RX IB vs. RX Consulting
Hey everyone, was going through WSO and saw a bunch of posts about both, but all that did was end up making me more confused so decided to create an account and post on here to try and get some clarification.
A little bit of background: got an offer for an internship at a pretty highly ranked RX consultancy (this is my final internship for undergrad), semi - non-target.
Anyways, are RX IB and RX consulting just two sides of the same coin? In short, when and why would one get hired over the other? Also, why do so many RX consultancies (FTI, A&M, BRG, etc.) have in-house IB teams, but RX IB firms don’t have in-house consulting teams?
What skills are developed in both & what overlap is there? Also, like 80% of posts on here about the topic mention that it is possible / straightforward to jump from top RX consulting to top RX IB, but that not many people want to do this for a bunch of reasons. Just wanted some additional input on this, and is the jump the other way (IB to consulting) possible / common & why? Why is the RX consulting world so obscure (many people in finance don't even know what RX consulting is, and most assume it's just RX IB). What are more general common exits from both?
For someone seriously considering a full-time jump to IB ( like me :) ), what’s the best way in—network your way in, lateral, or straight-up apply (let's assume to a pretty good RX IB firm )? How competitive is it coming from consulting, and what would the IB rec. team be looking for? Any recommendations on timeline? Also, why is RX consulting comp so high compared to other areas of consulting / even IB?
Apologies for the landslide of questions, but would really appreciate any input / insights.
Self-bump
In a restructuring, a company will hire three parties to advise them: a lawyer, banker and consultant. All these parties work together to close a deal. Lawyers are experts in legal elements (negotiating legal aspects of credit docs, sales processes, bankrupcy filing, etc.), bankers focus on traditional finance work (distressed M&A, raising capital, addressing existing cap stack) and the consultants focus on the operational aspects (developing business plan, managing the liquidity, managing vendors, cutting costs).
Most of the big RX shops have in-house "IBD" teams, but they are typically very small (their revenues are a rounding error vs big RX consulting revenues), limited due to conflicts (can't pitch to be the RX banker if already being hired as the consultant), and typically serve on much smaller deals on creditor side. Most companies and legit distressed investors hire true RX banks like EVR, PJT, etc. rather these teams.
RX IBD has much more applicable skills and better exists vs RX consulting. RX consulting is much less glamorous with most of the work similar to a finance / accounting role like tracking payables, liquidity and updating the same deliverables for weeks and months straight. It is paid well but your bonus is based on hours billed, so you can potentially make a killing, but that guarantees you are getting cranked because driven by your hours billed.
In short, RX IBD >>> RX Consulting and it's not close. RX Consulting is a good role with decent pay, but niche with limited exit opps. Most RX consultants stay in RX consulting though there are some, albeit rare, laterals to RX IBD or buyside credit roles if junior.
Great writeup however I disagree with some of what you said. Would not say RX IBD >>> RX Consulting is as wide of a margin as you state however, specifically to the high finance route of being an investor etc yes its a difference, but consultants often can become the interim CEO and have good touch points to distressed funds, management of companies etc. Different roles, but generally IBD is better for certain people just caveat the fact Consulting has its role and its an amazing career.
Agreed, aside from a couple things. In my opinion that the “RX IBD >>> RX Consulting and it’s not close” stance is myopic. In reality, RX consulting is essential in major restructurings, and the best consultants get extremely well compensated while building deep expertise that can lead to C-suite operational roles, distressed investing, or even RX banking transitions. OP, keep in mind that perspectives may differ, and you may get a slightly different response(s) if you posted this in the PE or consulting forums. Bottom line, if you really want to make the jump, you can. Also, RX consulting as you mentioned is kinda opaque so it's hard to get the best / most accurate "take" on the industry.
Also, this is atleast my take on the space, but the characterization of RX consulting as merely “finance/accounting work” is very misleading. While tracking payables and liquidity management are important components, top RX consulting firms (FTI, A&M, Alix) are deeply involved in operational restructuring, business plan development, cost-cutting strategies, and even interim management. They're probs often more critical to a turnaround than the RX bankers, who are ultimately just structuring a financial transaction. A successful restructuring isn’t just about shifting liabilities—it’s about making sure the company can function going forward.
Not even going to bother touching on the X is worlds better than Y in totality, but yes you can be an FA on an engagement, as well as provide banking services (have seen anything from 363 sales to refinancings).
Meant x > y for junior level (admittedly exaggerated) and based on the applicable skill sets and exits focused on in this forum. RX consulting is a great career and extremely lucrative as you advance.
Sure, consultants sometimes will do IB type work, but mostly on much smaller deals / companies where they only hire one financial advisor. I was addressing the typical large cap bankruptcy which Alix, A&M and FTI mostly play in. Your typical experience in RX consulting is not asset sales and capital raises.
Bumpy
Bumpity bump bump bump
Bumpp, curious too.
Bump
If you wanna lateral to IB, your experience in RX consulting from any reputable shop should at least get you conversations. Same for going from IB > RX Consulting. Gotta network, know your interview technicals, and you should be just fine. I went down the path of RX consulting > banking > back to consulting. Saw RX consulting peers exit to PJT, Evercore, Moelis, top BB banks, etc etc. Many in RX consulting stick around for x number of years and then go into Operating Partner roles, interim or full-time CFO roles, FP&A if they want, maybe a couple here and there go into an investing seat directly from consulting.
Curious, of the peers who made the jump to PJT etc, how much would you say networking played a role? Like did the experience of RX consulting on their resume do most of the heavy lifting & not too much networking, or did it all depend on networking? How would you recommend networking (talking with bankers who work on the same deals as you vs cold emailing etc). Does this change as you move up the reputation ladder when it comes to RX consulting firms? Also, did they have prior IB /PE experience or was it pretty vanilla aside from the consulting stuff?
Bump, very curious about this too
I'd say networking is a must to get your foot in the door, and good RX names on the resume go a long way in supporting your networking. Having experience at A&M/Alix will give more ease of mind to a banking VP/D who is vouching for recruits vs. experience at an Ankura or CR3 (not trying to knock those guys). Cold emailing is fine and you can get some hits, but if you do end up building some rapport with someone on the other side of the deal that'll always be better given that it's a warmer connection. Most of the folks I know who went RX Consulting to IB only had RX consulting or related experience, no background in IB/PE.
How would you rank RX consultancies on name recognition / prestige (at least in the eyes of bankers / PE people)? Is it dependent on if the firm does majority creditor or debtor stuff? Also, would you say that the work is majority accounting or is there a mix? One more question, what / how strong of a transferability in skills from consulting to IB/PE would you say exists?
This one may be subjective, but in your opinion, were the people who exited to PJT, EVR and others standouts during their time in consulting? Like, were they head and shoulders over the other consultants in their experience / skill, or were they just like others?
bump especially the creditor/debtor experience part
I commented somewhere on this in another thread, but a general tier list is as follows: T1 - A&M, FTI, Alix; T2 - BRG, Province, Ankura, M3; T3 - Riveron, Huron, EY-P, Portage Point Partners; T4 - Meru, Accordion, Force 10; T5 - PwC, Deloitte, others. In general, prestige is based on who wins the highest profile debtor-side deals. If not debtor-side, then the higher up the cap stack the better (UCC mandates are thought of as boring and “less prestigious”).
Definitely would not say the majority of work is accounting, lol not sure where that comes from. We do accounting in the sense that we’re the ones who model while RX bankers do not model nearly as much (in just about every deal, the consultants will build the models and hand them off to the bankers for their marketing materials). Someone commented above, but the smaller the deal you work on, the more of a consulting / banking role it is, as the consultants sometimes take on capital raises and 363 sales themselves on deals under $500m or so. Consultants from every shop mentioned from T1 through T4 above have engaged in these banking activities themselves (T5s often win the RX-related accounting mandates or receivership mandates).
All that said, yeah huge transferability. People come and go to/from RX IB easily if they want to. That said, people don’t tend to leave RX consulting. Not the original commenter, but I know guys who’ve made the jump to RX IB groups who were good but not the most amazing I’ve seen. Those guys are the ones who are CROs at like 35 years old. Long story short, if you’re from T1 or T2 (maybe T3?) consultancy above you should be able to jump to IB fairly easily if you really want to.
I think some MM / LMM banks like Lincoln and B. Riley do actually have restructuring consultancies.
bump
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