Restructuring prospects, why you should not consider restructuring
Just finished up my 2nd year as a RX analyst at a top group. Heading to MF buyouts. Over the past 5 years, I've noticed a real uptrend in interest in the space both on WSO and from kids at my alma mater, and often I've noticed this interest for what I believe to be are the wrong reasons. I wanted to make this post to hopefully help some prospects with career discernment and figure out whether or not restructuring is for them.
I think the first thing, the most important thing, and the thing that everyone singularly focuses on are the exits, the elephant in the room. By now its pretty common knowledge that restructuring can lead to exits to non-distressed PE and HF roles. I know many kids are not actually interested in the restructuring or distressed space and just want the easiest way to MF PE. I think my response to that would be, firstly, PE recruiting is a lot of self-selection. Restructuring kids get those exits not because of exceptional experience or exceptional pedigree, but because almost every one of those kids went into restructuring wanting to go to the buyside at a select number of firms, myself included. If you are that kid and opt instead for EVR/PJT/CVP M&A or GS, you will get the exact same MF PE exit you would have gotten, if you are just as prepared and driven. In fact, it will be easier for you to articulate to the recruiter why you want MF PE buyouts or whatnot, whereas some recruiters tried to bucket me into distressed roles at the beginning of the PE recruiting process.
I think where the real weakness of restructuring appears is when you look at the experience and culture of the groups in which you are working. Restructuring is extremely varied, so no two analyst years will be alike. This can be both good and bad, as you get a wider range of exposure to different processes but you also do not get to specialize in something like you do in M&A. When I think about building out a skillset, I think about specialization. Especially when PE buyouts is so similar to M&A, I do think that there is some benefit to picking M&A over RX in that context. The experience you get in restructuring is great, but it is just far less applicable to PE buyouts than M&A is.
In terms of culture, I can handily say that almost all top restructuring groups have worse culture than their M&A counterparts. I know this is true for EVR, PJT, MOE, possibly LAZ, and almost every HL office. For better or for worse, restructuring attracts a very different type of career banker than M&A (in my opinion). Your seniors are more abrasive and less charismatic. As a side note, on the plus side, however, you do get an extreme amount of senior exposure in restructuring which I doubt you will get in any other banking role. I have experienced and heard of much more toxicity in RX than I ever have heard of in M&A. I am a thick-skinned individual compared to most of my fellow analysts but there truly are complete dickbags in this industry. The hours are also much worse at the firms I mentioned above within RX as compared to M&A. The hours and culture also gets worst at "2nd tier" firms like GHL and Ducera. I would also expect get RX hours to get much worse as we enter 2024 and after. Finally, within your own analyst class, you will interact with a much more diverse group of peers if you pursue M&A. This (I assume) becomes really important as you progress throughout your career as you stay close to your analyst class. Kids in M&A are there because they want to pursue strategy, corpdev, PE, HF, consulting, VC, long-term IBD, or don't even know what they want to pursue yet. In RX, 9/10 kids in your analyst class want to go to the buyside, either in a PE or HF role. And this isn't to say anything negative about RX analyst classes. I love my analyst class. They have been my best friends for the last two years, and I don't foresee losing contact with them in the near future. However, all of us are relatively alike, relatively hardo, and share similar career ambitions. If you do want to be in a more diverse environment, perhaps consider M&A.
Finally, I think as a result of heightened interest, RX recruiting has also gotten a lot tougher. Due to small headcount and limited capabilities, we only interview very few kids, even from our target schools. If you apply, even if you have a great resume, you may not get an interview. Even if you do get an interview, you will go through 2 rounds of RX technicals and basic behaviorals to cull out the herd before the superday. Unlike 5 years ago, answering all RX technicals correctly (with some interviewer assistance) is table stakes if you want the offer. If you are not intuitively good at these logic/mental-math problems, you will not do well in these interviews. I am constantly astounded by how many kids are bad at logic and mental math while giving these interviews, so please be honest with yourself. Beyond that, we look at your behaviorals, what school you go to, and how much we like you to make a decision. A lot of this last portion is based on what seniors decide, and has a bit of nepotism layered in. Every year we have kids at the superday who ace every technical and still don't receive an offer. I think this is the biggest misconception in restructuring recruiting. These days, you can't just be a technical-only candidate and expect to get an offer. There's just too much competition. I believe that we are also starting to build out diversity programs, as are most firms, so many of the spots may already taken by the diversity process before your superday even occurs. Restructuring class sizes never exceed 10 for even the largest offices so there are a very limited amount of spots. There are probably 300 top-tier M&A seats while there may be under 50 in restructuring.
All this was the long way of saying that restructuring may not be the way to go. Feel free to ask me anything you want. I reserve the right to ignore dumbfuck questions.
Quick Q: you say hours are worst, so are you able to give a range? Most of the threads on here are for other coverage/product roles. Random follow-up- any insight into non-EB RX roles? Have heard of JPM having a small team that obv has barriers in terms of avoiding conflict of interest. Thanks for this honest, pragmatic insight, btw.
I would say 80-100. I know a couple groups that run around 100 constantly. I know that is the figure always given in banking but there is a big difference between 100 hours and 80 hours physically when you are working them. Each marginal hour gets worse. Comparing this to college friends in my year at PJT and EVR M&A who worked always 70-80 hours the last two years.
Edit: BB RX is not similar to what you get at a true restructuring group. Much more vanilla stuff.
No, there are no true IB Rx groups at a BB.
what are the proportion of people who are coming from mba’s? what is your opinion on mba’s?
We recruit a few people from MBA. Often times they are dual MBA and JD. For what its worth, they are generally from pretty strong backgrounds and have previous related experience, whether in banking or law.
While EVR RX is known to be very sweaty, PJT RX has better culture than PJT M&A and you can say the same for HL
I would disagree on your assessment of PJT. Agree with EVR. Would note that HL CHI and HL LA are both extremely sweaty and what you said really only is true for HL NY, which will still work you hard.
very on point, I would still say PJT RX is better given how the M&A group gets worked and interesting regional offices of HL are sweaty
I've also heard that the culture of HL RX is far better than that of HL Corporate Finance
Agreed.
CF culture varies and is group dependent.
*Neil Augustine has joined the chat*
edit: what? you think Neil isn’t like that??
GHL RX has undisputedly one of the most toxic cultures on the street. Not really worth considering unless you’ve exhausted your options at all other RX shops (incl. Piper, Miller, and Baird)
What if you interned in RX (I currently am; ignore flair) and for whatever reason don’t get a return - how would you spin your experience when interviewing for standard coverage groups?
I think I will get a return offer (solid midpoint review), but I am paranoid I won’t.
I think there are a lot of really good, simple answers for this. Here are a few points you could mention (obviously exaggerated a bit for interviews):
1. You want to develop expertise in an industry, not be industry-agnostic
2. You are interested in the strategic aspect of coverage/M&A banking. Want to understand how a company grows and strategizes, focus on strategy, not on liability management, bankruptcy, and special situations. Struggling/Dying company v. growing company
3. You enjoy the more clear, steady, process-oriented work that a M&A deal provides and you would rather get really good at M&A rather than get exposure to everything but be a master of nothing in RX (in terms of an analyst stint)
As someone who’s interested in restructuring but not completely sure if I understand what all it entails, what would you recommend to help me decide if I should go for RX internships? Is it really that much more hours and worse culture than M&A? I feel like I could be competitive for some of the EB RX internships, but is it worth trying for them in your opinion?
Reach out to some alum in RX, try to get through Moyer, or buy the guide on the RX interview site and read that. Any of these three will help you figure out if RX is for you. I think people make it out to be a lot more glamorous than it is however. Just know, everything you work on won't be as glamorous as the Purdue Chapter 11 poison pill or some Elliot activist takeover.
This comment is pretty good for a summary of the different models involved.
What are your thoughts on carving out an expertise on new technology i.e. cryptocurrencies, etc.? This sector's timing seems similar to the tech boom and crash of the early 2000s.
I don't know enough about crypto to have a view, sorry. In general, carving out an expertise in restructuring is really difficult in the industry sense because there are so few deals to go around. You also don't know if you are going to stay in the advisory industry long-term or not.
So tldr version is it's not directly as applicable to MF PE, your peers aren't going to be as diverse as they move through their careers, the hours are worse, the seniors are worse and it's harder to land an opening.
I think the first point is misguided. The reason that RX Analysts are so heavily recruited by PE firms is because the modeling in RX is much more technical, and so RX programs generate Analysts that are usually really good at modeling. I don't know about other firms, but I know that every model that we make is from scratch, and Analysts in RX spend a lot more time in Excel making models than other groups because the work is nearly all analytical. I think it's safe to say that the average RX Analyst is a much better modeler than you'd see in coverage groups. Coverage analysts tend to spend more time, relatively speaking, in PowerPoint which, while it is used in PE, isn't really the basis for making investment decisions. And at a lot of sponsors the Analysts/Associates are the ones fully owning the model and running with it, so having a junior that is super efficient at modeling and can independently assess data and incorporate it into the model, that's crucial. With all of that being said, I can't comment on how the RX Analyst experience compares with the M&A Analyst experience, but the above is definitely a consideration for why sponsors recruit RX Analysts so heavily.
Additionally, I do think it's a super relevant skillset to have when going into PE. You get exposure to the inner workings of the credit markets; you gain an understanding for the relationships between equity holders, creditors and other constituents; you do quite a bit of modeling; and you'll even run rigorous valuation analyses and marketing processes. You also gain a really good sense of the tactical decisions that equity holders make from both a balance sheet and operating perspective.
Regarding the culture and hours, I would definitely say that on average RX is going to be pretty intensive. The deadlines are usually tighter, the work requires more analysis and hence more work / review / iteration and situations in deals can change pretty quickly. The litigious nature of it also can add quite a bit of work / stress depending on the situation.
Regarding seniors, I haven't had the experience you have had and I honestly don't think that the grass is greener on the non-RX side of things. While RX deals can get contentious, I haven't seen anything that confirms that working in RX generally means that you're going to inherently have more abrasive senior folks above you. I've heard a plethora of horror stories from classmates and friends in M&A and coverage groups, and have also suffered some of those experiences myself working on the other side of the fence, so I don't think that's necessarily true. I think anyone going into banking should expect that some people above you are going to be miserable to work for - that's just the nature of the industry unfortunately.
In terms of being a challenge to recruit for, I can see that, and juniors recruiting in should go in with their eyes open and keep their options open. It's a small industry, deal teams are small, and hence recruiting doesn't afford a ton of openings for newcomers. Demand is high precisely because everyone knows what exits look like for a lot of these groups. So the competitive nature is really already known by everyone. With that being said, it's not different than recruiting for any group that has great exits - the competition is going to be greater for those seats.
As for connectivity with fellow Analysts, I was never in that situation so I could be wrong but it seems shortsighted to me. You're in a two year program then you're off to other places. Usually the program will have enough to keep you all relatively in touch. And if you went to a good sponsor it seems to me like your fellow Analysts would want to remain in touch with you anyways. But then again I could be wrong.
Were you ever an actual RX analyst? You imply that you weren’t. FWIW, my experience has been similar to OP’s than yours.
edit: you’re a MBA VP without a pre-MBA finance background. I’d take what you’re saying with a grain of salt.
OP here. I think you bring up some great points. I just want to clarify, if I could go back 4 years and decide whether or not to recruit for restructuring, I still would 10 times out of 10. I would not trade my restructuring experience for M&A experience and am glad that I pursued restructuring. I believe that the analyst experience is overall better than M&A. However, this post was written for restructuring prospects who have a very glamorous view of what the industry is really like. Saying this once again, I've encountered people both on WSO and kids from my alma mater who are very gung ho about restructuring and the opportunities within. The benefits and perks of going into restructuring are common knowledge on WSO. I specifically wanted to share the other side of the coin, with a negative bias.
Secondly, to address your points:
I would echo An1 in a much less dickish manner, and repeat that you are incorrect about PE recruiting. While the modeling in RX is much more technical and modeling is a large portion of a PE associate's job, that is only one small part of the story. I still believe that RX largely self-selects some of the most technically-capable and buyside-focused kids and this results in the PE/buyside exits that you see. PE recruiting is much more than modeling these days. It is not the modeling that makes us stands out. It is the fact of us that many of us are complete hardos (myself included), very driven individuals, and we were targeting great buyside exits from day one.
Of course RX is a relevant skillset to PE. I agree that we do get all that you have talked about. However we are lacking in some aspects as I pointed out above.
You're right about the hours and culture, agree with you there.
Seniors, I still believe that RX seniors are worse than M&A although that may be main character bias. On the other hand, you were never an RX analyst (don't mean that as throwing shade) so you may have had a different experience than me. The number of IBD analysts, rx or otherwise, who I have a closer-than-professional relationship with is in the high double digits, maybe even low triple digits, including school alum and analysts at my bank. You have less than 10, if any, of these relationships as someone who entered at the associate level.
In terms of interview difficulty, I also recruited (or planned on recruiting for) M&A roles. It takes about 2-3 days to prepare for an M&A interview at the undergraduate level. I would say it is extremely difficult to prepare for RX in less than two weeks. When you do get to the interview, there are more rounds, longer superdays, and less seats compared to any top banking analyst role. More than half the kids in your analyst class will be Harvard/Penn.
I think you misunderstood my point on connectivity. I am sure (have not reached that time yet) that connectivity is great. What I was more referring to was diversity of analyst class and exits.
Mind PM'ing me? Had some specific guidance that I'm looking for as a RX prospect.
Great points. It kind of seems like the ideal place to be for really learning the trade. You touch on so much and go so in depth. Like you said the work is super analytical, you’re not wasting days of your life in PPT learning nothing. Kind of shocking the divide in learning experiences across roles in IB sometimes, and coverage is a coveted place to be often. You do learn high level stuff well. I digress. I’ve been really interested in RX for that reason though, you dive deep in and get super in the weeds on a lot of stuff
Thoughts on recruiting for distressed credit/workout roles at BBs? Have you worked with anyone from these more risk oriented roles?
I have not worked with anyone in this role. From my knowledge, the "RX" work you do at a BB is not really similar to a true RX group.
Appreciate the candor. Would you say for those at semitarget but not Duke, UVA, Chicago, Mich, etc. and non-diversity interested in RX that recruiting for RX would be a waste of time? How would you advise on navigating vanilla IB/M&A recruiting at the same time? For example, EVR/PJT that don't allow you to recruit for both - would it be wise to give up on those RX groups to have a shot at their M&A at least?
If you are at a semi-target, I would check if you have alum in RX. If you do, you can probably recruit successfully and it is not a waste of time. Even if you don't, I would recommend recruiting for "tier two" groups such as: HL CHI/LA/MN/DAL offices, Gugg, Miller Buckfire etc. Maybe even GHL and Ducera. What's nice about RX is that you can very easily lateral up to a top-tier RX firm either for FT or a few months into FT because a ton of kids leave for MF PE or top M&A banking and you have a very specialized skillset.
Thanks for the response! For re-recruiting post-junior summer, would moving to a top RX group be easier from "2nd tier" RX groups as you mentioned like GHL for example, or from top M&A groups, say a top BB or something like MOE LA for instance?
What do you think about places like CVP/PWP where you can get mix of M&A and RX?
I guess they are not big in the space so the RX experience would be limited?
What’s your thoughts on the points you made (exits, hours, culture, work, etc) for RX at a BB. For example I know GS has a small RX group within leveraged finance but not sure how that would compare or what would apply from what you said
BBs don’t have real Rx teams. Just workout groups that do ABLs and DIP financing - boring shit
I would love to hear additional feedback on this. There is a RX pod in GS Levfin. From what I gather, there is a RX group that also does advisory. Not sure if they’re the same or not. If there is an advisory group, they must be really low-key.
Any advice for someone who is contemplating doing RX in the long term post-mba? What are things they should consider?
I'm sorry, I don't really have much of a perspective on this or enough experience to give you a good answer. I guess just make sure you like RX and the culture is a good fit for you. Teams are really small so you need to fit in.
This is a super vague question. I would focus on getting the post-MBA role first if you haven't already, and then it's just developing the technical skill set and trying to be in regular contact with other consultants / lawyers / advisors to develop a working relationship with them.
Currently in RX at a MM firm for the summer with decent deal flow. However, tbh I'm not too interested in the space. Do you recommend rerecruiting or sticking it out for exit opps. Ideally want to go to upper MM PE or MF
Just interned in a top RX group and am returning full time (ignore flair). I liked my group and am not interested in exiting to PE, though I did notice the RX MD's at my bank had less of a personal life than their M&A counterparts.
If your goal is to build the strongest modeling foundation your first 2-3 years out of college, nothing beats restructuring. the hours can be next level insane too, but every job will feel easy after restructuring. Everything other than MF PE perhaps.
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