Restructuring groups and opportunities
I've done a lot of research into industry and product groups, but I have not heard much about restructuring. Since restructuring has such a specific function, I'd like to know if someone can give me a detailed description of restructuring (aside from the FAQ description) including the entire deal process. Also, does anyone know the top groups and top boutiques for restructuring? Finally, I'd also like to know if the exit opportunities out of a restructuring group are comparable to the opportunities out of top industry and product groups.
TIA
...bump
Here are a few good threads on restructuring and restructuring groups:
//www.wallstreetoasis.com/node/3198
//www.wallstreetoasis.com/node/9281
You can find info on the top groups and top boutiques in those... short answer is Blackstone and Lazard are typically thought of as having "prestigious" restructuring groups, and some other MMs/boutiques also do restructuring. BBs tend not to do it as much because most of their clients are not going bankrupt.
The exit opportunities are comparable to top industry/product groups and some would argue even better.
True Blackstones and Lazard are very Prestigious Restructuring Firms but in terms of deal flow Houlihans seems to get involved in the most. Roughly 80% of their work is on the creditor side so it may not be as interesting but it gives a good combo of deal flow and the general skillset enabling you to exit into a Turnaround firm / PE shop or even a hedge fund!
Boutiques like Blackstone, Lazard and Miller Buckfire are leaders.
Evercore, Greenhill are also rising contenders with first class marques.
As they say, when people smell blood... GS just started a division.
Are exit opps out of BX, Lazard and MB restructuring all comparable? I know BX and Lazard are generally more prestigious, does this play into exit opps and grad school admissions for MB analysts?
May I ask why people are under the assumption that the debtor side is far more interesting? As someone who summered in restructuring at one of the aforementioned banks, I won't pretend to have all the knowledge in the world about the industry, but I still feel I should give my two cents.
First, the three top players in the arena are Blackstone, Lazard, and Houlihan. If you interview with any of those three, they will almost always name the other two as their primary competitors in the industry. That is not to say that they do the highest number of deals (otherwise a lot of restructuring banks that you guys have never heard of would likely take the cake), only that these are the banks that will generally get the largest and most talked about mandates.
Second, the debtor and the creditor sides will, for the most part, entail doing almost exactly the same analysis. The largest difference between the two will result from the sort of client you work with. Doing debtor work, the advisor will be working with less sophisticated counterparties that can often result in frustrating nights trying to figure out where the client firm's in-house people derived some of their numbers from. It also seems that many have absolutely no idea how to create a properly flowing model (at least half is always hardcoded), which can make inputting some slight adjustments into your model very tedious. With regards to the creditor side, the clients are far more sophisticated. This should come as no surprise, as the majority of clients on this side of a restructuring are distressed debt hedge funds that really know what they're doing. The negative aspect of working for the creditors is that information from the company in distress or bankruptcy is often hard to come by, as they are heavily distrustful of your clients. Then the numbers that you do get (from the debtor's advisor/s) are never really completely accurate, meaning that, like the analyst on the debtor side, an analyst on the creditor side will also have to go out and do some digging.
Lastly, with regards to exit opportunities, it should go without saying that nothing in finance today can really trump the Blackstone brand. Lazard too has a fantastic name, albeit not to the degree of Blackstone. Houlihan, unfortunately, suffers from a sort of brand dilution as a result of its strictly MM Corporate Finance practice (as well as its ridiculous name: Houlihan Howard Lokey & Zukin). This is not meant as a dig on Houlihan's corp fin group, which is probably the best MM advisor out there - it is just meant to say that it cannot compete with Blackstone in terms of prestige. Thus, even though Houlihan may arguably be the top restructuring advisor in the US and Europe, barring distressed debt hedge funds or certain turnaround PE shops (e.g. Oaktree) the exit opps are not what they would be from Blackstone or even Lazard. Again, I want to restate that this does not really mean all that much, as there are loads of other great jobs that don't have the exit opps of Blackstone/Lazard restructuring (almost all traditional IBD analyst stints, for example) that still lead to great options later on.
Great response. Thanks for chiming in.
Great thread, certainly a niche of banking I don't know much about. Does anybody have any restructuring reading material or any recommendations? Sites or books anything of that nature? Give me a PM if you know of anything, thanks very much.
I know a lot of people are starting to look for jobs right now so thought I would add something.
Hands down the top restructuring IB right now is MillerBuckfire. They are getting all of the large debtor side deals and a lot of middle market deals as well. Good people as well. Other top firms are definitely Blackstone, Rothschild, Lazard, Jefferies, Chanin, and Houlihan. All are great firms. Reaaly can't go wrong with any of them. One unique group that is highly regarded but small is Evercore. The heads of the group have different backgrounds but great/long reputations in the industry. They have been involved in some of the largest bankruptcies. Haven't heard much from them lately, but heard the last few few years they have been involved with some extremely large restructurings that were not disclosed. Have not dealt with Greenhill or GS, but Greenhill has picked up some good deals lately. Heard for years GS would start a group and almost bought a few firms. Everyone has always said the big issue with them entering the market is they could conflict out. Bankruptcy judges, bondholders, US trustee etc. don't like conflicts. They don't mind if they act as a syndicate agent for DIP, but have issue when they try to represent debtors or creditors. Alvarez and FTI also have restructuring investment banking firms as well.
Don't know if I agree with the Blackstone and Houlihan comment above. Blackstone likes to elephant hunt. They have been involved with some good deals lately, but the restructuring group has not had many big deals in recent years. Houlihan definitely does a lot of creditor work especially on large deals. Though the firm's M&A and Restructuring practice as a whole have always gone after the debtor middle market work. Their international offices do a lot of large debtor/receivership deals and could give them street credit for larger deals once the restructuring wave really starts. Wouldn't say one firms focus is better than the other. Larger deals are often more complex. Especially when you get into international/Cross Border issues. People that work on these types of deals generally will work on 3 to 4 deals a year. If you want to cut your teeth, and work on a lot of deals, groups that focus on the middle market gives you great experience and exposure. You would see the some of the complex issues in larger cases, but not as often. People at these firms could expect to work on possibly 7 or more deals in a year.
Key to restructuring is speed. A DM&A or 363 sale could be 1 to 3 months from start to finish. Versus a M&A deal that would last a year. New BK laws require an exit in 18 months, so you could be involved with a few deals where each requires multiple divestiture sales, financing the exit, negotiating with creditors, and (re)financing overseas operations. So if you only worked on 3 deals you would still end up with a healthy resume.
Having experience in both Debtor and Creditor side work, I would say Debtor side is better. Two reasons, first you are having think critically and come up with your own original ideas. Rather than just reviewing others work. Second, you tend to make more money on the debtor side.
Quite a few good books out there. One that I have heard a lot people reading lately is Distressed Debt Analysis by Stephen Moyer. If you want to take a class/certifications, the CIRA or TMA tests are good and informational. Not totally applicable to the banking side but give a good background on restructuring.
hands down, eh?
Last semester Henry Miller came to my Corp Fin class for a presentation. Afterwards, the prof invited some of the students out to lunch with him. That lunch made me want to be in restructuring, and now I might try to switch to the NY law firm that's tops for restructuring (Kirkland & Ellis, incidentally, where his daughter works). The lunch was a little late in the season, after we already accepted summer offers, so now I'm going to a firm for energy M&A but wondering if I should do Restructuring instead. Kind of a pointless story. Well, I guess my point is that when you hear a senior person describe restructuring work, it sounds exciting. Particularly negotiating with so many stakeholders.
Top-Notch Restructuring Groups? (Originally Posted: 09/18/2009)
I've recently gotten interested in restructuring and have been looking into creditor vs. debtor side work, distressed debt models, etc...
I'm looking for anyone with experience to share that would be helpful for a newbie looking to learn the ropes. In terms of firms with good restructuring groups, I've been hearing Blackstone, Lazard, Rothschild, Miller Buckfire, and Houlihan Lokey. In your experience, what other shops have stellar restructuring groups? I'd like responses to be based on personal experience to prevent this from degenerating into a rankings post. Hopefully this can supplement my current research. As always,
Thanks guys.
I actually have an interview at one of the firms that you mentioned above for restructuring. If anyone with knowledge restructuring has any recommended reading I could do to learn more about the business beforehand, please let me know.
I heard that the skills learned in restructuring are similar to M&A (minus the extra legal aspect). What are the things that people like most about working in restructuring?
Also, if you have any advice that would be great as well.
Thanks.
Run a search as this topic has been discussed before. The ones you mentioned are obviously some of the bigger players in the restructuring field, but EVR/GHL/Moelis also have respectable restructuring practices.
Miller Buckfire is an awesome shop. Tough to get in, pretty sure they only took 3-4 new analysts last year.
BX
I'd add Ernst & Young- Steve Zelin and Art Newman are former partners there
What are the best Restructuring groups? (Originally Posted: 11/10/2006)
What are the best Restructuring groups in the country besides HLHZ? Do any of them of them have a stronger presence in one particular region? Thanks.
In general I think Lazard has one of the strongest (if no the strongest) restructuring group. Don't know if they're stronger in any particular region though.
Very hard to get in though
Rothschild is very strong as well. Way bigger in Europe but they have had some high-profile restructurings in the US as well.
Lazard and Rothschild probably have the strongest restructuring practices in the US
The Blackstone Group
Lazard. This bigger then boutique bank relies on M&A as their bread and butter but everyone knows during restructuring, M&A slows down. That's why Lazard puts heavy emphasis on being one of the best if not THE BEST in restructuring to keep themselves afloat during recessions.
Unreal how this statement is still true to this day.
What about Greenhill?
or Evercore? Enough to keep them afloat after the bust?
Lazard, Evercore, UBS are great HLHZ, Chanin, Miller Buckfire are also good but a touch below.
What restructurings have they worked on? I imagine they are conflicted all over the place.
Code changed in 2005.
I haven't seen them listed in Bankruptcy Insider lists of Creditor or Debtor assignments. I'd hardly call them top tier - maybe they want to be and might be in the future but not now.
Despite the change in code, you can still have conflicts if your investment arm has holdings in the capital structure, and UBS has a large investment arm.
League table bs
I work at a boutique group focusing on restructuring. We have yet to see UBS or Goldman or other large banks (other than Lazard, which is a little different) as competition in deals, from middle market to biggies like Delta or Northwest - not on the radar. We've been expecting it, but it has not come to fruition yet. Granted, they may be able to stake out a business in pre-11 restructurings, but I still think they will face big hurdles in post-filings.
Mesirow...
You're correct, more prepacks, financing work than full blown restructuring.
big banks wont be in restructuring just yet but they are building up their practices in preparation for a fallout from PE
The irony is that the big banks were one of the drivers for the growing PE mess. They made fees by advising on selling and buying these companies at ridiculous valuations and issuing so much junk debt to pay for it, and soon they may make big bucks cleaning up the very mess they made.
why is everyone so cynic? Ride the wave bitches.
The regulatory trend is clearly moving toward allowing big banks to advise on ch11's. Courts and regulators expect walls within banks to control other conflicts, and bankruptcy is no different.
Evercore as tops? They just started their resturcturing practice recently...
you need to differentiate btwn those on the creditor and debtor sides
We'll see how the regulatory trend goes now that Dems control Congress and probably have a greater than 50% chance of getting the executive branch in two years. Whereas Republicans tend to view large financial concerns as trustworthy, Democrats do not.
I'll also add that Dems were not happy with the new bankruptcy laws recently passed.
UBS does not have long history in the US, which allowed them to do a lot of restructuring deals in the past. As they do more and more financings, they'll get conflicted in the future.
Correct me if I'm wrong, but I think UBS transitions the name of the group
Restructuring / Growth Capital Restructuring / FSG / LevFin FSLF
Restructuring is obv an active place to be now.
How long will it be a good place to be? Still a good place for a summer analyst next summer?
Really?
I knew BX was considered one of if not the top; what would you suggest are other top shops today?
Q3'13 restructuring league tables, enjoy: http://dmi.thomsonreuters.com/Content/Files/3Q2013_Distressed_Debt_Bank…
Looks like Laz and BX on top, which isn't surprising.
Thanks - looks like HLHZ is a (fairly distant) third; and interesting to see Moelis on the list as well, will be curious to see if they continue to gain in this area given it seems to fit with an advisory-focused firm like theirs...
It's important to note that Houlihan has always been a somewhat indirect comp to Laz/BX/Evercore/Rothschild/etc. in that they typically focus on creditor-side restructuring (which generally, as a very broad generalization, is not as "interesting" and has lower fees).
restructuring daily basis (Originally Posted: 02/16/2009)
Even after going through all the previous posts on restructuring, I still feel like I have no clue what a analyst in a restructuring group would do on a daily basis. Can any share their thoughts? Is it the same as banking where you prepare presentations, perform valuations on assets, and maybe project next 13 weeks cash flows?
Thanks
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