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This is probably a biased and contrarian opinion, but I personally think LMM/MM Debtor side Restructuring Advisory, specifically interim management engagements, would be the best place to learn how to run a business, and I will caveat myself before I say anything by IT DEPENDS on what the PE vs. RX role entails, but anyways.
LMM PE, depending on how sourcing / diligence / operating focused the role is, provides a best in class education on the “bigger picture” of buying and running a small company. You get to see from the very beginning to the very end how a business is sourced, negotiated for, closed on, handed over, run, improved, prepped for sale, and exited. You get particularly smart at quickly vetting investment opportunities, financially/legally structuring a deal, and monitoring business’ operations with the mindset of somebody sitting at the board level. And again, depending on the role, you might get deeper into one of these aspects than I suggest. The one downside of this as it pertains specifically to your question is that, from an operational perspective, you’re kept in somewhat of an ivory tower. Yes, you will absolutely think about your portco’s operations, but you will rarely get ownership roles over operational work streams, and your participation will typically be reserved to the highest level strategic discussions.
In MM/LMM Restructuring Advisory, you get a lot of the same M&A exposure (albeit typically on the sell side, and specifically within distressed / special situations contexts), but as long as you’re at a shop that gets interim management engagements, you get to actually run businesses. I’ll give you an example - on one of the interim management engagements I worked on for a retailer, one workstream I lead was the divestiture of a business segment. I was responsible for onboarding the sell side IB, building the 3 statement model the IB used to value the business, helped lead the financial/legal diligence and negotiations with the buyer, and so on. This experience is a lot like what you could get at a PE fund. However, on this same engagement, my primary responsibilities were actually helping to run the business. Evaluating inventory turns and write offs, looking at YOY store sales performance, executing liquidating sales, restructuring store and HQ organizational structures, thinking about potential commercial partnerships, building/managing the 13 wk cash flow to guide the CFO and controller on liquidity strategy, so on. These things are running a business, not the M&A parts of the engagement. As with my PE overview, there are downsides to this realm as well. People will say that it is easy to get pigeon holes in the RX space, and you can very reasonably argue that running a distressed business is not the same as running a small, growth oriented business.
***Buying and selling businesses is not equal to running businesses***. These get conflated and/or confused, or often, the assumption is made that because M&A is so impactful and strategic and critical, if you can be a successful deal maker or deal advisor you will be a successful operators. I don’t believe this is always true. Debtor side RX advisory is the one niche within the professional and financial services sectors where you can remain an advisor / distinct entity and actually get to run somebody else’s business for them in highly distressed, pivotal situations. That’s why I think it’s the best place to learn how to run a business aside from running your own.
Would love to hear if people agree or disagree
On the Creditor side now. Debtor side seems more interesting.