Why You Should Consider Restructuring – Common Misconceptions/Insight on RX Groups
This is my first post since I created this account about 1.5 years ago. I benefited a lot from this community, and I want to take this time to give it back.
To tell you guys a little bit about my background, I went to a semi-target and was fortunate enough to intern at one of the top RX groups (PJT/LAZ//EVR) – I will provide as many unbiased insights as I can and address key misconceptions people have about RX in general.
Before I dive into specific banks, I would like to address key misconceptions that prospective candidates have about interning/working at RX groups:
- You are not siloed into distressed opps for the buy-side.
- Plenty (I would say ~50%) of kids exit to MFs/UMMs and even non-distressed HFs that most people have to work at another buy-side role before even being considered. So why do you see so many RX analysts exiting for distressed shops?
- Sampling bias. Top RX shops begin interviewing kids as early as February and March, which means that these students studied for RX technicals plus other materials to prepare for coffee chats as late as January. Naturally, some of them will continue this interest when headhunters call and ask what they are interested in at the beginning of their full-time roles.
- You don't just work on "bankruptcy" deals. You work on "distressed" deals
- This is also a concern I had as the market condition when I got the offer and when I joined the group could not have been more different. Every business was struggling to survive when COVID first broke out but now almost every business can raise liquidity in this market condition. This worried me as the number of bankruptcy filings was at a record low level when I was about to start my internship.
- Yes, it is true that this industry can be cyclical and my workload was slower than my peers' at M&A or the RX class above me at the height of COVID. But I clocked 70-80 hour weeks on average, so did other banks that I had friends interning at. This is because of two main reasons:
- Because the companies are not filing for bankruptcy does not mean that they are not struggling. As you will learn if you become interested, RX groups provide advice even when they are not in bankruptcy.
- This was maybe specific towards my firm and one other firm, but senior bankers wanted fresh in-depth updates on key industries we often deal with. Because of this, I learned more about what has been going on in some specific industries throughout this internship than I would have imagined.
- Because the deals are often distressed situations, it doesn't mean that the work environment is "distressed"
- I only heard about this misconception through an underclassman who reached out and asked. So skip over it if you never heard of it. Basically, he asked whether the work environment was unfriendly because the clients and counterparties were unfriendly.
- This is simply not true. People are so chill. So did what my friends said about their groups. You need to understand that there are not that many bankers/lawyers/consultants who are involved in these types of deals, so words get around. Yes, there are lots of game theories involved, but that doesn't mean that people shout at each other on calls and meetings. (I heard it does happen though?)
Now, the fun/interesting part. I will try to provide more color on each group that I had some interactions/interviews with or have friends interned/worked at.
I am not going to comment on their culture, as that is a very subjective metric based on individuals.
PJT RSSG: Probably the most sought-after analyst program out there with/ MS M&A. I think this is the result of R&R legacy and strong presence in both debtor/creditor mandates. They mostly recruit out of the top targets, but I think this is a result of students who become interested in RX earlier tend to go to these schools more than anything else.
(NYC/CHI): Historic franchise since Barry and Terry. Generalist program for NYC and RX-specific for CHI. You go through another networking process during your FT training to get placed in the group for NYC. The global head of RX sits in Chicago, which is why I assume they have the RX-specific program in that office.
HL RX (NYC/LA/CHI/DAL): RX-specific internship across all locations. A common misconception is that HL is a creditor shop, but they do have a sizable presence in smaller debtor mandates. One thing to note is that HL is very decentralized, so deal flows vary by office and take time to learn about what each office has worked on before asking about certain deals during coffee chats/interviews.
: RX-specific internship. Killed O&G debtor mandates during the industry downturn in 15/16. They have been picking up on debtor mandates in other industries since then, more so on sponsor-backed ones, but I would say that they have a stronger presence in creditor mandates for other industries.
: Generalist program throughout the summer and the analyst program. I heard that you need to develop some reputation/relationship as an intern and as an analyst to get consistently staffed on RX deals. Great group – worked on Hertz, which is the most high-profile bankruptcy since PG&E.
Perella: To give more background about this group,(TPH) is an energy EB that missed out on some great RX mandates in the O&G downturn during 15/16. So PWP and TPH merged and picked up some great deals since then, especially during COVID.
: RX-specific internship. Acquired Millstein before COVID hit. Picked up some great mandates since then. I don't have any insight into how the merger has impacted the group, but Millstein was founded by Jim Millstein, who lead the restructuring practice for the government during 2008 before leaving LAZ RX.
: Similar to LAZ NYC, generalist program for the summer and network your way to be placed into the RX group for full-time during training. Has a strategic partnership with Intrepid, another energy EB, which explains the bigger presence in O&G mandates during COVID than it has in the past. Strong sovereign advisory practice.
: Lead by a former co-head of Rothschild RX. They recruited specifically for RX my cycle. Fewer RX MDs than others, but, based on observation, the firm has more flexible mandates in terms of deal sizes and debtor/creditor/UCC than its peers.
Centerview: Generalist program for the summer and for the three-year analyst program. Like, you need to raise your hand and become the go-to guy is what I've heard. Fewer RX MDs than its peers but the analyst program is generalist so no need to worry about the live deal experience due to CVP being CVP.
Ducera: RX-focused EB, hence RX-specific internship. Founded by a former partner at PWP. This group has popped up on creditor mandates for many high-profile deals during COVID. I would say that Ducera is a more creditor-focused shop than HL.
TRS Advisors: Founded by a former co-head of Rothschild RX. Saw these guys pop up on key creditor mandates like Ducera during COVID. Recently merged with Piper Sandler and am excited to see how that would work out since precedent mergers have worked out great for others.
To be clear, this is just to provide prospective candidates some colors on what I have learned networking/interviewing/interning for RX. Happy to add more things as I go along, and thank you once again for all the insight this community has provided.