Restructuring versus M&A

Hi everyone! I'm a prospective IB candidate (freshman at a Midwestern target) and I'm interested in Restructuring. However, I'm debating between pursuing restructuring positions at EB's versus pursuing more typical M&A and industry groups at BB's. I really like restructuring, but I have a few concerns. I would appreciate any advice. 

  1. I know that going into restructuring usually means going into a smaller bank. Would not have the network or name of a huge BB prove harmful? I'm also not sure at this point if I would stay in finance for the long-term if that has any influence on your advice. 

  2. I know that restructuring has been quite busy during the pandemic. So, being a student right now (I've got three and a half years left), would go into restructuring in what's likely to be a booming economy going to be bad for my career?

  3. I'm not sure about which role I might want to pursue after the analyst program (whether it be in HF, PE, VC, Corp Development, or even something outside of business). Would going into RSSG leave me pigeonholed? 

Thanks!

Comments (24)

  • Analyst 1 in IB-M&A
Dec 21, 2020 - 4:19pm

I don't have an answer for you, but a good question nobody entering RX asks themselves is... Do you like working/analyzing shitty companies all day? Because that's what you'd do. RX is also bleak/dark, and they're never happy outcomes, therefore there are a lot of assholes. I wish I knew this entering rx

Source: former Rx banker, Rx consultant Now on the buy-side (also bleak). 

  • Intern in S&T - Equities
Dec 21, 2020 - 9:02pm

Gonna be interning at a distressed fund. Do you enjoy the work? Or are you trying to get out? Feel like I just completely fell into the role and didn't put a ton of thought into working in this area long term.

  • Prospect in IB-M&A
Dec 23, 2020 - 11:00am

Interned at a top distressed group and left for exactly this reason. Couldn't imagine spending 2-4 years in that environment let alone my whole career. Even if you can separate yourself from it, it's what you deal with for the majority of your waking life

  • Intern in S&T - Equities
Dec 23, 2020 - 2:10pm

Any chance you could PM me? Have a couple questions about your experience

  • Associate 3 in IB - Restr
Dec 28, 2020 - 7:23pm

You must've had some really bad experiences during your time in the space. There are in fact satisfying outcomes when the company successfully executes its turnaround and the fact that thousands of jobs were saved in what could've been a complete liquidation. There's plenty of darkness dealing with distressed companies, but very interesting in managing how to approach each unique circumstance.

Dec 21, 2020 - 7:26pm
motley_accrual, what's your opinion? Comment below:

Realistically, the answer is no to all 3 of your questions. Hard to get pigeon holed so early in your career, and there will always be over-levered companies to restructure.

Would think those are all secondary or tertiary to the question of whether you think restructuring is interesting though.

  • 2
Most Helpful
  • Analyst 2 in IB - Gen
Dec 21, 2020 - 7:27pm

To answer your questions in order:

1) The best restructuring groups have just as much name recognition as any other banking group while competing for roles in investing, advisory, and finance. The headhunters know the top groups as well which means when corporate strat / tech / startup roles are pushed to them you'll have the same opportunity to interview as someone in another banking group. That said, you won't have the story that someone in a TMT group would when interviewing for a corporate strat role at a startup. So it depends on what exactly it is you're thinking about doing after two years of banking. If it's investing (PE or HF) you'll get all the looks you want from a good boutique same as if you were at a BB.

2) No matter where we are in a market cycle, there are always business in distress and others seeking m&a activity. If you're at a good bank you'll have things to work on no matter what. Don't pick the platform that you'll launch your career on based off of your perceptions of a market cycle.

3) See 1. If you're at a top restructuring group you'll get extremely good opportunities to interview for the best hedge funds and pe shops. VC and Corp Dev aren't the most popular exits but you could go after them if you really want. Candidly, it would be much easier to get a VC spot if you were on a TMT or Healthcare team. That's the cost of specializing. 

Most of the kids that wind up getting the best restructuring offers out of undergrad are pretty set on staying in finance. The Rx universe is small and recruiting is competitive and pretty technical -- the kids that just have a passing interest usually get weeded out. If you're at a target / semitarget reach out to upperclassman at your school that have interned or are returning ft to the places you're interested in -- they'll be able to walk you through their rationale, interests, and give you a good sounding board for when you're older and recruiting.  

  • Prospect in IB - Gen
Dec 24, 2020 - 4:22pm

I know this is a bit of a meme but in reality restructuring will still be incredibly busy in the coming years as there has been a ton of government support and offerings this year that mean that bankruptcies have just been put off. Indiscriminate debt market support from the government means that shit companies have been floated through this thing and they will still, next year, be shit companies, but now without that support.

Dec 23, 2020 - 2:42am
ASEANalyst, what's your opinion? Comment below:

1. Comparing huge BB to a RX shop isn't quite fair in terms of network as you'll be mostly communicating with smaller, financially distressed companies and lawyers (lots of bankruptcy/corporate litigation lawyers). Having doubt staying in finance is already a bad sign if you are considering going into RX since you'll be dealing with a lot more technical and law stuff plus people in RX are quite ruthless with deadlines and clients are desperate so expect insanely tight deadlines and hours at times.

2. There will be always over-levered and poorly managed companies. You'll be working less hours overall if the economy is booming.

3. There's always distressed fund and SSG exits. But RX exposes you to a much more specific skillset (corporate turnaround, liquidation/bankruptcy, etc) which aren't quite transferable if you're planning to exit outside of the RX industry

Dec 23, 2020 - 10:09am
WB97, what's your opinion? Comment below:

"2. There will be always over-levered and poorly managed companies. You'll be working less hours overall if the economy is booming."

You would think this would be the case but the opposite is true - in an easy credit market the lack of RX mandates means each one is more hotly contested and your MD will be tearing his/her hair out pitching CoComs and trying to make revenue targets. This makes for a worse analyst experience than a year with lots of execution.

Dec 25, 2020 - 7:00pm
SunTzu, what's your opinion? Comment below:

RX provides great exit opps for private credit as well. You become very familiar with credit docs and the levfin world. There is not nearly enough talk about private credit on WSO. Especially given the amount of capital flowing into the space. 

Life is more than dollars
Dec 27, 2020 - 3:45pm
Lester Freamon, what's your opinion? Comment below:

Do you mind elaborating a bit on private credit? I'm exploring restructuring opportunities in the consulting space, since it's an area that's obviously hot right now, and have always been interested in credit buyside opps. Does private credit involve mezz and special situations groups or what?

  • Analyst 2 in IB - Gen
Dec 24, 2020 - 11:30pm

the mandatory nature of restructuring transactions -- and the fact that there are often contractual deadlines (i.e. maturity dates, coupon payments, covenant breaches, liquidity shortfalls, etc) means there's less BS turning of documents for new pages and comments that don't add value

M&A on the other hand - the CIM can be unlimited pages and the marketing process can always wait another week until the extra appendix pages on "key investment highlights" have their graphic tweaked yet again and the whole process can get delayed 6 months since someone decided this quarter just doesn't feel right to kick off as you're dependent on directors' and executives' whims for if, and how the M&A process will proceed.

People are not as focused on how pretty all the fluffy extra pages in the deck are when there's no money for payroll / a default at the end of the quarter... you're more focused on critical value-add analysis (generally) and figuring out your side's negotiating leverage in RX in my experience.  

  • Analyst 1 in IB-M&A
Dec 28, 2020 - 2:24pm

RX will always have opportunities just like M&A will always have opportunities at least in MM. It just depends on what industries are booming/busting. RX is faster, less sexy, and can be more intense. Similar skills. I waa between RXSSG and M&A just happened to get M&A offer. I know people in RX who love it though, but they tend to be more blunt and frankly smarter than many in M&A.

  • Intern in IB-M&A
Dec 28, 2020 - 8:27pm

Just to add - generally speaking, during my internship I noticed that the RX bankers are definitely more passionate about their job compared to M&A/industry bankers. And same goes for the RX and M&A bankers that I met during recruiting at other firms too

Dec 28, 2020 - 6:25pm
smokeybruin, what's your opinion? Comment below:

Interned at a top shop this summer (though in Europe) and can share a few thoughts on RX maybe (but as I said, that's an European's POV - take it for whatever its worth).

We were extremely busy this summer and outworked our M&A colleagues by a few hours each day. We handled some very well known names and I was actually impressed by the scope of RX work. Thought it would be more "law-ish" and document-based, but it was actually much more corporate finance than in my following M&A internship. Also a lot of the projects started pre-COVID, so don't worry about a lack of work after that hell is over. There will always some failing companies, and at least for my country/region I am pretty sure that a lot of work will come in 2 to 3 years, when government help has to be refinanced and a lot of companies will face extreme problems that now have only been deferred (tempted to think the situation might be similar in the US). So overall, if you are (or anyone else reading this thread) interested in staying in finance, go for it.

As for the decks (I didn't work on a single pitch throughout my internship btw - the projects came in left and right without a single pitch), I felt that my RX team didn't overthink stuff as much as my M&A team did. The decks were in no means bad and actually still extremely spot-on, but compared to M&A there for sure is less focus on making it look fancy or impressing a client with some obscure analysis no one actually cares about. A lot of the work actually was also very much M&A related (ie looking at some possible disposals to generate cash and stuff) which is of course done hand in hand with the M&A guys, so you'll actually do a lot of the interesting M&A stuff and in addition RX, which I think is a great combination.

Can't really tell a lot about exits, but one colleague exited to a PE during my time there, another former MD went to a PE and funnily I interviewed with one of the best RX consultancies afterwards and the partner of that team previously also worked in my team. So the exit opportunities for sure exist too.

Received an offer from both internships this year and went for the BB M&A one, despite loving the RX work actually. Was an extremely hard choice and, if the M&A team didn't do such a great job in convincing me to join, I might have gone for the RX job even with both offers available. Overall, both are extremely great choices, and will provide you with the exact same opportunities afterwards I guess.

Dec 31, 2020 - 7:03am
loanboy043, what's your opinion? Comment below:

I'm thinking about creating a mini-overview of restructuring / Ch 11.

- anyone that wants to help me create stuff (I made a list) - and learn on your own - let me know. Literally going through real examples in legal docs - Looking for someone that is high energy/motivated/willing to get their hands dirty, and has free time, and wants to add something to their resume perhaps. Don't wanna say any more than that.  Hit me up

Also - any interest in this from the general public? 

Also - anyone that knows me and reads my stuff knows that "mini" means probably fully loaded, very insightful stuff.

  • Intern in IB - Restr
Jan 1, 2021 - 10:06pm

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  • Intern in IB - Gen
Apr 28, 2021 - 10:36pm

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