Distressed Fund Exit To Equity Investing Possible?
Hi all,
I'm currently a restructuring analyst at a boutique thinking about where to recruit on the buyside over the coming months. My thinking is that as of right now, I like the distressed space and will aim for distressed HF roles. However it's hard to say for sure whether at some point I'd want to make the switch to L/S equity and maybe even PE.
Are there any considerations in strategy (private vs public, control vs more passive, etc)/brand which would make a potential switch down the road possible, or at this point will you basically become a "credit guy"? Thanks in advance!
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Following. also interested in places like DK, king street, silver point, owl cap
Will be going to a SS Fund so here's my take on it:
You will gain/have a niche skillset that is hihgly valued and rare, why would you try to compete in the L/S spce when any banker can just become a model monkey and get spit out of the L/S MM model if not good enough to make PM? good L/S SM roles are very very hard to get.
PE is very very structured, doubt UMM/MFs would consider you if you don't do your associates years in PE, MMs may consider you but the best way to get there is likely through an MBA.
Wouldn't be a problem to move to a more equity focused event driven or special sits fund since theres a lot of overlap but a pure GAARP style L/S tiger cub would prob be difficult outside of a few one off hires.
More special sits and loan-to-own control type PE is also possible as theres a lot of overlap but would be harder going for straight LBO shop
My question for you is why? Why would you feel the need to switch to l/s equity or PE in the future? It sounds like you don't really know what you want to do long term - and that's dangerous (not like crazy dangerous) when you're choosing your buyside gig. When you are a banker you're basically like a stem cell, you can develop into anything you want and pursue all the pathways and exit ops. As soon as you become a somatic cell or whatever, your optionality takes a big hit. Say you want to go to PE, the big question is going to be why? why PE and why now? why didn't you do it after banking? what's changed and why shouldn't I just take this other dude who has been doing PE since banking? -> same questions for l/s equity and everything else.
That being said, its still very possible and doable, and there are many stories i'm sure work well in explaining why you'd want to do the switch - but it's just much harder and you may have to take a seniority haircut at the very best case. Now if you're at a good enough distressed fund with the prestige then maybe all the doors open up for you anyways. Going from Elliott to some PE shop or L/S equity fund may not be that hard. Now the kicker is you have to get into a a Tier 1A+ fund now. The other option is to do more distressed/special sits stuff at a place that does a lot of distressed PE/loan to own like an SVP. If you go to those places I think you can make a pretty easy case to go into PE. Not sure about l/s equity but maybe.
Thanks for the response, I think that all makes a lot of sense. I guess then it would be a good idea (probably true in general) to try for a well-regarded name, or more SVP tule loan-to own if PE is a potential interest down the road.
To answer your question, I just started in a restructuring group a couple weeks ago. At this point it’s hard to really know for sure if I’ll enjoy spending more time figuring out the restructuring process as opposed to focusing more on the business. Right now I think it’s great, but I’m aware there’s a possibility that could change as I get more experience.
I get it, you're just figuring stuff out and RX groups push a ton of talent to distressed but there's a ton of optionality within those groups. You can go to PE or l/s equity from RX groups too. Figure that out in the next 2 months if you can. Distressed isn't limited to just process, there's an equal amount of time spent focusing on the biz and if its good or not, what's wrong with it, can it be fixed, what's it worth when it's fixed etc. Partly why RX guys can do PE and equity too. It's a pretty niche skillset but encompasses a surprisingly large amount of fields. No LBO models or M&A accretion/dilution really but that's easily learned.
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