How is Houlihan Lokey Restructuring compared to BX (PJT) and Lazard?

I'm a sophomore and I wanted to learn more about the top firms in US restructuring. How does HLHZ compare to PJT and LAZ in terms of experience, culture, and exits?

Thanks.

 

I know HL is dominant in the RX industry. I think in terms of deal flow and marlet share they get the most involved in all the major situations around the globe. HL also seems to have a much larger practice than the other two.

I know from speaking tona friend that while they are hands down the best creditor side advisor they also frequently do plenty of debtor side deals. You can do a search on this but there are advantages to working on both sides of the deals.

Very tough to get offers from any of the three and that's probably the reason they all have great exits. PJT and HL recruit directly into RX but Laz does not and places afterwards. HL RX also gets top exits too, there have been people to Apollo, Oaktree, Ares, KKR, Blackstone, Carlyle, TPG in both distressed arms and non distressed as well as elite distressed funds and PE funds.

I'm not sure about Laz or PJT bit you will probably get the best RX experience at HL since they have most expensive RX practice out of any bank.

 

Well there is a selection bias - people that go into RX are generally interested in distressed or turnaround investment opportunities so these guys aren't trying to get into regular LBO funds. I mean the opportunity is there if you want to go to a regular PE fund / Corp Dev. because you will definitely have the skill set to do so.

But if that is what you wanted to do in the first place why would you go into an RX role? You would be better served going to a BB in a coverage group (Corp Dev) or another strong M&A boutique.

But to answer your question HL RX does place well even to regular PE if that is what you are interested in: there was someone from recently HL RX who exited to KKR PE but this is definitely not the common path.

 

I'm going to HL RX for SA this year and had offers from other great BB / EBs (MS, PWP, GHL) but literally every person from my school that has gone to that group were some of the top kids (summa, beta gamma sigma, great past internships, etc.) and have exited to some amazing funds afterwards.

I think Houlihan is probably the top RX shop in terms of deal flow and market share post- recession but that's also because their RX practice is massive with like 170 professionals around the world. On most major situations around, HL is always involved in some capacity.

Regarding culture, I can't tell you about Lazard or PJT, but HL has such an amazing culture and that was one of the reasons I was drawn to them. Many of the MDs started out as analysts at HL and built their careers at the firm so analysts are treated very nicely and there is good retention for those who don't want to leave.

I think they all place great to be honest. The one advantage that HL has working on the creditor side is the ability to develop relationships and learn more about different distressed funds. With an RX stint at any of the three, you'll be able to move anywhere in finance pretty easily.

 

HL has a fantastic culture, probably one of the best on the street in terms of culture but you'll still work hard.

Agree with the posters above: HL has an amazing RX practice. They have so much deal flow and own such a huge part of the RX market. I think Laz and PJT have had some turmoil in their groups in the past couple of years with a couple of senior guys leaving but they seem to be doing just fine now.

The HL RX guys gets sick exit opps - they've gone to all the top funds out there and HL has such a big network because of its large RX practice that many PM / MDs and prestigious HF / PE funds are from HL FRG.

In RX these three are the major players and generally own the market so all will give you an excellent experience and exits at the analyst level. Not easy to offers at these shops though especially for RX which is generally way more competitive per spot than M&A.

 

Houlihan has really prestigious RX team that is considered a big powerhouse. They reputation is for the creditor side deals so they have like the best relationships with the most prestigious funds out there which means great things for their analysts but apparently they do a lot of debtor deals too.

The crazy thing about HL RX is that even in a down RX market they still stay pretty busy and get a lot of deal flow. I think compared to Lazard and PJT that HL RX actually owns the market at this point but I'm not sure. They all probably provide an equally good experience.

I might be biased cause I'm going to HL for M&A but it is such an awesome firm and has an excellent culture. They are like #1 in all their business lines whether its MM M&A, RX, or even Fairness Opinions.

 

WSO has a HUGE hard on for HL these days...

I only know one guy at HL but have worked across from their LA and NY guys on deals. I've also won pitches against HL. Of the 3 I'd choose HL but preferably LA or London.

I would avoid PJT... it's lost a bit of the magic that they had as Blackstone. I know of a couple situations where they pissed everyone off and no one wants to work with them.

Haven't interacted with Lazard so no real comment there.

Agree on exits. Kids that dive into Rx generally would rather exit to a distressed fund than a buyout fund.

 
DaBBzMan:

WSO has a HUGE hard on for HL these days...

I only know one guy at HL but have worked across from their LA and NY guys on deals. I've also won pitches against HL. Of the 3 I'd choose HL but preferably LA or London.

I would avoid PJT... it's lost a bit of the magic that they had as Blackstone. I know of a couple situations where they pissed everyone off and no one wants to work with them.

Haven't interacted with Lazard so no real comment there.

Agree on exits. Kids that dive into Rx generally would rather exit to a distressed fund than a buyout fund.

Out of curiosity, do you have any opinion as to why WSO has been getting a hard on for HLHZ?

 
Schwanstucker:
DaBBzMan:
WSO has a HUGE hard on for HL these days...I only know one guy at HL but have worked across from their LA and NY guys on deals. I've also won pitches against HL. Of the 3 I'd choose HL but preferably LA or London.I would avoid PJT... it's lost a bit of the magic that they had as Blackstone. I know of a couple situations where they pissed everyone off and no one wants to work with them.Haven't interacted with Lazard so no real comment there.Agree on exits. Kids that dive into Rx generally would rather exit to a distressed fund than a buyout fund.

Out of curiosity, do you have any opinion as to why WSO has been getting a hard on for HLHZ?

NO fucking clue tbh. In my opinion its a platform that is ~85%-90% creditor-side. Which is fine, and you will get interaction with funds. But that isn't superior to company side, which is better, more technical experience.
 

I have no clue... Maybe there was a larger than normal wave of WSO users that got into HL's SA analyst program. However, I will agree that HL's restructuring platform is one of the strongest and definitely does compare to Lazard's and BX/PJT's. That being said, the love for their middle market CF division is unjustified to me.

 
roytheboytoy:

I have no clue... Maybe there was a larger than normal wave of WSO users that got into HL's SA analyst program. However, I will agree that HL's restructuring platform is one of the strongest and definitely does compare to Lazard's and BX/PJT's. That being said, the love for their middle market CF division is unjustified to me.

There is a bit of a void in RX right now.. Blackstone is gone, so there are new debtor side mandates open that weren't there previously.. Evercore is getting aggressive with their practice and are on the uptick. As I said I haven't worked with Lazard before so no comment, HL doesn't get much/any debtor side love and I hear mixed things from creditors (feedback is generally that their pitches are just a fk ton of creds).
 
DaBBzMan:
roytheboytoy:
I have no clue... Maybe there was a larger than normal wave of WSO users that got into HL's SA analyst program. However, I will agree that HL's restructuring platform is one of the strongest and definitely does compare to Lazard's and BX/PJT's. That being said, the love for their middle market CF division is unjustified to me.


There is a bit of a void in RX right now.. Blackstone is gone, so there are new debtor side mandates open that weren't there previously.. Evercore is getting aggressive with their practice and are on the uptick. As I said I haven't worked with Lazard before so no comment, HL doesn't get much/any debtor side love and I hear mixed things from creditors (feedback is generally that their pitches are just a fk ton of creds).

I can't say that I am seeing any real "void" in RX from my perspective. It is business as usual, with the caveat being that today things are far busier than they have been since ~2009-2010, given we have energy as a large industry in severe distress. The huge inflow of business from energy means that there is a little more room for market share to be distributed than there was two or three years ago, when deals were harder to come by. There's also probably a bit of an advantage right now in debtor work for guys who have the presence in energy on the industry side, such as Lazard, given that energy is a pretty specialized space and expertise in the industry is helpful.

As everyone has mentioned HL is a creditor side shop and does well on that side, but it's fair to say that they are not respected quite as much in the profession given that they do not do debtor side work.

On the debtor side, you have PJT / Lazard / Evercore competing for debtor assignments along with some smaller firms. Some of these firms, like BX / PJT does a mix of debtor and creditor side work.

I'd say ideally at the analyst level, you would do a mix of debtor and creditor work. Having one or two big debtor side deals over your time as an analyst is very useful, but on the other hand you quickly realize how much extra work and pain is in a debtor side deal vs the average creditor side engagement.

 
Best Response

A lot of the posts here on the restructuring industry aren't quite accurate. PJT has not slipped at all with the transition from Blackstone, and in fact has picked up a plurality of debtor mandates recently across several industries. Also, no one would describe Evercore on the uptick (they haven't done a great job with EFIH), and while they show up now and then in large situations, they are not one of the stronger presences.

In terms of the debtor vs. creditor advisory issue - there's been a number of comments on why debtor side work is better, probably reflecting a lack of actual restructuring experience. Debtor side work is much more administrative in nature, and while fees are generally higher, a lot of that is a result of time spent on aspects of the process unrelated to the broader strategic and deal aspects of restructuring. From an analyst perspective, that means a lot more time creating powerpoint slides for management / boards / creditors (the first two of which are generally less sophisticated parties who often have never been through a restructuring before), handling diligence requests, managing a dataroom, etc. Keep in mind that in a restructuring, the debtor has no real economic value at stake. Creditors (particularly fulcrum creditors), as the de facto owners of the company, are the ones with economic incentive in the outcome of a workout process and therefore are more motivated to generate creative solutions to maximize their piece of the pie and maximize the value of the company as a whole. OTHOH, debtors are primarily focused on keeping the business alive, maintaining liquidity and facilitating an environment to allow creditors to negotiate value. Sometimes they sort of negotiate on behalf of existing equity interests but that's sort of a joke since the equity is almost always worthless except for some nuisance value. Anyways, none of this is to say that you won't learn a lot guiding a debtor through a bankruptcy process, just that its often times less compelling than advising creditors.

To illustrate this in terms of actual examples - a debtor advisor would create the operating model that reflects management's business plan, but the creditor advisor would pick apart and evaluate the model. A debtor advisor would manage the process to raise DIP/exit financing, but creditor advisors (in conjunction with the investors they represent) are the ones who determine economics of the financing, the strategic rationale, and ultimately provide the capital. Finally, the debtor will do everything possible to facilitate / speed up negotiations to expedite the bankruptcy process (including aligning itself with specific creditors), but ultimately it’s the creditors who frequently drive the negotiation amongst themselves, and often end up controlling the process (either through providing capital or exercising other forms of leverage - the company is after all the collateral of its secured creditors).

That being said, PJT and Lazard do plenty of great creditor work in addition to high profile debtor work vs. HL doing mostly creditor side work, so I would probably still recommend starting there if you're looking to gain a variety of experience and exit to the buyside. They generally hire smarter kids as well. But the fact is that HL is one of the top players in the industry (also, NY > LA for HL). Although to be fair I'm guessing HL probably does have a number of mediocre bankers due to their sheer size.

 

For HL, I know the largest office is in NY but apparently even the less metro cities like Dallas and Minneapolis tend to have great exits too. However my friend who works there had mentioned NY, LA, and London are the best.

For the combination of culture, exits, and experience I'd actually pick HL too - seems like an excellent shop to be at.

 

PJT is still getting mandates by the way, maybe not as much, but they are still a fine RX shop. Moelis is an up and coming restructuring shop and they get a lot of business in the space. Lazard is still doing great but they have some good senior guys getting ready to retire which will change things up in the space but I would they are the top debtor side shop at this point.

HL probably has the best worldwide rep as the top RX shop just because their practice is massive compared to the other guys. They actually got several larger sized debtor side deals last year but they are still recognized as a creditor-focused advisor. Their CF practice is generally recognized as the best in the MM space so it comes down to what size deals you would like to do but no doubt it's a great shop to be at all around even for Fairness Opinions if that's what you are into. You want to go to a shop that's the best in its class at what it does and HL does a good job of doing just that.

 

Just did a capiq screen for bankruptcy advisors (LTM) because I am bored. Caveats: Will not capture everything but another datapoint. No fee size information. Some of these firms are a lot larger than others.


Company side:

---Lazard--- Swift Energy Offshore Group Millennium Lab Holdings Hovensa Hercules Sabine Oil & Gas Walter Energy Bommerang Tube The Standard Register Company Chassix Holdings Cal Dive International RS Legacy Corporation (Lazard MM)

---Blackstone/PJT--- Magnetation Walter Energy Relativity Fashion Samson Resources Corporation Magnum Hunter Resources Corp Arch Coal

---Moelis--- Rdio RAAM Global Energy American Apparel Northshore Mainland Services Midway Gold US Hycroft Mining

---Evercore--- Energy & Exploration Partners Parallel Energy The Grant Atlantic & Pacific Tea Company Corporate Risk Holdings

---Miller Buckfire--- Taylor-Wharton International Molycorp

---Rothschild--- Allen Systems Group Alpha Natural Resources

---Centerview--- Quirky Patriot Coal Corporation

---Jefferies--- Everywhere Global

---Greenhill--- n.a.

---Houlihan Lokey--- n.a.


Creditor-side:

---Jefferies--- Alpha Natural Resources Patriot Coal Corporation The Standard Register Company

---Blackstone/PJT--- Walter Energy Molycorp

---Houlihan Lokey--- Quicksilver Resources RS Legacy Corporation

---Moelis--- Quicksilver Resources

---Miller Buckfire--- Molycorp

---Centerview--- n.a.

---Rothschild--- n.a.

---Greenhill--- n.a.

---Lazard--- n.a.

---Evercore--- n.a.

 

Lazard has always been killing it on the debtor side as I mentioned.

It's not listed on CapIQ but keep in mind that Houlihan's on the creditor side of 80% of the deals that's listed on the company side on this list. And for Quicksilver HL is on the company side not creditor side.

The list also has Blackstone as both debtor and creditor side advisor for Walter Energy.

 

This is why I had such a hard time in the Energy IB Associate thread. Lazard (+Lazard Houston) is absolutely crushing it in RX. Dealflow is dealflow is dealflow.

For reference, here are the major bankruptcies in 2015 in the oil and gas space, from oilandgas360

http://www.oilandgas360.com/wp-content/uploads/2015/12/ECI-Bankruptcy-T…

 

That's just announced. Completed restructurings for the year is the better metric to go by which should be further segmented by the geography you are interested in. In our case:

2015 Completed Restructurings In the US:

Houlihan $25.7B Moelis $15.2B Lazard $12.7B PJT $9.0B Rothschild $5.2B

Notes

  • Houlihan and Lazard seem to come out on top most years
  • Moelis has been doing so well in RX the past couple of years and is getting stronger it seems like
  • PJT still looks strong (more so abroad) in spite of what some posters are saying
 
qwertyzxc:

That's just announced. Completed restructurings for the year is the better metric to go by which should be further segmented by the geography you are interested in. In our case:

2015 Completed Restructurings In the US:

Houlihan $25.7B
Moelis $15.2B
Lazard $12.7B
PJT $9.0B
Rothschild $5.2B

Notes

- Houlihan and Lazard seem to come out on top most years
- Moelis has been doing so well in RX the past couple of years and is getting stronger it seems like
- PJT still looks strong (more so abroad) in spite of what some posters are saying

My deals are Lat Am and US so in those places PJT is losing some ground (not saying they are weak or are falling off a cliff).

The best figure is to look at Announced + Completed given restructurings can drag on longer than a normal sellside process (also because M&A looks at announced as well)

 
silvermoon137:

This is highly personal but I would say:
PJT if you're set to be in this for the long term and Lazard if you still want to preserve some optionalities outside. HL has a good practice but hard to compete with the other two from a career perspective based on what I understand, but could be wrong.

Surprisingly, the actual retention rate at these firms is probably opposite to how you've ranked. Practically no one at Blackstone stayed past 2 years (probably partially a function of the type of kids they hired). Lazard has had a few, but still not many. HL has had "good" retention (relative to other firms - as a whole, most are still 2 and out).

 
appleipadair:
silvermoon137:
This is highly personal but I would say:PJT if you're set to be in this for the long term and Lazard if you still want to preserve some optionalities outside. HL has a good practice but hard to compete with the other two from a career perspective based on what I understand, but could be wrong.

Surprisingly, the actual retention rate at these firms is probably opposite to how you've ranked. Practically no one at Blackstone stayed past 2 years (probably partially a function of the type of kids they hired). Lazard has had a few, but still not many. HL has had "good" retention (relative to other firms - as a whole, most are still 2 and out).

Appleipadair –

Good points made, a couple of interesting points for you to consider:

PJT: Very different from BX restructuring. Prior BX restructuring is a feeder group for buyside opportunities in the industry. Friends from the group used to quote "99% launched to buyside after 2 years". Word I've heard (but have not verified) is that current culture encourages people to stay on. There is a pseudo vacuum if you're looking at it from a typical banking structure in the sense that there is a large part of the team is made up of either really senior bankers up top or more junior guys (ANL & ASO) at bot. A lot of room to get more responsibility and pay.

Lazard restructuring: As I mentioned, potentially both a good career place and launchpad. Internal focus on retention with strong exit options particularly in the distressed asset space

HL: Like I've mentioned not as familiar.

However another point to consider is that retention =/= whether some place is a career spot or not. I think when you think about a place as a career spot it's the culture, reputation, deal flow, opportunity to learn and take up more responsibility etc. Many BB banks have similar retention rate at the junior level but I'm pretty sure we can agree that a couple of them are better places to focus on a long-term career than others.

 

HL does have very good retention. Granted most analysts there exit to the buy side but many of the MDs and Directors have made their entire careers after undergrad at HL which makes the place have a very unique and comfortable culture. You really don't see that in the finance industry too much given how much people like jumping around.

HL is a good place for your career but the downside to building your career at HL IMO is the number of levels they have (Analysts, Associates, VP, Senior VP, Director, MD) with 3-4 years at each level. So I think it will take you a longer time to make MD than at a BB where sometimes you see MDs in the early 30s or even under 30.

From my understanding however PJT and LAZ don't really develop analyst talent like HL does but if what silver spoon said is right regarding the lack of middle management at PJT, that's great for analysts seeking to stay on for the long term. From an analyst perspective though, the goal is really to get to the buy side which all three do very well but again with the combination of all the factors involved HL RX is definitely my pick I were given the option: large network & great rep, smaller analyst class in each location, great exit opps, excellent culture, & good comp and perks.

 

Check out HL's Minneapolis office. The head of Rx sits there so they do all the cool deals (Lehman, Enron, TXU, etc.) and it's a really laid-back office. Probably the best hours in banking and still some great work experience / exit opps plus a ridiculously low cost of living.

 

I don't think so. For M&A yes I would probably take Lazard, Moelis, and Evercore over HLHZ to get access to larger PE funds but for RX I would hands down take HL over these guys except for maybe Lazard in which case it would come down to culture and HL is heads and shoulders above Lazard for culture

I have a very close friend at HL RX and knowing everything I know I would take HL RX in a heartbeat because of the great exits, culture, & perks these guys enjoy. Keep in mind that analysts (M&A + RX) classes at Moelis, Evercore, Lazard are generally 20 - 40 analysts every year in the NY office alone. No way these guys are all placing well.

The HL RX analyst class per year is like 7-8 analysts in each of the major offices (NY, LA, London) and probably less in the other locations. The majority of these guys at least in NY/LA/London are placing incredibly well into top funds with a few staying on as an A2A promote because HL actually does encourage that.

 

I'm an analyst at one of the shops you mentioned but if I had gotten HL RX, I would've taken it. I mean I'm happy where I am but HL was my first choice when I was looking into making the switch to RX.

 
ttim111:

I'm an analyst at one of the shops you mentioned but if I had gotten HL RX, I would've taken it. I mean I'm happy where I am but HL was my first choice when I was looking into making the switch to RX.

Your dealflow obviously sucks since you are constantly on here... I'm guessing PJT as I am also in RX and have been hit up to go over there recently and know they are ACTIVELY hiring for the group.

No one is hating on HL and everyone regards them as a top restructuring shop, look at the numbers, but they also have a larger restructuring group so it is to be expected. There are pros of Debtor vs Creditor and everyone has their own say, but the BEST experience is to work on both while in banking. I have 3 debtor and 2 creditor going right now and its great to see both side of the coin.

Agree with @APAE on the career track at PJT, it is too early to tell how they will pan out.. They will probably end up doing just fine but you have no way of knowing right now. Its a bit of the question around Guggenheim right now given they are still new.

 

Wow this topic has been beaten to death. I would place Houlihan Lokey and Lazard as the top guys in the space with HL on the Creditor Side and Laz on the Company Side.

I go to Wharton so I know people who have interned or are at each one of these firms and HL for sure gives you the best overall package at the analyst level when you consider everything (culture, comp, experience, lifestyle, exits, reputation, perks, etc.)

After HL / LAZ the next tier is Moelis, PJT, and Rothschild. These 5 are the heavy hitters in the space and the rest are decent places with honorable mentions going to Evercore, Millstein, & Miller Buckfire.

 

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