Distressed-debt mess boosts need for specialists.

• Author: Marshall, Jeffrey
• Position: RECRUITING

The distressed-debt wave sparked by the summer's credit market crisis is sure to create a lot of work for restructuring and turnaround specialists. But it has also created snowballing demand for experts in distressed debt or equity.

Alvin Spector, a principal at Lantern Partners, a recruiting firm specializing in strategic management assessment and governance, thinks a real talent crunch is brewing. Not only is there a dearth of such specialists in recent years, but those who are seasoned are likely to be snatched up by hedge funds and other private equity players whose needs have mushroomed and who can pay what the traffic will bear.

Years ago, Spector notes, distressed debt analysts and workout people were in commercial banking and insurance circles, and their ranks grew in the wake of cyclical turndowns in the economy. As that area dimmed during the boom that began in 2003--and as commercial banks trimmed that area from their training programs--the talent pool became quite shallow, he says.

"There's not enough talent out there--our job [as recruiters] is harder than ever," he says. "We've been trying to find a senior investment-grade credit analyst for an insurance company, and we're having a hard time." What talent has come out of the banking and insurance companies has been migrating to hedge funds or investment banking, he says; that's true in Europe as well, where he has heard of specialists in distressed securities being able to command multiple-year guarantees and a seven-figure income.

Moreover, pension funds and endowments that have also been piling distressed debt into their portfolios will also be looking for analytic help in-house to minimize any damage. And, even the commercial banking side needs help, Spector says: With all the financial engineering that has been done to offset risk, regional and even community banks have felt comfortable buying higher-yielding securities to get more yield.

And it isn't...