Restructuring: Anti-climactic Experience
Disclaimer: not meant to be a rage-bait or troll post. Genuinely interested in opinions given how highly the seat is touted on the forum.
Have spent time across credit and equity side. More recently, the RX / non-performing side.
Anyone else feel that RX is not some immutable, technical beast that it is often marketed as?
I was coming from an M&A background (strong one at that in terms of types of transactions covered). I was told the nuances of RX are such that most people would struggle staying afloat.
Interviews were generally fine (nothing you cannot learn in a week or two with a few dedicated hours each day). On the job, the level of knowledge required for the technical (i.e., not fundamentals based) knowledge of credit derivatives / CDS is perfunctory at best.
Most of the nuance is in the legal documents. And this nuance is not something that bankers lead the party at (even at the better places). Yes, good senior bankers are adept at initial views on feasibility of a drop-down, uptier, double-dip or some combo of these but the real perimeter of play is being defined by lawyers which then determines the viability of options being proposed.
Moreover, with democratisation of information most capable interviewees (even college kids) turning up can readily bulk-up on RX stuff much like the old days of BIWS and WSP guides (i.e., quickly going down the same path). To be clear, I think this is is a good thing because if the mystique is simply due to information asymmetry on where to get info or the lack of accessibility, then with the utmost respect, that’s not because the concepts or seat is difficult. It’s just lack of availability .
Curious to hear if I am oversimplifying things but so far it’s been a bit of a letdown.
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. That’s what real complexity looks like.
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.
Very insightful
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.
I agree. I wanted to ask why you think the bankers get paid more than the Alvarez and Marshal guys? It seems like they provide more value in the grand scheme of things.
"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.
lol you’re going to absolutely hate it as a junior associate IMO — first and second years do like zero critical thinking. The work will heavily involve prepping sig pages, compiling documents together, ‘drafting’ ancillaries that basically just need a good find and replace entity names/dates, mindlessly porting people’s comments into docs, and process management (updating checklists of docs). Nothing strategic happens until you’re like a midlevel/senior. Lots of nice people though — more senior lawyers will offer to explain to you what EBITDA is
Any resources to go more than 1 inch deep then?
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.
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
Congrats on ECM
Yeah I thought it was gonna be some 7D chess too and realized that banking is just banking. Still the same shit at its core. Also I get that its more "technical" compared to a vanilla sponsor-backed sellside would say broadly M&A especially ones involving public players is just as if not more technical.
"Anyone else feel that RX is not some immutable, technical beast that it is often marketed as?"
This is finance. Basically nothing is a technical beast. Similar to how in accounting basically starting with assets=liabilities+equity gets you 99% of the way to any given accounting answer, basically 99% of finance is just doing buy low, sell high. Virtually everything about finance is just either different ways of doing that or how to go about doing that.
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.
To that point, asset dropdowns, double dips, etc. were new ideas before they became commonplace. While you can have innovation in other product groups (e.g. RMT transactions in M&A, direct listings for IPOs, etc.), I thought restructuring banking was uniquely "technical" for the pace of new structures and ideation that you could see year to year. I do think a strong M&A group would probably give you the same exposure from a literal Excel model or product standpoint, but I've always thought RX gave the most shots on goal for exposure to interesting financial workarounds (multiplied by historical events e.g. COVID).
Lastly, I'll echo that RX groups are small and full of hardos. Doesn't mean they're more technically complex than M&A groups, but there's probably a broader range of ppl in M&A which makes it less generalizable.
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.
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)
One of the few times I get to chime in on an area of expertise on this forum, so here goes.
First off, generally agree with Director in IB - Restr, golden takes, and extremely accurate.
I will say, as someone on the legal side, and been on numerous restructurings, everyone likes to overstate their own corner a bit. Bankers like to joke that lawyers run the show, we like to think we're the architects, and funds like to think every idea originates with them, but the reality is much more iterative. Clients and investors usually come in with economic objectives, we (lawyers) define the boundaries and identify paths that are actually defensible, bankers pressure-test the economics, and everyone goes back and forth until something workable emerges, hopefully.... Agree that RX isn't some mystical intellectual mountain, but also wouldn't undereestimate how much judgment is involved because the complexity isn't in memorizing bankruptcy jargon or building a three-statement model, it's understanding incentives, documents, litigation risk, how a dozen sophisticated parties will react to each other etc. And yes, this is mostly our responsibility, but it's collaborative.
The reason new structures keep appearing isn't because one group is uniquely brilliant; it's because smart people with different skill sets and competing interests keep pushing against a changing set of constraints..
The one dark horse, and one that I omitted from the above is the RX consultants. Tremendous respect to them. If anything, they often have the most consequential role because they're dealing with operational reality while the rest of us are debating legal and financial abstractions. All our structures are worth nothing if the company burns cash regardless etc. Turnaround advisory was also one of the first specialities to emerge, historically speaking. Right after RX law.
Very insightful
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
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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:
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? 📈
Rx is more technical as a junior relative to other banking gigs because you have 100x capital structures you have to run through a new 3-statement model to see where cash flow shakes out.
If you’re advising the company and you have multiple lenders, you’ll have 4-5 different TSAs you’re modeling out.
During negotiations these 4-5 transaction term sheets will change 50x depending on things like make-whole provisions, PIK toggles, exchange rates, interest rate step ups.
On the creditor side you then take all these permutations and run 500x scenario analysis on what recovery looks like for your lender group that have 3 different tranches if it was a 1L 2O vs 2L tranche. If you’re uptiering into senior secured vs extension with higher coupon.
This is why the gig is more sought after because it’s a lot more technical from an excel modeling perspective than every other group.
Not to mention the above is just the credit side of the transactions. You’ll deal with hybrid debt, equity, asset level valuation, sub divestitures, and capital raising.
It’s the only IB group where you can truly touch every aspect of a transaction.
As someone in the RXCO space and somewhat junior into career but not really I guess. I definitely feel like lawyers and bankers are driving the strategic discussions but we are much more entrenched in the operations (by nature) and the details of the transactions. Basically ensuring we can run the play that the other advisors think is advisable if that makes sense. I sometimes think I’d enjoy the banking side more but the WLB to pay ratio is pretty good so don’t think I will make the jump (or try to).
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
Let us build / help build next time. Rates x hours…
This is fair but then how do you also explain the exits per capita being better than any other industry/product group across wall st? Self-selection? Surely the job plays into it as well
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
Nothing is technical in IB, we are not programming AI or working on LEO orbit satellite
I’ve Said This before and Will repeat again. The Lawyers are the true creatives in Rx. I speak to Analyst and Associates- they are clueless and always need a dumb down version of the RSA
Yeah this is pretty good man.
This information is very interesting
Yeah I totally agree. From getting exposure to LevFin at some BBs, I can say that LevFin offers the same exits (if not better) than RX does and teaches you more actually about how credit works. RX is pretty much glorified lawyer work. Nothing wrong with it, but very far from true IBD work unless it’s distressed M&A.
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