Q&A Distressed Private Debt & Private Equity

Much appreciated for your help!!

I struggle to know what really fascinates me most, though I prefer the story at the corporate finance side rather the fin mkt. But I do prefer the path where I can learn the most. 

Why would you prefer TAS-IBD-HF rather than IBD-PE/CorpDev if the final goal is to create a business? The latter seems more in line with the true business side. Thanks to WSO, I've heard another path seems exciting which focus on MM IBD-PE then try to act as independant sponsor or family office PE, where true value hides.

Also in Europe, seems large amount of people in HF starts from ER?

Appreciate for everything you've done here, this really means a lot to a junior guy like me. Really excited about your youtube channel and all the best!

No I would not recommend such a transition at the junior level. Much easier at senior level when focus can be more around portfolio management.

Because your thinking could be logical.

Working in NPL means mostly on the portfolio or loan basket management side: A fund buys SRTs or NPL bundles thus viewing risk and value from a macro or portfolio-level lens. The focus is usually on optimizing recoveries across multiple impaired positions, relying on servicers, legal recovery pathways, or portfolio sales.

In that sense you are trained to assess distressed assets quickly and allocate resources where the recovery ratio justifies it. In this context, you rarely go into the operational depth of each borrower. And rightfully so because you have an army of consultants in your investment case.

Private Equity distressed or turnaround, however requires - at least for their recruitment / or to be a good professional in that space - a very micro, surgical view of each investment. operating a company, managing the - sometimes hostile - capital structure - directly or through governance. That means looking under the hood in all spheres - team quality, margin structure, strategic growth angles, operational levers, stakeholder positions, replacements etc. - and being accountable for long-term transformation.

So while NPL teaches you valuable skills around downside protection, distressed pricing, and legal enforcement, PE demands a step further: operational insight and transformation execution.

In fact, some of the reflexes from NPL (e.g., early exits, bulk deleveraging strategies, minimal engagement) can be in tension with the long-haul, build-to-scale mindset of PE. And thus - this will not support on the mid term a satisfying transition.

However if you are a distress hardcore enthusiast;can be a very good school.

1. What books do you advise for European students aside from Gatto and Moyer (smthg less Ch11 specific)? And how can a student improve in distressed investing beyond reading books?
   
   Beyond the classics like Moyer and Gatto, I’d really recommend The Art of M&A series- the normal, distress and modeling one - it’s not necessarily distressed-specific but it gives a strong operational and transactional framework that is super helpful to have a clear understanding of where things may break ahead of going restructuring mode.
   
   That said, there’s honestly nothing more valuable than reading financial news daily and saving every single concept you don’t understand into a folder. Whether it’s a legal clause, instrument structure, process nuance—build your personal “knowledge glossary” and just grind through it. The alternative is to be in a distressed corporate early on but can’t advise that.
   
   Also, I’m currently preparing a curated YouTube channel focused on corporate finance, restructuring, and special situations, tailored for people experiencing those situations. So reverse question to you: if you had the possibility to get such a channel, what would you like to see, what would you resonate with and what platforms would you engage with?
   Any person reading this also let me know - so you can help me help you.
   
   
2. Do you think it is easy to go from special sits lending (PC-like: rescue capital, DIP etc.) to tradable distressed?
   
   It’s possible, but it’s not a like-for-like move and I would definitely do that jump if I want to specialise in investments - not restructure businesses. Special sits lending is tailored by nature: you negotiate your own docs, set your securities, structure your protections and influence the company’s future directly. Every deal is a mini buyout + legal chess match. You’re part-credit, part-operator, part-legal architect and part equity like holder in some cases. Or at least your exposure is.
   
   On the tradable side, you inherit what’s already out there—public bonds, old loans, legacy docs—and your job is to figure out:
   (1) how to price the risk vs market misunderstanding,
   (2) where you can enforce or get into the cap table, and
   (3) whether there’s an angle to reshape the documentation in or out of court or exit profitably.
   
   So: tradable is more about arbitrage, enforcement strategy, and secondary process dynamics. Lending is more about upfront structure, downside protection, and control. Transitioning is doable, but again: at Senior level. And smarter than at junior one long term.
   
   
3. What’s your take on shops that do distressed real assets (RE, Infra..)? Are skills transferable to corporate credit early in career?
   
   Yes but if you take things knowingly.
   
   If you’re doing distressed real estate with high operational content (e.g. hotel platforms, repositioning logistics hubs, infra turnaround), that’s extremely valuable and maps well to corporate distress. You’re learning capex timing, cost restructuring, margin rebuild, and legal enforcement.
   
   If you’re doing pure collateral-driven plays on low-value-add assets (e.g. residential, no repositioning), the learning curve plateaus faster and I cannot recommend going there long term. So it’s all about the intensity and complexity of the value creation, not just whether there’s collateral or not. For me, collateral plus operational work = as valuable as any corporate credit seat. (And honestly the same if you have the curiosity of understanding the different industries and products)
   
   
4. What’s one thing you would have done differently if you had the chance to redo your career in distressed?
   
   I would do exactly the same except I wouldn’t make my life hell for it. I would have been more aggressive into it - though for some it’s already a 10/10 risky path.
   
   My path has been pretty unusual. I started in high-yield DCM / acqfin at a top shop. I was a top performer there with the awards etc whatever.
   
   I loved it for two years but quickly became fed up with the politics, and low value add of the service. I didn’t come from a privileged background so anything that was not straight to the point and transformative was utter BS for me.
   
   I got headhunted into an in-house at a top commodity trader that underwent a complete restructuring in house. Company was on brink of collapse and we were 3 people handling multi-billion debt and equity deals, disposals, liquidity crises. Did probably 3 burnouts there and became completely on hedge. But that’s where I understood what most Rx guys never fathom.
   
   Then I became head of M&A in a PE-backed propco that also underwent restructuring, which I had to lead in house.
   
   So by force of things I had to step up.
   
   On the back of this I was recruited by a firm that needed a VP to oversee all special sits / distressed investments.
   
   Built the platform - structured the division and equity vertical by myself - made it to head of investments / MD.
   
   That means I was doing restructurings and recapitalisations hands-on as the advisor, investor, corporate across my career.
   So I don’t get affected by the whole prestige BS. Have seen too many fancy investors I had to get out of « tricky » situations.
   
   term sheets, legal docs, CFO meetings, shareholder disputes and operating an asset, enforcing or preventing an enforcement. One can have the fancy pedigree but without the formal toolkit most people get hammered.
   
   I would advise first investment banking then pure Rx - if you are risk averse
   I had to learn it backwards. It worked, but it was brutal.
   
   So if I had to redo it: IB first, then operational distress later, with intention.

Mind giving me a bit more background and what you want to do long term?

Hello,

I would say it depends on how junior.
Big4 turnaround is good if you want to go into tuaeound consulting.

The job is otherwise not fit for pure Rx.

You’re about to enter RX at a time when deal flow is strong. That’s a great spot to be in, but the real question is whether you use this momentum to just grind deals, or to actually build range. If you’re aiming for a long-term seat at the table—whether in investing, advisory, or operating turnarounds—you’ve got to make every deal work for you, not just the client.

1. Learning

Most juniors stay at surface level and fail to see the bigger strategy that is made available to them when they see a deck. They are chasing deliverables, updating models, ticking boxes.
You’ll get faster at that, sure. But the people who grow fastest are the ones who start tracking patterns or build their own mental playbook. On every deal, ask yourself:
• What kind of crisis is this? (liquidity vs. solvency vs. governance breakdown)
• Who holds the leverage and why?
• What kind of exit is actually on the table?

Every deal has a logic basically.

Also stay close to cash which is the ultimate Rx bottom line.
Everyone talks about capital structure because fancy and mechanical. But to progress in Rx you need to be laser focused on understanding cash. 13-week cash flows, vendor dynamics, working capital traps, accordion tranches if you know where the cash is bleeding and what levers are real, you’re already ahead.

You also need to progress on Legal as quickly as possible.
You don’t need to be a lawyer, but you do need to have the capacity to challenge an Rx lawyer 6 years down the line. Acceleration clauses, cross-defaults, intercreditor fights, sponsor arbitrages, name it. Learn what triggers action, what are the legal implications and the legal protections and the risk you cannot deploy them. Eventually it is a chess match.

Thirdly understand stakeholder behavior as this is quite underrated.
Some deals are won (or lost) in the room. See how your MD handles fragile founder egos, stressed CFOs, aggressive lenders, passive board members.

2. Gaps You’ll See in Typical Banking Training

Linear and passive thinkers get smoked in Rx up the hierarchy because of lack of understanding in what I said above.
Bankers are trained to optimize for one the cases they know and reproduce a playbook: the base case.
In RX, that mindset gets you behind on every deal as the experienced hustler will always be a step ahead. The best people are running three scenarios at once and thinking in probabilities, not single answers.

Zero operational context.
Most juniors have no idea how businesses actually function day to day. To be good at restructuring you need to manage liabilities sure but you also and mostly manage operational Assets.

3. What Makes Certain Advisors Great

The best RX advisors I’ve worked with both sides of the table are co-building the deal with you and not simply just doing a vague reboot of conversations.

It doesn’t mean they come from fancy shops - actually these guys are the most dangerous because they have high ego and low delivery. Which blows up quite a bit of deals.

So to not do that you need:

1. Fluency across roles: speak to a distressed investor, a CEO, a board member, and a lender - all in the same meeting as if you were one of them - and tailor the pitch without losing substance. That makes them a force multiplier.

2. Ruthless prioritization: know what matters in the deal and not just this week. Not in six months. Push to get your side of the chessboard moving forward.

3. Real backbone in hard situations: everybody gets tense in Rx. Advisors to get paid. Counsels to not get sued. Borrowers to survive and Creditors to protect their name. So the best guys are the ones that always force themselves to keep cool head.

Lastly 4: value-add. If you BS around for 2h on a call I am not dealing with you on another transaction. Embarrassment to everyone on the real world.

Hope this helps!

Even if you have the wallet, nobody has years to waste.

If your endgame is to work in US RX and you’re using the JD/JD-MBA to bridge into the market, it’s fully overkill unless you’re aiming to practice or do legal-heavy advisory (basically rx counsel).
RX firms in the US hire laterals without JDs —HL, PJT, Laz included and it is quite possible to move within 3 years. Strong Euro RX experience + lateral effort + possibly an internal transfer > 3 years and $300–400k+ sunk into a JD in 99% of cases I consider.

But be mindful no job in Rx houses will give you full legal knowledge. So long as you know the Rx processes, Rx boutiques are pitch heavy and quite high level.

I still need to find a banker that fully redlines an amend and extend themselves.
I did and it cost me years of slaving on office floors.

Yes and no.
It is really much like playing offense and defense on a board game.
Yes because on the debtor side you try to support your business priorities which significantly differ from the lender perspective in most case.
No because you cannot be a good Rx senior banker if you can only manage one side.

Masterpiece

Thank you for your feedback / reading of the feed —very much appreciated, and hope you got away some useful things as entry points into the European market as a foreigner.

You’re right that RX is often perceived as more technical and structurally oriented, which can seem more “neutral” territory when cultural familiarity is limited.
All in all this remains a common perception 99% of people seem to have so do not take my view as the market’s view. Anything, could be the reverse. I just give my honest view without any sugar coat or attention to prestige.

That said, I’d caution against assuming restructuring it’s inherently a purer technical track—many large restructuring teams, particularly at well-known boutiques, still operate with a pitch-driven, high-level culture. Likewise IBD can be very nurturing if outside of working time you take the very long time of reviewing all the documentation of a deal. But then IBD doesn’t fully allow that because organisation is not efficient and you would jump to 150h / week …

You’ll often find that up to Director level, the depth of execution in Rx can remain quite surface-level unless you actively seek out operational or capital-structure-heavy mandates. The learning curve can be steep, but it’s nonlinear—and standing out at MD level will usually demand exceptional endurance, deal flow generation, which can only be sustained through competence and stamina. It’s not the quiet technical haven some expect.
Everything in IBD / RX is about self learning - from my experience.

On the other hand, while IBD retains a “one-size-fits-all” the generalist model most teams have (even if split in sectors) gives solid foundational exposure but often lacks the space to develop deep expertise unless you actively rotate across capital markets, M&A, and restructuring. Even then, most IBD platforms don’t necessarily allow for deep execution ownership unless you shift laterally or grow into a niche internally.

If you’re drawn to learning curves, complexity, and real business problem-solving, RX can provide sharper inflection points earlier in your career. But it’s important to remain clear-eyed: real technical mastery usually requires moving beyond just branding and into environments where execution, not just deal origination, drives development.

Wishing you strength and clarity in choosing the path that aligns with how you want to grow.

Apologies I just saw this - didn’t get notifications.

Appreciate your question - it is a quite complex one without understanding your background.

If you’re genuinely drawn to learning how the business world works under real pressure, RX can offer that - but so can VC or small cap M&A - but the path depends heavily on what you want to build long term.

At this point, the only general recommendation I’d feel confident giving is: if there’s even a seed of ambition to eventually build your own firm, start in the small-cap RX space. Large cap will be too financial engineering driven and you may not be exposed to a full deal.

There you’ll be forced to understand different views of capital providing, strategy, maybe even ops.

Happy to expand in DM to understand your point. It really depends on your endgame.

Have a good week.