Why distressed/special sits
So. Got the offer for a bank’s RX group. Really like the work but I don’t know what it’s like on the buyside. Does anyone have some reading materials you would reccomend to understand distressed investing a bit better?
Also, why are YOU personally working in distressed credit / special site / etc
Stephen Moyer's Distressed Debt Analysis is a really good resource.
To answer part two, while I don't currently work in distressed debt/special situations, my first internship was with a bank's RX group and what I really liked about it was the underlying legal framework that you had to understand in order to do good analysis and the fact that the companies you're investing into often have meaningful value but due to market conditions, poor financing decisions, etc., they're now being sold at a much lower value, so you can get pretty good returns assuming you can turn it around.
I don’t know why people say this. That book has nothing to do with a bank rx group. It’s about junk bonds or something...
You're right, but OP asked about distressed investing not sell side advisory. That said, Salerno's Executive Guide to Corporate Bankruptcy is a better resource for someone new on an Rx desk.
Buyside distressed debt/special sits sucks ass, I did it for a few years. Everyone is always mad at each other, you have no industry specialization, it's full of hyper aggressive douchebags. Would caution against going down this path - use your RX experience to land in a more growth or special sits (not focused on turnaround) fund
I am an industry specialized LMM turnaround monkey.
It's almost exactly like running a startup; cash is burning and you're fighting against the clock.
Have taken a few companies from close to filing/essentially insolvent to thriving and fast growing.
It's extremely satisfying and our returns are excellent. I will see if the returns hold with scale, obviously things become a lot more competitive once you move past ~$4m - $5m in EBITDA.
And yes, it's a cutthroat/unpleasant environment but some people like it. Startups aren't for everyone either. You'll get very love/hate responses like the above guy that didn't like it.
Bro, wtf are you talking about?
What? He's literally answering the question lmao
Can you please provide analogue employers for your company / group?
Trying to better understand your role. Sounds fun.
i mean zero disrespected to you, but what you're describing here is not relevant to 99.99999999% of RX bankers. your experience is hyper specialized and not something anyone coming out of analyst program would be recruiting for - if i remember correctly you mentioned CSC generation at one point which are more operators than distressed debt investors (although they focus on turnarounds).
RX banker bros go to distressed debt shops like oaktree / cerberus / apollo and get their asses crushed lol
He asked about buyside which would include turnaround focused PE firms. I have nothing to do with csc.
I work in SSG. I'd differentiate between liquid and illiquid strategies. Liquid is distressed trading done by L/S HF, hence follows HF general rule: fast-paced, dry culture, usually a decent amount of douchebags. Illiquid is SSG groups (think Ares, GSO, Oaktree, etc) which is where I'm at. It looks a lot like PE: 3-5y term of the investments, significant DD on private materials, true partnership with the portco.
As for why I do it: very intellectually challenging. I’m a maths guy at heart so this was for me the most analytical part of finance (done IB and some PE before).
Any specific questions happy to try answer.
Interested in learning more about this. I'm currently an SA in RX and looking at this at a possible exit in the future as the field/work seems pretty interesting.
1. How difficult is it to go from the liquid side to illiquid and vice versa? Is it similar to PE where PE->HF is common but the opposite is more difficult?
2. What are your opinions about a long term career in the field? I was recently talking to someone at a well known distressed HF who told me to stay away since it's becoming increasingly difficult to find good investment opportunities and distressed funds are generally underperforming. Have heard this from many people at my bank as well. Also even if this is true, would it be different depending if you're on the liquid vs illiquid side?
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