Restructuring bankers: Like M&A bankers, but better?
Alright, so you want to work in a bank.
For some reason (long work hours, stigma, etc.) you don’t want to work in the investment banking division (M&A and capital markets) or in sales and trading. That’s absolutely fine. You can apply to the wonderful world of restructuring. But what does that mean? What does it entail? And how do you get in?
We spoke to Scarlett Li, an associate on Rothschild & Co.’s restructuring and debt advisory team, to find out more.
What is restructuring?
“Corporate finance at its finest,” according to Scarlett. More broadly, it’s about providing financial advice to a company in financial distress (running out of money) or to the creditors they owe money to. Restructuring bankers work to ensure that the company doesn’t go belly up (insolvent/bankrupt) – and, if it does, they advise on how it can get itself out of the mess to everyone’s satisfaction.
How does restructuring in slot into the rest of the investment bank?
Restructuring is part of Rothschild’s global advisory team, sitting with the rest of the investment banking division. The team, Scarlett says, is “deal oriented.” The primary difference between restructuring and advisory or capital markets bankers, however, is the way they approach their work.
“In M&A,” she says, “you think of value maximising, but in restructuring, the company is typically encountering financial difficulty, so the focus is on minimising loss.”
That doesn’t change much of the non-technical side of the work, however. “We are also working on deals and advising clients - but are looking at it through the different end of the spectrum,” she says.
What’s so interesting about restructuring?
Scarlett compares restructuring to a game of chess involving many different players, “allowing for a lot of exposure. Even at the junior level with [the] management team, sponsor, creditors, other financial advisors, lawyers, and senior bankers.”
Her role in restructuring is much broader than her background in PwC’s tax team, where “you only get to see one aspect of a deal,” as opposed to the big picture. It’s the difference between being Magnus Carlsen… And the rook he puts into D4. Understanding how so many chess pieces move is a critical part of the game and requires a much broader knowledge base than other areas of banking.
Scarlett says her team is “always working in tandem with lawyers.” Restructuring is all about insolvency law. “Being able to understand these and then translating the legal perspective to the situation and to commercial / financial” professionals is key to the process.
“I enjoy the complexity of it,” Scarlett says. “It involves a lot of game theory, and I find the challenges rewarding and fulfilling when you are able to drive to a successful outcome.”
How does seniority change your job in restructuring?
Scarlett joined Rothschild as an analyst. Initially, she was primarily focused on “the execution [of a deal] on a case-by-case basis.” As she became more senior, though, her scope widened. “The way I think about the role is like a horizon period,” she says. “When you're an associate, you have more responsibility, think more about how you can execute the deal, looking at the week ahead, maybe the month.”
There’s a pretty big jump in responsibility when you hit VP and above, however. A VP thinks “more strategically as to what the deal is going to look like, where it's going to land and not just the execution part.” An MD does all of the above, “but you also look at the bigger picture in terms of the pipeline and opportunities for the business going forward.”
What’s the work-life-balance like in restructuring?
If you're looking for a 50-hour work week, restructuring may not be the place. “In terms of hours, it's really not too dissimilar to M&A,” Scarlett says. “We go through different phases of intensity… We are often working towards cliff edge deadlines. If you are unable to meet those deadlines, the consequence would be detrimental.” A company going bust could mean tens of thousands of lost jobs and creditors losing millions. “That translates to peaks and troughs in terms of workload, and sometimes a more flexible approach is required.”
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