Restructuring --> Direct Lending / Private Credit

First time poster--haven't been able to find substantial information on this subject so I figured I'd start a new thread. I'm wondering if anyone could provide some insight on the pivot from restructuring/distressed (IB) to the private credit/direct lending space.

Restructuring exit opps typically get mentioned in the SS/Distressed Credit context, but do analysts/associates get looks from private credit/DL shops as well? Although restructuring work is more transaction-based than typical LevFin deals, the overlap is noticeable, especially when engaged on a refinancing/recapitalization, DIP marketing, etc. Depending on the situation, RX bankers can spend substantial time reviewing indentures/credit agreements, modeling debt repayment scenarios, analyzing leverage/capacity, which I feel like would transfer well to the private credit world.

Also, is it correct to have a more bullish leaning view on the role of DL/private credit providers in the current regulatory environment going forward? Interested to hear some thoughts from people in the industry (outlook, day-to-day, lifestyle/pay) especially in the current credit cycle. Thanks.

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Comments (10)

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  • Analyst 2 in PE - Other
May 21, 2020 - 12:51pm

I'll bite, in the space myself. We have had several people join our private credit shop that invests cross-capital structure from RX backgrounds as the skillset is largely transferable especially if the private credit shop does hairier deals.

Day to day work revolves around reading CIM's, writing investment memo's, creating diligence lists and conducting calls with PE firms / banks, issuing term sheets / IOI/s, reading through credit docs for deals that are closing, LBO modeling, meetings with management teams sprinkled in here and there, etc. You get the jist,

You are starting to see a lot of private credit firms raise opportunistic / special sits funds which imo you would be a good fit for.

Comp is a little lower than PE, but not substantial. Ranges from ($175k-$250k) at first year associate level depending on the size of the shop and where it is located. Ares, GSO, Owl Rock, HPS, Bain Capital Credit, etc are going to be near the top of the range while your more MM players such as THL Credit, Varagon, Maranon Capital, Crescent Capital, Comvest Credit, etc.) will be slightly lower.

Granted mobility at smaller shops is much better than the larger shops and you'd be able to make it to a senior-level position faster and potentially easier. Likewise, the smaller shops generally have better hours

  • Analyst 2 in IB-M&A
May 21, 2020 - 7:08pm

Private credit is fairly transaction based as well. Believe it or not, a bunch of those "special situations funds" you see restructuring guys going into are actually private credit funds.

It actually wouldn't surprise me if there were more restructuring guys in private credit than secondary distressed. In my experience, the amount of seats open for the latter is far less than the former at any given point in time.

May 21, 2020 - 11:56pm

Private credit seems like a much better overall gig than a lot of other buyside roles. You're getting the transaction experience, investment analysis skills, and solid comp

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Jun 8, 2020 - 1:32am

I'm in the lev fin space and have a bunch of direct lending / private credit published docs from law firms / primers - if you want I can send.
interestingly I get a lot of ppl asking for this who are currently in various roles. even big 4 transaction advisory ppl asking me. happy to help. but in terms of direct insight - the guy above is your guy

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