Restructuring groups at investment banks

Restructuring is booming. Restructuring groups at investment banks handle formal and informal corporate reorganizations and bankruptcies. A typical assignment would involve working a firm that is in serious risk of failure due to lack of profitability and excess debt. The work can include M&A (selling off a failing firm’s assets), liability management (restructuring the firm’s debt), arranging post bankruptcy financing (debtor-in-possession loans), cram-downs (forcing debtholders to take less or to take equity) and general coordination of the strategy and planning process. In today’s tough economy, there are numerous restructuring candidates in areas such as autos, financials, industrials and natural resources. Fees for restructuring work can be quite lucrative and it is not unusual for a bank’s total fees on a transaction to be north of $5 million – in some cases much more. Bonuses are good, guaranteed salaries not unusual and the competition for talent in this area is considerable. Some of the big banks have good restructuring groups, particularly Credit Suisse and Morgan Stanley. But much of this work is handled out of boutiques. The reason is that boutiques are less likely to have a conflict from being a lender to a troubled company, a past underwriter or to have had an association with past management. Some of the best restructuring groups are to be found at Blackstone, Evercore, Lazard and Perella Weinberg. As noted above, the best way to get into this area is by networking and contacting investment banks with strength in the area. Persons with a legal background in bankruptcy are good candidates here. Also persons with a strong work ethic, knowledge of math, knowledge of debt and debt markets can do well in this industry. It is a good area for bankers with experience in capital markets and other industries to transition into.