FROM A LEVFIN BANKER - This is how an Apollo LBO Deal works

I saw in an earlier post ("Is Apollo that bad") and it brought back some memories. I was just going to respond in that thread but my post ended up being much longer than I had expected so I decided to start a new thread, and maybe address some questions you may have regarding LevFin deal dynamics.

I worked in LevFin at a BB and I can confirm that Apollo is one of the toughest clients to handle - both from a junior standpoint as well as from a senior standpoint (basically at the MD-level). I unfortunately had the pleasure of working with Apollo on multiple deals (both closed deals and lost bids), so here's one story:

  • APO Principal calls our MD on a Thursday afternoon. Wants $800m of committed financing by next week. Our MD tries to push back on timing, asking for a bit more time. Principal goes on a 5 minute stern discussion basically saying "stfu, I don't care, get it done. You should be thankful we called you to begin with. If you can't accommodate the timing then you're off the deal. Your call."
  • After working frantically with my M&A team over the course of 6 days (including up to midnight on both Sat / Sun) going through the data room and going back and forth on the commitment papers / terms, we churn out an underwriting credit memo and go to committee.
  • Committee hates the deal. This is unsurprising - the target company is shit, the terms are shit, and Apollo is setting the new low bar in the market for minimum equity (APO is notorious for being extremely adamant in terms of putting in as little equity as possible). On top of that, Apollo had recently started asking for a specific "discount" in terms of fees - basically Apollo rebates X amount of financing fees by virtue that they are Apollo and they do a ton of business (ridiculous I know, and LevFin groups now call this the "Apollo discount"). But of course my LevFin MD and the Coverage MD push back with the Ace-card argument: "but it's Apollo, one of our highest paying clients. If we don't do this deal, they'll just replace us with CS or something. The deal's gonna get done either way. Not to mention it'll create bad will for future deals with them..".
  • As with all underwriting processes, business rationale always trumps all credit rationale. Committee conditionally approves deal - the two conditions being a pushback regarding one of the mechanics of the RP (restricted payment) covenants and a pushback on the whole "Apollo discount" fee mechanism. Despite pleas from the deal team, the Head of Credit Risk swears that he will do everything in his power to shoot down this shitty deal if the deal team does not attempt to push back on this clause and the fees.
  • Our MD calls the APO Principal, tells him we are conditionally approved to come in for 25% of the financing as planned, but that we need to push back on the RP clause and fees. There proceeds to be a 5 second silence. APO Principal tells us in a dark tone that we'll hear back from them shortly.
  • 30 minutes later, our MD gets a call from APO's Head of Capital Markets. The APO of Cap Markets starts to yell at our MD as if he had just found out he was secretly sleeping with his wife. The APO message was basically the following: "Do you know how much fees your bank earned from us last year? It's $XXX million. I repeat, triple digit million. And this is how you pay us back? Tell your committee that these clauses are non-negotiable. If you expect any further business from us going forward, then you WILL get this through. Did I make myself clear?"
  • Phone call ends. Our MD takes a deep breath and blankly stares at his computer screen for a few minutes. It's humbling even for myself, to see a grown man literally get yelled at and belitted like that. I had initially viewed Investment Banking MDs as these BSDs on top of the finance food chain, but here I see for the first time that MD's are human beings just like the rest of us, and while we (analysts) complain about getting shit on by senior bankers, they too get shit on by clients and upper management internally.
  • Our MD proceeds to speak with our Global Head of LevFin and Global Head of Capital Markets, seeking their advice / support on how to approach this situation. My MD does not want to give off the image to committee that he's a pushover, but at the same time, he doesn't want our institution's relationship with Apollo to be damaged over this deal. Not to mention the lashback my MD would receive internally if the deal were to get hung. My MD comes back to me and asks me to arrange an ad-hoc call with committee members for this evening (10pm) and make sure to include the Global head of LevFin and Cap Markets in this committee call.
  • We get on the call, but Global Head of LevFin / Cap markets join late. For the 20 minutes they are late, the Head of Credit Risk berates our MD on how he can't even push back on a single clause and why bother having a credit committee if we're just going to offer the client whatever they want. Our MD remains calm and just asks that we wait for the Global Heads to join. Global heads join at 10:30pm. They proceed to assure the Head of Credit Risk that they are on board with this, are fully aware of the risks from a relationship and bank balance sheet standpoint, and are signed off on it. Credit Risk head is clearly overpowered, and reluctantly offers full approval on the financing. Deal is now fully approved.
  • LevFin grinds throughout the night with lawyers to finalize the commitment papers. We seem to keep going back and forth on some minor terms so we (LevFin / Underwriter counsel & Apollo / Sponsor counsel) hop on a call at 2:45am to finalize the terms. Turns out APO didn't really care about those minor terms, it was just the sponsor counsel trying to stir some shit up to score some goodwill points (Kirkland is notorious for doing this). At 3:15am, final clean version of papers come in for final review and we release our signature pages. It's 3:30am and I finally go home and crash, utterly exhausted from the past 7 days of this shitshow.
  • Apollo eventually wins bid and syndication of the term loans surprisingly go smoothly. I guess it helped that the LevFin markets were absolutely on fire at the time. 12 months later, the company goes into default. LMAO. Why am I not even surprised. I guess that's what happens when you overlever the shit out of a shitty company. Not my problem, we already collected our U/W fees and the risk is off our balance sheet. Good luck to the RX teams pitching for that business, you couldn't pay me to touch this shit and deal with this kind of sponsor again.
  • Just check my inbox and receive a direct email from my MD. "Hey ___, Apollo just reached out to us for another underwritten financing, can you help out on this one? It's a bit of hairy situation and I need an experienced junior who can run this as they want signed papers by next week. I've already informed ____ (the staffer). Pls let me knw asap. Thx."

Fuck my life.

Comments (173)

Jun 10, 2020 - 2:29pm
10x Leveraged, what's your opinion? Comment below:

No problem, I do have several stories with regards to my interactions with the M&A / Coverage team on a number of deals that I would say are both quite educational but also absolutely hilarious (the M&A guys I worked on many of my deals with were absolute clowns, in a good way haha) - maybe I'll write one up down the line when I have more time


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Jun 17, 2020 - 9:06am
bankingpostcrash08, what's your opinion? Comment below:

I worked with them on the M&A side. Advised them over the period of a year or so on a take-private of a decent company in a declining industry. The team was super polite, well-mannered and always treated us (the buy-side M&A advisor) with a ton of respect. I would echo that the (fourth year) associate (and soon to be principal) seemed to be running the deal and he was certainly getting smoked. Not to take away from what others said, but I always found them to be total gentlemen.

Jun 10, 2020 - 2:30pm
10x Leveraged, what's your opinion? Comment below:

Thanks, and agree, nothing my MD could do in that position, sometimes it is what it is


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  • Associate 3 in AM - FI
Jun 9, 2020 - 8:01pm

Not going to have much negotiating power when you write a check for 25%, just going to get bent over the barrel even harder and told how terrible your bank is. But yeah, Apollo has a less than favorable rep with creditors. Can't say I won't be a bit pleased to see them take a hit on their Chuck E Cheese investment soon.

Jun 10, 2020 - 2:32pm
10x Leveraged, what's your opinion? Comment below:

Ah I should have clarified - typically we would underwrite the entire 100%, but "with the expectation" that our pro forma hold will be for 25% (as guided by the sponsor). Apollo will always demand a 100% underwrite at least on paper, so they have the flexibility to shift other underwriters' economics as they see fit

But yea agree not much leverage with a sponsor like Apollo for a 25% pro forma hold, but when your credit risk guys go off the deal team like that then well.. kind of expected


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Jun 10, 2020 - 11:10pm
xyzzz, what's your opinion? Comment below:


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Jun 10, 2020 - 2:34pm
10x Leveraged, what's your opinion? Comment below:

Lucky you, hope the sponsors you deal with a much more humane

And totally agree with you, hung deals are the absolute worst and arguably the funniest because everyone is panicking. I have 2 hung deals that I've been part of which have been absolute shitshows but I guess I'll save that for another thread down the line hah


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  • Intern in IB - Gen
Jun 9, 2020 - 8:52pm

Great story. How did you respond to your MD at the end? I'm assuming you didn't really have a choice.

Jun 9, 2020 - 8:55pm
Leverage Hero, what's your opinion? Comment below:

Have worked on an Apollo deal and this sounds 100000% spot on. The third bullet is classic...the whole "this is happening with or without you, so your call" nonsense.

Third to last bullet is also spot on....have seen this with K&E and DPW consistently. Newer partners trying to get some brownie points with the client. Then you point it out and they act confused and try and throw breadcrumbs down a different path so you don't catch them.

  • Associate 2 in PE - LBOs
Jun 10, 2020 - 10:27am

Saw this on the forum earlier but have seen it to be true, with K&E guys referring to their whiteshoe biglaw firm as "shop". Ridiculous

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Jun 10, 2020 - 2:36pm
10x Leveraged, what's your opinion? Comment below:

Oh god K&E and DPW both make me want to pull my hair our when dealing with them from the underwriter's side, i swear some of their partners are just absolute clowns with a specific mandate to waste everyone's time


  • 1
Jun 15, 2020 - 11:40am
NSA Surveillance Van, what's your opinion? Comment below:

Deffo can relate to this as well, even at a very junior level several summers ago. I understand interns are supposed to sit there, stfu, and take notes, but my god did they extend those phone calls by an extra 30-60 minutes at the end of every DD call.

All of the seniors would get off the call the minute the lawyers crawled in for the questionnaires at the end. Their self-promotion marketing schpiel was also very unnecessary and sounded scripted af

Jun 9, 2020 - 10:05pm
earlysummer, what's your opinion? Comment below:

Great read, thank you for this. When you say that the sponsor counsel added some minor terms to stir up shit, were they some minor commercial terms that the counsel unilaterally added/changed without really running them by APO? Does this happen frequently (I guess at least with Kirkland this seems typical)?

Jun 10, 2020 - 2:26pm
earlysummer, what's your opinion? Comment below:

Sounds like a typical lawyer thing to do. The more frustrating and annoying part is when the lawyers fight to the death on the minor points that they added to the agreement just to show some "value add" (perhaps also to distinguish themselves from the other law firms that don't push for such terms).

Jun 13, 2020 - 12:16am
FluidMosaic, what's your opinion? Comment below:

typically the lawyers read through all recent deals and try to weave in points from those deals that are aggressive / beneficial to the borrower. Apollo probably knew they were adding these, but it wasn't anything they cared about and would have been fine without

Ex - lawyer here who now works in special sits. IDGAF about minor terms and hate when counsel drags on deals like that. We do give negotiating points that are must haves but anything beyond.

Jun 10, 2020 - 2:39pm
10x Leveraged, what's your opinion? Comment below:

Nah they still seek the most competitive financing package but they interact with you more professionally rather than treating you like as if you were just their "financing bitch" to put it crudely


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Jun 10, 2020 - 12:33am
ovenfresh, what's your opinion? Comment below:

Good write up. Sounds like a terrible culture. Apollo has a reputation in the leveraged loan / high yield bond markets for screwing lenders if things at a portfolio company start going the wrong way. I haven't formally tracked this but I bet Apollo portco debt on average trades at x bps wide of a similarly capitalized industry comp. All that said I give these guys credit for fighting hard to defend their equity investment if portfolio company performance deteriorates (usually via a super aggressive reading of the credit docs to the detriment of lenders). I don't condone what they do to lenders, but they don't just hand the keys over if things blow up - they fulfill their fiduciary duty to their LP's by getting creative in their reading of the docs / maximizing liquidity runway / transferring assets / etc. Also, if creditors don't want to get shafted by Apollo, then there's two simple solutions; avoid apollo deals or spend more time readings the docs.

Jun 10, 2020 - 2:46pm
10x Leveraged, what's your opinion? Comment below:

You are correct, our syndicate desk also tends to add some "Apollo premium" when pricing and APO deals. With that said Apollo-backed new issuances are usually some of the higher yielding paper you see in the leveraged finance market, so CLOs seeking yield will pile in regardless, especially when there is a heavy influx of demand relative to supply as we've seen in the last 4-5 years


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Jun 11, 2020 - 8:10am
D-finance, what's your opinion? Comment below:

Interesting.. how big is the APO premium? Also it's interesting to see how all their effort to skim a few bucks in margin, juice IRR with higher leverage, etc are now met with higher pricing.. which defeats a bunch of stuff they were trying to achieve with their aggressive approach. Makes you wonder if it was a bad strategy after all lol

Jun 10, 2020 - 2:03am
Synergy_or_Syzygy, what's your opinion? Comment below:

I need to be very careful, but I would say that in my experience, the types of firms behaving like the one OP described now outnumber the types of firms who are frankly, for lack of a better word, better partners with the rest of the transaction - bankers, lawyers, credit investors, and even management.

I am not convinced that being a marginally better fiduciary to your LPs in a given deal through the squeezing of fees and terms is worth sacrificing long term certainty and comfort of deal execution and support going forward. It is not at all obvious to me that you will never run out of bankers and credit investors to burn, recent history notwithstanding. And in fact, there are still many successful PE firms, both MF and MM, who would agree with this position.

Would be curious to hear what OP has to say on the matter.

Be excellent to each other, and party on, dudes.
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Jun 10, 2020 - 2:21am
Synergy_or_Syzygy, what's your opinion? Comment below:

It is a mixture of MF and MM firms. Certainly a lot of MM firms do very dicey deals and have the added benefit of threatening us with direct lenders. MF firms can lean on their fees and relationship banks. Different way to accomplish the same thing. Certainly not all MF or MM firms operate like this, though, see my comment above.

Be excellent to each other, and party on, dudes.
  • 3
Jun 10, 2020 - 2:49pm
10x Leveraged, what's your opinion? Comment below:

Haha yes, if you know, you know

I won't call out specific names just out of respective to those PE funds but yes there are a number of sponsors out there that were very painful to work with as well (although none were as bad as Apollo)


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  • Associate 2 in CorpDev
Jun 10, 2020 - 1:40am

Nice write up! Sb'd.

Question though, how does Apollo stay strong / performing with all the defaults? Equity would definitely be underwater in those situations and in this case they're taking a write down 12 months into a deal

Jun 10, 2020 - 8:52am
karypto, what's your opinion? Comment below:

I just tried adding every member of Apollo on my LinkedIn with a link to this thread. Will let you know how many fishies I catch.

Jun 10, 2020 - 10:25am
Incoming cfa level 1 charterholder, what's your opinion? Comment below:

4th time I reread this, it was such a good read.

I saw that you changed some of the wording, why? It was great the way it was written the first time!

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  • Research Associate in HF - Event
Jun 10, 2020 - 11:48am

Paul Weiss typically does Apollos docs, not Kirkland. Apollo is doing its job - the best for its LPs - and it's doing it well at that. It has no obligation to its creditors once an agreed upon document is executed. You can try blame the stupid par money buyers and massive inflows into CLO asset class for taking shitty terms, but end of the day it's a market being created for a buyer and seller and if APO can syndicate out terms wide of a friendlier sponsor that nets them a higher IRR, it is what it is.

There's plenty of APO blowups or soon to be blowups...again there's good reason they price significantly wider from typical sponsor deals and they clearly don't always take a donut on their equity checks given how loose the covenants are. Platinum, BC...there are many other sponsors who will also go out aggressive on terms similar to APO but are less talked about.

  • Chuck E Cheese
  • Lumileds
  • Shutterfly
  • Realogy
  • Westcorp
  • Clubcorp
  • Fresh Market
  • Rackspace
  • Linen N Things
  • EP Energy
  • Hexion + Momentive
  • Claire's
  • Caesar's

I'm sure there's many more but those were the first to come to mind. You can't blame a distressed fund either who try to catch a falling knife and gets buttf*cked by the sponsor because they don't know how to properly read docs.

End of the day, Apollo is an opportunistic and distressed-focused investment manager. If you want to make money and the pie (biz) can't grow, guess what...somebody is going to get their face ripped off. I never worked in LevFin but the OP story seems about right...nothing controversial, a bank can either make money or they'll go CS/JEF to get the deal done. The only knock on Apollo is simply they don't sugar coat it and go out like "hey lets be partners and get the deal done, LETS ALL WIN, HOORAY!". Most sponsors when it comes down to the line think alike, just the presentation may be different.

Jun 10, 2020 - 2:02pm
kordel123, what's your opinion? Comment below:

Paul Weiss tends to cover Apollo due to a partner Taurie Zeitzer (who was from K&E) and the fact that they're more a creditor-side law firm - Kirkland's practice is 99% debtor. The other Apollo law firm is Akin Gump

If you've ever been in a negotiation between Paul Weiss and Kirkland, you'd think WWIII was about to happen...

  • Research Associate in HF - Event
Jun 11, 2020 - 10:35pm

I'm so excited to see Apollo get f*cked senselessly. Especially the part with the disqualified lender limbo on their $192mm slug. Docket here for anyone who wants to read (again, guess which lawyers they use...).

They went out with Angelo to try to do a priming IPco deal around Eaton's back, just like how Anchorage and GSO did to Eaton on JCG a few years back...instead Eaton banded the CLO gang together and said enough is enough, I will be the one doing the fucking tonight.

Bless Angelo and Apollo and whoever the fuck Gamut is. They all deserve to get primed (though obviously its bad precedent but whatever, sponsors will do what they want to do).

Jun 10, 2020 - 12:09pm
hot1590, what's your opinion? Comment below:

First of all, really enjoyed reading and the OP couldn't have depicted it better. Playing devil's advocate for PE, because this is something I didn't truly appreciate until I jumped ship from banking. Part of their performance is judged on how little money they have left on the table. I think it's more true at megafunds, where you just know you have lots of levers with banks. And when the lev fin had been so hot up until recently, you would've been questioned by your billionaire founder/CEO who never retires why you couldn't have lowered the fee more. I'm not saying that PE guys do that out of pressure, but it's more of a buyer's mentality.

Jun 10, 2020 - 11:17pm
xyzzz, what's your opinion? Comment below:

Very interesting, but seems to intuitively make sense.

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Jun 10, 2020 - 1:23pm
abacab, what's your opinion? Comment below:

Sixers / Devils product of PE

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  • Analyst 2 in IB-M&A
Jun 10, 2020 - 1:55pm

"They'll just give it to CS or something" LOL Best line of the whole post

Jun 10, 2020 - 11:18pm
xyzzz, what's your opinion? Comment below:


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Jun 10, 2020 - 1:59pm
TechBanking, what's your opinion? Comment below:

Great post. It takes me back to 06/07 when I was in sponsors coverage (FEG) at Citi. We were underwriting so much crap for PE funds that made no sense, and everyone knew it. I asked my group head who was on the commitment committee, and he said "What are we going to do, win zero mandates? We'll be out of a job in either case (of this blowing up or us not generating fees)."

That is the inherent problem in highly optimistic markets with easy credit terms.

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Jun 13, 2020 - 10:44am
ruscal, what's your opinion? Comment below:

Yeah. I haven't been in this world for over a decade but part of the fun of gfc was ripping apart cas and indentures clearly finalized in the middle of the night and never read properly as banks tripped over themselves to green-light stuff in '06-'07, and discover what degrees of freedom sloppy drafting gave borrowers. Half the time it wasn't even aggressive terms, it was some wording that didn't even make sense or two baskets that weren't internally consistent and we got to see what we could do with that..

Jun 10, 2020 - 2:48pm
Jamie_Diamond, what's your opinion? Comment below:

beautiful write up and love the reference to CS - no mandate gets past them

What concert costs 45 cents? 50 Cent feat. Nickelback.

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Jun 10, 2020 - 3:52pm
thebrofessor, what's your opinion? Comment below:

posts like this make me so fucking glad I get to choose my clients.

I am so sorry you had to deal with entitled assholes like that. the language they use "do you have any idea how much in fees we paid you?" dude, please, you're giving an IB your clients' money, fuck off. "terms are non negotiable" is code for "there are plenty of assholes who don't care about doing a quality deal, we're not altering terms just because you asked" and finally the low equity thing, this should tell you all you need to know. skin in the game, or lack thereof, means they have no confidence in the business, otherwise principals would be lining up to coinvest.

anecdotally, met apollo, BX, KKR, oaktree, ares, and goldman at a conference. apollo reps were uniquely douchey, had the same attitude "you know who we are, this is our fund, invest in it." (guy goes back to texting). I didn't invest with them.

Jun 10, 2020 - 11:19pm
xyzzz, what's your opinion? Comment below:

You're able to work with a lot of buyside clients?

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Jun 11, 2020 - 12:51pm
thebrofessor, what's your opinion? Comment below:

KKR - entitled, silver spoony, unapproachable, spent more time talking about shoes and handbags and vacations than investment process

goldman - good friend works in PE there so I can't talk too much shit. they're a fine shop but the people I met acted like they were too cool for school, even if they were a bit nicer during cocktail hour

oaktree - nerdy contrarians, best people to talk to about investments, most awkward during cocktail hour, but I've placed money with them several times and have been impressed every time

ares - I feel like the kids who got laid in high school who didn't go to oaktree go to ares. impressive investment process, but a little bro-ey (in a good way). fun during cocktails

BX - pretty balanced overall, seems like a good shop. if KKR had personality, they'd be blackstone

forgot one, Carlyle - all I can remember is how weak the investment presentation was and how bad the MD's breath was. also, the fund I got pitched on is getting fucked right now (I didn't invest)

keep in mind, I'm not a whale (my firm is, I'm not) so maybe my experience is driven by that, but this was a pretty exclusive conference, I'd hope the faces of these orgs would be on their best behavior.

Jun 10, 2020 - 5:09pm
Texas Tea, what's your opinion? Comment below:

Please tell me this was an energy deal

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Jun 10, 2020 - 6:31pm
jpmoranmonkeysachs, what's your opinion? Comment below:

I'm so not shocked. Sponsor capital markets team are very well equipped to push overly aggressive terms. You can actually see a difference between funds with capital markets MD and the ones without. MFs inherently have an edge over the lower tier funds when it comes to processes and financing.

OP - gut feeling you work at Citi.

Jun 10, 2020 - 6:55pm
anonymnous, what's your opinion? Comment below:

my experience with Apollo as a client has been LOL.. can relate

"we do not reach the peaks of these mountaints, without first learning to give up our want to surrender" - shanke koyzcan
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Jun 10, 2020 - 7:12pm
lazerbear, what's your opinion? Comment below:

Fantastic post, thank you. Very insightful into the actual mechanics of an underwriting situation. I just wanted to expand on two areas pertinent to LevFin that OP touches upon that others may find interesting:

1) The 'innovations' that the high yield & leveraged loan markets have seen from law firms in the past few years have been truly scary. Often PE firms do not fully know everything in their grids (which counsel creates) that they're asking banks to underwrite, and often they're sneaked into commitment papers in such a furtive manner that given the time-crunch, as described in OP's deal, it's very difficult for banks to fully grasp all the terms they're signing into. Separately, frequently banks will underwrite crazy terms too, because unlike with pricing flex, banks take the view that the sponsor will fix doc terms in market if they need at no cost to the banks, even if this is outside their flex. This becomes dangerous because with the very strong market we've seen in recent years, investors have limited scope to push back on terms too; they simply won't be allocated on a transaction if they push back too much. The market probably needs a body of some sort which represents and speaks for lenders on doc terms because at the moment LBO doc terms are incredibly loose. The game is too skewed in favor of private equity firms in this regard in my opinion. It will be interesting to see how this documentation looseness impacts restructuring processes that we'll see due to Covid-19.

2) OP mentions capital markets roles at PE firms. There has been a proliferation of this role at PE funds in the past 5 years or so, and many of these positions are filled by ex-LevFin bankers. The role drives me crazy in a way; these guys are paid purely to squeeze the best terms out of the banks. This is traditionally something that the deal team partner would be more than capable of doing. I understand that this division of labor helps deal teams focus on the M&A process, but I find it surprising that people view the capital markets role so attractively. You're essentially paid to beat up the banks and your 'value add' is you arguing that you managed to drive 0.25x more of leverage or squeeze pricing by 25bps (I'm skeptical of this - the market is competitive enough to ensure the best terms are achieved in my view). As a LevFin banker, at least you're taking underwriting risk and are rewarded with chunky fees to do so - to me that is a more challenging job than being a capital markets guy at a PE firm who really has no skin in the game (I know they receive carry etc. but they're not heavily involved in the investment process). Sorry this was a bit of a rant. Curious to know if others share a similar view; perhaps there's an angle of these financing roles that I do not fully appreciate.

Jun 10, 2020 - 9:32pm
Sr2009, what's your opinion? Comment below:

I remember when one colleague from the syndicated desk moved to one of those PE cap markets teams, at a second tier fund. The first grid he sent us was a collection of the most aggressive terms we have ever conceded to our top sponsor client. He was just trying to get that as a precedent for his fund.

So I can see some value add from the fund perspective. Not sure how to quantify that value add though.

  • Associate 3 in AM - FI
Jun 10, 2020 - 9:53pm

1) Definitely agree with this, fairly surprised it hasn't happened already. In Europe, will be interesting to see if ELFA ends up making any traction.
2) I imagine people in these buyside cap mkts roles basically just add an extra 1x of leverage higher than they know banks are willing to underwrite and start negotiating from there, so not exactly much value add. Have come across a few that aren't particularly well versed in rating agency processes and have almost "advocated" their way into getting their deals a CCC initial rating.

Jun 11, 2020 - 12:53am
hot1590, what's your opinion? Comment below:

The value-add of someone from capital markets isn't just for doing syndicate deals with banks, but it also has to do with ever-increasing abundance of private credit capital. I mean on one hand you see megafunds increasing their credit funds because opportunity is there, which is actually a testament that the LBO financing universe has become more "complex"--not the financing structure itself, but matching the right appetite for the right shops (or however you want to phrase them).

Jun 11, 2020 - 5:33pm
earlysummer, what's your opinion? Comment below:

On point #1, regarding the pro-borrower terms that sponsor counsel has been managing to sneak into the documents, i'm sure the lender has their own counsel that catches and reviews such terms and flags them for their client. So I don't think it's because of the sponsor counsel that such terms make it into the docs and become "market" terms, but more so that, given that the market has been the borrower's market for a while (and still seems to be the case), lenders do not have sufficient leverage to fight back against such terms.

Jun 10, 2020 - 10:10pm
calvincoolridge, what's your opinion? Comment below:

We need another post like this for similarly horrible corporate/M&A clients. i.e. PepsiCo ...

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Jun 11, 2020 - 3:09am
thegreatspoofing, what's your opinion? Comment below:

This might be one of the most simultaneously insightful and entertaining WSO posts i have ever seen. SB for u sir, this was sick!

Jun 11, 2020 - 5:47am
hungaroe, what's your opinion? Comment below:

Excellent post, on may dimensions: fun to read, anecdotical of such a tx, but also Reflexion/thought-provocative.

The level of entitlement is beyond description. Haven't had much direct interaction with APO, so I can't contribute. In my experience, some of the most down-to-earth (purposely did not use humble), open, value-adding -and perhaps humane- people I have professionally dealt with, have been the most successful. Most of them entrepreneurs, founders of vast companies in their respective countries/industries. Massive amounts of own money, self made (if money is the measure), with tons of interests economic, charitable, intellectual etc. People with a high degree of self-awareness, self reflection, critical thinking, deep curiosity, insightful views, but also respect and class. Sure, business oriented and very much aware of the value of each minute of their time. There are many fools that think of themselves highly beyond description, acting like kings and behaving link despots. Unfortunately many in our industry. Just for many of them to find out, that they are just another brick on the wall or hamster in the wheel of life. Look at your MD, a BSD eating his tongue when dealing with such "business partners". For sure, the big kings of the MF will also have their own experiences. The latest, when you are dealing with a situation out of your (supposed) control such as a illness, to find out how empty and delusional this behaviour is. Money or power can help in many situations, not always. Having power and money (in the PE case trusted money from LPs) obligues more from character and values that many people have, assume or act accordingly.

Thank you for your story @10x Leveraged and keep more of these war stories coming!

Jun 11, 2020 - 9:49am
notandy, what's your opinion? Comment below:

Incredible writeup - never seen such a detailed account of the dynamics between lender and sponsors, as well as the internal approval process. Great job OP.

Jun 11, 2020 - 3:12pm
TheBuellerBanker, what's your opinion? Comment below:

Very myopic view of the dynamic. Very untrue

  • 1
Jun 11, 2020 - 6:57pm
Pizz, what's your opinion? Comment below:

" MD takes a deep breath and blankly stares at his computer screen for a few minutes. It's humbling even for myself, to see a grown man literally get yelled at and belitted like that. I had initially viewed Investment Banking MDs as these BSDs on top of the finance food chain, but here I see for the first time that MD's are human beings just like the rest of us, and while we (analysts) complain about getting shit on by senior bankers, they too get shit on by clients and upper management internally."

Jesus. Christ.

Jun 12, 2020 - 12:50pm
cap182375, what's your opinion? Comment below:

Curious - whats the reaction of the syndicate when something like this happens? I assume its some mix of BB's, large regionals, etc. and then obviously their underlying debt investors. They're obviously not privy to all the internal approvals at your bank, but aren't they aware to some extent of how aggressive Apollo is and how the deal is kind of risky?

Jun 13, 2020 - 12:26am
baguette et vin, what's your opinion? Comment below:
10x Leveraged:
Not my problem, we already collected our U/W fees and the risk is off our balance sheet.

Great read. Can you expand on how exactly that the risk the taken out of the BS? Thanks.

Jun 13, 2020 - 4:12pm
Shaynepunim, what's your opinion? Comment below:

Wow, that is a tough story.
I worked with Apollo on a small deal many (many) years ago, and while they were a bit superior, we surely didn't have such experience. There were some really smart junior bankers on their side. and I learned some cool Excel tricks from their model. I was DCM and we only prepared more simplified debt projection/coverage/covenant coverage models.

That's something I really disdain about the business, tho, the veiled threats, the condescension. I guess ---- -swinging is part of the game in IB, but honestly I find it juvenile and showing someone who has no self-control. If you can only get your point through by demeaning and berating someone, that's weak. Weak, Apollo-man, weak! ; )

I was lucky to always work with straight-talking yet dignified guys. They got hot under the collar, but never raised voices or threatened, and we did just fine -

Jun 14, 2020 - 7:44pm
TheBuellerBanker, what's your opinion? Comment below:

Depends on the audience lol with LPs / management teams and the likes then yes. But in front of advisors or juniors a lot of VPs, Principals and Partners can turn into unpleasant twats

  • 1
Jun 16, 2020 - 12:30pm
Shaynepunim, what's your opinion? Comment below:

This was early in my banking career, a while (!) back...I'd never seen a circuit breaker in a model. They also had an unusual data validation methodology (apologies I can't recall the exactly) for running alternative scenarios. Anyhow, once I learned them I remember incorporating them into my models going forwards. I feel like the advanced use of Excel (in addition to the many updates over the years) is much more pervasively known by junior professionals in general. I'm quite sure anything I saw then that was newer to me you already know!

I'm a return-to-work professional having been home for years raising children, and when I returned I learned sooooo much. I had several "millennial mentors" who helped an ol' dawg learn many new tricks. I absolutely love Excel and PPT wizardry.

WSPrep has super Excel and PPT courses, and they are inexpensive - my firm had paid for them, but I know there's a discount if you purchase through WSO - even my "mentors" who were little Excel gurus found useful information. I like courses like that because once you have access, you do indefinitely (as far as I'm aware), so it's awesome for a quick reference when you forget something. Of course, there's always 'just Google it' too.

Anyhow, times when I was able to teach a college student intern at my firm an Excel trick, I felt very good about the progress I'd made in upgrading/updating my skills-

Jun 15, 2020 - 9:52am
luketr, what's your opinion? Comment below:

Good read!


  • 1
  • Associate 2 in PE - LBOs
Jun 17, 2020 - 6:47am

As the same guy who posted on the other apo thread as an associate who is currently here, I will say that you hit the nail on the head. People here run and get off on the name. Seniors honestly get away with a lot more here than they would at a smaller fund, but that's pretty apparent by now it seems. But I will say, you think the bankers are treated poorly? You should see how legal counsel is spoken to lmao. Inhumane at times, especially to Counsel or Junior Partners ie. those who aren't critical to the relationship with the firm. Also to corroborate the above, Paul Weiss is retained counsel on everything just for the record

  • 4
Jun 18, 2020 - 4:01pm
earlysummer, what's your opinion? Comment below:

Out of curiosity, why is the legal counsel treated worse than the bankers (assuming that's what you saw)? Is it because some of the issues brought up by the legal counsel are not really deemed to be "commercial" or material enough? Also, are the Paul Weiss guys generally competent? (as in, are they an actual value-add to the deal?)

Sep 10, 2020 - 9:57pm
JBK, what's your opinion? Comment below:

I'd imagine it's for the same reasons as the lev fin bankers are treated badly. Except counsel is almost a commodity at this point. If Paul Weiss isn't gonna take it, Dentons or whoever else will for $1k+ an hr. You can run out of bulge bracket banks w/ the balance sheet to do the deal, but you will never run out of lawyers who will probably tune you out when you're on a rampage and still bill you afterwards. 

  • Associate 2 in PE - Other
Jun 23, 2021 - 1:29pm

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Jul 13, 2021 - 11:26am
Anonymous244729, what's your opinion? Comment below:

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Jul 13, 2021 - 11:34am
PainterDry, what's your opinion? Comment below:

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Jan 21, 2022 - 9:49am
Yoooooo, what's your opinion? Comment below:

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