Distressed Investing vs Workouts Group (credit fund)
Hoping to hear some thoughts on benefits / downsides of these two roles compared to each other... distressed / special sits investing at a dedicated distressed fund versus internal workout team at a top direct lender (workout team can take equity ownership and perform the turnaround for very troubled positions). Trying to think through work life, career development, comp and generally just how interesting each role is, and would welcome any thoughts.
Mind PMing me the name of the fund with that workout group? Not common for the workout group to tackle a turnaround. Even just fund size, geo and industry would be nice to know.
The workout team is a value preservation team at the debt fund while the distressed / special sits team is more of a value generation team at the fund.
I made this decision and went with distressed / special sits.
@M_1 Golub, Monroe Capital, and Apollo are all recruiting for teams that can lead turnarounds.
This is correct. The workout group at a direct lender is handling portfolio companies that, for whatever reason, did not pan out as expected post-close and they are analyzing how to maximize the firm’s returns (whether taking control ownership, converting some debt to preferred equity, negotiating a Sponsor equity infusion in exchange for maturity extension or covenant holiday, etc.). It’s a very important team given the nature of private credit - it relies on generating consistently stable returns, as opposed to private equity firms that can offset a bad investment with a homerun investment. So if a private credit firm loses $50MM on one deal gone bad, it’s a big deal. You’ll still get good experience negotiating legal docs with PE firms, lawyers and co-lenders, underwriting restructurings/amendments, interfacing with your internal investment committee, modeling complicated cap tables, etc. Since special sits investing is still new transaction execution / underwriting from the perspective of your firm, it’s likely viewed as more “prestigious” with slightly higher comp.
Would you think that the mandate to take on equity and manage the turnaround changes this dynamic somewhat from a classic workout team? Trying to benchmark roles like this, but seem to fall somewhere between distressed investing and classic workouts / risk management
How did you weigh comp vs lifestyle? Also, it would be very helpful hearing any other thoughts you had while deciding since I’m in the same boat now decision wise
Only way I'd go to workouts team is if it was a hybrid team at a shop that had both special sits and did workouts. For example Ares since their special sits guys also do their workouts.
Lifestyle is going to be worse imo at workouts depending on how many names / lead time you get as a workouts team. It's kind of like banking where you may get dropped into troubled situations last minute.
These workout teams are executing full blown turnarounds or doing more traditional management of just trying to claw back cash etc?
Workout team tends to be more portfolio monitoring + leading the restructuring and sale of assets / companies. It’s certainly a way into special sits / distressed but imo if that’s what you’re going for, you should just go for special sits / distressed in the first place (whether on sell side or buy side).
How easy would it be to switch into a special sits / distressed investing role from workouts? Currently at a private credit workouts group that also does distressed investing on the side (mostly into the companies that we're turning around). Would going RX IB -> SS be an easier route?
Is it one of the funds listed in the thread earlier, or another private credit fund?
My firm runs sector teams fairly independent from each other, and each have their preference for utilizing our workout group. Some teams leverage them extensively, while others (like mine) have more restructuring experience and tend to handle the workouts themselves. In that case, someone from the workout group is always on the calls and looped in on process, but we're the ones making all of the decisions and a lot of times they just handle the back office portion of the restructuring.
Would this be a viable exit op for someone with a RX Consulting background (FTI, Alix, A&M)? Tried looking on Linkedin but most people seem to be lifers who joined a workouts group early and hopped around across different banks/lenders.
Mollitia explicabo molestiae error eum eveniet. Deleniti officiis porro at eum magni totam dolore.
Sint et officia eligendi est nobis. Quis commodi dolor voluptas ut consectetur. Est exercitationem ipsam assumenda quia ut sed illum. Sed libero recusandae et repellendus odit autem. Dolor voluptatum ut sunt. Id reiciendis ab quidem qui velit.
Magnam magnam est tempore repudiandae suscipit. Sit inventore quasi ea accusamus et exercitationem. Sed ut iure omnis soluta consequatur ut.
Natus blanditiis recusandae ea adipisci accusantium laudantium vel. Ut aut explicabo perferendis voluptas non sed nihil. Rerum impedit autem saepe dolorem officiis.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...