Restructuring Roles and Salaries
Just like in any other area of investment banking, there exists a strict hierarchy in restructuring.
However, there are some slight differences that exist in the responsibilities and deal team structure in restructuring (along with generally higher levels of compensation relative to M&A).
The Restructuring Roles and Titles
Just like in any other area of investment banking, you have four primary roles that can occasionally have different titles at the highest levels: managing directors, vice presidents, associates, and analysts.
The analysts in restructuring almost always come straight out of undergrad or via a lateral hire (from an analyst role in M&A, LevFin, DCM, or very occasionally equity research).
Generally speaking, analysts in restructuring get more responsibility earlier due to the much leaner deal teams that are run in restructuring. It's not uncommon for a pitch to have a singular analyst on it and for live deals - that could involve restructuring hundreds of millions or billions in debt - to have one or two analysts working on it.
A stylized deal team structure is shown below. At elite boutiques - like Evercore and PJT - it's also rare to find more than one associate on a live deal unless it's very large or logistically complicated.
Because every restructuring deal is reasonably unique - dealing with a unique capital structure and financial situation - there are less templates to work off of than in M&A.
As a result, analysts are often working 70-90 hours a week on fresh models and iterating them to look at various scenarios the MD wants to present to the client.
This is on top of the more administrative work all analysts - regardless of what area of investment banking they're in - will do such as organizing calls, taking notes on calls, pulling equity research, etc.
It's therefore not surprising that restructuring analysts will frequently leave after just 12-24 months to the buy-side. They've put in a lot of hours, have beat their way up the learning curve, and often feel ready to leave.
Part of the reason why restructuring deal teams are so lean is that the role of the associate is a bit different than in M&A. In M&A associates are often expected to be light-touch; meaning they're not spending much time in the model or generally in the trenches on the deal. With more analysts below them they're expected to have a more managerial role, while getting into the weeds only when necessary.
In restructuring associates are responsible for:
- Communicating down to analysts the pitch or deal structure and developing a game plan for doing the deliverables
- Getting into the model when needed to make sure a complicated transaction is appropriately modelled out
- Sometimes refreshing pitch decks themselves
- Often dealing directly with management or creditors on lower-level queries
- Communicating up to the VP and MD on where the analyst and associate are in their modelling or pitch-deck building process
- Doing ad hoc screens and profiles for MDs (see the Restructuring Interviews course for examples of these)
The role of a restructuring associate can be daunting. Because of how lean deal teams are they really are a jack of all trades. For a fresh MBA or JD/MBA grad the first year on the job can be frustrating as you try to manage analysts and communicate to senior folks, all while doing the grunt work (at often a lesser pace than your analysts who have been doing the work for a year or two already).
However, associates are often rewarded with relatively secure vice president promotions. It's rare for an associate - at most restructuring groups - to be kicked out before they hit VP or have to wait around for four or five years for the promotion.
Restructuring Vice Presidents
Vice Presidents are finally out of the weeds of Excel and PowerPoint. VPs are generally responsible for fully understanding what the client needs, where the pitch or deal is now, and what the managing director wants to do.
VPs will also be the go-to senior contact for the analyst and associate when they need to make a small judgement call or need clarification about something.
The VP will then be responsible for discussing with the MD where the team is, what they're doing over the next few days, and making sure the MD is fully supported with the materials he or she needs.
The VP will also be on all - or almost all - calls with the management of the company (or the creditors, if it's a creditor side mandate) along with the MD.
Finally, VPs will be the ones getting deliverables from the associates and analysts, marking them up, and then sending them back down most of the time. VPs will be the ones making sure not too many iterations are needed from the MD level.
VPs are probably the most fluid position in restructuring investment banking and is heavily dependent on their work style, level of seniority (VP1, VP2, VP3, etc.), and how in the trenches they want to be on deals.
Restructuring Managing Directors
The role of a managing director is more or less the same as what you would find in any other area of investment banking.
Note: Sometimes you'll see someone with the title "restructuring partner" this often involves them having a founding role in the company or being the group head. It doesn't necessarily denote anything about their day-to-day role. You may also see "director" titles, which would be the equivalent to being a senior VP.
Their first and most important job of the managing director - from the banks perspective - is bringing in business. For restructuring this means keeping tabs on what companies are in the early stages of distress, how to get in contact with them, and getting in front of management early in order to pitch a novel restructuring solution.
Like all MDs, they will have a wide network of contacts developed over decades in the industry. Many restructuring pitches will be the result of MDs knowing the legal council for the debtor, private equity firm behind the debtor, or the hedge funds that make up the creditors of a certain class of bonds (for getting creditor-side mandates).
Restructuring is both an area of banking where the solutions pitched are often novel and distinct (meaning not all MDs will come up with the same solution) and where relationships can be very important.
At the same time, obviously there are a lot of "cold pitches" to companies as most companies - that are not owned by a sponsor - will not have ever needed the services of a restructuring investment banking before. So the entire process, set of solutions, and players in the industry will be new to those debtors.
Restructuring Investment Banking Salaries
In the analyst years, restructuring groups will generally pay the same as M&A groups within the same bank. However, because the large restructuring groups are housed within boutiques - like PJT, Evercore, etc. - the pay significantly outpaces what investment banking analysts make at Bulge Bracket firms.
As you get into the more senior titles in restructuring, pay becomes more variable depending on what firm you're looking at (with Evercore and PJT paying the most on average for pure restructuring investment bankers).
Generally speaking, restructuring associates and VPs will be paid more than their M&A counterparts even within the same bank. This is largely due to the fact that the hours are long, the work specialized, and the buy-side opportunities - while not as diverse as you get in M&A - generally paying the same or more than their M&A equivalents.
Further, because of the small pool of talent in restructuring it's not uncommon for associates and VPs to make the move to the buy-side at some point so they are a flight risk if they aren't paid adequately (unlike in M&A where this is les of a concern).
For analysts, the pay will generally be between $150,000-$220,000 to start off in terms of all-in compensation. Generally the base will be $95,000, but some firms are still stuck at $85,000 (which is the same base salary as the BBs).
For associates - who are either coming off their MBA or are direct promotes from being an analyst - the compensation is between $250,000-$350,000. Generally, it will take associates 3-5 years before their VP promotion.
At the VP level things begin to diverge a bit more and compensation will be heavily dependent on the firm one is at and how well the firm has done in recent years.
At the VP level you should also not expect all the compensation to be in cash or without clawback provisions. However, salaries for VPs will generally be in the range of $400,000-$700,000 all-in.
For managing directors or partners - like in all areas of banking - it comes down to how well the firm has done, how much money you can say you yourself brought in to the firm, and whether or not you're a liability to leave.
Speaking in general terms again, a compensation package of between $1,000,000-$3,000,000 is a fair range for a managing director in restructuring. Obviously seasoned restructuring bankers, heads of groups, or those who have had a great year can break out of this range significantly.
Obviously all of these figures should be taken with a modest grain of salt. Depending on the geographic location, firm, and economic landscape the figures are subject to change.
However, what has been consistently true over the last decade is that restructuring compensation outpaces M&A all things being equal and that the starting salaries are generally on the high or highest end of the spectrum.
It's not a mistake that restructuring has quietly become one of the most sought after areas of banking to break into; it pays very well and provides great exit opportunities.
If you're curious about learning more about restructuring investment banking - including getting access to hundreds of interview questions and a nearly 100-page overview guide of the day-to-day role - feel free to check out Restructuring Interviews.