Dave Portnoy on Moelis: “Our banker was unusually bad.”, “They stole from us”
Any Moelis hardos want to weigh in on Dave Portnoy’s comments on Moelis.? @UnstructuredCapital posted a video of an unknown (at the time) person at surf lounge complaining about the bankers who represented him. After his followers pointed out that it was Portnoy in the video and that the bankers in question worked at Moelis, Portnoy was in the accounts DM’s saying “They stole from us. Metaphorically speaking.”
Anyone have any insight as to what happened between the two parties?
Analysts expensed too many Uber Eats meals
Anybody have a video? I can’t seem to find it on the account?
It’s on their story
He tried to stiff Moelis on deal fees. They failed to get another offer then tried to go with Penn behind the deal teams' back and skip paying fees.
who is Penn?
Penn Gaming, the company that bought a piece of Barstool.
The company that bought a 33% stake in barstool
Sorry. I’m still new, so am trying to understand this. Presumably what you mean is that Penn tried to buy out Barstool, so Barstool contracted Moelis to shop Barstool around and ensure that they get the best offer, then when there was no better offer, Barstool goes with Penn and tries to stiff Moelis on the fees, even though they ran a process?
Yup exactly
He def seems the type
In fairness, that is definitely one of those scenarios where as the banker you just feel slimy for collecting lol. Most awkward deal I ever worked on was when I was at a god awful no-name boutique and we blindly shot CIMs for a client at like 200 random PE groups we found on Pitchbook. No interest whatsoever and the BoD and CEO both started openly shitting on us to our (Zoom) faces. CEO eventually steps up and finds a strategic acquirer within his network almost immediately willing to pay a great price. We spend the next two months begging the CEO to loop us in on DD calls and providing absolutely no value then ask them for $1.5M when the deal closes. So goddamn uncomfortable.
Lol...love the tail fees...CEO should have put them on the carve out list, sounds like a 1.5mm mistake on his part
There’s a reason EL’s exist. This is business. Not sure what Portnoy expects, signed contracts to not be honored?
In other news: a new moneied, geeked up, 50 yr old trying to sound relevant to first year finance bros at 3am in a night club in the Hamptons. Got it
wtf ever bro, if they 'stole' from you, then you'd be able to sue and win. sounds like you just don't know how to read an EL and tried to sneak around it and got called out.
Supposedly the CEO of barstool had to rein him in lol
And always be known as the trusted advisor who sues their clients
What? I was referring to Portnoy being able to sue if he was stolen from, but he can’t because he wasn’t stolen from.
I think you're misinterpreting the above comment - he was referring to Portnoy
I've been on some entertaining calls where members of management lose their shit for various reasons (related to advisors and unrelated to advisors), but Portnoy cursing out your MDs because he thinks they're chiseling him would be wildly entertaining.
would almost make working at Moelis worth it. Almost.
Have spoken to advisors that work on $2-15M small companies (a lot of which are blue collar) and have heard of ridiculous requests from clients (some of which would be highly illegal). Sometimes makes you wonder how they created a million dollar business.
What kind of requests? Could you provide some colour?
Worked in LMM (TEV $100MM) for a couple years. There is a ton of sleazy shit that goes on at that deal level.
Probably the worst was an executive recruiter turned quasi-banker who secured a sell-side mandate from a small services company by agreeing to split the fee with the company's CFO. Said recruiter/banker would also bring deals (as the sell-side banker) to buy-side bankers but would only show them the deal if they agreed to pay 40-50% of their buyside fee to him. So the dude was essentially bribing company upper management for mandates and would then only deal with bankers/intermediaries who would agree to pay him part of their fee. Meanwhile he would be openly communicating with the buyside bankers behind the scenes to ensure the deal got done, regardless of if it was in the seller's (who was supposed to be his client) best interest. Bribery, conflicts of interest, double-dipping, etc. Guy had no shame.
Shadiest shit I ever saw on the job by far. Not sure what the dude is up to now but wouldn't be surprised if he wore cuffs at some point.
Lol
I listened to the whole podcast and Portnoy said that bankers from The Raine Group (who those two young guys in the video with portnoy worked at) ran a due diligence/models with Draftkings acquiring Barstool and arranged for a dinner with bankers from Raine, the DraftKing CEO, Portnoy, and the Barstool CEO (Erika Nardini) to see if they would all get along, then nothing came to fruition.
Moelis had worked with the previous majority owner of Barstool (The Chernin Group) on other deals. Moelis failed to even get one company to offer $100 million to buy Barstool, and the bankers claimed that the lack of deal wasn't due to the services offered by Moelis but rather Portnoy being an ass and narcisist. Portnoy then claims that him and the Barstool CEO used their own network without the services of Moelis to source the deal themselves and came up with their valuation $450 million on their own as well without Moelis. The price and deal were agreed upon without the services of Moelis. Then at the end of it all Moelis still wanted a traditional advisory fee for the deal.
My banker buddies told me that paying a retainer fee for the initial due diligence is standard, but if a company sources and closes their own deal then that's where things may get a bit grayish.
Which podcast was it?
The Dave Portnoy show. Unstructured capital has the direct link in their story
Great context thanks for that. Regarding a company closing a deal on their own – almost 100% of M&A engagement letters will include a tail, stipulating that the banker is owed the success fee as long as a deal within the scope of the engagement closes within a certain timeframe (typically 12 months). Often these are voided if the banker is explicitly fired, but if the detail you're giving on Barstool is right I'm guessing Moelis wasn't actually fired beforehand since that sounds like they got paid on a total technicality (assuming they really did nothing and Barstool/The Chernin Group felt they really deserved nothing).
In practice some bankers will voluntarily discount their fee to some extent if they wind up not actually making a contribution, especially if they value the client relationship. I'm guessing that's not how Moelis operates though... not sure if it's enough to imply a pattern of behavior but in another incident they wound up suing their client Ferrellgas for their $20mm restructuring success fee after Ferrellgas paid them only $10mm and refused to pay the rest because they were "not pleased" with Moelis' performance lol.
I'll have to go see how our ELs are structured but I believe if there is a buyer who isn't on buyer's list (the banker never reached out to on the client's behalf) than the banker isn't entitled to the fee.
I've never seen an EL with this stipulation.
I've seen and negotiated them both ways. Sometimes ELs state that bankers only get paid for groups that they either introduce and/or interact (reach out or are connected by the Company or its shareholders). Other times, they're a blank slate, which is usually our starting point.
Unless it was carved out, legally Barstool has to pay Moelis. Dave can bitch all he wants about that, but he should be pissed at himself, and more importantly, his M&A counsel, for not negotiating a better engagement letter to begin with.
Podcast: The Dave Portnoy Show
Episode #83 Titled: Rico Bosco Declares War on Barstool Summer Interns:
Starts at 19 minutes 15 seconds mark and ends at 28 minute15 seconds.
I don't get why this Dave Portnoy guy is so famous. Why do people care about him...
He's funny
Worth $80M and runs his own company... living the absolute dream.
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