Big 4 restructuring vs. banking restructuring (and exit ops)

Hey guys,

1. What are the main differences between Big 4 restructuring and restructuring at a bank? I have heard of one Big 4 Restructuring group doing doing distressed M&A deals, but do all of them do this?

2. Does anyone have any insight into exit ops from Big 4 restructuring? Do some exit into distressed debt PE/hedge funds? Would a mega fund like Oak Tree take a guy straight from Big 4 restructuring or no?

I have heard of some folks hopping over to Restructuring groups at banks after a Big 4 Restructuring gig (heard of one top 3 Rx group that took a big 4 restructuring guy), but I'm not sure if it is necessarily common. Appreciate any insight.

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Comments (14)

Oct 17, 2014 - 2:17pm

Big 4 works on those RX deals but just do the accounting side of it. The investment bank (Laz, BX, HLHZ etc) do the actual advising on how to actually approach the situation. For example in a Chapter 7, a bank may make assumptions on what the value will be in a liquidation scenario but will hire the accountants (Big 4 RX group) to do the actual calculation on how much Acc Receivables/inventory/PP&E etc. can be recovered and sold off for.

Basically the bankers strategize up the game plan and then hire the accountants to "verify the numbers".

Best Response
Oct 17, 2014 - 3:46pm

monkeyleverage:

Big 4 works on those RX deals but just do the accounting side of it. The investment bank (Laz, BX, HLHZ etc) do the actual advising on how to actually approach the situation. For example in a Chapter 7, a bank may make assumptions on what the value will be in a liquidation scenario but will hire the accountants (Big 4 RX group) to do the actual calculation on how much Acc Receivables/inventory/PP&E etc. can be recovered and sold off for.

Basically the bankers strategize up the game plan and then hire the accountants to "verify the numbers".

Apparently you missed the fact that Big 4 (along with several other regional firms) have turnaround and restructuring advisory practices that are not "just the accounting side of it".

Oct 19, 2014 - 5:15am

@Blue-Tooth Tony - Do you know how often Big 4 firms act as a financial restructuring advisors? I've done some research and have seen that EY has been the financial restructuring advisor for the City of Detroit, but haven't heard of any other major deals where a Big 4 firm worked in this capacity. Is this a one-off type of thing or is it common for these shops to act in this capacity (or are they mostly on the operational restructuring side of things)?

Do you have any insight into exit opportunities (is PE common)? Appreciate any insight or guidance you can provide.

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Oct 19, 2014 - 6:22am

monkeyleverage:

Big 4 works on those RX deals but just do the accounting side of it. The investment bank (Laz, BX, HLHZ etc) do the actual advising on how to actually approach the situation. For example in a Chapter 7, a bank may make assumptions on what the value will be in a liquidation scenario but will hire the accountants (Big 4 RX group) to do the actual calculation on how much Acc Receivables/inventory/PP&E etc. can be recovered and sold off for.

Basically the bankers strategize up the game plan and then hire the accountants to "verify the numbers".

This is not accurate. I have not been checking the league table for restructuring recently, but last time I did KPMG in Europe was well positioned (think top 5). Back in 2012, also, I interviewed for Morgan Stanley Restructuring group and the guy told me that sometimes they do joint-deal with Big 4 or compete with them on others.
All in all, I believe it is always better to do the job in a bank/boutique for salary, exit opps and prestige (if you believe this to be important) but the difference in restructuring between banks & big 4 is lower than in normal M&A/corporate finance engagements.

I'm grateful that I have two middle fingers, I only wish I had more.
Oct 19, 2014 - 9:10am

cruel3a:

monkeyleverage:

Big 4 works on those RX deals but just do the accounting side of it. The investment bank (Laz, BX, HLHZ etc) do the actual advising on how to actually approach the situation. For example in a Chapter 7, a bank may make assumptions on what the value will be in a liquidation scenario but will hire the accountants (Big 4 RX group) to do the actual calculation on how much Acc Receivables/inventory/PP&E etc. can be recovered and sold off for.

Basically the bankers strategize up the game plan and then hire the accountants to "verify the numbers".

This is not accurate. I have not been checking the league table for restructuring recently, but last time I did KPMG in Europe was well positioned (think top 5). Back in 2012, also, I interviewed for Morgan Stanley Restructuring group and the guy told me that sometimes they do joint-deal with Big 4 or compete with them on others.

All in all, I believe it is always better to do the job in a bank/boutique for salary, exit opps and prestige (if you believe this to be important) but the difference in restructuring between banks & big 4 is lower than in normal M&A/corporate finance engagements.

Sorry but I beg to differ. Look at this league table if you think I'm lying. http://dmi.thomsonreuters.com/Content/Files/4Q2013_Distressed_Debt_Bank…

Btw, Morgan Stanley's RX group only exists in EMEA, not in the US, and the big 4 restructuring advisory work is also mostly in EMEA - the US Big 4 only works on the accounting side of RX deals. This is the same reason why Big 4 TAS is highly regarded in Europe (with decent exit opps), whereas in the US it's viewed as a job you get if you can't make it to banking.

However I do agree with you that the difference in RX between big 4 and banks is lower than in normal M&A. Regards.

Mar 2, 2016 - 10:12am

What about boutique consulting firms like Alvarez Marsal or Alix Partners? These guys usually deal with big names, or are hired directly by mega funds to assist on portfolio companies work outs/restructuring, correct?

Always been interested in rx, but I'm on my phone so apologies if this has been covered in depth on other threads

Mar 2, 2016 - 10:22am

Also, out of curiosity, when it's said restructuring interview questions are harder then, say, M&A, what would be an example of this? Something like going into technical analysis of selling assets, leasing them back, and where that impacts financial reporting/stock price?

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