Restructuring banking: part fireman, part therapist, part punching bag

If you thought working in restructuring was just a way to call yourself a “banker” without working in investment banking, you’d be in for a slight shock. 

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Speaking on The Turnaround Podcast, hosted by former White & Case partner Stephen Phillips, Moelis MD and European co-head Matthew Prest spoke about the life and work of a banker in restructuring. The reality is somewhat more multifaceted than you’d imagine.

The first role is prescribed by the boss. “Ken Moelis,” said Prest, “says that we're like the fire brigade. You know, when somebody's house is on fire, we run in as everybody else is running away.” And much like running into a fire, although far less dangerously, restructuring has a tendency to bite you back.

The fact that it’s a process that only happens when the feces has hit the fan means that there’s a fair amount of stress that a restructuring banker needs to diffuse. Senior management teams “want an outlet to express frustrations and offload. You've got to be thick-skinned, and to be able to take that,” Prest said. With some CEOs, however, “ego gets involved." 

That can especially be the case in situations where fingers need to be pointed, and cuts need to be made. “Generally,” Prest said, “the companies that you're dealing with have not got the strongest financial departments or teams,” and that means people are often afraid to face the consequences of their actions. “There's a risk that somebody else is going to get treated better than I am,” Prest explained, “and then I'm going to look like an idiot, you know, in front of my committee and my boss, etc.”

An impartial third-party (read: the restructuring banker) needs to step in and ask: “What are the constituent elements of the model, what part of the business will succeed, which part of the business needs to get chopped?” At the end of the day, that is the reason that the restructuring team was brought in the first place.

That doesn’t mean that restructuring can’t be rewarding. Prest had a key role in managing the fallout from the Steinhoff scandal, the largest case of corporate fraud in South African history. “It was great,” he said. “I always say that it was the Champions League Final of my career.”

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