Hey guys - I have a restructuring interview with a boutique investment bank (HL, Roth, GHL, Gugg) for a lateral associate position. I was wondering if any Rx guys can give me a heads up on what type of questions to prepare for. Will they be looking for deal experience or will this be a technical grilling/fit.
Thanks
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My experience lateraling at the associate level at one of the shops you mention was 1) minimal but not zero deal discussion 2) heavy emphasis on technical questions (specifically around modeling/valuation and credit/documentation) 3) heavy emphasis on “why banking” and “why here”
I thought the HL case study was great for the RX specific questions and the YouTube series (11 parts) “mini course in restructuring” was good for a high level review of some ideas in Moyer and worth checking out.
Sure, happy to. I’ll try to make an outline from the types of questions I’ve been asked.
Documentation: -Types of seniority (structural, temporal, contractual) -Levers that exist within documents to allow companies to access additional liquidity (DDTL, committed revolvers, debt baskets) -Provisions that would prevent companies from accessing liquidity or raising new funds -Provisions that could limit operations (permitted capex, permitted expenditures) -Covenants (financial covenants, maintenance covenants, incurrence covenants) -As a potential lender, how to approach a distressed situation and what might make it attractive / what protections would get you comfortable to lend to rescue the company -Provisions that could generate additional returns for junior debt holders (PIK, penny warrants) -Options to refi if not 100% of lenders consent -Restrictions for companies selling assets (generally must be at FMV, may have to be used to pay down secured debt, may be forbidden if part of collateral to secured lenders)
Credit: -Red flags for potential earnings manipulation -Drivers to increase cash generation in a business (cost normalization, outsourcing, headcount reduction, off market leases/rent) -How to calculate EBITDA -How to normalize EBITDA to comps (owned versus leased property = rent expense, cost normalization = add back non normal costs of distressed company to evaluate as a restructured going concern) -Calculate FCF (know how to get to both UFCF and LFCF) -Calculate EV (know that equity can’t be negative so if EV is face value of debt then your debt must be impaired and trading at discount, also know the 3 statement effect of this and how to calculate the implied debt prices) -Holding period return -Approximate bond price given coupon, maturity and yield -Effects of various restatements on EBITDA -Liquidity and cash flow ratios -Valuation methods -DCF inputs (Rosenbaum DCF chapter summarized for free on YouTube, ~1.5 hour video)
Other than those I have been asked brain teasers, market questions, questions on distressed situations I’m following and some of the standard accounting / 3 statement questions from IB interviews.
fastbreak Thanks for your insights, I find it unique that you actively chose to jump from direct lending to RX when usually people go the other way around, just a couple follow up question if you don't mind
Thanks again