I have received a FT offer to work at a MM PE firm with $4-6B AUM. Down the road I'd like to do some sort of distressed investing (either on the HF or PE side) and wanted to get everyone's thoughts on turnaround PE industry. Any advice on breaking-in, top firms, personal experiences, industry outlook, etc are greatly appreciated and will be rewarded.
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My take on the future is that we'll see less of the over geared sponsor owned companies (purely because the leverage isn't out there yet) who need to be liability stripped, de-levered but are still fundamentally good companies and more in the way off companies who have been picking off cost savings from their SG&A and Capex has dropped below subsistence level who are running tight margins and will need a recapitalisation soon enough. Furthermore, those who have taken a similar approach to their inventories will need an injection of capital in the up turn.
There's also the refi wall of 2015 to consider. Without CLOs -regulation is killing them ( now 5% skin in the game is required) and liabilities are too expensive- there's little demand for Lev Loans so defaults could be on the horizon. There is the argument that they are a viable retail product but in Europe they aren't Ucit compliant (because the regulators tend to come from an equities background and they're scared of the liquidity) and so this may not come for a while. This even should throw up some opportunities, but it's hard to guarantee as the 2013 wall was amended and extended, which may have soaked up all liquidity and companies may get quite the shock.
In Europe people are looking towards the beer drinking countries and avoiding the wine drinking ones in favour of a more stable, creditor friendly and efficient restructuring environment. But most big funds have set up Euro fund waiting for the bank to start offloading their books, however banks are initially more likely to offload their good loans to avoid the loss recognition.
One trend i've seen is that in certain cases some firms are putting up a real fight when funds such as Oaktree (who publicly state that they aim to buy under intrinsic value) aim to buy a company. Obviously not applicable in all situations e.g. loan-to-own
Oh and from all accounts places are pretty busy at the moment.
Little incoherent word vomit for you there. Hope it helped.
Thanks Oreos! Have you worked for one of these firms before? If so what was your experience like?
Pay the man.
I did. Anybody else with insight into the industry?
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