Smartest thing you've seen a rainmaker do to get a deal through
As the title suggests, has anyone heard of or witnessed something in a particular pitch that stood out to you.
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Out of college I was working in acquisitions at a distressed debt shop. As part of a portfolio, I was allowed to underwrite and bid on one of the loans with little oversight. I won the deal.
It was a $4mm deficiency judgement that had established a writ of attachment on the guys personal residence. The writ was worth $600k. We won the loan at $200k. The overall portfolio was a $80mm purchase price — they were throwing me a deal to cut my teeth with.
Fast forward and I quickly learned what a homestead exemption was. Bottom line: the writ was worthless; I just had a claim in C7 bankruptcy.
A year later, the guy was in chapter 7 bk and had settled all debts but ours. Through the grapevine, Charlie Munger was a friend and was helping him settle debts. Never verified.
I had become good friends with the founder of our company, a 70 year old guy who had been very successful in the business. He took the time to help me work this out.
I’ll never forget him on a call with the borrower. The borrower offered $400k to settle. He paused for a bit. And said that with the network he has heard about, he would rather hold out and see what happens through the full chapter 7. There were multiple entities on the hook — including celebrity affiliates.
They guy called back a few days later and settled for $2.5mm. I would have taken the $400k, which, at our cost of capital would have broken even.
That fund went on to due an unlevered 1.9x and 66% IRR. Levered it was 9x. Good thing I had a few bps of carried interest.