Interested restructuring- good or bad idea?

Hey guys I am a junior in university right now and am interested in restructuring. I will be looking for a SA job soon and am wondering if you can tell me more about RX ibanking.

What are the best firms I should apply to?
What are the exit opps?
Will restructuring be good going forward?

 

Above is close, but not completely accurate. Just some additional clarification points:

1) Two clear leaders in the field are Blackstone and Lazard then followed by Greenhill and Houlihan Lokey (and maybe Moelis). Houlihan Lokey, while generally regarded as the best creditor side restructuring advisor (advising the lenders/banks as opposed to the debtor/company itself), is unfortunately not seen in the same "tier" as BX/Laz due to the perceived lack of prestige of creditor side work compared to debtor side work. You also have restructuring specialized firms like Alvarez & Marsal, Miller Buckfire, and Alix Partners. Sometimes they will do advisory work in competition with Laz/BX/GHL/etc. but most of the time they are hired as operational restructuring consultants typically dealing with things like AR/AP, budgetary issues, etc.

2) Exit ops for restructuring, like any banking analyst position, is highly dependent on your bank. As a generalization, it will be a bit more challenging for you to get a traditional buyout position simply because your restructuring experience will be different than that of a typical M&A focused analyst. That said, if you're looking for a traditional buyout position, you can still get it. Restructuring tends to be pretty modeling/quantitative heavy, so if you stress that and ace the technical/modeling portions of the interviews, you should be fine. Like triplectz mentioned above, you're obviously in a good position to recruit at distressed debt funds.

3) In the near-term, restructuring will probably be pretty slow. Markets, while not in full bull market territory yet, are definitely on the upswing. Barring any implosion out of Europe, we'll probably be good for a few more years. While there are always cases that need restructuring and some layovers from the last bubble (see: TXU recently filing), the opportunities will be few and far between. But I can tell you for sure that the seeds of the next recession are already being sewn and leverage/pricing for current buyouts are nearing frothy levels again.

 

What are the exit opps? I would say distressed investing and also special situations, including shops that focus on structured investments and restructuring plays. These would include shops like Oaktree, Angelo Gordon etc.

Will restructuring be good going forward?

Overall the distressed market in the U.S is pretty slow right now (thou the NPL, REO business appears to be still working for some) while all the megafunds are sitting on top of tons of cash, having raised billion dollar distressed vehicles over the last few years. So all the big funds are looking abroad for yield. Europe is a favorite among many, but as Avenue Capital and others found out, creditors rights are not quite well protected in many such countries. In fact, I don't think there have been many distressed investing success stories in Europe outside the U.K, Ireland and in some cases, Germany.

Too late for second-guessing Too late to go back to sleep.
 

As an analyst though, does it really matter if business is slow for restructuring right now? It's not like you really get paid to bring in business.... If you're leaving after two years anyways like most do isnt it almost better for it not to be too busy so you can do quality work and have a life? I could understand if you're a VP or something but why does it matter assuming you have at least a few good deals.

@South Sea Tulip- Ive heard the creditor vs debtor thing before but it doesn't make sense to me. Isn't representing the creditor even better for exit opps because you are bascally learning it from an actual investor's perspective? Seems like its great bridge to the buyside and who the hell wants to work so badly with the management of a bankrupt business trying to just save their own jobs? lol I'm curious about this bcaus none of the 4 or 5 people I've talked to who do restructuring for a living made it seem like debtor work was better, and most of them do debtor work. It sounds like ppl say this who dont know about restructuring

 

It matters if you actually want to get on live deals as opposed to pitching for two years straight. Not only is the work more interesting when you're actually working on a live deal, but it looks much better from an exit opp standpoint. Your experience is much more valuable if you have a few deals under your belt as opposed to pitches that went no where. Good luck getting a PE/hedge fund/b-school opportunity without working on anything live.

Working with the creditor more often than not involves working with senior banks and all they care about is getting repaid, for the most part. In general, your analysis will consist of evaluating different offers that the debtor side proposes. So on the onset, you're generally reactionary as opposed to actually being in the driver's seat. The amount of industry and company knowledge you'll gain is much greater on the debtor side because you have to work with management to figure out a new and sustainable capital structure, business strategy, etc. Lastly, debtor side restructuring gets higher fees. While that doesn't translate to pay at the analyst level, it should give you an indication as to which service is more highly valued in the market. And yes, oftentimes management will be striving to save their job, but that's how you want it to be. There's nothing worse than working with management that doesn't care about the company at all. You're going to find your job a lot harder when you're not getting any info from them. In regards to your last comment... if you ask 4 or 5 people in restructuring which work, creditor or debtor side, is better and they all say the same thing, why wouldn't you believe them?

 

There will always be shitty businesses and there will always be shitty industries. You just want to be in a group that has a good reputation in whatever industry happens to be cratering at the time.

I think of restructuring as counter-cyclical, but I don't think its peaks and valleys are as severe. Restructuring engagements can least for YEARS not months, so you could go your entire analysts stint working on 2-3 deals (not to mention bankruptcy lawyers also have an incentive to stretch it out even longer so they can keep milking the fees).

Plus the fee structure does typically have a "success fee" component, but a decent % of what the banks bring in over the entire deal is also in the form of a "retainer" - like a monthly consulting fee.

If you're on the debtor side - that means you're basically negotiating on behalf of the company against their pissed off creditors. Vice-versa on the creditor side.

 

I understand your point about deal flow...but at a firm like BX, Lazard, HL and Rothschild shouldn't there always be adequate deal flow? For an analyst at least? Not that many firms even do Rx so how bad could deal flow really get

I mistyped what I meant to say. I meant to say out of the 4 or 5 people Ive talked to, most of them do debtor work but none of them have communicated to me that it was better. What you said about working with senior banks definitely isnt true. They advice bondholders, not banks.

 

Word, thanks, I have no idea how I missed that.

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

Thanks again giants, the one question I didn't get answered was hours? I'm actually curious if Patrick wouldn't mind sharing as I like Rothschild as a company and would be eager to hear what it was like working for them, to say the least.

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

It really depends on the bank. For example, Evercore's Restructuring group gets slammed. One of my friend's roommates is about to start his second year there, and according to him, the Evercore analyst leaves in the morning before he does and comes home several hours after he does. Heard the Houlihan Lokey guys also get worked pretty hard.

On the other hand, there are banks like Broadpoint (now known as Gleacher & Company), Imperial Capital, Jefferies, Greenhill, etc. that work tough hours but not to the extent of what I've heard about Evercore/HLHZ. Can't comment on Lazard or Rothschild's groups since I don't know anyone at either bank.

But regardless, if work/life balance is one of your bigger priorities, I don't think any advisory-focused shop (basically all the banks I mentioned) would work for you. Busy practice + small analyst class = a lot of work.

I'll be working at one of the aforementioned banks (you should be able to cut the list down to 4) starting in July, so I'll let you know how things are in a few months.

 

For the past couple of years there's been a lot of work but the low hanging fruit is gone... You can get into PE from restructuring since you learn the same basic skills whether in restructuring or m&a plus, there are PE shops out there that focus particularly on special situations or distressed companies

 

Thanks for the info Jack and young.

Jack: I'm not so much interested in a work/life balance as a work/sleep balance. I've found my life in general feels like shit unless Im getting ~8 hours of sleep a night (I can handle a few days on just 4 hours a night, but I honestly hate it).

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

Figures, now I just have to decide if I'm going to be too old for that shit :-p

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

@heebbanker: Thank you very much! @Maherj1: I'm a student in a university in Boston and I'm planning on doing a restructuring internship in new york. Restructuring dealflow in Saudi Arabia is low given the size of the economy. Do you happen to be from the region(MENA)?

Greed is Good.
 
konig:
@heebbanker: Thank you very much! @Maherj1: I'm a student in a university in Boston and I'm planning on doing a restructuring internship in new york. Restructuring dealflow in Saudi Arabia is low given the size of the economy. Do you happen to be from the region(MENA)?

It's not just due to the size, it's due the fact that the laws over there favour the debtor considerably

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

I am not personally in restructuring, so take my advice with a grain of salt. My impression is that LevFin and syndication are great segways into the world, but I think you will need to do a lot of self-research given your current position. Rebranding sounds like a good idea - anyone got any other thoughts on this?

 

restructuring is just, if not more difficult due to smaller market, as hard to get into as M&A. same re-branding / networking applies.

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

HLHZ london hired 2 post MBA lawyers as an "experiment." start hustling.

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

It's amazing how most posters are only aware of the bulge bracket......Houlihan Lokey is the largest restructuring firm in Europe currently, and has won the European restructuring house of the year award for two years running.

Houlihan is a leading creditor restructuring firm in the US for all firm sizes and does a fair amount of debtor work in the middle market.

They are also aggressively moving into Asia and have excellent relationships with the Chinese government - think of all those underperforming state owned enterprises - years of restructuring deals. Since China is so relationship based, they are light years ahead of other players in that market.

 
nrc_chicago:
It's amazing how most posters are only aware of the bulge bracket......Houlihan Lokey is the largest restructuring firm in Europe currently, and has won the European restructuring house of the year award for two years running.

Houlihan is a leading creditor restructuring firm in the US for all firm sizes and does a fair amount of debtor work in the middle market.

They are also aggressively moving into Asia and have excellent relationships with the Chinese government - think of all those underperforming state owned enterprises - years of restructuring deals. Since China is so relationship based, they are light years ahead of other players in that market.

Haha, let me guess, you work at Houlihan?

 

very enlightening...Didn't they teach you at school or at your IBank or wherever that when you invoke some data you must acknowledge the source?

 

There will always be companies with problems, and ones that need to distressed M&A advisement and restructuring. This has been discussed in prior threads. Question is where you want to be after 2-3 years. Either of those options (restruc / M&A) will get you into PE/HF.

-- "Those who say don't know, and those who know don't say."
 

^ although some companies will be in reorg/distressed situation, it is getting pretty low... i think it's less than 3% default for non-investment grade companies now.

However, if you're at a top restructuring shop like BX / Lazard, you'll most likely be very busy. Plus, Restructuring analysts only take on a couple deals per year since the deals can drag.

 

Restructuring will slow down, but there is more than enough work to still go around. Think about terminally ill industries like newspapers, radio, etc.

Restructuring also applies to companies that face litigation and technical defaults. Suppose a company was just discovered to be putting asbestos in their soft drinks.

Generally banks keep these groups pretty lean, and while they were ridiculously understaffed over the past year, perhaps they'll have more reasonable hours going forward.

 

Restructuring, as has been discussed, will always be busy. Although the tidal wave in defaults, Ch. 11'S, and a-to-e's of the last couple years looks to be receding, shops are always looking for new opportunities. For instance, I know a lot of creditor-side work (think HFs that invested in the "fulcrum" securities and took control of co.'s) of the last couple years has led to shops going back to those clients and doing divestitures, DM&A, etc.

That being said, if faced with a choice between restructuring and M&A at any of those shops (bar HL perhaps), I'd personally take M&A regardless of the business environment. Restructuring (did SA) always presents interesting and challenging cases, but deals take a while, you won't get the same skill set as M&A or ind. groups, and thus you can be limited to distressed PE/HF.

Some also do not enjoy having to do financial analysis within the scope of the legal framework for Ch. 11. Many issues re: debt and distress have to do with legal issues and can limit creativity and agility of plans.

 
kidflash:

miller is a ghost shop from i've heard. cv and gugg poached their remaining rainmakers. oh and GHL RX is solid too, but their analyst program.is generalist across M&A and RX.

This is accurate. A guy I know in the Class of 2012 lateraled to Evercore, and a guy in the Class of 2011 lateraled to GS FIG. Many of their seniors have all moved to other boutiques, bringing the juniors along in some cases.

Centerview took one MD, two VPs (and retitled them as Principals), and an associate who was an A2A promote at Miller Buckfire. Evercore took an MD, a VP, and the analyst I already mentioned.

Per your list, you should also add Millstein. It is a brand new shop; I haven't yet seen them on anything besides the AMR deal, but Jim was Chief Restructuring Officer at the U.S. Treasury and received minority equity funding from Third Avenue. They have Dave Barse on their board.

You also need to add Moelis, Rothschild, Alvarez and Marsal, and FTI Consulting (with an asterisk).

I am permanently behind on PMs, it's not personal.
 
7xEBITDA:

Miller is handling the Detroit bankruptcy, isn't it?

If a firm is in the business and they are not on one of these large bankruptcies, its a pretty huge black eye. There are so many constituents and conflicts involved, these large restructurings may very well have anywhere from 10-30+ advisors involved.

Unless of course you mean on the debtor-side which is far more competitive.

 

I believe Miller is one of the main advisors on the debtor side - I saw Buckfire speak over the summer and he said what he could about the firm's involvement. It wasn't much, but the impression I got was that MB was heavily involved. I feel like they're still very strong in municipal restructurings, but I could be wrong. I don't know much about the RX space.

 

Anyone heard of Goldin Associates? Am not familiar with them and am fairly ignorant of prominent Rx shops besides those mentioned above. Also, Gordian Group though I kind of doubt their legitimacy.

People demand freedom of speech as a compensation for freedom of thought which they seldom use.
 
Anihilist:

Anyone heard of Goldin Associates? Am not familiar with them and am fairly ignorant of prominent Rx shops besides those mentioned above. Also, Gordian Group though I kind of doubt their legitimacy.

I actually know someone at Gordian, come to think of it. Does seem pretty chop-shoppy.
I am permanently behind on PMs, it's not personal.
 

Blackstone.

Better pay. Better reputation, literally the most gold-plated banking name out there. Better exits, to the elite distressed/turnaround funds. Better culture, Better seniors, they go to bat for you during recruiting. Better physical office.

I am permanently behind on PMs, it's not personal.
 

7 posts and no one has mentioned Lazard yet, haha.

Lazard and BX are generally considered to be the top debtor-side restructuring practices on the street (with Rothschild following as a third, and some of the boutiques like Moelis and Evercore trailing behind) HLHZ is king of creditor-side restructurings

Do you guys think getting into RX is still a good option at this point in time (considering the business cycle)? What will deal flow in RX be like over the next couple of years?

 

Restructuring is a great place to start and will not pigeonhole you, although most "exit ops" may be limited to more distressed-focus PE and HFs. Still know people who later on went into more "traditional" IBD groups.

Although you probably won't be doing pure DCF models and such, restructuring analysis is pretty technical and will allow you to really understand capital structure, negotiation, game theory, and other useful and applicable concepts.

Deal flow - while not on par with 08-09-10 - is always there. There are always poorly managed companies, industries that are dying, business models that are obsolete. So far in 2011 there have been some big Ch. 11's. The focus in restructuring in the next few years looks to be, on an industry basis, a lot of consumer/retail, paper/packaging, and maybe even some cleantech. Thematically, look for distressed M&A, asset sales, spinoffs, etc.

 

Borders just filed for Bankruptcy and Blockbuster is in Brupcty too they are just two huge ones I can think of off the top of my head. I am sure given the wave of debt maturities coming up over the next few years there will be lots of dealflow

 
TimothyBryce:
I am sure there would be some difficulties in making the switch to the London/HK from NYC due to the different bankruptcy laws, but I don't think it would be that hard to learn the differences at a high level, and a lot of things like valuations and non-Chapter 11 restructurings would be the same. I think

So basically bankruptcy laws are similar across countries? Also could anyone tell me what are the key skills that an analyst gains in RX. Thanks. Please forgive my ignorance.

 

If you get into BX or LAZ Restructuring - you're pretty much set to go to HF or PE after your analyst stint - heard good things about HL as well - Rothschild is good, but a small notch down from the aforementioned firms - those are basically the big players in the space - there's always going to be activity in the industry, especially on the creditor side (bankruptcy process takes years) and there's always distressed firms that can't refinance - but it's definitely going to be slower than 08/09...

 

I wouldn't take restructuring. The number of deals is very limited, my friends in restructuring are all worried and moving out now to M&A/Leveraged Finance. Although it is a good skillset it is very legal. It would have been ideal to be in restructuring during 2008-2010 for 3 years. Now it is time to be in Leveraged Finance.....

 
pivot1990:
I wouldn't take restructuring. The number of deals is very limited, my friends in restructuring are all worried and moving out now to M&A/Leveraged Finance. Although it is a good skillset it is very legal. It would have been ideal to be in restructuring during 2008-2010 for 3 years. Now it is time to be in Leveraged Finance.....

Yeah that is definitely one of my concerns looking at Restructuring going forward. I think it is very interesting, but concerned jobs in the space may start to disappear over the next few years.

 
pivot1990:
I wouldn't take restructuring. The number of deals is very limited, my friends in restructuring are all worried and moving out now to M&A/Leveraged Finance. Although it is a good skillset it is very legal. It would have been ideal to be in restructuring during 2008-2010 for 3 years. Now it is time to be in Leveraged Finance.....
this is a gross overstatement. 08-10 was for restructuring what pre crisis was for m&a.

Now restructuring will still have solid dealflow it just wont be christmas anymore, companies still go bust.

 

Bankruptcy / distress is most commonly as a result of a mix of both financial and operational issues, e.g. dying business + overly optimistic cap structure done in an LBO. Issues on each side - assets and liabilities, basically - inextricably cross-fertilize each other and causes/exacerbates a downward spiral of distress.

Again, restructuring over the next few years won't be what it was 08-10 but there is always a need. Restructuring firms and groups are looking towards more of a lifecycle management function (advise creditor --> loan becomes equity --> firm client, previously creditor, is now owner --> restructuring firm advises NewCo on DM&A/asset sales/recap, etc).

 
analystforhire:
Bankruptcy / distress is most commonly as a result of a mix of both financial and operational issues, e.g. dying business + overly optimistic cap structure done in an LBO. Issues on each side - assets and liabilities, basically - inextricably cross-fertilize each other and causes/exacerbates a downward spiral of distress.

Again, restructuring over the next few years won't be what it was 08-10 but there is always a need. Restructuring firms and groups are looking towards more of a lifecycle management function (advise creditor --> loan becomes equity --> firm client, previously creditor, is now owner --> restructuring firm advises NewCo on DM&A/asset sales/recap, etc).

Appreciate the insight Analystforhire...Can you offer anymore input into what exactly Rest. firms and groups focus on? Thanks

 

Basically, restructuring groups will advise on out-of-court restructurings (exchange offers), Chapter 11 processes (including, from debtor side, reorg. plan, asset sales, etc, and from creditor side, plan changes, secondary sales), distressed M&A, loan amendments/extensions/revisions, fairness opinions, expert testimony in court.

As a lot of these things are negotiation-based, restructuring folks are typically perceived as "scrappy", i.e. not your prototype blue blooded banker. Also, mostly done within a greater legal framework (i.e. bankruptcy code) and so it can be interesting to see the intersection of law and finance. On the other hand, it can limit entrepreneurial spirit and is often a zero sum game.

 

Is there an M&A component as well? would it be the case that the best option for a distressed firm would be to sell and then the restructuring group would handle the sell side M&A akin to when an industry group does its own M&A? THANKS again, your help is much appreciated

 
design:
Didn't Patrick used to work for Rothschild restructuring? He should be able to shine some light on this topic.

Patrick, if that's true would you mind sharing some insights from your experience? Thanks

 

As I mentioned in a couple of these posts, there is always distressed M&A, whether it be a division, a set of assets, or an entire company.

If it's at an MM/BB, restructuring will typically team up with a couple folks from the M&A group and/or industry group.

At restructuring boutiques, the restructuring guys will do it.

Not to be rude, because I appreciate your thirst for knowledge, but you can go on any restructuring firm's website and look under "Services." Will be glad to answer any deeper q's after that.

 
analystforhire:
As I mentioned in a couple of these posts, there is always distressed M&A, whether it be a division, a set of assets, or an entire company.

If it's at an MM/BB, restructuring will typically team up with a couple folks from the M&A group and/or industry group.

At restructuring boutiques, the restructuring guys will do it.

Not to be rude, because I appreciate your thirst for knowledge, but you can go on any restructuring firm's website and look under "Services." Will be glad to answer any deeper q's after that.

Not rude at all. Thanks for all your insights and I will do some more research on my own

 
Best Response

Financial restructuring is different from typical banking in several ways:

1) In bankruptcy, you work within a legal framework (the Bankruptcy Code)

2) Restructuring is often a zero sum game, that is, different creditors are fighting over a fixed pie - versus M&A where you theoretically are creating a bigger pie

3) Restructuring is countercyclical. When typical bankers are getting small bonuses or being laid-off, you're busy. This is actually a very positive thing as you do well and get paid when other jobs are scarce, and when you are slow, there are usually many other options. Also, since restructuring groups don't want to be caught flat footed in a downturn, they tend to keep people and pay a little better, even when slow. Often they are part of larger firm and are a smaller part, so when restructuring is down, the rest of the firm can subsidize compensation.

4) You often work with demoralized, disorganized companies, there is little glamour or glitz and client employees aren't always giving it their all. While this gives you the opportunity for more leadership and to have a bigger impact, it can also be frustrating.

5) Due to the legal framework, zero-sum game, and other unique attributes of restructuring, you develop a very specialized set of skills that are not easily or quickly replicated. However, you often have to engage in distressed M&A and perform analyses that typical bankers perform, so you maintain the ability to jump back to the healthy side with little adjustment.

 

Would the hours for a restructuring analyst differ from an M&A analyst? Lets Assume they work at a top restructuring shop (Lazard, Rothschild, Blackstone).

I also understand restructuring engagements are on average considerably longer than M&A - some even enduring an entire year. Would the restructuring analyst's odds at landing a solid exit be impaired for having worked on only 2-3 deals during his/her entire tenure?

 

I mentioned this before on another thread, but I honestly can't emphasize the fact enough: If you want to do restructuring, it really doesn't get better than Houlihan Lokey. It's almost guaranteed that when a Fortune 500 company goes bankrupt, HLHZ will be involved in some sort of capacity. They have done the five largest bankruptcies in US history (think Enron, WorldCom, etc.) and have a special focus on all the airlines. So overall, great shop to be in.

 

If you get a job at Lazard or Blackstone restructuring, rest assured you will have no problem getting the absolute top HF jobs after your two years.

That being said, though, those positions are extremely difficult to get. Blackstone recruits for its restructuring group separately than its other groups, and analyst class size is tiny - like 5-6 people. I'm pretty sure most of the class is Harvard and Wharton, maybe a little from the other ivys. Lazard recruits for its restructuring group through its general banking program, so once you get into the program (which is very difficult as well, given its small size - roughly 20-25 people) you then need to be placed into the restructuring group.

 

Assume one has a platform offer for Lazard / Rothschild and is vacillating between M&A and restructuring. What would you choose to do?

Its been established that restructuring exit opps from a top shop are second to none, but is the lifestyle of restructuring analyst better than that of an M&A's?

 

I'm not sure if Rothschild's US restructuring practice is as good as Blackstone or Lazard's. I would probably do M&A at a bulge bracket bank over restructuring at Rothschild if I was interested in restructuring nonetheless.

Personally, I find M&A more interesting so I would go for M&A even over restructuring at Laz/Bstone. But that's just me. It depends where your interests lie. As for the restructuring hours - they'll be opposite of banking. In good economic times, you'll have easier hours than banking. But in bad economic times you'll be working hard. That being said, I have heard that restructuring hours overall (considering the net of bad and good economic times) are somewhat less than M&A hours.

Although restructuring analysts tend to go to HFs after their two years, and the hours at top HFs are usually less than the hours at top PE shops.

 

Prescott is right. HLHZ M&A is distinctly middle market, but the Restructuring group runs with the big boys. They are always in the big pitches and frequently win. They tend to work the creditor side on large mandates, but do debtor work on mid to small deals as well.

 

HLHZ restructuring is really good, but they don't have the "prestige" factor of a Blackstone or Lazard. Prestigious positions are more desirable and harder to get, and I've heard that this translates into analysts at prestigious places getting the best exit opportunities into hedge funds and business schools. Same logic as banking - it's not like a Goldman banking analyst is doing way more complicated and intense stuff than a Lehman analyst, but the Goldman analyst gets much better exit opps because he's a Goldman analyst.

You would be crazy (in my opinion) to go to HLHZ over Blackstone or Lazard.

Another good restructuring firm that also doesn't have the prestige of Bstone/Laz is Miller Buckfire. I went to their presentation, though, and the people were sooo weird...

 

Why would an analyst from a top restructuring shop join an HF over a PE? Wouldn't the skill set acquired be more applicable to a PE position, particularly in the post-acquisition phase when the portfolio companies needs some sprucing up?

There seems to be a paucity of professionals with the necessary experience to fix-up the lemons acquired by their respective shops.

 

there are a lot more distressed HFs (by that i mean HFs that invest in distressed assets - not HFs that are blowing up) than there are distressed PE shops.

Author of www.IBankingFAQ.com
 
ex-banker:
there are a lot more distressed HFs (by that i mean HFs that invest in distressed assets - not HFs that are blowing up) than there are distressed PE shops.

Exactly. Who wants to own the equity of a company that could potentially file for bankruptcy?

 

The hours in restructuring are just as bad as M&A, especially at the moment with the downturn in the economy ! The restructuring team I am joining is doing a typical 9 - 3/4 am day. and are pulling frequent all nighters.

Of course in an upturn there would be less hours in comparison to M&A due to lesser amounts or lesser likelihood of bankruptcy.

Also Greenhill is ok for restructuring. Not in the same league as BX, HLHZ, MB or LAZ. These are really the top 4 shops to look at.

 
sherminator:
how difficult is it to get into restructuring for full time right out of undergrad at a top group? would it be possible without a SA banking stint? i'm really hoping to get interviews with either BX or Lazard in the fall but i know its nearly impossible, even with a prop trading position from a top BB

would like some info as well

 
gimmearedbull:
sherminator:
how difficult is it to get into restructuring for full time right out of undergrad at a top group? would it be possible without a SA banking stint? i'm really hoping to get interviews with either BX or Lazard in the fall but i know its nearly impossible, even with a prop trading position from a top BB

would like some info as well

Ok so look at it like this....and note that I am from the UK so I believe getting into top restructuring firms is slightly easier here due to lesser presence - cold hard facts.....

A) I have 1 Energy Derivs Trading Internship - JPM B) I have 2 UK M&A internships - GS and JPM

I am from a Top UK Uni with an equivalent 4.0 GPA. I had numerous BB M&A offers.......and here is how I performed for restructuring....

1) Lazard - Submitted a well crafted application - rejected before 1st round.

2) BX - Ignored me for 6 months - through persistence and from what i believe to be a lack of talent in the earlier part of the recruitment season, I was offered interviews.........19 rounds of interviews and 4 tests later I was made an offer.

3) HLHZ - No response from the online application - so I contacted the HR directly. After 17 Rounds of interviews, which was the most technical interview process I have been through (they expected a high standard especially considering my finance background and 3 internships) I was offered a position.

Before applying for Grad roles I thought that I would breeze into a job, with top grades and 3 excellent internships under my belt. This really was not that case and I really had to prove my worth to the firms - it was a very tough task.

Also note that because the restructuring specialists are much smaller than the BB - it makes the whole process more rigorous but what I believe / hope to believe to be more beneficial in the long run.

 

In reading through the different interpretations of debtor vs. creditor advisory roles, I was curious who the debtor-side really represents. The creditor-side makes sense to me (the claim holders). The debtor-side is purportedly the company, but wouldn't that in effect just represent the equity holders (equity funds, management, etc) - trying to limit secured and unsecured claims and/or maximize value so that the equity holders come out as least impaired as possible?

I apologize for the naivete here, I'm entering B-school soon and will be looking to reposition myself in a restructruing group next summer (currently work in sell-side fixed income research).

 
FFF:
In reading through the different interpretations of debtor vs. creditor advisory roles, I was curious who the debtor-side really represents. The creditor-side makes sense to me (the claim holders). The debtor-side is purportedly the company, but wouldn't that in effect just represent the equity holders (equity funds, management, etc) - trying to limit secured and unsecured claims and/or maximize value so that the equity holders come out as least impaired as possible?

From an advisor perspective the creditor side is usually a less stressful gig - you are dealing with a group of bondholders rather than hand holding the debtors/company/equity sponsor. Creditor side workload is mostly just catering to your creditor committee and monitoring the debtor's proceedings to make sure your committee doesn't get screwed at any point - i.e. preserve value and fight for high recovery.

Debtor side pays bigger fees, typically, but you work for it and get more odd-hour/one-off requests - from an ibank's capacity perspective, I think it is more efficient (fees per banker) to do creditor side because you can handle more deals. I've only done a few debtor side though so if a BX or LAZ analyst wants to speak up on this I would be curious to see their perspective.

if you like it then you shoulda put a banana on it
 

I think most would agree the cycle will sustain restructuring's "heat" for at least the next two years.

I'm an analyst at Houlihan. Consensus here is that this is really just the beginning and we will be seeing alot more major bkrptcys which can last quite long (sometimes years).

if you like it then you shoulda put a banana on it
 

The more I learn about restructuring the more I get interested. It seems very dynamic compared to M&A which is very process-heavy. Like someone mentioned earlier, it's a zero-sum game so most deals will close and there will still be unhappy faces.

I really like restructuring for two more reasons: 1. consulting/problem solving 2. platform. So you have a value-break in a company and you have these assets that are worth less than the amount of debt that the creditors need to receive back (with interest). The problem solving needed for this involves lots of negotiation and dividing up the pieces of the pie in the best way possible for all parties. Its not just company A and company B. It's company A and then all these creditors. Also, restructuring can work out well and lead to something new. look at american airlines being coming out of bankruptcy and then merging with usairways. look at tribune and co and its flexibility to divest some of its assets now.

 
mountainvalley:
The RX group in Lazard-Chicago is very strong and their guys are almost all former bankruptcy lawyers turned bankers. The boutiques with strong practices usually don't have internal lawyers, from a cost perspective. But maybe the BBs with larger resources do?
man who has no idea which banks are in restructuring
"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

Sorry to tell you this, OP, but it's unlikely any bank or hedge fund is going to want a law student as an intern.

Also, if you are in law school, the reality is you don't have solid experience in anything.

 

Yes - restructuring groups hire analysts out of undergrad (and associates out of MBA), same as any other industry/product group. You can find lots of info online, but at a high level, restructuring advisors figure out what to do with companies that cannot - now or in the near future - repay their debts. Once this starts to become obvious, both company and creditors will hire restructuring advisors, and the two sides fight about how much cashflow there is, and where it should go / who takes a haircut. It is very interesting, and very hard work, but can be a little less fun than M&A/capital markets, because there's no happy ending for either party to a restructuring. (Except for the bankers and lawyers).

 

Jeez I hope restructuring isn't "booming" until 2010! As much as restructuring is an interesting field, getting a job in I-banking is hard enough without limiting yourself to firms with top restructuring groups. If you haven't done so yet, I would apply to every possible bank. If you happen to get a spot in a restructuring group down the line, then bonus.

PS: Proper abbreviation is HLHZ

 

First, I highly recommend the following books:

'Creating Value through Corporate Restructuring' By Gilson

'Distressed Investment Banking' By Owsley and Kaufman

Both of these books will give you a great overview of the business of restructuring.  However, do not expect to be asked detailed questions about restructuring deals if you have not been working in restructuring in the past.  Restructuring is a highly specialized field of investment banking that requires knowledge of bankruptcy law and distressed debt, as well as the valuation tools that you would use in a typical product or coverage group.

In addition to knowing basic valuation tools (dcf, comps, etc.) know the 'absolute priority' of debt in a distressed situation.  Be able to explain that senior debt will be made whole before subordinated debt, and subordinated debt will be made whole before stockholders recieve any value from a bankruptcy situation.  Absolute priority does not always hold true in restructuring deals, but your interviewer will likely want to know that you understand the concept.

I will post again to give an overview of my knowledge of the firms you asked about.

 

First, I have not heard of any of the Big 4 being involved in the investment banking side of restructuring deals.  It is likey that Big 4 TS groups assist in certain due diligence aspects, but don't expect to get an Ibanking experience at one of the Big 4.

Lazard, Rothschild, and Blackstone are all great names with established restructuring groups.  There are also several other smaller shops to look at such as Mesirow, Miller Buckfire, Gordion Group, and Jefferies.  Also, Guiliani Capital Advisors is a good restructuring shop that was acquired by Macquarie last summer.  I can't provide you much information about these banks, but they are worth a look.

HLHZ is consistently ranked as the top restructuring bank in terms of deal flow and is well-known for its restructuring expertise.

I don't know anything about GS's new group, but I believe you will see many of the other BB banks attempting to open up FRG's as the markets continue to turn.  However, BB banks have always had trouble maintaining FRG's because there is something of a conflict of interest associated with restructuring the same debt you helped to place when the markets were bullish.   If you want banks that specialize in restructuring, go with a boutique.  If you want the name, go BB.

 

Just to add a couple of points regarding firms: Lazard and Blackstone are really the big 2 in restructuring. In addition to firms mentioned in mschutzy's post (Rothschild and Miller Buckfire most importantly though both have lost key people over the last few years I believe), a number of other M&A boutiques also do some restructuring including Greenhill and Evercore. One thing you should know is there is a big difference between what is known as debtor-side restructuring and creditor-side restructuring. Debtor-side is representing the company that is distressed/bankrupt. Credit-side is representing the creditors of distressed/bankrupt companies. I believe you get a much more valuable experience doing debtor-side work, which leads to better exit opportunties if that's what you're ultimately after. All of the firms I've mentioned do mostly debtor work. HLHZ is the largest creditor-side restructuring bank though they also do a little debtor work (especially in the middle market). Other firms that do a lot of creditor work are Duff and Phelps (was Chanin Capital), Mesirow, FTI Consulting.

With regards to the bulge brackets, historically, they were not legally allowed to do restructuring. That's why the field is dominated by boutiques. In the big bankruptcy law overhall of 2005, this rule was changed so now bulge brackets can participate. GS is the most obvious new entrant as they went out and hired one of the very top bankruptcy attorneys a couple of years ago to lead their efforts. My guess is other banks will follow as restructuring heats up over the next few years and other areas continue to be weak.

As for interviewing, most of the techinal questions shouldn't be too different than other non-restructuring interviews but I would definitely have a basic of understanding of capital structure and the bankruptcy law. Exactly as mschutzy said. Also, I would have a good answer for why you want to do restructuring. Keep in mind that restructuring recruiting is likely to be pretty competitive since there really aren't that many jobs out there, and a lot of folks have the same idea that you do: that it is probably a good place to be for the next few years.

Author of www.IBankingFAQ.com
 

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