Restructuring vs. M&A

I have always been interested in restructuring but ended up signing with a top M&A group for next summer. I really loved my restructuring class and could see myself going into it for full time. How feasible is it to move from M&A to RX? I know its early and a lot could still change that'd make me want to stay in M&A, just curious if anyone has any experience they'd be willing to share.

 

Are you going to be an analyst or associate? And does the EB where you're going to work do M&A and Rx? If analyst, it won't be that hard to move to restructuring. M&A is pretty quantitative, and if you're doing buyside work you'll get good exposure to complex balance sheets and cap structures.

 

Assuming you're PJT/EVR then, you should be fine. I actually talked to someone pretty senior about this (interested in distressed/SSG in the future) and she was very adamant about focusing on LevFin/FSG/M&A straight out of college because it's much easier to move into RX down the line than out of it

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I think ideally you would want to work as a generalist in both M&A and restructuring in your analyst years and have the options to choose later on, in terms of buyside and sellside placements.

My friends who switched from M&A to restructuring usually take a 1.5-2 years back since they don't have intimate understanding of the process yet to run on your own without being watched over.

 
Best Response

M&A exit opps are generally PE shops or else onto a corporation. If you are very good you may get into a HF. On the other side with a restructuring background you can move onto Distressed Hedge Funds, PE shops, corporations and even the healthy side - M&A. The reason I say M&A is also a possibility is because the skillset of a restructuring banker includes all of the technical skills of an M&A banker + more.

 

To be honest, I'd probably be more inclined to taking the M&A Associate role, if only becuase at that point you're already an associate. With the other position, how open are they to promoting you in a year? You don't want to have to do another job search in a year.

 

You have to take into account your hopes and dreams in the future. If you want to make a jump to PE, might be better to get in at an analyst role, especially if the group is a well known or respected restructuring group. Restructuring is good right now and your modeling/technical knowledge/experience will be better than with an M&A group since you may have to put together things from scratch. I don't think you can go wrong here, but my personal opinion is go restructuring unless you want to be in IB long term.

XX
 
Pike:
You have to take into account your hopes and dreams in the future. If you want to make a jump to PE, might be better to get in at an analyst role, especially if the group is a well known or respected restructuring group. Restructuring is good right now and your modeling/technical knowledge/experience will be better than with an M&A group since you may have to put together things from scratch. I don't think you can go wrong here, but my personal opinion is go restructuring unless you want to be in IB long term.

You'll likely be expected to put things together from scratch in both roles that's kind of a moot point.

 

Thanks for the feedback so far. In terms of my long term goals, it would be to exit into a MM PE shop within the next 2-3 years or work in a corporate development role. I think both restructuring and M&A would provide some very solid skills and deal experience which could translate directly into those exit options.

@TheKing, the latter option mentioned that they are open to the idea of promotion after 1 year of serving as a 3rd year analyst.

@ProspectiveMonkey, I have more experience in restructuring but I am interested in M&A, which I view as a more versatile skill set. However the restructuring group also has its fair share of distressed M&A deals. I'm mainly looking for feed back as to which career path would best set me up for my intended exit options.

Thanks again

 

I would agree with the viewpoint that the associate opportunity should/can be viewed as getting a promotion. One risk I have identified with this, however, is that coming in as an associate may limit my exit opportunities into PE because I could be considered too senior. Would you all agree with this? Adding to this point, is there a risk that coming in as an associate may be viewed as I want to stay in Ibanking for the long term?

 

Actually I think you're really fortunate to get the associate level from 3 yrs of corporate finance without taking a discount, which is great. Some may say it's better to stay as an analyst for PE recruiting, but I think for this case (where you'll be looking at MM PE, if PE is something you want to do down the road), it won't matter. Because MM PE is less structured and less picky about taking analysts than associates. Given that, and assuming you're not particularly interested in restructuring vs. M&A, I would take the associate position.

Keep in mind that while the shop said they're open to promoting to Associate after 1 year, the 3rd year analyst to associate promotion may require more than 1 year for a firm to assess someone's performance. If I were you, I would take the associate 1 position over analyst 3. You'll be doing more or less the same thing, except with analyst 3, you'll have to really outperform right off the bat to be considered for promotion given the short amount of time. Whereas with Associate 1, it's almost like how newly minted MBAs join banks as associates - they are given some leeway and time to ramp up the learning curve. Plus a bigger base and bonus.

 

Would probably take M&A; assuming you're at LAZ / EVR / GHL, by the sound of it. M&A is more transferable to other groups and restructuring, although very interesting and technical, can pigeonhole somewhat. Even though you're interested in distressed investing, you're still an SA and M&A this summer will be a better experience. That said, you can still move from top M&A to distressed shop / move into restructuring FT.

 

Assuming the two shops are equal in other regards, and you do not strongly prefer one group of coworkers, M&A would keep your options open a bit more.

It is still quite feasible to go M&A -> Distressed, if you decide you want to pursue that route. It's a summer job, so I am guessing you do not have any actual PE experience. In which case, M&A might be advisable, just to improve your marketability to more traditional funds.

Like you said, this summer is going to be scorching hot for M&A. I'd jump on it.

 

As it's just an internship, your primary goal should be to improve your CV and take on more interesting roles. That's why I'd go M&A/TMT. Just work as hard as you think is necessary to gain a full-time offer, and place a high emphasis on fitting in with your team and networking with senior level staff so they think that you'd be a good guy to keep around.

 
no homo:
As it's just an internship, your primary goal should be to improve your CV and take on more interesting roles. That's why I'd go M&A/TMT. Just work as hard as you think is necessary to gain a full-time offer, and place a high emphasis on fitting in with your team and networking with senior level staff so they think that you'd be a good guy to keep around.

Primary goal surely should be to convert to full time though, no? In which case, wouldn't it be smart to seek out desks that are more likely to be hiring?

 

Do whichever you think would be more fun. You're actually going to have to sit there for all these hours and do the work, not just press a button and have the 2 years disappear. Both are great opportunities. Personally, I'd go with MS M&A because M&A is great.

CompBanker’s Career Guidance Services: https://www.rossettiadvisors.com/
 

It's for sure I will do whatever I think will be more fun. But that's a personal decision and you guys won't be able to help me with that. But what you could help me with is discussing the different exit ops. I think, restructuring offers decent options with regards to distressed funds? Is that a reasonable assumption?

Many thanks for your help.

 

Not all restructuring houses are the same. They do different things and have different clients.

As for exit opps - if you want to work at a distressed fund, yes, definitely work for a group that has distressed funds as clients. Then it's the same as any sell-side to buy-side transition.

If you want to do true down and dirty Chapter 11, workouts etc., the firms to go for are Blackstone, HLHZ, Jefferies, and Rothschild. Other firms might do things like offering various alternative/creative debt packages, and call it "restructuring." It varies.

I don't know anything about GS restructuring, but if I were interviewing for them, I'd ask what kind of clients they typically represent - debtors, creditors, equity holders, etc., and what kinds of assignments they take on.

 
Restructure This:

I don't know anything about GS restructuring, but if I were interviewing for them, I'd ask what kind of clients they typically represent - debtors, creditors, equity holders, etc., and what kinds of assignments they take on.

Who would you hope they represent - if you were interested in doing restructuring at that firm (i.e., which would provide the best experience). I can windle it down fairly quickly to debtors and creditors, because equity holders are usually SOL. From there, I know that the debtor side does much more work since they're raising financing (DIP and Exit), valuing the company for distribution purposes, and very likely finding bidders for the non-core assets. I'm not certain as to what the creditor side would do, with the exception of objecting to valuations. Did I just answer my own question?

 

I don't necessarily have a preference, I just want to do interesting deals, and I'd try to get a feel for what they do. I'm less excited about being a debt salesman, so if the whole thing sounded more like a glorified corporate refinancing operation I would be less inclined.

If you're representing a creditor, you're basically going in and fighting for one of two things. Either you want your money back and you use all sorts of tactics to get as much as possible, or you want control of the company. Actually that's a bit simplistic - it might be a combination. Cash plus warrants? New securities? Whatever you can get. And you're right, you'll argue with all the other parties about valuation, asset sales, and everything else.

A really interesting assignment might be working for an activist hedge fund that's buying up slices of debt at a large discount, and trying to force a Chapter 11, or force themselves into control of the company. That's kind of like "creditor activism" a sort of "back door private equity."

Not all equity holders are 100% SOL - although it's true they're not exactly running the show at that point. Sometimes public shareholders can hire banks to be on their side, if there's residual value there. Delta Airlines, etc.

I should note as a caveat - I have very little industry experience (which I hope to change shortly). The above info is sourced from my networking with insiders and other research.

 

Keep in mind that there are vastly more healthy (M&A, industry groups, etc.) analyst positions than restructuring positions so I wouldn't target restructuring jobs only. Having said that, if you can get a top restructuring spot (doing mostly debtor-side work), I would seriously consider it. I think it gives you a better skillset than the healthy side and you can always make the switch from restructuring to M&A (going the other way is much harder).

Author of www.IBankingFAQ.com
 
ex-banker:
Keep in mind that there are vastly more healthy (M&A, industry groups, etc.) analyst positions than restructuring positions so I wouldn't target restructuring jobs only. Having said that, if you can get a top restructuring spot (doing mostly debtor-side work), I would seriously consider it. I think it gives you a better skillset than the healthy side and you can always make the switch from restructuring to M&A (going the other way is much harder).

What are your thoughts on creditor-side work? From talking to restructuring professionals at a number of banks (HL, EVR, LAZ, etc.), it seems like creditor-side work can be beneficial since you can work closely with PE firms, distressed HFs, etc., which means you develop that network and also learn to think like those investors would. Are the exit ops from creditor-focused banks (ie. HL) not as great as the exit ops from debtor-focused banks?

 

So how much would you value working at Evercore/Moelis which has the generalist model so you can do M&A and restructuring vs. working at somewhere like Lazard just in restructuring or just in M&A.

 

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