Not the first in your career, the first one you could really call yours, where you first made your bones. The one where you led your first LOI negotiation, where you were the client's first call not someone above you, your first tussle with the IC. You know the one I'm talking about.
Buyside, sellside, hell even your first trade, all war stories welcome, no names if preferred. Young'uns, feel free to chime in as well.
I'll kick off. Emerging markets ISP taking a pre-IPO round from a DC based fund. Being middleman to client C-suite delusional on value, local regulations that are barely an update from the British colonial days and a young hotshot principal on the buyside looking to make his mark gave me the greys. But holy shit was that fun, totally made me a deal junkie.
I'm trying to switch things up from all the recruiting / interview / prestige posts. Senior(ish) monkeys, I know a lot of you feel the same, come be a part of the solution and engage. Reminisce and share your wisdom.
A bag of chips for a cookie in 4th grade
Small sellside ($200 - $400 MM) working on a very lean team where it wasn't top priority for other deal team members (busy on other bigger and 'better' deals). Gave me the opportunity to step up and build/run model, drive materials and be point man for contact with client. Led to a lot of stressful late nights but ultimately forced me to learn how to model quickly and 'own' the execution of a mandate.
Being 'the guy' on a file made me realize a part of the job I never appreciated, it's an amazing feeling being the one person a deal team looks to for answers and have them trust you directly with autonomy to run something of that scale as someone in their early 20's.
i shorted 1mm 30yr bonds..they ticked up 3 ticks and i sold 1mm more...up another few ticks and i sold 5mm more..up a few more ticks and i sold another 5mm....this repeated until bonds were up a full point (32 ticks) and i was down about $50k...at which point my senior looked over my shoulder and said "what are you doing?...you can't just drop 50k like that! i still need to work!!"
that was my first day as a trader at a bank...i had no clue what i was doing...nobody had trained me...i had not been told my risk limits...nothing.
i went outside and puked on the sidewalk.
How did no one train you? Did you Mike Ross your way in there?
My first originated deal: In an area contiguous with my firm's traditional practice area, but in a more "niche" end market. Deal was on the smaller side for my firm. I had spent a year calling literally hundreds of companies in my "spare time". Many were way too small, or profiles no one would touch. Found a gem asset. Had enough industry knowledge and deal chops under my belt to sound credible to the client.
Got them to hire me: Negotiated engagement letter, brought it through my EC, got it signed, and then I kicked off the deal. Because it was a smaller deal, got very limited resources. Did buyer outreach to our traditional counter parties as well as new names that the firm had never seen before. Deal nearly died a thousand times. Smaller deals are harder - the diligence is much more intense, and there is no "wiggle room" on value. Every f'n penny counts. Everything from LOI and NWC negotiation to getting all the seller interests aligned was excruciating. Got it closed. Both buyers and sellers extremely happy with the outcome.
Was paid my first MD commission. Got pats on the back from everyone at the firm (we are a boutique). Remarketed the hell out of the deal. Decent inbound activity in the space since people know I can get shit done. Bought everyone on my deal team some nice token gifts. This is why I love this job.
Brings back memories for me - not even that old yet. Two come to mind; I work in spec sits/distressed.
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1) One deal was for an emerging markets APAC commodity player in an extremely non-ESG vertical (e.g. Palm Oil). The company owned a bunch of plants but was getting destroyed by the trade war - they were unable to sell their product to the US market (there was a Chinese relationship) and the underlying currency was extremely volatile. In forbearance on all of their loans and zero resolution in sight. However, on a balance sheet basis the company was asset-positive to around US$200 - 300mm if a buyer could be found for the plants and the liens released.
It was a family owned business and the CEO, who could have not have been more lovely, just wanted out to cash out and visit her children in NYC. I’ve never seen a deal so universally shunned by the street - every single fund we spoke to refused to take a meeting on the deal after hearing about the company. Even investment banks didn’t want a free co-lead on the mandate. We took a meeting at Apollo and I think they purposely put us in a windowless room so the principal wouldn’t be embarassed for taking the meeting.
I spent 6 - 8 months of my life intricately tracking the Indonesian Palm Oil market and spending hours in Paris Baguette babysitting management in between meetings.
I left that firm after doing this deal - which never closed to my knowledge. It was a lesson in selling and what things couldn’t be sold, at any price.
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2) We owned a secured convertible in another dumpster fire of a company. There was a bank TL senior to the convertible which did not trade, and the thesis was there would be some sort of strategic roll-up or sale of the company that would take our these junior notes. They were trading a very heavily implied discount to recovery even after paying off the TL, but the company had been going sideways for a while and the notes were fairly illiquid. I had led the diligence on the company and didn’t love the deal, but it was an opportunity to make a stamp at my new firm and felt comfortable with the create.
The investment was made prior to COVID where these types of plays were alright. COVID hit and the business continued to list sideways, except all of the potential acquirors immediately stopped all M&A and focused on themselves.
Lo and behold, come fall and the company got taken out at a ridiculous valuation by a SPAC. All of the accrued interest and discount on the convert came to our favor - on a $15mm investment, we walked away with north of $175mm. I don’t think I’ll ever feel that good again - it was a once in a lifetime trade.
Much more junior than most of you taking part in this thread but I'll still give it a go - will also not post with my actual name as this is a bit sensitive and the deal could be recognised...
Interestingly my deal was a financing trade - HY / Leveraged Loans kind of deal or at least I thought so. PE client bought an asset cheap (COVID impacted, restructuring, forced seller type of situation) and did not need financing at the time. After few months/years under ownership - asset has done well, very well in fact and wants to access the capital markets to be part of the big boys and be able to have scalable capital for M&A. Overall it's a great asset - strong cash conversion, asset light, resilient sector across economic cycles, but you guessed it there is a major issue - largest customer directly and indirectly is c.40% of their sales... Not great to be a lender in there.
To cut the story short - we had to go down to direct lenders / opportunistic pools of capital and offer them a piece of that public capital at a discount through a side fee letter (I did not know this existed until I did this lol). Now as you can imagine these guys wanted to tighten the legal doc on every single aspect which the PE guys were not happy with. There was also a random offer from an Asian fund willing to take a significant portion of that capital - only issue is - they were not IC approved and as you know things take time in Asia. Do you take the risk of staying in market to get better terms from these Asian guys no one has ever done business with? Why of the opportunistic guy do you let in your capstack? Should you take more than one to push them showing them that they are in a competitive environment?
Now why I say that this is my first deal - probably because it is the first one where I felt challenged mentally (I am a junior most often we are masturbating growth rates in a model - here the question was so what do we do next? How to we give a good advice to the client at measuring the risk between each offer and ability to deliver from each party? Which one will be a long term partner over a simply opportunistic guy willing to take the money and run away as soon as they can?). Given how unique the situation was and the size of the business I had amazing exposure to the PE fund (Principal / Associate) as well as the Management team (CFO / Head of Corp Dev) - as in jumping on calls with them 1-on-1 for 30mins daily over a 3-4 months period, did not really expect this in BB IB below Senior Associate level.
Sell-side as a 2nd yr analyst (300-400m). Was a carve-out for a F500 company which was undergoing a much, much larger MOE. VP on deal was staffed on three other transactions simultaneously so he took a flier and had me go solo to the client HQ and help facilitate confirmatory DD with the PE buyer we had lined up (I had developed a good working relationship with the client leading up to this, owning the CIM / buyer outreach etc). It was basically me and the deal team for me on the first floor of this building in a war room I established with management and our counsel, and the second floor was Credit Suisse (advising on the larger merger) and they had a similar war room setup in the conference room directly above us. Things were super tricky trying to juggle the attention of the larger org's management team (who had rightfully deemed the larger merger as far more important) while trying to keep the PE buyers not too angry at the fact that an Analyst was all they had in terms of pure transactional resources. All in all the two weeks of confirmatory actually went well with the PE guys only having a few remaining questions...
...unfortunately the answers to those questions (largely having to do with TSA considerations and costs associated with the carve-out) led to the deal falling apart a month later. Alas that was when my numb indifference really came into full swing regarding the outcome of deals you've poured your heart and soul into.
One of the firm's client's was working on a bunch of deals and ran out of bandwidth for a smaller deal that was just about to go to LOI(<$250M). The MD that covered them volunteered to help out since we were working on two other deals for them at that time. That of course rolled down hill until it made it on to my desk as an Associate. I realized I was on my own with a great 2nd year Analyst after the kickoff call when the MD promptly handed it to his Director and the Director told me not to waste his time with it. "Just don't fuck it up" was his guidance. It got worse after meeting the legal team and the only one that would answer emails was the Associate.
Long story short, the Analyst, legal Associate and I ended up doing everything. I read every single document and checked every single number out of pure fear. I learned more on that deal that any other since.
I didn't get invited to the closing dinner but did hear that the Director drank so much that he forgot the name of the company they bought and also knocked over a bottle of wine the Group President ordered to celebrate. He was also the guy that shit his pants when he went out with us for karaoke one time. I think he had a problem.