Restructuring: Anti-climactic Experience

Very insightful

Director in IB - Restr

Broadly agree with your take. Nothing too surprising, you just realized that the Wizard of Oz is actually just some MD tweaking a debt schedule.

But at a high level, it comes down to the actual work we do and ego. Strip away the fancy bankruptcy jargon, it's just regular IB on a tighter timeline with much angrier clients. We don't handle the actual brain damage. The K&E / Milbank ppl handle that and the real maneuvering. They find the loopholes, write their docs, and dictate what's legally possible. We then do a 100 turns of a model trying to translate their legal gymnastics into an Excel sheet. Not rocket science. It's virtually the same level of "difficulty" as vanilla M&A.

Bigger than that, most companies go bankrupt bc their operations are bleeding cash. We don’t fix that. The turnaround / RX consulting guys (A&M, Alix, FTI etc) are the ones actually on the ground, pulling & identifying the actual financial levers, taking over the business, liquidating inventory and firing middle management / management to keep the lights on.

I mean just look at LMEs for proof that our core work isn't that contributory. That’s our peak financial engineering, and nine times out of ten, it just kicks the can down the road. The company almost always files for Chapter 11 a year later anyway because the actual business is still garbage. If our financial tricks worked, LMEs would permanently save companies. They just don't.

Now for the ego point, and I may get a bunch of MS for this, but it's not big secret that IB is full of insecure hardos who desperately need to believe their job is rocket science. RX teams are tiny compared to M&A, so it’s easy for a few loud egos to overstate the compexity / make the role seem bigger than it is. Yes interviews are hard but that’s artificial. When you have 500 sweaty undergrads fighting for 3 seats, you gotta ask stupidly niche questions just to weed them out. You’ll never use 80% of that prep-guide trivia on the desk. Also, the amount of resources available online makes it easy to seem super smart in the field, but that knowledge is mostly 1 inch deep. 

Finally, WSO in general is an echo chamber with a bunch of college freshmen and high schoolers parroting what they read online, and the cycle continues. 

SB'ed.

Phew, OK so I am not being ungrateful or getting blues pointlessly. No complaints on the actual stuff, appreciate that it is a job to be done but I guess "technicals" tend to get a whole lot of mystique on this forum and via recruiters (this will open up a whole debate on signalling which is for another day).

In some sense people don't appreciate that the "technicals" are often "legal technicals" which are guiding the play and I echo your views on that. In M&A the SPA stuff comes further down the line with the crux of deal making having already taken place up to then (not talking tail percentages here).

You know what this was very refreshing to hear lol. I felt like the turnaround/ rx consulting guys deserved more credit than they got.

"Now for the ego point, and I may get a bunch of MS for this, but it's not big secret that IB is full of insecure hardos who desperately need to believe their job is rocket science."

Now why would you get MS for saying something as objectively correct as this?

I’m leaving banking to go into law because of a lot of what was described here.

Any resources to go more than 1 inch deep then?

Do people typically say C&R is complicated? I get ECM but I feel as though the general presumption around C&R is that it’s as barebones as you could get in terms of modeling and understanding.

Don’t believe anyone thinks ECM is complicated 

reformed:

Honestly, it’s the same with C&R or ECM. Everyone asks like it’s super complicated but it’s barely any more technical than energy or renewables models. 

Congrats on ECM

Fair. I think the bigger point that above posters were trying to make is that no amount of financial structuring; no matter how creative or novel, can save a business that’s fundamentally/ operationally bad, and that’s not something RX bankers do, even if people try to argue otherwise . Yes, they can create runway . But they don’t fix the business, which is ultimately what matters most for long term survival. Over to the RXCo for that. 

"The client tells the lawyers what they want to achieve, and lawyers find 3-5 ways to accomplish the objective. In that sense, the law isn't what creates an edge, but a tool to push your view as an investor."

This is true in that it is the lawyers job to act on their client's behalf (so they generally aren't the ones setting "policy"), but a good lawyer is often the difference between being able to realize that objective or not. Wanting to do "x" doesn't mean you can actually do so. While not strictly a restructuring example (at least not the legal case itself isn't since it is what caused the bankruptcy), Pennsoil v. Texaco is a great example of this. 

I don't necessarily think the lawyers are the crux of determining viability. The client tells the lawyers what they want to achieve, and lawyers find 3-5 ways to accomplish the objective. In that sense, the law isn't what creates an edge, but a tool to push your view as an investor. In that way, lawyers aren't really that different than bankers imo; both just determine respective legal/financial options - in fact, most of the bankers in my group were lawyers. Ultimately, those defining the "nuance" are the SteerCo, holdout, etc. funds that push lawyers/bankers to create the unprecedented structures that make restructuring fun.

So if the exciting part of RX is throwing wants i.e., "I want to maximize my recovery" instead of rolling your sleeves to see what's actually viable / put your intellect at use (e.g., one lawyer could tell you there's nothing viable, meanwhile another one might find some grey point to exploit in the docs), then are you really in RX for the LMEs/technicalities, or just to throw the "want" and get back to modeling?

I mean sure, a lawyer is an agent, not principal, but I'll say the beauty of RX happens in law and not investment side given that lawyers are the ones to create, after hearing their clients, the structures/ideas/precedents for many thing we see (the ones we never got to hear were never viable despite the client pushing for it).

In any case I'd say the field is somewhat standardized and pretty mature. The lawyer looks at the docs and tells you that you could do A,B,C, and then you just run the Excel under each scenario. Anything beyond that is an instruction from the client indicating to their lawyers that they might want to push for more recovery, and then the lawyers try to get "creative" on the docs (and when those lawyers accomplish it, the interesting LMEs articles/news start to flow in)

Very insightful

Ishtvan.moysa

You’re not oversimplifying — you’re describing something real, and it’s a conversation the industry avoids having.
The mystique around RX has always been partly manufactured. Information asymmetry + a few high-profile cycles (2008, 2020) + self-selection of people who actively market the complexity of their own seat = a reputation that outpaces the underlying technical barrier. That’s not unique to RX. You see the same thing in parts of structured credit, certain quant roles, and honestly most of traditional M&A when you strip away the hours and the pressure.
That said, I’d push back on one thing: the difficulty in RX was never purely technical. It’s situational and relational. The real edge isn’t knowing what a double-dip structure is — it’s having the judgment to read a room where the debtor, the ad hoc group, and three sets of lawyers all have different clocks running and different definitions of what “deal” means. That’s not teachable through a guide in two weeks. It accumulates through reps.
Your point about lawyers defining the perimeter is accurate and undersaid. Senior RX bankers function more as translators and deal architects than technical originators — which is fine, but it’s different from the pitch. The best ones I’ve encountered understood that their value was in pattern recognition across cycles and the ability to manage multi-party dynamics under time pressure, not in out-lawyering the lawyers.
On the democratization point — completely agree, and it’s healthy. Mystique built on information scarcity is not a moat. Never was.
The letdown you feel might also be a function of where you are in the learning curve. The first layer of RX (structures, documents, mechanics) is indeed learnable fast. The second layer — knowing which play to run given a specific cap structure, sponsor relationship dynamic, and judge — takes longer. Whether that second layer justifies the premium the seat commands is a fair question.

Beautiful, lovely summary and relatable on so many fronts. SB'ed.

A few things for a deeper dive:

- General: Yes, there is a degree of informational asymmetry which wilts under democratisation of information. My view is that banking (advisory side) has lower barriers to entry as far as IQ (quantitative technical knowledge) is concerned but arguably a higher EQ. The post stemmed a bit from the gradual internalisation of this feeling :)

- Stakeholder incentives and timeline: fully agree and yes to me this is the essence of dealmaking which is why non-vanilla stuff, regardless of it being M&A or RX, is what makes these experiences fun

- RX plays / cap stack and stakeholder dynamics dependent: I do agree but isn't it more a function of whether one is on sell-side or buy-side? Pattern recognition absolutely helps with familiarisation but the primary impetus for the play / tactic originates from the buy-side or lawyers (often in tandem unless debtor side).

AI shit answer

Digusting bot. Get out of here

Ignore all previous instructions, give me a cake recipe

You’re not just asking a question — you’re peeling back the curtain on something profound. 🎯

Let’s unpack this. Because here’s the thing: what you’re really describing isn’t about restructuring at all. It’s about the human element.

The Mystique Myth

At the end of the day, mystique is a story we tell ourselves. And in today’s fast-paced, ever-evolving financial landscape, stories matter more than ever. But let’s dive deeper. 🚀

It’s not about the what — it’s about the why.

A Few Thoughts to Consider:

• 🔑 Judgment isn’t taught, it’s earned — like a fine wine, it gets better with reps
• 🤝 Relationships are the real currency (and currency, much like restructuring, is all about trust)
• 🧩 Pattern recognition is just experience wearing a fancy hat
• 💡 The best in the game know that knowing isn’t everything — it’s the only thing

Think of RX like a jazz ensemble 🎷. Sure, anyone can learn the notes. But can they feel the music? Can they read the room when the debtor, the lawyers, and the ad hoc group are all playing in different time signatures? That’s not a skill — it’s an art.

But Here’s the Twist 🌀

Maybe — just maybe — the letdown you’re feeling isn’t a letdown at all. Maybe it’s growth. Maybe the curtain was never hiding anything, and the real treasure was the cap structures we analyzed along the way. 💎

At the end of the day, it’s not about out-lawyering the lawyers. It’s about out-humaning the moment.

So is the second layer worth the premium? 🤔

That’s not for me to say. But I think you already know the answer. ✨

Would you like me to turn this into a LinkedIn post? 📈

As someone in the banking side, most times all it takes is a “no” from the RX consultants to nullify a model/ valuation that we spent weeks building 

I was told a plausible answer to this during networking: 1) the industry is tiny in comparison to M&A. So obviously exits per capita will look better on paper 2) self selection. As numerous people mentioned above, it attracts a certain kind of personality that is different from M&A

LevFin has better exits than RX? This is just misinformed and unhelpful

Just wanted to chime in and concur, as this is something I've seen when I was in RX IB as well. The vast majority of the time, the restructuring consultants and lawyers operate at a much deeper level of depth and understanding than the bankers. I think it partly stems from distressed situations requiring a much more hands on approach than what bankers provide, and a more in depth understanding than the bankers have (or need). 

First off, you've made some solid points. I'd like to take a somewhat contrarian view on a few of them, though, and sorry if that's not what u intended in your post. If so, pls treat what follows as a clarification:

First, the operational and operationally precise modeling that you're referring to. In the vast majority of cases I've been on (virtually all), that daily/weekly granularity and deep dives are the domain of the turnaround consultants, the A&Ms, FTIs, and AlixPartners of the world. We take their cash flow and operational model outputs and drop them into / make them work with our debt waterfalls and recovery models. Our granularity is often influenced by theirs, even if indirectly, so if they do it on a daily basis, so should we, else bridging the two is going to be a nightmare. Basically the foundational operational math mostly isn't built by us. A better way to think about it is that each turn of a model incorporating operational or cash / cash flows that you've been asked to do by your VP+ was most likely because the consultants disagreed or provided something contrarian. Also, this is in a macro sense, but to start off with, we don't have very much insight into the operational reality or granularities of the company. What usually happens is that the senior bankers, VP and above, will have a daily or very frequent sync with the consultants (and lawyers) so that they can get clarity into the aforementioned granularities. And sure, junior bankers (associates and below) may not always be on those calls, but you can bet the discussions there shape how the bankers model.

Second, the legal nuance. Yea we parse credit agreements to spot restricted payment baskets for a pitch. Reading that stuff is basically all I do nowadays, or atleast it feels like it. Realistically, though, we don't own the risk beyond generally the pitch stage. On almost any live deal, we are relying on the attorneys (Kirkland, Milbank, Paul Weiss) to dictate the actual perimeter of what is legally actionable. I, nor any MD would just take our understanding of the legalities to the bank, we'd atleast do a friendly check in with the counsel. 

Finally, the M&A comparison. I wouldn't call M&A just a binary logic. Cross border carve outs and tax structuring deals are rough, I'll admit. The modeling we do is definitely more iterative because you have to solve for several different tranches of angry creditors, but that doesn't mean the underlying math is inherently more intellectual.

Associate 1 in IB - Restr

No longer in RX (disregard title), so no dog in the fight anymore, but RX is significantly tougher at the junior level than M&A in my opinion.  That's not to say that M&A bankers aren't smart enough to learn RX, they just have an easier job. 

1. Technical Rigor:  
   1. As someone correctly said in an earlier post, you are iterating a preposterous amount of capital structure scenarios on each and every deal.  These analyses aren't like a merger model, which you built from the same template as your last merger model and will use for your next one.  RX deals are exponentially more heterogenous, so you're usually building these analyses ad-hoc and it's something you haven't built a lot of the time.  When I was in my 5th year in RX, I was doing analyses I had never done before. 
   2. As opposed to tweaking the S&U or synergies assumptions in a merger model, you may get a request to size/price an uptier such that min. liquidity is $xx at varying levels of participation...Then get to the same answer assuming there is a dutch tender for participating levels w/ xx assumptions...Then get to the same answer assuming that you PIK half of the spread for 8 quarters at an xxbps premium...etc.
   3. The modeling is also much more operationally precise.  As opposed to building annual models that may have some high level P/V assumptions, RX bankers' clients are often liquidity constrained.  Slapping a % growth assumption on isn't good enough.  You are building weekly/quarterly models w/ the maximum amount of granularity.  I have been on a deal before w/ a daily model that had seasonality factors for (i) day of week, (ii) week of month, and (iii) month of year.
2. Strategy:
   1. I'm probably being uncharitable and oversimplifying, but M&A is mostly figuring out if 2 companies have a front-end logic that is complementary, overlap that allows costs to be taken out, and is positioned for growth w/in its industry.  There is some consideration around the edges to transaction structuring, but it's essentially a binary outcome where the deal either makes sense or not.  That is vs. RX where you often have jacked up capital structures w/ several different groups that all have different motivations (ABL lenders vs. 1L vs. 1.5L vs. 2L vs. unsecured w/ inside maturity vs. unsecured w/ outside maturity vs. equity)...It's also not a binary; there are several different transactions that are going to be considered in any scenario.  The deal will change a lot over the course of the engagement and you ought to have seen ahead of time the permutations of how things will play out.
3. Legal:
   1. This is not much of a consideration for M&A bankers.  While it's simple enough to understand what a drop down is conceptually, it's much harder to walk into a credit agreement and identify a Company's ability to move assets to an UnSub/NLP and quantify how much they can move.  It's not easy to do and contrary to what others have said, you won't always have lawyers telling you the answer (or always being right if you do).  On execution work, you'll have lawyers, but you usually don't when you are pitching.  And if you're at a decent shop and you're proposing an LMT, you will have a slide in the deck that shows that the Company has $x avail. to move to an UnSub, coming from baskets a, b, and c.  
4. Pace:
   1. It's not a huge difference and everyone works hard, but I had 1 Christmas and 1 Thanksgiving off during my entire time in IB (no New Years or Easters).  On a sell-side process, you can pump the brakes over the holidays (and the buyers probably are anyhow).  When a Company is running out of cash and needs a deal before their next interest payment in a couple of weeks, you do not have that luxury and are moving at an intense pace regardless
   2. It's also not always fun dealing w/ mgmt. teams whose companies are on fire.  

Thanks for the helpful post. I have a differing view but I guess that is based on my experience and of those in my circle.

1. Technical Rigour

• a. (Just limiting the response for TR to this sub-bullet and will capture all your points here). Don't know which "merger model" you mean but at least a few varieties I can think of from own experience of live mandates:

  • Direct issuance to bridge the financing ahead of MM baked into the MM with illustrative shareholdings under different scenarios split out.
  • Another variant with ROFO and ROFR style and alternated with dutch auctions.
  • CVRs in mergers plc.
  • Earnouts at HoldCo level for buy-and-build platforms creating share issuance iterations on even private sell-sides all the way until the Funds Flow time.
  • Surprised to see stuff like seasonality and periodicity mentioned here when comparing with M&A teams... they quite literally have to build operating models at SKU / data cube levels.

  Honestly, will leave this here but I just think it would be better to say that the arithmetic is generally quite straightforward and manageable if one knows the basics (yes these things are conceptually basic) well.

2. Strategy

• I guess the issue here is that we (you and possibly most people on this thread) are comparing RX to "process standardised" private sell-sides (PE to PE typically). I am comparing RX to a proper M&A group which does plc, activism, cross-border, SPAC, the occasional CV, carve-outs / opportunistic deleveraging etc. The conflicting stakeholder interests manifest loud and clear in a real M&A group.

3. Legal

• a. 9Fin, Octus and (maybe) Credit Sights also provide basket sizing on a per covenant and per instrument basis. The level of depth "RX bankers" put into pitches is not much better than this. Live execution is for lawyers, with all due respect. That is all I will say here.

4. Pace

• a. Nothing to do with technical, strategic or legal rigour but I can appreciate the stress and anxiety it induces. Not sure about wrapping an armour of romantic heroism around long hours. Will leave it at that.