Restructuring Networking QuestionsUpdated:
Over the past few months I've been asked about what some good networking questions are for restructuring.
It never occurred to me to include something like that in the course, but it's actually probably a good idea to have something on that in there. So I've added a new PDF to the members area of Restructuring Interviews for everyone.
As I've frequently mentioned, restructuring tends to a bit more traditional than other areas of investment banking in both how recruiting and networking occur.
While there's no doubt that networking has become less important over the past ten years across all of investment banking, it is still something worth doing in RX.
This is primarily due to how small RX groups are. Having an associate or VP say someone they've talked to should get a first round won't invariably mean that they will get one, but it carries much more weight than in the world of M&A.
Things to Keep in Mind When Networking in Restructuring
When networking with someone in a M&A group, the primary thing the person you're talking to will be asking themselves is, "Do I like this person? Would I want them to work with me?"
In restructuring that is still a consideration, of course. But the first thing they'll probably be asking themselves is, "Does this person have any idea what restructuring even is?"
So when networking in RX you should have two objectives:
- Be likeable and don't come across as too much of a gunner / keener
- Demonstrate that you have an understanding of what RX really is
Here are some rules to keep in mind on your networking calls.
Rule #1: Don't Ask Technical Questions
No one wants to get on a networking call and then feel like they're in a deposition.
You shouldn't be asking technical questions in a networking setting. How I would define a technical question is any question that has a definitive answer you could find in a textbook (e.g. don't ask how they think about DTLs in the context of a restructuring).
Rule #2: All Questions Should Be Seeking an Opinion
Everyone wants to feel like their opinion is valued and respected (and as a junior banker it isn't often, so it's a nice change of pace!).
Your questions should try to make them think about their answer. For example, asking them if they are on both creditor-side and debtor-side deals at the moment and then if they find switching between creditor-side and debtor-side deals difficult to do throughout the day is a great question.
There's no objective answer here, of course. Some will find switching between both types of deals to be a pain as the work can be quite different. Others will find it to be a nice change of pace as it breaks up their day.
This question is simply asking their opinion while making it clear (implicitly) that you understand that there is debtor-side and creditor-side restructuring deals and that the work done on each side is a bit different.
Rule #3: Show off Your RX Knowledge Implicitly
An objective of yours, as mentioned earlier, is to show you understand what RX really is all about in practice.
However, at the same time you don't want to come across as someone who is a keener or gunner or whatever you want to call folks who are obsessed with banking.
The way you can do this is by asking questions that implicitly show your understanding of RX. The question in "Rule #2" is a great example of this.
You implicitly demonstrate that you understand the distinction between creditor-side and debtor-side work and that each requires a bit of a different mindset, while asking for their opinion on how easy it is to context switch between them.
In this question you're showing your contextual understanding of RX while making them give an opinion. That's what you want to aim for.
Rule #4: Understand the Downsides
A major mistake folks make during networking is coming across a little too eager. The reality is everyone in banking ends up being a bit jaded and you should appreciate that before getting on the phone with anyone.
Just because a banker is jaded doesn't mean they regret doing banking and wish they worked at a non-profit somewhere, of course. But it does mean that when they talk to someone who comes across as being very enthusiastic about banking it can be a turnoff (especially if you can't convince them you understand what RX banking really is all about).
I always think that the best networkers demonstrate an interest and understanding of RX, seem like a fun person to be around, but also are sensitive to the realities (including the downsides) of the job.
This latter point can be done in a gentle way by asking questions about some of the downsides of restructuring investment banking, which we go over in the course.
Obviously RX is the best place to be in banking - in my slightly biased opinion - but there are nevertheless downsides.
Many are terrified of ever bringing up downsides to being in banking (whether that's in M&A or RX) during networking. Obviously, you have to read the room when discussing the downsides of banking. Some people you're talking to may not want to talk about them.
However, I think it shows maturity and seriousness when a candidate briefly wants to talk about the downsides of banking. It shows you are under no illusion that banking is a bed of roses and will make all your dreams come true.
Ironically those who don't come into banking wearing rose-tinted glasses tend to be those who enjoy banking the most as there isn't the same level of cognitive dissonance that occurs when you begin.
Rule #5: Be Humble and Self-Deprecating
One of the best things about restructuring is that there is constant innovation in the types of deals that are done (within reason, since everything in finance is somewhat based on precedence).
A great way to stand out is to show you roughly understand some of these new types of deals while asking for their opinion on whether they think more of these types of deals will occur.
However, you need to be careful here. Deals in restructuring are complicated and the person you're speaking to will obviously know much more about them than you do.
So you want to always use humble and self-deprecating language when discussing anything in RX that is quite complicated. You don't want to suddenly get a bunch of follow-up questions asking how much you really know about these types of deals.
An example of a great question would be around IP transfers, which was most famously done by J. Crew in 2017 (and has been followed by quite a few large brands since).
Showing that you roughly understand what IP transfers involve (the transfer of IP assets to an unrestricted sub that can then have new money issued off of it) is incredibly impressive. It shows you have a real interest in restructuring and follow it as closely can be reasonably expected for someone outside the industry.
The right way to ask this kind of question would be as follows:
"One thing I've found fascinating are these IP transfers that have occurred, which appear to have really started with J. Crew in 2017. Obviously, they're very complicated and I can't confess to really understanding exactly how it all works, but I was wondering if you still talk about IP transfers in some debtor-side pitches or have a lot of the loopholes that allowed for J.Crew to do this been closed in the past few years?"
A question framed this way is fantastic, in my view. It asks for an opinion and shows a relatively advanced understanding of what's been happening in RX.
At the same time, the person you're speaking to will appreciate your humility and self-depreciation; not pretending like you actually understand all the nuances of IP transfers - like why unrestricted, not restricted, subsidiaries are utilized - or how they operate.
While it can be difficult to really stand out while networking with M&A bankers, with RX bankers it can be easy to stand out from the pack if you ask thoughtful questions that show your contextual understanding of RX.
Further, networking can lead to first-round interviews much more directly in RX than in M&A. The weight of a recommendation from an associate or VP can directly translate into a first-round interview, whereas in M&A it tends to be a more bureaucratic and HR-involved process.
Keep in mind my rules above and if you've already ordered the restructuring course, you can find the new PDF with 18 networking questions in the members area along with everything else.
P.S. - Remember to keep your networking calls to 20-30 minutes. Short and sweet is always better and bankers appreciate people being considerate of their time.
Thanks for the comment! It’s been really rewarding to see that my writing has helped folks out.
I have considered talking a bit more about the buy-side and potentially doing a little guide on it. One issue is the diversity of the credit space; the span between the day-to-day doing direct lending vs. being in a distressed debt HF seat is very large.
I’ll probably begin talking a bit more about private credit and more activist distressed topics in the coming months if I have time.
Really enjoying the posts so you’ve put out so far – easily the most informative on the internet regarding restructuring in my opinion. Given that you have a post on restructuring roles and day to day of the advisory side, any chance you would be willing to write about the role of an analyst/day to day at a distressed credit fund (maybe what the split is like in terms of idea generation vs research or how ideas are screened for/sourced on both public and private credit side)? Would be very interested in hearing about it from someone who is close to the space.