Like the credit boom turned on its head, restructuring deals help lower companies’ debt before it drags them into insolvency. Deleveraging is the awkward word the industry uses and it offers opportunities right across the financial services business.
As I wrote in February, the big investment banks see restructuring as a great chance to restart relationships with indebted corporate clients, and are willing to go head-to-head with well-established boutique advisory firms for lucrative advisory mandates. JP Morgan, Credit Suisse and Morgan Stanley have all made high-profile hires in London.
Smaller boutiques are building up their teams while new ones are springing up. Jefferies is a new name for many in Europe’s restructuring industry, while Gleacher Shacklock, Greenhill and Moelis have all made hires. Others, such as Versatus, see former bankers set up shop to offer their capital market expertise.
Lawyers also sense opportunities. Loan documents are the bedrock on which banks will strike restructuring deals. This means hiring a clever lawyer, able to pick apart thorny inter-creditor agreements, can give you a clear advantage over rivals.
London-based “Magic Circle” law firms, such as Allen & Overy, Freshfields and Clifford Chance, face growing competition from rivals such as Ashurst, Gide Loyrette and Paul Hastings, with the latter recently hiring many of Cadwalader’s highly respected restructuring team.
The big four accountants see restructuring as key, and take a large share of the business available. A restructuring needs number-crunchers and business analysis, and PwC, Deloitte, KPMG and Ernst & Young usually have a role somewhere in the restructuring process. All have been hiring.
This boom, like the credit boom before it, will not be short. Restructuring the debt load taken on when times were good will not be over by the end of the year, industry sources say, nor the end of the year after that.