Q&A: VP in Restructuring

  • BS in Accounting & Finance graduating with honors 
  • CPA, ABV, CTA, CIRA, CDBV, Series 66 & 79 
  • 3 Years in Big 4 Audit
  • 1.5 Years in TAS
  • 2 Years in the Restructuring space
    • Currently at a boutique investment bank
    • Hybrid role of financial & operational restructuring, special situations M&A and distressed debt principal investing

Feel free to ask me any questions.

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Comments (75)

  • Analyst 1 in IB - Cov
Apr 8, 2021 - 12:08pm

In another post, you had mentioned that your comp is $200K. This seems a bit low? I remember seeing a few posts that juniors at A&M, FTI, Alix were raking in big money since their compensation is tied to their hourly billings. Would love it if you could shine some light to the overall compensation in the RX space. Thanks in advance

  • VP in IB - Restr
Apr 8, 2021 - 12:57pm

I had mentioned that comp was easily over $200k; did not want to share exact numbers. Base salary currently $140k - $160k for reference; bonus can be as high as 100%+ of base salary. It is standard that in this industry, many firms do apply a quantitative measurement of what your year-end bonus payout will be using your total billable hours for the year. That is a big piece of it, with a portion being discretionary.  

Apr 8, 2021 - 1:59pm

Thanks for taking the time to do this. Assuming you were managing a small turnaround focused firm doing deals with avg equity checks of $10M - $25M and needed to build a team:

  • Where would you want to recruit from? iBankers in rx? Consultants at firms like A&M, Alix, etc? Lawyers with significant relevant experience and maybe a bit of a finance background? Other PE firms?
  • What do you think comp ranges would need to be at for LMM among the groups mentioned above? Seems like $200k - $350k for someone associate lvl?
  • When building a team, would you want people with experience specific to your avg deal size? How important would you say that is? 

Unrelated:

  • Are you a part of TMA or any other relevant orgs?
  • Favorite resources on rx? How do you stay up to date? 
  • Where is your firm currently recruiting from? What does the pipeline look like?
  • 4
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  • VP in IB - Restr
Apr 8, 2021 - 2:27pm

All very good questions. Sounds like you're referring to a pure Turnaround & Restructuring in the corporate renewal industry. There are a fair amount of firms that have less than 10 employees that do this, substantially most of which are industry veterans coming from different backgrounds (maybe 1 or 2 junior staff with ~3 to 4 years of relevant client-facing experience). 

  • Typically would stray away from recruiting Rx-focused bankers since this is more management consulting-focused
  • $200k - $350k for an associate level role is way above market rates; this is relevant only to those top tier Rx firms mentioned. They consistently bring in a fairly large client base with deals involving $1B+, so they can afford to pay such a high comp to attract top talent. With a much smaller sized client base being targeted, comp is naturally going to be much lower. A lot of these small shops chose to have a mix of the employees work on a contract-basis and pay them based on their hourly billable rate agreed upon. Further, it's not abnormal to actually follow a weekly payroll structure (employees paid every Friday) while also invoicing clients on a weekly basis. You're able to manage the cash you bring in with the sales your firm would be generating in any given week based on hours billed in the weekly invoice. For an associate with 3-4 years of work experience and just breaking in to the corporate renewal space as a salaried employee in a firm of the size you mentioned would likely start at around $110k base with bonus being highly creative as to how you want to structure it.
  • Regardless of deal size, you're going to want highly experienced individuals managing the client engagement. I'd say specific industry veterans are more applicable for larger-sized deals, but of course having the relevant industry background helps

Unrelated questions:

  • Yes, I'm part of TMA (including subcommittees), AIRA, ABI, Secured Finance Network and ACG   
  • Subscribe to Petition (fairly entertaining and informative email blasts periodically). Other subscriptions to subscribe to that help (but may be much more expensive) includes TheDeal, S&P LCD, Debtwire, Inforuptcy, LevFin Insights (I could go on). These subscriptions offer options curating daily emails on what's going on in the industry. also stay up to date through networking events within one of my professional organizations.
  • We recruit from all backgrounds to leverage everyone's background (those from IB, private lenders (BDCs), Rx shops, law firms and even individuals that were former clients
Apr 10, 2021 - 5:14pm

Thanks for the answers, and sorry I was referring to it from the perspective of an LMM firm. Do you think the comp amounts are still high? Seem on target given how few people have appetite for turnaround work? 

Apr 11, 2021 - 8:57pm

From more of an Rx consulting standpoint, what are some key skills and qualities you'd want a prospective candidate to demonstrate? From the people I've talked to, creativity (due to how different each engagement is) and some technical skills like cash flow forecasting seem very important. 

  • VP in IB - Restr
Apr 8, 2021 - 11:47pm

I was not in valuations when in TAS (was in FDD performing QoE's for buy and sell-side mandates). Having the ABV along with the CPA was a shortcut to exempt me from 1 of the 3 parts of the CDBV (Certification in Distressed Business Valuation). Having an audit and TAS background is a very strong combination of skills to possess in restructuring, as you need to have an understanding of the complex accounting concepts and mechanics of how the financial statements of a business are created. Couple that with the due diligence side of M&A deals serves in your favor when standing out among the candidate pool.  

Apr 8, 2021 - 7:35pm

Thanks for doing this! Putting aside money, how do you like the restructuring world compared to TS? I worked in TS but found it get stale very quickly because 90% of what I was doing on a deal was more or less the same. That coupled with the fact that the work was very niche made me want to explore more operational type of work that would better put me on track for CFO type of roles own the road.

Having said that, I've wanted to maybe consider Rx work since it'll still be operational, but also pay more and be more exciting than the work I'm currently doing at my Big 4 right now. How have you liked it versus TS & how were you able to sell your TS experience to get an opp in Rx?

  • VP in IB - Restr
Apr 9, 2021 - 12:00am

The #1 reason I can give about how I like the restructuring environment is that you're literally on the front line trying to keep businesses from failing and causing substantial losses to not only all the creditors/stakeholders, but also saving countless jobs that would've otherwise been eliminated in a Chapter 7 liquidation. It's a domino effect many times where it's not limited to just the Debtor facing liquidation - think about all the Debtors' vendors who in turn rely heavily on the sales of the Debtor. If the Debtor goes out of business, many of its vendors may follow suite shortly thereafter. There's a high level of satisfaction entering the beginning of a deal and watching a highly distressed company be able to turn things around back to a profitable, growing company by the end of the engagement.

This industry typically consists of a vast amount of former business owners, CEOs, CFOs, etc. When handling interim crisis management work, once you're senior enough, you'll be the one serving as interim CFO or CRO for example. So without a doubt, this industry primes you to be on an accelerated track to being a CFO. You're skillset becomes invaluable, as you've continued to gain experience in all unique situations where the underlying root problems start to become familiar and the steps needed to remediate such issues (whether through an operational or financial restructuring).     

Apr 9, 2021 - 11:42am

Awesome, that definitely sounds like pretty cool work! If I'm worried about the work becoming stale like it did in TS, do you think that's warranted, or is that less likely, just given how different each Rx case is? I guess I'm one of the few people that liked a lot of aspects about TS, but I got bored after a while because it was basically just doing a bunch of cash-to-accrual adjustments & reversing a couple of out-of-period adjustments to either up or lower adjusted EBITDA (depending on whether it was sell-side or buy-side diligence). The few times I enjoyed the work was when I worked on a couple of clients that actually valued our input and wanted us to really dig deeper into the models being put forward & doing pro-forma adjustments of our own. Otherwise, the work was very cookie cutter and boring after a while.

Also, if I'm not able to get into A&M/FTI/Alix right away, is Rx one of those things where it's specialized enough that it makes sense for me to take a boutique offer in that space to get experience and then move up, or is it better to stay at my Big 4 firm, get more "trainable" skills in finance/accounting, and then keep trying to lateral over to the bigger firms?

Thanks again!

Apr 11, 2021 - 9:35pm

I hadn't looked into Rx before but that work seems truly valuable and rewarding. Thank you for sharing that. What if one wanted to be on the track for CEO instead of CFO? Would this still be a good route to take? 

Apr 9, 2021 - 9:55pm

Sure,

'Conventional' quant work relies on liquidity, correlations, frequent trading, modeling, etc. For RX/distressed type work where situations are less amenable to conventional methods, I would anticipate some demand for 'alternative' quant skills -- automation of diligence processes, opportunity screening (perhaps moreso in business development), pricing/analysis of derivatives, NLP of legal docs, etc. Essentially data-savviness.

Distress is relatively insulated from quant methods by its nature, and I understand there is good reason for that. However, it seems to me as this is taken as a presumption of the industry; I suspect there are overlooked pockets of opportunity. Envisioning the industry 30 years from now, it's hard to imagine it devoid of any progress on the quantitative side of things. So, I'm wondering if you can speak to any of these ideas, and whether you / your firm values quant skills (i.e. would you hire a quant?).

  • VP in IB - Restr
Apr 11, 2021 - 9:15pm

Being able to see the bigger picture and outlining the core considerations/areas of focus in its simplest form to the MDs under extremely tight deadlines. Ultimate focus is on how you can make your MD's lives easier from the work you produce. You also really need to have really thick skin to be in the game due to how extreme the stress is and how short of a fuse many people you will work around have. 

  • VP in IB - Restr
Apr 11, 2021 - 9:19pm

Rx advisory definitely did not experience the level of workload anticipated in 2020 due in part to the series of massive federal stimulus and lender flexibility with Debtors over the course of the year. However, this is only delaying the inevitable that we're starting to really see come back as 2021 progresses. Stay tuned - it's going to be insanely busy in the Rx world for the next 4-5 years.

  • Analyst 3+ in Consulting
Apr 12, 2021 - 8:29pm

How are people with a business valuation background viewed in the RX world? I've spent the majority of my time with the BV team but have been working more and more with the TAS team at my firm. I don't have a CPA but do have my ABV. I'm looking to to make the move into RX and wondering what I'll be up against. Thanks!

  • VP in IB - Restr
Apr 13, 2021 - 2:34pm

Generally, the ABV doesn't really matter much. The core certifications you would see among those in the Rx space are Certified Turnaround Analyst/Professional (CTA/CTP), Certified Insolvency & Restructuring Advisor (CIRA) or Certification in Distressed Business Valuation (CDBV). Business valuation is just a piece of the overall role in the industry (also dependent on what type of Rx role you're looking at). 

  • Intern in IB - Restr
May 8, 2021 - 8:11pm

As a SA about to start in IB rx, what's some advice you'd offer that would make the experience most valuable in the long run? To go with that, what's some advice you'd offer that would help an intern stand out most among their class?

  • VP in IB - Restr
May 15, 2021 - 6:28pm

To get the most out of your experience, try and take a step back to understand the bigger picture behind the deals you're working on. Understanding the rationale for why a company is being recapitalized in the first place and the analysis that went into how that was structured will provide a lot of insight. If it's a sales process, understanding the nuances of why the target is being sold outside of Chapter 11 or whether you're running a solicitation process for a stalking horse bidder in advance of filing for Chapter 11 to set the stage for an auction process with a Section 363 asset sale. Thinking about all the stakeholders involved and what % recovery the creditors are receiving from the sale proceeds versus what they would've received in a pure liquidation of the company (if liquidation yields greater return, then there is no transaction that would occur since it would be against the best interests of the creditors). 

Ask good questions, be reliable, never make the same mistake twice, have excellent technical modeling skills and turning an accurate/high quality request from an MD ASAP (as this is an extremely fast-paced industry where time is not on your side).      

  • Intern in Research - FI
May 15, 2021 - 6:10pm

I'll be interning as a credit research analyst on the sell-side this summer. I have increasingly been getting interested in restructuring banking. How will an internship in credit research look like if I want to recruit for full-time at a restructuring group? What can I do to boost my chances of getting a full-time offer in restructuring?

  • VP in IB - Restr
May 15, 2021 - 6:42pm

It would help somewhat since you're evaluating the creditworthiness of companies and the likelihood of defaulting. However, you would need very strong modeling skills (3-statement financial modeling, 13-week cash flow modeling, liquidation analyses, etc.) which requires a strong understanding of both accounting and finance. Getting directly into restructuring out of college is extremely hard - people are typically making a lateral move from another IB role or have at least several years of relevant consulting experience under their belt from a respectable firm. Start proactively reaching out to individuals in the field from different banks to see if they can speak with you about how they got into the role, what information they can share about their experiences and what the recruitment process generally looks like.  

Jun 6, 2021 - 3:09pm

Hi I am currently based in London and am a junior lawyer in a top-5 UK-based law firm (Clifford Chance/Slaughter and May etc). I am currently in the M&A team and did a Restructuring rotation before this. I am really interested in moving to RX on IB side. I understand from your replies above that 3-statement modelling is crucial for RX IB.

Are there any other models that you think are crucial for IB RX modelling? And do you have any recommendation of resources to learn these skills? And other skills relevant for RX recruiting? (I have been through Moyer, follow law firms' legal restructuring updates and follow Houlihan Lokey's market updates). I am trying to prepare for interviews and will start recruiting around next summer.

Thanks so much in advance!

  • Associate 2 in IB - Gen
Jun 7, 2021 - 12:09pm

What do MDs / senior folks make? Just take a stab. 

Jun 9, 2021 - 11:41am
  • Master in Accounting & Finance - La Sorbonne
  • Master in Corporate Insolvency Law - La Sorbonne
  • 1 year in restructuring - Big 4
  • 1 year in restructuring - liquidator
  • Love distressed and special situations (distressed M&A, Turnaround PE)
  • Live in Paris but can work in London

Are there any suggestions to what I can do as specific position or companies to join?

Thanks in adance.

Jun 9, 2021 - 11:57am

Ideally, I am looking for the best compensation in these sectors. Furthermore, I am more interested in the investment aspect, which is found more particularly in PE.

Alas, the PE is very competitive in Paris, difficult to access without having completed a top engineering school. Easier to join a consulting firm like A&M. 

Oct 27, 2021 - 3:19pm

Hi VP in IB,

I'm wondering if you can help me out with my situation. I'm currently a first year analyst at RBC (LevFin) and looking to pivot into RX IB or RX Consulting.

What are the underlying differences between the two roles?

Which line of role did you find to be more interesting and why?

What are the respective hours between both groups?

What were the hardest decisions you faced within each?

Do you think Distressed Debt Investing and RX PE are as dynamic and exciting?

Your input would be greatly appreciated! Thank you!

Most Helpful
  • VP in IB - Restr
Oct 27, 2021 - 4:28pm

Sure, so to answer your questions:

  • A bit on Rx IB: More focused on capital restructuring for distressed companies (modifying the terms of their secured debt or negotiating a debt-for-equity conversion, as an example) in order for the company to continue operating without the stress of missing another interest payment or defaulting on its debt obligations that have become to burdensome to service. In other instances, they are involved in an out-of-court sale or 363 asset sale in a Chapter 11 bankruptcy with the goal of maximizing recoveries to creditor classes.  
  • Rx Consulting: More so management consulting (typically turnaround & restructuring advisors or "crisis managers") that come in (typically upon a demand by the company's lenders when a covenant violation has occurred) to independently review and remediate the stressed company by identifying the root causes that caused the business to suffer in the first place and implement a turnaround action plan to stabilize the business. They will put together a 13-week cash flow model and present findings to the lenders/equity sponsors with strategic alternatives illustrating the course of action under each scenario. They will indicate if its feasible to bring the company back to profitability or if the company is too far gone, in which case, they work to try and maximize creditor recoveries on their investment. 
  • I personally find the Rx consulting side more interesting, but its a matter of preference. Both groups work unpredictable hours that can get fairly extreme with a lot of stress to get something done very quickly (and accurately).
  • Distressed investing is extremely interesting and tactical, as you can deploy so many creative strategies with significant upside potential for a remediable business (assuming you weren't buying the stressed business for pennies on the dollar to liquidate everything with the assumption that liquidating the business would yield a greater return). I can share more about the various strategies if you want to DM me. 
  • I cannot speak to the hardest decisions I've had to make because in this arena, every decision is critical in an already very tense work environment.   
Oct 27, 2021 - 5:10pm

Great answers! Can I pop a few of my own on? 

How do you pitch to potential RX IB clients and is it done as frequently as Leveraged Finance?

Is the pay discrepancy very different between Turnaround v RX IB?

Does the modeling within either position get overly tedious (like it does in M&A)?

Were you effective WFH or are these travel intensive jobs?

Nov 4, 2021 - 4:32pm

Cheers, great Q/A, especially the discussion on critical vendors. I had a question about big 4 rx exit opps. Namely, in the UK, would it be possible to lateral to a turnaround consultancy shop (e.g. A&M/ Alix partners), from big 4 rx (having around 3+ years of experience there)?

Nov 9, 2021 - 6:09pm

I am really interested in the Rx side of IB - so thank you for taking the time to answer these questions.

I have a two-parter - if you don't mind.

1. Is the main difference between bulge bracket Rx and boutique Rx that bulge brackets can provide distressed financing packages (ie. DIP financings, rescue financings and Chapter 11 Exits) given their larger balance sheets?

2. My professional experience is in equity analysis on the buy-side, specifically 4 years as a long/short equity analyst. I am currently at London Business School doing my masters in finance (MBA equivalent). Given my background, do you think it would be possible for me to break into Rx IB at the associate level? 

  • VP in IB - Restr
Nov 10, 2021 - 6:50pm

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  • VP in IB - Restr
Nov 26, 2021 - 12:57pm

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