAs in Restructuring (RX) - any regrets?
To any Post-MBAs who pursued a longer-term career in restructuring - I'd love to get your thoughts and insights on your career so far, whether you are happy with the decision, or have any regrets and so on. I'm about to start my MBA at a top finance school (Wharton / Booth / Columbia) this fall and would love to hear your insights on this.
From surfing WSO as well as speaking with various people, I've compiled the following pros & cons of a long term career in RX:
The work is complex and interesting - each restructuring situation has its own unique circumstances ad therefore the solutions offered are specifically tailored to the situation, instead of it being cookie-cutter as it can be at times in regular M&A. RX bankers develop a heavy technical skillset both on the financial side (cap structure / distressed M&A) as well as the legal side (navigating credit agreements / bond indentures) - essentially a half banker / half lawyer hybrid. Likewise, all RX professionals I've spoken with have told me that they do find the work intellectually stimulating, given the technical nature of the product.
Great Job security - RX is countercyclical so during downturns it thrives. In a bull market, RX teams tend to run lean to begin with so it's quite difficult to find competent replacement hires given the niche / technical nature of RX - hence layoffs in RX is not very common. One RX banker put it this way - if you're an EB looking to cut costs, who would you try to cut in: the 15-person RX team or the 150-person M&A team?
Compensation is great - given that most RX roles are in independent advisory shops (PJT/EVR/HLHZ/LAZ etc) pay is quite generous (up to 250-300k all in for 1st year associates) and sometimes surpasses that of the M&A folks.
Hours are always Brutal (is it?) - I've heard a bit conflicting views on this so I'm admittedly unclear. Some have told me that the hours are absolutely brutal at all times (one full time analyst working in a BB M&A group explained how the EVR RX roommate would come back home later and leave to the office earlier than he did everyday), and that it's worse than that in M&A. On the other hand, I've also read instances and spoken with individuals who described that their hours are not too bad during bull market times (PJT / HLHZ to be specific), and that brutal cases usually are from when market heads into a downturn (like right now, during covid) as RX teams are kept lean so the sudden influx of dealflow exceeds capacity.
Promotion to MD is more difficult - a VP level RX banker explained to me that the promotion path to MD is much more difficult than in the M&A side, as MD promotions are determined based on ability to bring in deals and there are only a limited number of RX deals (relative to M&A deals). As a result, the VP to MD promotion is a bit of a crapshoot and requires some element of luck and timing (i.e. a downturn comes by and you suddenly get an influx of distressed opportunities to lead / originate). As a result there are several cases particularly in bull markets where RX bankers get stuck at the VP level for longer than expected, and promotions to MD can take much longer than the standard 3 yrs Associate / 3 yrs VP / 3 yrs Director / MD timeline that we see in M&A. Also noted that there is no "Director" level in most EBs (just straight VP -> MD) which further exacerbates the length of time needed to serve as a VP.
Vacation time is impossible - One RX person had told me that the one thing he had a tough time in RX is that going on vacation for an extended time (1-2 weeks) is very difficult due to the length of the mandates in RX. Typical RX mandates last 8+ months so if you are on a RX mandate, you basically cannot go on vacation during that period. This is a contrast to M&A where the vast majority of the deals are quite shorter (2-3 months on avg) giving them a bit more leeway. Also M&A deals tend to fall apart often as buyers / sellers can just walk away at any time, whereas RX mandates rarely fall apart in the traditional sense, given that a company that is approaching bankruptcy will be in a position where it's forced to take some sort of action - just a question of which.
Would be great if anyone (specifically post-MBA RX folks, or anyone pursuing RX as a long term career) could confirm or debunk any points above and comment on anything they'd like to add with regards to a long term career in RX. In particular, I'd love to hear your thoughts on what you had expected in RX before starting work vs. what you had realized (or wish you had known) after you started working.