M&A versus Restructuring for Private Equity
As I understand it, the standard route for someone hoping to break into Private Equity is M&A => Private Equity or Consulting => Private Equity, but the M&A route is most common.
My questions is why isn't restructuring more common if not the most common path?
From the outside looking in M&A consists of advising companies on M&A transactions, which translates to (from a time expenditure perspective) only a small part of the work done in Private Equity. Whereas in Restructuring you're helping companies in shitty situations get from a position of chaos to one of stability which (from a time expenditure perspective) makes up the majority of the work done in Private Equity (Managing Portcos).
I'm not in the industry so please correct if there are key things I am ignorant of. Furthermore if anyone can shed light on what managing portcos day to day actually looks like that would be great.
cheers
Based on the most helpful WSO content, here's what you need to know:
M&A vs. Restructuring for Private Equity
Common Paths to Private Equity:
Why Restructuring Isn't the Most Common Path:
Exit Opportunities:
Skill Set Utilization:
Recruiter Perception:
Managing Portcos (Portfolio Companies) Day-to-Day:
For more detailed insights, you can explore the following threads on WSO: - https://www.wallstreetoasis.com/forum/investment-banking/restructuring-…</a">Restructuring prospects, why you should not consider restructuring - https://www.wallstreetoasis.com/forum/investment-banking/why-you-should…</a">Why You Should Consider Restructuring – Common Misconceptions/Insight on RX Groups
These threads provide a comprehensive look at the nuances of restructuring and its role in the path to Private Equity.
Sources: Restructuring prospects, why you should not consider restructuring, Why You Should Consider Restructuring – Common Misconceptions/Insight on RX Groups, Restructuring prospects, why you should not consider restructuring, Can I transition from restructuring to regular private equity?, How to Prepare for Restructuring Technical Questions
Restructuring work tends to be very legal oriented with financial analysis reflecting that. Most buyout shops don’t need that kind of experience so they tend to pick from the rest of banking more.
Thank You
This is just not true
1. Availability bias - there are a TON more "M&A"/industry coverage seats than legitimate Rx seats at the analyst level (PJT, HL, Lazard, PW) - probably 10:1 if I had to guess.... so you're going to see a lot more traditional bankers in general (note: I don't think the analysts at PJT/HL generally have a hard time placing)
2. With that said, this industry works through circular thinking - we hired M&A bankers (because there are a lot more of those), so we'll continue to hire more of that kind. This is why you will see certain firms hiring from specific groups within specific banks - it has almost nothing to do with rational reasons... its mostly just because of the connectivity / "pattern recognition"
3. There are some firms where the Rx skill-set or background is highly desired - value oriented shops that dabble in distressed, credit - e.g., Oaktree, Centerbridge, Apollo, Cerberus, etc.
Thank you!
Regarding ratio of M&A/coverage bankers to RX, wouldn't it more like 50:1 or even 100:1? All the BBs (by far the largest percentage of headcount) don't have RX groups (or if they do it's not really RX, just internal turnarounds), so that only leaves the 12-15 RX groups that are at MM and EB.
Yeah. There's only like 5-6 top firms for Rx which is max like 40 analysts and that's overestimating. There's loads more headcount at BB and EB m&a. Per capita Rx has stronger exits (just look at PJT and EVR rx exit table they made)
PW? What’s that? Is that PWP? Or Paul Weiss lol
Because there are less Rx analysts. FYI there’s like 50 m&a analyst per class at EVR now and only 8-10 Rx. Rx definitely get good MFPE looks just look at EVR/PJT placement chart
Per capita top rx shops (PJT, EVR) crush it compared to M&A. You’ll get interviews wherever you want at one of the above mentioned rx shops
Ye EVR Rx and PJT RSSG will have no issues with exits. Other rx groups will likely be typecasted by hhs as spec sits candidates
I was an RX analyst at a top shop. Oddly, enough I found some reputable firms suggeat RX was less preferred than M&A. I was certainly preferred by Apollo, Centerbridge and the likes but some PE shops thought why would someone who wanted PE do RX rather than M&A. Stupid take from them tbh but nothing I could do. It certainly doesn’t prevent you from getting an interview but think if your goal is truly BX or KKR PE then like M&A at top relevant coverage group better. If its Apollo then RX
I agree. I had a chat with a buddy who is A to A in RX and when he explained his day to day the experience is far more relevant to PE, than M&A processes. He also said he got to do M&A processes when the bank was short staffed but you can’t put an M&A guy in a RX seat.
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