Restructuring: The Hottest Group In A Cooling Economy - M&I

Top Restructuring investment banks

Banking Investment / January 12, 2019

“Do you ever have one of those days? When you feel like you might just default at any second?”


Whenever the economy starts sinking faster than the Titanic, you start to hear about Restructuring and Distressed M&A all the time.

Sure, everyone else is getting fired – but if you go work in one of those groups, you’re guaranteed a higher bonus even as the broader market sinks, right?

Maybe, maybe not – so let’s take a look at what you actually do in a Restructuring group, how you break in, and what you do next.

A Day in the Life

So what do Restructuring bankers actually do, and how does it differ from other what other investment bankers do?

The main difference is that Restructuring bankers work with distressed companies – businesses that are either going bankrupt, getting out of bankruptcy, or in the midst of bankruptcy.

When a company’s business suffers and it starts heading down the path of bankruptcy, its creditors – anyone that has lent it money, whether banks, hedge funds or other institutions – immediately take notice.

A Restructuring group might be hired by a company to negotiate with its creditors and get the best deal possible, usually in the form of forgiven debt. Or they might advise a company on how best to restructure its current debt obligations either to get out of bankruptcy or to avoid it in the first place.

Another big difference is that Restructuring bankers must work within a legal framework – the Bankruptcy Code – and hence must have a more in-depth legal understanding than other bankers.

Hot or Not?

The “hotness” of Restructuring and Distressed M&A depends on what the economy is doing at the moment: if we’re in a recovery phase, everyone wants to work in M&A or Leveraged Finance.

But if things are heading into a bottomless abyss or if we’re in a consumer-driven recession, you suddenly start getting beer goggles for Restructuring groups.

You take a lot of risk by joining a specialized group like this because the economy and bankruptcies can turn around very quickly – you could say the “Beta” of being in a Restructuring group is higher than other areas.

Debtor vs. Creditor

Broadly speaking, there are 2 types of work that Restructuring groups do: advising a creditor (or group of creditors) and advising a debtor (the distressed company).

You can think of these separate roles as buy-side (representing the buyer) vs. sell-side (representing the company trying to sell itself) advisory in the world of M&A.