Open to any questions involving the broad field of credit advisory and investing.
To give you a bit of background, I've worked in: bulge bracket restructuring, boutique restructuring, private debt, distressed debt, a FinTech start-up, a family office, and currently at an asset manager that structures credit and asset-based solutions for venture and growth-stage companies.
The connectivity to every job has been either credit or special situations. Happy to share my experiences and thoughts as you apply to or consider any of these jobs. Over the past 10 years in each job I've seen a lot and seen the career trajectories of many talented and amazing people. Ask me anything!
WSO Mentor
Want to work with me? Check out my profile here.
Really cool background (per linkedin). I have a couple questions, really appreciate you doing this--
What is Brodsky like? Like, as a person + boss. Is he nice, helpful, explosive, terse? I've spoken to him before in a professional context but am unsure if he would be receptive to further networking.
What made you want to go distressed --> tech startup / venture? Was it something you didn't like about working in distressed, or were you always planning to go that route?
What is something you wish you knew before starting in distress or something you would caution to someone else wanting to go that route?
Family office-- what size? What sorts of things did the family office offer that made it more attractive than working somewhere more institutionalized?
My aim is to not really speak to specific people or funds. Even if it was, I'd only have nice things to say about every person I've worked for, every role I've had, I've enjoyed and learned a lot from. In terms of networking, my guess is for any famous or high-level fund manager, it's super hard to network without providing value. Especially in public markets funds. Private market funds you can often reach out to show them a deal or to discuss different ways of working together or sourcing.
Personally, I've always been torn between (i) enjoying in-depth diligence and complexities and problem solving (such as those in distressed) and (ii) getting really excited about starting something brand new and taking a big risk. Distressed was always my main goal and dream job since college, but sometimes things change both on a professional and personal level and you get excited about new goals and dreams.
Distressed is great, don't have anything bad to say about it. I would just specify: distressed is often very specific. If you love the problem solving nature and deep thought and diligence behind distressed, it's an amazing career choice. That being said, distressed often has less exit opps than banking / PE / venture, and there hasn't been massive growth 2011-2021 in the distressed market. If you want to do distressed you should, but you should make sure you want to.
At least in my distressed experience, I was surprised by the depth of analysis. Some situations seem simple but there's any multitude of documents, analysis, org structures, legal structures, business plans, risks and migrants. On each trade, there's almost no limit to how deep you can go, and you definitely have to enjoy solving complicated puzzles (which I did and do).
Hello,
I would like to thank you for giving others the opportunity to ask questions about the finance field. I will be a sophmore next year at a CUNY school in NYC majoring in Finance. I am interested in a field in the investment/asset management industry. What do you recommend I do to secure internships this year and next year besides regular steps such as networking? How do I quickly build a strong foundation of my financial skills and how do I make sure that an investment analyst at an asset manager is the right role for me?
Thank You
I'm a few years out of the game in terms of first job from college, but I imagine not too much has changed. You need to (i) work hard to have a high GPA (ii) demonstrate interest in finance by being a TA, joining finance clubs, joining business fraternities and (iii) developing expertise in modeling and technical analysis / interview questions. Then you need to take advantage of either (i) any on-campus recruiting or (ii) networking to find available roles. If it's the right role you have to figure out what the job involves and if you have a core interest there or if it leads to jobs you will have an interest in.
Can you go over your stats (school, gpa, prior internships) and also how you landed your first gig?
Sure! I went to Cornell. My "way in" was through an on-campus internship posting on the career boards. Previously I hadn't done much in finance (I lifeguarded my sophomore summer), but I was a TA in a few accounting / finance classes and did a few other extra-curriculars. My gpa was relatively high. It was really just having a high enough GPA / prior interest in finance, then trying to execute well on the interviews I received. Nothing too special. I accepted my internship offer to return.
In the venture debt world, how do you get comfortable taking company risk with the lack of operating history of a lot of the opportunities you look at? Are there concepts you incorporate from your distressed background to gain protection from natural early stage company volatility?
Great question! Personally, I like to focus on companies that have some level of understandable and monetizable core asset. Even if companies are venture-stage, they might be super capital intensive with capital needed for things other than marketing or salaries. They might need working capital, or capital for roll-ups or acquisitions, or capital to build-out specific assets. The venture and growth-stage world is massive and many high growth companies have real collateral that isn't personnel.
Definitely. Most importantly, after distressed / restructuring, you get a confidence that no structure, or legal documentation, or business model can be too complex to understand or model. Additionally, in any credit role, the ability to think through businesses and covenants and margin of safety that comes from distressed will be valuable.
can you discuss the roles that bankers can go into when it comes to credit fintech companies?
I've seen it go a few ways for bankers:
- Analysts leave banking to (i) do a coding bootcamp and be an engineer (ii) do a bootcamp or MBA to be a product lead or data analyst or (iii) do bus dev / corp dev / cap markets for the FinTech or (iv) FP&A
- Associates / VPs leave banking and can take higher up roles, especially if their experience adds to the role. For example, I was able to leave distressed to lead a specialty investment vehicle, since I had special situations experience.
- MD's / Group Heads often leave their roles to found fintech start-ups or take immediately C-level roles based on their experience in the industry
IMO most of the best roles I've seen at start-ups you get by joining start-ups out of college / MBA or gaining specific expertise in the industry. The MBA seems to help get interesting corp dev / bus dev jobs in big tech, after which you have A LOT of options at start-ups.
Is the move from restructuring consulting to distressed debt common? What would you say are the important areas to focus on for such a move?
100% most definitely. IMO a lot of banking has had a "brian drain" since a lot of MBA's now go into tech and a lot of analysts leave for the "buy side". I've seen many many restructuring consultants go straight into Associate / VP roles in IB restructuring. Super common.
Make sure you understand the financial component of restructuring (i.e. the legal nuances and models). The MBA can help. But so can learning from the bankers you work with on the mandates. Often you can start as a Junior Associate and learn these nuances and don't have to prove anything except that you can learn.
What are your thoughts on starting a career in private debt/direct lending? On average, is the pay in line with PE? Also, do you recommend doing i-banking before going into credit? Thanks!
I personally think that IB is a great way to start your career, since you (i) learn an insane amount of analysis and modelling (ii) get a great network of similarly minded people and (iii) open up a super diverse realm of possibilities like PE, HF, Private Debt, Corp Dev, top-tier MBA. It can't be matched in terms of diversity of exit (in finance).
Broadly speaking, if you compare the tiers (like mega-fund PE vs. mega-fund private debt, middle-market PE vs. middle-market private debt), PE will often pay more than private debt. There's just more upside there and higher fees. That being said private debt can often be more stable and be less competitive for career advancement. Also, it's hard to say since some private debt funds lever to equity-like returns, so they might pay more. At a core level though, PE is higher on the risk spectrum so often pays higher. Distressed can pay like PE, but there are fewer opportunities to scale since the opportunity set is limited. More volatility.
Going directly into private debt or direct lending can be great. You just have narrower exit opps (easier to go from IB to PE than debt to PE). Depends what you want long term. Also, going direct to private debt can help you avoid IB if you don't want the crushing hours / lifestyle. I've seen direct to private debt -> MBA -> PE often though.
I really appreciate the thorough responses to all of my questions. Thank you for your time.
Thanks a lot for doing this Q&A!
Wanted to follow-up on your point re compensation as this still seems to be a rather opaque topic even at the MFs with significant differences. Would you kindly be able to say what ASO1 can expect at a MF Credit arm? Have heard that especially at the top tier places (BX Credit, APO) you would expect to clear in line with PE folks. Thank you!
Thanks for doing the Q&A!
I'd be interested in hearing more about NPL investing since that tends to fall under credit unless I'm mistaken. Have you been involved in many of these transactions? If so, it would be great to hear more about your experiences.
Any insight into how to get into an NPL investing role as well would be great. I work in corp dev for an NPL corporate investor but would be keen to move to a fund at some point.
Interesting. At risk of sounding stupid, if I remember correctly NPL's usually refer to commercial loans that don't perform? In distressed I mainly looked at corporate loans and corporate bonds in distressed or bankrupt companies that were public issuers. If NPL is what I think it is (private commercial loans), I don't know if I have anything useful to add.
Have you chatted w/ the investing team about what they do and how they got there? And have you taken a look at where people in your firm go when they leave? Could be great to reach out to someone who left to see if they need an analyst etc.
Hey, thanks for sharing your wealth of knowledge! I’m interning next summer at a BB in capital markets (yeah, I know... not ideal for buyside exits), but my goal is to someday get into a distressed lending buyside role. I’m thinking I might try to put in my 2 analyst years in cap markets then try to lateral into Lev Fin (the bank I’m joining has a top 3 lev fin team) as a 3rd year analyst or possibly associate. Do you ever see associates in banking exiting to credit? Is Megafund credit somewhat unrealistic? Maybe go for less prestige oriented credit shops? I’d love to hear your thoughts! Thanks!
Hey! Any time. By distressed lending do you mean distressed debt (like buying distressed debt) or lending to distressed companies or both? But yeah, it's very common to begin in capital markets in BB and switch over to Lev Fin or IB, even before the 2 years are up. Just work really hard and at the 1 or 2 year review you can ask about it. Associates and 3rd year analysts leave for credit all the time. MF is definitely realistic from a BB. You'll see when you get there, you'll have a lot of options, just make sure to learn as much as possible and work hard / not burn out.
Thanks for response! I'm excited to hear that MF is still possible. I definitely have a lot to learn about the debt side haha. But back to your question - I wasn't aware that those are two completely different career paths. I had thought MF credit is so big that they tap into everything (both direct lending and buying distressed debt). What is comp like in either side? Which side do you think will have bigger growth over the next 10-15 years? I've seen people say that it's tougher to go from credit --> PE and that credit can pigeonhole you (I don't plan on going to PE anyways). But besides that, what are some other drawbacks of going into credit?
Curious if you have any advice for how early stage companies/start-ups should think about taking on venture debt? If you have any resources that you used to learn about the venture debt landscape that would be awesome. Thanks!
Definitely! Often "venture debt" refers to companies that lend non-dilutive or minimal dilution loans to companies concurrently with the company receiving venture funding. The loans might make a high rate of return relative to other loans, but this is often great for the tech company, since raising VC financing often costs far far higher in terms of IRR when you think through what early-stage equity is worth. Often venture debt funds like this only lend w/ certain VC funds or sponsors, since they have strong relationships, and the tech companies are often cash burning. There are 4-5 main players in this space, and often you'll be introduced by your VC partners who invested in your company.
I focus on more "asset based lending", in that certain growth and venture-stage companies need large amounts of capital to scale and need that money for assets (e.g.not marketing spend or salaries but forms of assets such as accounts receivable, working capital, acquisitions, FinTech products, new world assets / tech assets).
Either way, you want to take a look at your growth plan and valuation and think through where you think the company will be and how much capital you need to get there. Most importantly, how confident you are that you will get there. If you have a high level of confidence, and you have product market fit, often the company is far better off finding non-dilutive or less-dilutive options such as venture debt or asset-based facilities.
Is that helpful? Feel free to DM me if you have other questions.
Thanks a lot for all the answer, really appreciated !
Quick one about moving from S&T role to distress debt investing, did you see this happening often ?
Background would be 2 years as EM Rates Sales at European BB and 2 years as HY Credit Trader on the buyside (European AM under USD 100 bio AUM), with the firm not having internal seat for distress investing, direct lending,...
TBH I haven't often seen someone move from S&T to an investing role (in my limited experience). I have seen people move S&T to IB though and then investing. I imagine you could easily do a distressed debt trading role? I think you always have to look at the positive and find ways to get things done.
Maybe a good route is MBA then an investing role or associate at IB then investing.
Many thanks for the answer !
I looked at distressed debt trading roles but outside BB I don't see a lot of them, especially on the buyside. Maybe buyside execution desk at private credit/credit abritrage/special situation funds ?
Regarding transitioning to the trading role at a BB in the sellside, I think the fact that I don't have sellside market making experience is playing against me. So while it still looks feasible, I think my chances would be quite low.
From past experiences and talks with HH, I am a strong candidate for EM Rates/HY Credit and even being considered for Credit Derivatives/Structured Credit roles by BB but only as a Sales.
Looking into IB, do you think I should focus on DCM HY as other roles such as levfin or M&A seem far away from my skillset ?
Really appreciated the insights.
Thanks for doing this Q&a, very insightful. My question is on structured/Securitized credit. It’s more of a HF strategy than a PC strategy, but i believe both are involved in it. I’m in banking there, but looking for an out to a HF or UMM/MF credit arm that’s involved. I’m considering switching to a S&T role or principal investing role if the opportunity presents itself. In your experience do you think it makes sense to pursue either of those to reach the end goal of HF/UMM/MF or suck it up and stay in banking to exit there?
By principal investing role do you mean in-house at a bank? Either way I think you have to decide on what you actually want to be doing and push that path. You might be happier doing a certain role on the sellside than a certain role on the buyside, the fact that it's a HF doesn't necessarily mean you'll like it. If you're good at anything there will be interesting opportunities, even in IB you can get great at a certain industry or role and go to a boutique or start your own shop or take that expertise elsewhere.
Expedita a suscipit quas libero quia est. Nisi voluptas debitis nulla rerum. Ea vitae quis vel tenetur aut. Est eius labore ut ut. Non nostrum tempore officiis magni quo et. Nihil voluptate et numquam labore quam consequatur. Ea a quod mollitia molestias necessitatibus aut earum qui.
Sit harum at deleniti amet qui consequatur. Pariatur repellendus harum quis minima voluptates. Amet a consequatur neque unde.
Magnam sit praesentium itaque enim qui quisquam veniam. Facere et soluta ex beatae ipsum laboriosam. Consequatur veniam delectus cupiditate. Et facilis dolores consequatur qui minima nostrum nam. Et incidunt impedit sed. Nesciunt iusto et sunt cum. Sapiente ut fugit rerum magni sunt vero quis pariatur.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Dolor illum quidem omnis deserunt dolores commodi autem. Qui necessitatibus maxime aliquam suscipit voluptatum. Dicta ratione sequi ut. Voluptas autem laudantium quo omnis. Magnam repellat et nesciunt omnis eos.