Special situations opportunity

Hi all, looking at an associate role at a special situations fund. Wanted to understand the perceptions of these funds and exit opportunities.

The fund is focused on privately originated investments, backed by financial or real estate assets. 2/3rds of their investments tend to be debt, and 1/3 equity.

The focus is on distressed or turnaround situations where the company is suffering a liquidity event. Investments are typically $20mm + in sub $50mm EBITDA companies, with a five year hold.

Clearly quite a specific focus, so I wanted to get a view on the likelihood of exiting into traditional Private Equity if I wanted to make that switch down the line.

Thanks.

Comments (14)

9y 
Banker007, what's your opinion? Comment below:

I asked them about the sourcing model. I would be a senior associate, running the analysis and execution of opportunities. More focus on structuring investment. A lot of opps are sourced from existing JV relationships.

9y 
Banker007, what's your opinion? Comment below:

Basically, where the company's business plan is solid, but they have got into trouble because they aren't able to source financing from the banks due to risk, or current underperformance. In this situation the fund invests via debt which is backed by some asset (be it property or a financial asset which can be liquidated). The fund, will therefore structure the investment to minimise downside by being able to take the property and will maximise the upside by taking an equity position in the company or getting warrants. The rate on the debt will be around 20%.

9y 
Bullet-Tooth Tony, what's your opinion? Comment below:
Banker007:
Basically, where the company's business plan is solid, but they have got into trouble because they aren't able to source financing from the banks due to risk, or current underperformance. In this situation the fund invests via debt which is backed by some asset (be it property or a financial asset which can be liquidated). The fund, will therefore structure the investment to minimise downside by being able to take the property and will maximise the upside by taking an equity position in the company or getting warrants. The rate on the debt will be around 20%.

This sounds like a Mezzanine fund, not an SSG fund.

Best Response
9y 
Banker007, what's your opinion? Comment below:

I think the other thing that makes them less of a straightforward debt fund, is that they also buy assets out of bankruptcy (such as hotels) and roll them up into operating companies which they have ownership in.

My real question is this strategy will work today given the number of investment opportunities out there, but may not tomorrow. I also would ideally like more equity investing long term, but the structuring and debt knowledge is valuable for the short term. Versus the alternative of staying in IBD, is this an attractive opportunity to gain investing experience that won't limit my chances to switch into traditional private equity in the future?

  • 2
9y 
Bullet-Tooth Tony, what's your opinion? Comment below:

It sounds like a solid opportunity. DD or SS funds are well-respected IMO b/c the work they do is complex and there is a ton of risk. You need a strong stomach for DD investing, as my contact at Victory Park would say.

Exit opps are sound for other DD or SS funds (think Wayzata, TPG Credit, Sun Capital, Victory Park, etc.). You could also land a job at a top consulting firm focusing on turnaround and restructuring.

9y 
Banker007, what's your opinion? Comment below:

Thanks for the thoughts there really appreciate it. And what do you think about making the switch to a pure private equity shop 2 years down the line as a VP? Fundraising is difficult now in that space, but thinking out to the upswing that's where I think you want to be. Is it difficult to make that cross from debt to equity investing at a junior level? Clearly I have a strong background in equity from the advisory perspective, and will do some equity investing in this potential role.

  • 1
4y 
LaNoob, what's your opinion? Comment below:

Interested as well...

9y 
nickksteve, what's your opinion? Comment below:

Voluptas molestiae dolor et sit est harum dicta soluta. Ea dignissimos voluptas ea voluptate laudantium quod. Accusamus et iusto et occaecati quis. Fugiat id in enim culpa labore iusto in.

Nobis cum id impedit corporis. Consequatur qui excepturi eum reprehenderit possimus ipsam eos. Earum numquam omnis vero in ut corrupti. Aspernatur rem repudiandae assumenda laudantium cupiditate sunt earum. Beatae accusantium et quos laudantium facere. Sit harum perspiciatis cupiditate voluptate nisi ratione qui.

Repudiandae et et iste adipisci corrupti fugit. Impedit consequatur tempore exercitationem quas. Et totam et distinctio reiciendis.

Start Discussion

Career Advancement Opportunities

February 2023 Private Equity

  • The Riverside Company 99.5%
  • Warburg Pincus 98.9%
  • Blackstone Group 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

February 2023 Private Equity

  • Ardian 99.5%
  • The Riverside Company 98.9%
  • Blackstone Group 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

February 2023 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 98.9%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Ardian 97.4%

Total Avg Compensation

February 2023 Private Equity

  • Principal (8) $676
  • Director/MD (22) $599
  • Vice President (84) $363
  • 3rd+ Year Associate (85) $276
  • 2nd Year Associate (192) $264
  • 1st Year Associate (369) $227
  • 3rd+ Year Analyst (28) $157
  • 2nd Year Analyst (78) $133
  • 1st Year Analyst (224) $122
  • Intern/Summer Associate (30) $80
  • Intern/Summer Analyst (283) $58