BuysideHustle

Simply put, distressed investing is an investment style that focuses on investing in companies that seem to be falling apart. Also, there is a legal aspect to distressed investing (i.e. creditor rights, seniority in the capital structure, collateral, bankruptcy process) that you are not exposed to in traditional equity investing. For example, say you are looking at investing in the unsecured debt of a company that has $1Bn of first lien debt, $500MM of unsecured debt, generates $200MM of EBITDA and spends $50MM per year on Capex. If you know a little bit about value investing already, then you should know the basic difference between a good investment and a bad investment (read all the best investing books if you haven’t already).

You don’t need a $4K per month apartment, $50K cars, $20K watches, $5K vacations, $400 dinners, etc. For example, if you make $200K per year, then you shouldn’t buy a car worth more than $20K. Cars and most watches depreciate in value over time. If you start right out of college at 21 and keep working on your side business consistently, then by 25 you can easily make at least $50-100K of additional income per year. Since all of your daily expenses can now be covered from the side business, you stop stressing about things like losing your job and start focusing on what is it that you really want to do (instead of what is a stable career path that makes me a decent amount of money).

During my time in banking as an analyst, I met MDs making $1MM per year and senior MDs who were making $5MM+ in any given year when deal flow was good. Year 0: $125K Base + $50K Bonus (this is the stub year from when you graduate business school or get a direct promotion to the end of the calendar year) Year 3: $190K Base + Bonus Up to 125% of Salary (~30% of bonus is deferred in stock) Signing bonus as an Associate is larger than as an Analyst – expect to get ~$50-60K when you sign your offer. ~$60K of that will be granted in restricted stock that vests over three years, meaning after the following year you receive $20K in shares (depends on the price of the stock at the time as you are granted X number of shares during the time of your bonus).

While people still don’t expect much from an analyst fresh out of college, you are still expected to learn quickly and be able take full control over models and presentations after your first year. After working as an investment banking analyst for three years, I learned a ton about how to stand out from your peers and be a top-bucket ranked analyst. At bulge brackets, you will be put on more deals than at a boutique firm, but you aren’t as involved in each deal as you would be at a boutique investment bank. With just five people on the team (really four people since the senior MD wasn’t really involved except for high level meetings), I have to say it was an extremely lean team.