Should I be concerned about a company's performance when going in house?

[lawgrad15555]

Hey everyone. This forum has been hugely helpful to my career. I'm finally looking at making the move in house from working as a Corp/M&A associate (3rd year) at biglaw in a secondary market.

The company I'm interviewing at has about 550 million in revenue and 70 million EBITDA. The share price has been really hurting lately. Was at a high of $1.30 in 2018 and is now at around 25 cents. Is this something I should be concerned about? The pay is equivalent to what I'm making now and the role seems really interesting. Note that this is a downstream oil company so the share prices seem to fluctuate more than most. Is this something people usually assess when going in-house?

[shock259]

That's a pretty big drop in the stock price. Not familiar with that industry, but that would definitely be raising flags for me.

Where are you in the interview process? I think you can ask casual, sort of generic questions during the interview process about the nature of the business ("what's the biggest challenge the company is facing right now", etc.). But if/when you receive an offer, before accepting I'd be really upfront and ask multiple people about the performance of the company and their expectations on the future.

And I would also dig around a lot more online. Look through company filings, read industry reports and reports about the company, and try to get a better feel for where things are headed.

[Anonymous User]

Yes, you should be concerned. That's essentially a penny stock that will likely be bought (and maybe making you redundant) or go into BK with worthless equity. I wouldn't go there and if you do, your equity could end up being worthless, so negotiate as high of a base as possible. Have had friends recently experience this in O&G industry: they pay a lot and a big portion of equity, which amounted to essentially nothing when the company went bankrupt.

[nealric]

I'd be wary. Company performance is very important to your prospects in house. Even if the company stays stable, if it isn't in growth mode, it will limit your upward mobility and experiential opportunities.

Most companies provide a relatively substantial portion of total comp in equity. If the company is doing poorly, your pay will suffer. Another issue is that lawyers (other than the GC) are relatively disposable compared to the engineers and operational folks who keep the lights on. If they have a mandate from shareholders to cut costs, the law department is a prime target. If you are laid off, having a second or third tier name on your resume won't be as marketable as a blue chip name. Finally, any company in the penny stock range is a gamble beyond the very short term. Best case scenario would be a takeover by one of the majors or large cap downstream companies where you are retained and your equity vesting is accelerated.

[Anonymous User]

I think it’s hugely important. I turned down an offer that hit a lot of my checkboxes because they didn’t pay bonuses at the half year mark and laid off people while I was interviewing. Their stock price had taken a beating over the last year as well.

I was fairly confident they would recover and it was just a cyclical downturn, but I wasn’t willing to enter a company at its nadir. I suppose the equity would’ve offset my concerns but the base, bonus, and mobility (and amount of work if they were laying people off) was a big concern.

[Anonymous User]

Seconding this. As someone who accepted an offer at a firm that was on the downturn, I really regret my choice. Because we weren't growing, I wasn't doing much interesting, and I was always very worried because I knew the legal department was on the chopping block whenever budget issues came up. (We also had a bunch of ticky-tack budget cuts focusing on perks and amenities. You'd be shocked at how much shittier work is when basic QoL stuff you'd never think twice about at most firms gets taken away from you.)