Wrong to think this is disrespectful?

Been seeing this tick up a bit recently: after a pitch, management presentation, model calls and multiple DD sessions/catch-ups, a potential sponsor buyer will either ghost or send a 1st year associate to deliver the "we're not interested" call to the IB MD. Generally this person has zero idea why it was turned down and sticks to platitudes like "too early." 


I don't fault the associate and I would never fault a firm for declining to invest, but I do think sending a 1st year to decline is a bit rude after the bank has bent over backwards to facilitate diligence. Like, obviously if you're a known entity with money, we're going to include you on our outreach going forward, but these funds that are leaving this bad taste post-interaction are almost never gonna be the first call going forward. 


These aren't the rainmaker MDs or IB VPs, but they are early in their career. I get it - we're the bank and this is client service and we are the lowest rung on the totem, but has the market become so saturated with opportunity that PE just dgaf about personal relationships? Seems like such an easy call to make as a PE VP/Principal that would pay dividends and we're just not seeing it. 


Feel free to flame me/call me a loser, but wanted to see what others think

 
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My experience has been getting the call with with the "why" if I've built rapport with the deal lead or have a pre-existing relationship.

If its not a warm relationship, I get the vague "thanks but no thanks" call you describe, and I always try to reconnect and understand the concerns. It's really important to have quality feedback for the client and get ahead of the issues in case someone else may come across them.

On the rare occasion, sometimes there is additional info or an angle that's been missed and the feedback call can be an opportunity to alleviate concerns and keep them in the mix.

The ones who refuse to give any feedback I just assume they're looking at a lot of different things and have no bandwidth or resources to dedicate to mine.

 

Nah depending on how far the deal progressed / how involved the sponsor was, the pass should be communicated by the (senior) BD person or a (senior) member of the deal team working on it, with a few tangible points of feedback to pass along to the client (e.g., couldn't get comfortable with the end-markets, don't like where the macro environment is heading in the sector, etc.).

Radio silence or sending a first year to give a generic "we don't have an angle" is bad form IMO.   

 

In your post you just said you’re going to continue reaching out to the sponsor for future deals, so why would they change their behavior if they don’t feel like wasting time telling you they pass?

Also, why do you care as an analyst / associate if you’re MD gets his ego bruised?

 

Its fine for an associate to decline, but it sounds like the associate does not know how to decline a deal properly yet. If its a quick decline then there isn't a need to elaborate on the rationale outside of a high-level bullet point or two, however if you've attended a management presentation, you should be a little more professional & thoughtful in your response. If the sponsor has repeatedly done this, I'd cut them out of processes going forward as they are a waste of time.

 

Ignore my title I’m a VP at a PE firm.

Agree as a general courtesy we will try to send mid / senior folks to decline, especially for important relationships.

For relationships that are still early and on deals that will always be a no go, we will send an associate or senior associate to decline. It’s an opportunity for them to practice representing the firm and talking to bankers. Sounds like you’ve had associates that have not been properly coached, which I’d agree is the sponsors fault. 

 

I'm leaning towards giving the associate the benefit of the doubt in that he was asked to deliver the message and is still learning how to have these conversations. Giving associates rope to have these conversations is important to their development; I'm sure they'll get better with repetition. 

 

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