Restructuring technicals and their difficulty

Preparing for interviews at some EB's for restructuring and from a lot of posts i've seen it is termed "very technical", anybody know what that actually means. Is it case studies? Modelling questions? Brainteasers?
Any help is much appreciated. Thanks

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Comments (20)

Mar 24, 2020 - 12:10am

case studies and modeling. check out moyers distressed debt and HL's case study

Array
  • Prospect in IB - Gen
Mar 24, 2020 - 10:15am

Can you please clarify what you mean by case studies and modeling? I have read moyers, HL, and have spent time on technicals across the expected topics.

I know that it is expected you should be prepared to discuss a case you have read about (as in a distressed company, a bankruptcy, etc.), but did you mean case study as in on-the-spot case where they give you information about a company of their choice?

Besides paper LBO or waterfall exercises, I don't assume you mean an "actual" modeling test right? -- that seems irrelevant for undergrads.

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Mar 24, 2020 - 11:31am

Know your valuation technicals well and how a distressed company would change these. For a case study, they generally give you a fake company and you go through their capital structure and what you would recommend for a restructuring. They just want to see how you think and if you generally know your stuff.

  • Prospect in IB - Gen
Mar 24, 2020 - 11:58am

Thanks for your response. Don't want to bother you too much with follow-up questions, but since it seems like there isn't much visibility on restructuring interviews (and we're all wondering the same Q's), would you mind continuing to clarify the case study?

I understand there's quite a few questions here, so if anyone else in this thread is willing to also jump in with input, we would highly appreciate all the help.

What is an example (either in your experience or hypothetically) of a recommendation that would be made based solely on the information in this type of exercise?

How long is this activity? Are instructions given verbally or on a piece of paper / computer?

To arrive at a conclusion, does the interviewer typically begin by prompting you to calculate different things and ask for moving pieces (such as with a paper LBO) -- or are you given a bunch of info at once and it's mainly conversational in nature.

Mar 24, 2020 - 12:55pm

At least with mine, they give you info on a company (debt tranches, EBITDA, CapEx, etc.) and then ask you for your opinions on what you recommend for the client. Would you recommend a liquidation, restructuring, etc.? They will help walk you through and give assumptions along the way to help you reach a conclusion, but it's very much seeing how well you understand the options available to a company and if you can defend your reasoning. If you can defend why you would do one over the other well, then it proves that you know what you're talking about.

I can't speak to anyone else's experience, but mine was one full interview (30ish min).

Mar 25, 2020 - 10:08pm

It's the typical IB technical skill set plus some additional questions specific to Rx. Basically understand capital structure well. They love to ask about ParentCo debt vs OpCo debt, recovery for secured vs unsecured, etc.

  • Prospect in Other
May 22, 2020 - 4:43am

Has anybody used any of Wall street prep's resources on rx? Are they any good?

Most Helpful
May 22, 2020 - 12:54pm

Generally you can think of RX interviews as being a blend of two components:

  1. Classic technical questions (that you find in the classic guides) that will be particularly relevant to RX
  2. RX specific questions

Classic technical questions, with an RX bend, would be around things like: PIK through the three statements, asset write downs through the three statements, how would a DCF be different for a distressed company, the EV for a distressed company, etc.

RX specific questions can be further broken down into qualitative and quantitative components.

The qualitative involves you showing you understand the general dynamics of restructuring (including what is actually done on the job). For example, what are the characteristics of a distressed company, what do RX bankers actually do (it's not all Chapter 11!), what kind of out-of-court restructurings (broadly) exist, what's the Chapter 11 process involve, what are cram downs, what are DIP loans, who is and is not an impaired class, what is included in profiles and screens, etc.

The quantitative questions will revolve around basic bond math (estimate YTM, what happens to YTM if the bond's maturity is one or two years longer, etc.), waterfall questions (who is the impaired class, what's their recovery, etc.), find the interest rate given leverage and coverage ratios, etc.

Obviously, there are lots more questions, but as a general study plan it's a good idea to think in terms of knowing: classic technical questions, qualitative RX specific questions, and quantitative RX specific questions and figure out what areas you're weak in.

As a general note, I'd also say that in a classic IB interview getting one or two technical questions wrong is probably going to get you dinged. However, in a RX interview the expectation is not that you're going to give a brilliant, fulsome answer to every question.

Probably the best interviewees are those who show they have a contextual understanding of what RX is; what are the possible outcomes in a restructuring, what are the kinds of deals done, what's the day-to-day job really like. This will likely be even more the case moving forward as lots of people who don't really know what RX is will be applying to RX roles and RX bankers want to make sure that folks know what they're really getting themselves into.

  • Intern in IB - Gen
May 4, 2021 - 6:15am

As a sophomore applying for SA I was asked these questions along the process:

-how does an asset divestiture change the leverage of the company?

-two companies have everything identical, one has a market cap of 1mm and other of 5mm, which company has the most volatile stock?

-how does post reorganization debt change the recoveries?

-how can a company go bankrupt suddenly without any debt?

drop 5 SBs for the answer write-up, it would take a while hahaha

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