by Brian DeChesare Comments (32)

Restructuring and Turnaround Consulting: The Best Backdoor into Distressed Investment Banking and Private Equity?

Restructuring and Turnaround Consulting

If there’s one thing that all bankers enjoy, it’s making fun of consultants.

But that might not be a great idea if you’re interested in restructuring and distressed M&A – it’s one field where a consulting background can give you an advantage.

And if you don’t get into one of those groups as an intern, turnaround consulting is often your best path in.

I was curious to learn more, so I recently spoke with a reader at a top turnaround/restructuring consulting firm:

Broken Companies and Random Career Paths: A Match Made in Heaven?

Q: So, how did you get into restructuring/turnaround consulting?

A: I fell into it!

I started my own tech company right out of undergrad, but it didn’t work out.

I had stayed in touch with a few friends who went into investment banking, so I reached out to them, networked, and won an offer in private banking at a bulge-bracket bank.

I didn’t want to be on the retail side of financial sales forever, so I went back to school for a Master’s in Finance degree and then won an internal strategy role at a Fortune 500 retailer.

That job turned into a finance/M&A role because the retailer was contemplating a large acquisition at the time.

But as the acquisition talks died down, so did my job.

I spent a month doing nothing and then decided to apply to all the consulting firms in my area.

I won an offer in a traditional management consulting/strategy team of a well-known consulting firm and thought I would be a management consultant there.

But all the engagements in that group were fully staffed when I joined, so they shifted me to restructuring projects for a retailer instead.

Q: I sense that your story is not too common.

A: Not at all. Most people get into our team from one of these backgrounds:

We also accept around 30 interns per year across all our offices, and many of these interns win full-time return offers.

Q: I see. So, how exactly did you win this role?

A: I won the role mainly because I had worked on internal strategy, finance, and M&A deals at a Fortune 500 retail company.

Since so many restructuring and turnaround engagements involve retailers, my background was a perfect fit.

Many people come into interviews and say, “I want to advise retailers because… I like shopping!”

But that’s a poor response, and you need a better story if you want to get an offer.

I went through 12+ interviews, and 10 of them were dedicated to assessing my background in retail (the remaining few were difficult technical interviews).

I pointed to some of the work I did on dynamic pricing and how to integrate e-commerce, mobile, and brick-and-mortar.

One interviewer had just authored a white paper on the same topic, so we had an in-depth discussion that convinced them I was serious about the industry.

Q: You also mentioned, “difficult technical interviews.”

What did they ask in interviews?

A: They asked a lot of nitty-gritty accounting questions on standards for revenue and expense recognition and how items like stock-based compensation worked.

There were also quite a few questions on modeling capital structure and different types of debt/borrowings.

They didn’t ask about valuation, but they did ask me to build a 13-week cash flow model to assess a company’s liquidity.

This type of model might focus heavily on the most common liquidity ratios, such as the current ratio, quick ratio, and cash ratio as well as metrics like the Cash Conversion Cycle.

I didn’t know how to do that, so I was honest, told my interviewer I didn’t know, and offered to build a normal 3-statement model instead, which worked.

I also received questions on the restructuring process, such as Chapter 7 vs. Chapter 11 bankruptcies and the required adjustments to a distressed company’s financial statements.

I didn’t answer all of those perfectly, but I did well enough to win the offer.

On the Job in Turnaround Consulting

Q: Thanks for that overview.

What has the job been like so far?

A: It’s a jack-of-all-trades role. I spend time on FP&A work, modeling work, and also liaising with bankers and management teams.

In a typical engagement, a retailer might file for Chapter 11 bankruptcy because creditors are pressing the company or because it has a liquidity crunch and can’t pay for upcoming obligations.

The company will speak with restructuring/distressed bankers, and the bankers will usually pitch a sale of the company’s assets, or, sometimes, the entire company.

Then, we’ll come in, perform due diligence for the bankers, and create detailed 3-statement models for the business.

Often, we assume full operational and financial control of the company. They may even contract us to serve as the “Chief Restructuring Officer” in the company’s executive ranks.

We’ll assess the company and make operational recommendations; for example, if the company has 1,000 stores, we might recommend downsizing to 650 stores.

We’ll then create new projections based on 650 stores and use these new projections to negotiate a Debtor-in-Possession (DIP) loan.

From there, the process could go anywhere: A single buyer for the entire business might emerge, or there might be a stalking-horse bidder, or one company might want to buy only 350 stores and the company’s receivables.

We then build a model for each scenario.

We do not do the valuation work – instead, we send the financial projections to the bankers, who complete the DCF, comparable company analysis, precedent transactions, and other analyses.

Bankers then take the valuation and pitch the company to potential buyers using different transaction structures.

But then the buyers might come back and propose something different, and the company will ask us to model the new proposals, such as selling only specific divisions.

Sometimes we do a bit of valuation work to check the bankers as well.

Q: I can see the appeal. A lot of “valuation” is quite boring and consists of data gathering; modeling these different scenarios seems more engaging.

What does this description mean for your day-to-day work?

A: As with all consulting roles, I may be either assigned to a client or “on the beach.”

If I’m “on the beach,” I spend time creating practice models and honing my skills.

For example, I’m off client engagements currently, so I’m looking at one retailer and assessing if it can meet certain financial obligations in the event of scenarios such as asset sales or additional borrowing/repayments.

We also spend time on pitch decks and store visits for prospective clients.

There isn’t necessarily anything wrong with these companies – remember that “restructuring” can take place without declaring bankruptcy.

Sometimes, we visit stores to assess whether or not a potential client could stretch out vendor payments, cut CapEx, or lower its overhead costs.

When I’m assigned to a client, I spend a good portion of my day on modeling work, but there are other tasks as well.

Typically, we’ll go on-site to the client, and 5-8 of us will sit around in a conference room for most of the day trading ideas and working with management.

Depending on the size of the company and deal, the team can scale up significantly, but the average size is 5-8 people.

Ad hoc tasks come up all the time as new bidders appear, and as lenders emerge and demand different terms.

The average day might be spent on anything from building pivot tables with the average spend per vendor over the past ten years (to answer due diligence requests), to updating and sending models to bankers, to doing store visits.

Working Hours In Restructuring Consulting

Q: It sounds more interesting than hibernating in Excel all day.

You had mentioned earlier that the hours were quite bad. How bad are they, and why are they that bad?

A: When I’m on a client engagement, I work 75-85 hours per week.

The average is around 300 billable hours per month, and these engagements often take 4-6 months to complete. Some engagements can go on for well over a year, though.

You can do the math: 300 billable hours per month equals 75 billable hours per week.

Add ~2 hours per day of non-billable time to that, and you get 85 “in-office” hours per week.

In bankruptcy settings, billable hours are tracked by the tenth of an hour – so you need to be diligent about documenting how you spend your day.

On average, I arrive at 9 AM, stay there all day, and leave around 2 AM. I’m not necessarily working the entire time, but I’m more-or-less on call for multiple different parties during these hours.

Remember: You’re working with bankers, so you’re on their schedule.

Also, many distressed companies need urgent help to stay solvent, so long hours are required.

When I’m “on the beach,” the hours are much better: I might arrive at 9 AM and leave at 6-7 PM, and no one says anything, especially since I’m now “Lower Management” (The hierarchy is Analyst, Consultant, and Senior Consultant).

Of course, we’re not necessarily “on the beach” that much: In my last team, three members hadn’t had a week off in over a year.

Q: I see. Now that we’ve established that the hours are bad, what about the compensation?

A: My base salary is on-par with what an IB Associate earns: $120-$125K USD.

However, my bonus is a lot lower since everything is based on billable hours.

There are a few different bonuses at my firm; one is a function of total billable hours worked (also known as your “utilization”), and there’s also a year-end bonus equal to 10-15% of the base salary and an additional discretionary bonus of around $10-15K.

So, if you’re fully committed year-round at the Associate level, you might earn close to $170K all-in.

If you’re working significantly less than that, all-in compensation might be closer to $140K.

These figures are discounts to what IB Associates earn, and they’re also less than what MBB consultants at the same level earn.

However, they are higher than the compensation at small and mid-sized turnaround firms.

(NOTE: Compensation figures as of 2016-2017.)

Q: And now I have to ask about Starwood points. You knew this was coming.

A: Well, who knows if they’ll exist in the future with the Marriott deal?

But yes, there are some nice perks that make up for the lower-than-expected compensation.

For one thing, if we get out of work at 1:30 or 2:00 AM, we can go out for dinner or drinks, spend $3,000, and expense it.

You also expense all your meals and daily spending, so you can save a lot of money when you’re on the road.

You’d never be able to get away with that in IB unless it’s at a closing dinner.

Also, we do rack up a ton of points.

For example, I’ve amassed enough Hyatt points to go to an exotic destination for my annual vacation, rent a fancy suite, and stay there for free for over two weeks.

The Exit: Chapter 7, Chapter 11, or Private Equity?

Q: That is pretty nice; I tend to collect points from credit cards and then never use them.

Let’s continue with this positive point and go into the exit opportunities.

A: That’s one of the main advantages over management consulting at MBB: It’s easier to get into distressed/restructuring roles in both IB and PE from here.

I’ve seen people leave our group for the following opportunities:

  • Corporate Development and Business Development at Fortune 500 Companies – And if you have 5-6 years of experience, sometimes you can join at the Director level.
  • Client Companies – Several of my F500 clients have offered me jobs.
  • PE Mega-Funds – This one is less common, but I have seen team members get into KKR, Blackstone, Golden Gate Capital, and Silver Lake.

Q: So many exit opportunities, but you have to pick just one.

Which one is in your future?

A: I’m leaning toward middle-market private equity funds focused on retail or turnaround deals.

I’m not especially interested in staying here for the long term because it’s easy to get “trapped” at the Project/Engagement Manager level: You’re good at executing client engagements, but you can’t win enough new business to make it to the Partner level.

Plus, I enjoy the analytical aspects more than the salesmanship, and at the top levels, the job turns into a sales role.

With that said, if Nike offered me a job, I might just take it and cancel my plans for PE.

They have an incredible campus!

Q: I’ll have my people talk to the CEO…

Any final thoughts on the job?

A: Don’t be intimidated by the hours.

You can easily get burned out working 80-100 hours per week in banking, but the workday is more bearable here since we’re always sitting around a table speaking with each other.

The camaraderie we build going out together in strange towns makes it worth the trouble.

Also, you get more networking opportunities in this job than in IB: Even as an Analyst or Consultant, you’ll be interacting with MDs at banks, CEOs, and other executives.

If they like you, they might offer you a job on the spot.

Finally, keep in mind that this role is one of the best ways of getting into Restructuring or Distressed groups, especially if you’re older and missed the internship train.

And if you choose to stay in this role, you’ll do well even when the economy is performing well: Companies can always “restructure” to improve their performance.

Q: That was a pretty strong “sell,” but your logic makes sense.

Thanks for your time.

A: My pleasure. Think about turnaround consulting!

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

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Read below or Add a comment

  1. Hello Brian, thank you for the informative interview. I find myself 8 years later researching resources about the Restructuring Consulting business and I must tell you it is such a niche field that there are not a lot of papers out there about it, so this has been a great help in forming my expectations going in.



  2. Jason Ho

    Hey Brian,

    What’s your thought of the MBB in the Restructuring game?


    1. I don’t know enough about their restructuring practices to have an opinion. This is a broad survey site for finance careers, with occasional coverage of related topics like consulting. But consulting is not the core focus, and we don’t really track what MBB are doing in different markets.

  3. Hi Brian,

    At the moment I have an offer from a Big4 to join their Financial Due Diligence team. On the other hand, I have an offer from FTI Consulting to join their Corporate Finance and Reestructuring team.

    Which role could be more meaningful/helpful if my ultimate goal is to break into PE?

    1. The FTI offer is probably better because FDD at the Big 4 rarely leads into PE directly.

  4. arya shadeslayer

    Hi Brian,

    I am going to be joining an EB in London as a summer intern in a few months. I was wondering what are the exit opportunities like for debt advisory and restructuring and what is the difference between the skills gained in M&A vs Restructuring?

    Thanks a ton!

    1. Standard exit opportunities are any credit-related funds… distressed, high-yield, mezzanine, turnaround PE, things like that. The difference is that Restructuring is much more credit-focused, while M&A is less so, so Restructuring better positions you for credit-related buy-side roles, while M&A is better for more standard roles such as plain vanilla PE firms that simply acquire companies and then sell them.

      1. arya shadeslayer

        Thanks for your reply Brian! Do you think it’s a good idea to go into Restructuring if you don’t particularly have an inclination towards any team currently and might want to go back to your home country after some years? Also would restructuring still be useful for corp dev roles?

        1. I think M&A would be better if you do not care which team you join. Restructuring will not be that useful for corporate development roles because large public companies rarely acquired distressed companies or assets, and the credit work is limited to financing for deals, not changing around companies’ capital structures.

  5. Luca Pacioli

    Can you comment on joining a firm like Getzler Henrich & Associates? How is their reputation in the industry?

    1. Sorry, I don’t know anything about that firm. It seems legitimate and very well-established judging from LinkedIn.

  6. Brian, I appreciate the article and found it very insightful. the whole reason I found out about restructuring is that a company in my area is hiring an analyst to report to the C-level executives of the company and help with their corporate restructure. The company has had decreasing sales and has a decent debt load. I’m guessing the majority of the work will be related to asset sales, capital raising/transactions, & operational matters. long story short, it sounds interesting but the obvious risk is that the company could go bankrupt if all goes badly.

    I am a CPA with assurance experience and I’m guessing I’d pick up valuable modeling experience and valuation experience in this position. My question is, if this job were to go badly, do you think I would be able to spin this story to get into a restructure advisory firm or maybe make a stop in a Big 4 valuation practice first? I would just worry that if this job lasts less than a year that it wouldn’t look great on my resume/lead to questions in future interviews. I guess any position like this does carry a risk, it is more about spinning it if it goes poorly, reaping the rewards if it goes well.

    1. Yes. And it’s an easy explanation if the job ends up lasting less than a year.

  7. Hi M&I team

    Can I kindly ask for your opinion regarding my current situation? I am young M&A professional working in a CEE country at one of a Big 4 with 2,5 years working in this field right after my graduation.

    At the moment I am in talks with other Big 4 for joining their CEE restructuring team. Joining this team would mean promotion, working with Partner with MS, Lazard restructuring background and travel all over CEE region.

    Wanted to ask you for an opinion – if my ultimate goal is to break into some CEE or European PE, would going into restructuring on regional level in Big4 limit my chance to join some “regular” PE since, there are not a lot of PE with focus distress assets in this region (might be wrong).

    Think of should I pursue this path?

    Thanks in advance

    1. Maybe a little, but it’s much harder to move from a generalist role into restructuring than to do the reverse. So if you’ll get better deal experience and networking, you should take the Big 4 restructuring role.

  8. Thanks for this insightful article!

    Currently in restructuring consulting, but want to move into restructuring banking. Is it possible if I spend a few years at my boutique advisory firm, I could switch into a restructuring banking role as a VP?

    1. I would say that’s unlikely because most banks “demote” you if you come in from another industry. It’s especially unlikely if you move to restructuring at an elite boutique. Possibly at a smaller firm maybe.

      1. Hi Brian,

        But this guy said he had seen people move to Restructuring Groups at Banks – Including the likes of Rothschild and other elite boutiques, while you said it would be unlikely?

        Am I missing something?

        1. “Is it possible if I spend a few years at my boutique advisory firm, I could switch into a restructuring banking role as a VP?” – The “as a VP” is the unlikely part.

          Yes, he can move over, but he probably can’t do it and move in at that level.

  9. What are some examples of rhese RS consulting firms?

    1. FTI Consulting, Alvarez & Marsal, and Alixpartners are the Big 3 in RX consulting. (I work for one of these 3)

      In addition you have McKinsey RTS, BRG, and some others.

      Just to confirm hours and comp from the article are spot on.

  10. Mark Stinzled

    Great information! I’m not a fan of the “last chance” type of enthusiasm though. Take me for example. I went to a Big 10 school and didn’t want to do banking upon graduation. I worked as a financial analyst for 6 months after college (started the first week of June). Once I realized I wanted to do IB, I joined a boutique firm and ended up staying for 6 months. I wanted something more intense so I joined a premier middle market firm. I stayed there for less than a year, 10 months give or take. I then interviewed at a bulge bracket bank (GS, MS, UBS, WF) and worked there for exactly 12 months. Before attending B-School, I worked at a distressed PE firm as an associate. I didn’t navigate to a BB firm for prestige, as many middle market analysts get into PE, but because I didn’t feel satisfied and wanted more work, I was capable of more (I don’t have much of a social life nor do I want a large one). Many of the analyst from what I remember in my old PE firm were 3 year analysts from either premier middle market firms or usually 3 years at BB. Not everyone starts in banking.

    1. ??? Thanks for adding your comments, but I’m a bit confused. No, not everyone starts in banking, but it is quite difficult to get into PE or distressed PE without that type of background, which is why turnaround consulting can be useful. Not saying it’s the only way to get in, but, realistically, you need some type of transaction experience to have a good shot.

  11. Hi Brian,

    I am currently an Associate in Loan Restructuring Team at a Big Regional Bank – would the restructuring IB team see this as a value-added experience? And is there typically a case study for restructuring IB interviews?


    1. Yes, they would see it as a valuable experience, and you could probably move into IB directly from there as long as you have a decent amount of deal experience.

      If you’re an experienced candidate, yes, they might ask you to complete a modeling test or case study in IB interviews (usually just a 3-statement model, sometimes broken into quarters/months/weeks). They might also ask you to look at a client’s financial statements and the market value of its debt, its valuation, and so on, and make a quick recommendation about the best option (e.g., sale of entire company, sale of assets, or renegotiating the terms of the debt).

  12. Blake Murphy

    Brian- I’ll be heading to my Superday at one of the top restructuring consulting firms later this week. Would be happy to speak to my experiences and knowledge of the recruiting side.

    1. Thanks! Sure, let us know how it goes, and good luck!

  13. Felipe Martins

    What about these firms outside U.S.? Any names to pay attention in Brazil?

      1. Felipe Martins

        Thanks for the advice, will sure be looking for such names. In addition, is there an article about foreigners breaking into wall street? (In my case, I’m from Brazil but always wanted to move to New York, but never knew how to apply)

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