Special Situations Groups - Exit opps?

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Quite boring. You don't touch companies. Its mostly loans and investments in illiquid assets.

Nothing at a bank will ever let you get interaction with management, imagine the conflict of interest. Not even PIA which is lending/mezz and acquisition financing. You care about transactions and then move on.

I can't tell if this is a serious question or not, but it any case... having been at a turnaround and special situations fund this past summer there is a lot of 'query work' as with buying any portfolio company. You're buying an entire company, not a position, using investors money, and staking your lively hood on its viability; I hope there is going to be a lot of 'query work'. Special situations / PE are analytic by nature though sometimes at a high level with screening investments, but if you think about it intuitively a special situations fund is still buying a company that typically will have some types of problems etc. so its PE+: lots of work.

With special situations and turnarounds and with any PE fund you work closely with management, I think the level of governance is sometimes fund based, but the guys at my firm were checking in weekly if not daily at some investments depending on performance.

IDK what you mean by model operations, an LBO does that already. If you're asking about day to day and FP&A type shit that's done at the portfolio level with metrics tracked by the sponsor.

You seem to have this rosy view of working with management and portfolio companies, its definitely a tough relationship to manage i.e. I'm reducing headcount (expense synergy), bolting on another company so you better integrate well, and oh yeah I'll be tracking that and its linked to your bonus, and I'm 15 years younger than you.... ready go.... Not that its a constant battle, but its not a walk in the park at least from what I saw / heard.

Good answers, thanks. And yes, this is a serious question. I am balls-deep in a totally unexpected interview process and I am trying to get a better feel for what I am getting into. Having not spent a ton of time looking into PE and especially special situations, i am quite naive at this time.

Generally boring = less comp and less valuable experience. Is this the case?

I am thinking of M&A vs Public Finance in my comparison.

Not all Special Situations groups buy whole companies. Some just make investments in illiquid parts of the capital structure to get good risk-adjusted returns, as Illinois wrote. Depends on the group but yeah some that I've met definitely seem pretty boring, despite probably making bank.

Bepbep, you are wrong and I think missing the OP's question since you were an intern at a "fund".

I think OP is asking about bank's SSG groups.

At bank's SSG groups, you will not look at companies but assets and materials. The most banks do with companies is coinvestments and mezz investments and that isn't SSG, its PIA.

I.e: GS SSG is illiquid investing mostly in aircraft leasing and real estate.

it's not high action like trading at all. However, you get to really focus since there is not as much noise. The "excitement" comes from chapter 11 court battles where there is a complex capital structure or dealing with funky jurisdictions. As far as working with management, you will be working AGAINST management most of the time. It's them that screwed things up and they will fight to take whatever value they can out of the company. If you are working with management, it's likely new guys you brought in. i.e. your capital is paying for them, so you'll be demanding results. unlike stocks, you cannto just sell when they screw up, so it can be very tough. A HF that bought defaulted debt from Niger recently froze money wired into the government's account in Hong Kong. This kicked off a diplmatic incident where the State Council (hungry for resources from Africa) from the PRC intervened creating all kinds of hell for Hong Kong's Basic Law which is meant to prohibit that type of ntervention. This one ended badly. they did not get the money.

That is not boring at all in my opinion.

We do a lot of stuff that would fall under the purview of the special situations group at a lot of banks, and I personally find it very interesting, but if you find the due diligence boring you're going to have a hard time finding a satisfying role as an analyst in any fundamentals-driven group.

Illinoisprogrammerisajoke, I think you're wrong about GS SSG. I've seen them in a number of loan-to-own situations with corporate debt.

Any idea on comp for groups like this? I would imagine it is nowhere near a PE comp structure of $140k+ for an analyst.

At the senior level is comp easily in the $MM range, or a few hundred k?

Not sure where you guys are getting this info from, or what your definition of boring is. We work with Special Sits groups a lot at my bank and they take pretty significant slices of equity and debt in the deals we do. I've not worked on a desk myself, but it seems pretty interesting because they're looking across the entire capital structure in a huge variety of industries, in a lot of non traditional investments.

I worked at GS SSG. It's not "boring" but it's not exciting shit either and its more of an IBD pace than a trading pace. You look at illiquid assets and not whole companies. You look at IRR and returns. It's fun because you can look at anything but its limited in that you don't care about companies or managing them.

Yes it non traditional investments but the OP said, " I would really like to work with management and have the opportunity to impact the company itself."

In that case, you will get none of that at special situations. you'll have 0 impact on anything you buy and the only management you work with is some redneck dude trying to sell his building.

There are special situations funds structured as private equity funds that occasionally take over companies... Might not happen at a bank, but definitely happens in funds with more jurisdictions.

Special situations groups do Rx, distress sale, etc, sometimes is part of the M&A group

Zing!!! Who cares. The smartest people from ib trading / research are moved to cio Treasury anyway. Cio/ treasury houses some of the most important people in the bank.

Think what u want, but facts are facts. If you know about running a bank, you would know how important cio is, especially right now. Besides sell side fixed income is dead.

Anyway if you really wanted to be attached to a business with a great pnl you wouldn't work in investment banking anway you would be a branch manager as retail banking is way more profitable. Everyone knows that.

It's called front office because it's client facing. Back office positions aren't named that to be derogatory, it's just nomenclature to classify different parts of the business by function.

968 bananas? Were you born for banking?

If you're principal you likely don't have clients. Is that back office then? Why does it matter?

CIO and treasury are good roles. 'Prestige' I don't understand but have seen people with good financial + networking skill do well from those functions (esp. CIO)

Honestly re exit opps from any non IBD role - networking is a lot more important than anything else due to the unstructured hiring processes.

I'd argue that any position that directly generates revenue or is subordinate to a revenue generating position is front office. It's less about client interaction and more about your potential effect on the firm's P&L.

Def. of front office is anything that is a revenue center. Back office is a cost center / support function for the cost center. Middle office is anything that supports front or back office or internal / supports platform.

treasury manages company's funds - its goal is not to make money technically .... recall Volcker. CIO office (you mean JPM)? - read the description - their job is not to manage money ... its to manage the bank's exposure

http://careers.jpmorgan.com/careers/divisions/treasury-CIO

Wouldn't you like to know, peasant.

I interviewed superday with GS SSG and it was a miscellaneous group of analysts and they all seemed like tools

The special situations group does work that ordinarily won't fit into other groups. Be careful since special doesn't mean prestigious. It also works with distressed companies and not old-fashioned companies, so there are trade-offs.

However, the group is extremely profitable so you won't have a shortage of stories to tell PE recruiters.

Lol troll? SSG is about investing and/or advising in distressed / illiquid assets. Not about being in the Navy Seal of banking. Personally, i think you need to like that kind of asset.

Lol troll? SSG is about investing and/or advising in distressed / illiquid assets. Not about being in the Navy Seal of banking. Personally, i think you need to like that kind of asset.

Definitely BX PE out of undergrad :)

do a search, GS ssg has been discussed to death. its not really comparable to ibd. and prestige well thats based on each ones perceiption so whatever.

interesting question i've only ever heard of GS'

DB, GS, MS have SSG UBS and BAML have SSG & EM Lending Group (or some similar names) Citi, WF used to have it, not sure about CS, Barclays etc.

I think that all BBs have one, or some equivalent at least some PE firms and HF too many threads on this subject here already

Theres a SSG team at Macquarie too.

Thanks, I was pretty sure a bunch of the banks have them. Any info on how easy/difficult it is to break into these groups coming from IB within the same BB/other BBs, and how they're viewed from a b-school/buy-side perspective?

pokersliar:

Err .... do you mean SSG or merchant banking?

GS Merchant Banking is good but the actual GS SSG group is amazing ... however those groups won't hire that many analysts.

IMHO, it's better to be in GSMB as an analyst b/c you get more mentorship / guidance. SSG is mostly VPs and up with experience who make it rain.

That said, irf you have opportunity, I'd go but be sure to findout where your offer is from. There's TONS of principal groups: Prop Desks, Principal Investments, Merchant Banking - they all generally do the same but the products focus, location, and general investment mandates differ

On the others, not every ssg is actually good ... i'd take UBS PE over UBS SSG

Obviously, but good luck getting into one of the exclusive groups at UBS like SSG, PE, O'Connor, etc. GS SSG is open to college grads. Recruiting at the elite placements in UBS, on the other hand, is a complete black hole.

UBS O'Connor guys were originally criticized by colleagues due to earning, literally, over 10x other UBS stars. Then again, studying the few information available about the group shows anybody working in this area will learn tons.

I dunno... I don't have a chance, but maybe you do. Good luck. All I've heard is these groups are for experienced people, not for college grads just looking for pay and prestige.

Just for clarification...

GS MBD is a series of private equity / real estate funds in which Goldman is generally a 1/3 investor in...GS SSG is one of the few parts of the firm that is 100% on balance sheet. Also, the groups in SSG are relatively well balanced. It does not consist of only V.P's and up.