Leveraged buyout

I had a little experience because in between my years at business school, I worked for Citibank in their asset-based lending area.

So I learned about asset-based financings for receivables, for inventory, and the earliest of days of bootstrap LBO people.

You know, I was one of the only ones who had that kind of experience.

So when we started to get a few assignments in this, you know, I was chosen to get involved with it, which was, you know, which to me was very interesting.

You know, I would say that I got assigned very quickly to, you know, we were progressing fast into the

LBO world back then.

It wasn't called private equity.

I ended up being assigned to getting involved with a fair amount of media transactions.

Now, to put the early green shoots of infrastructure institutional investing into perspective, you might remember, if you've been listening to the show, that the first VC investment, Fairchild Semiconductor, was nineteen fifty-seven.

The first private equity LBO deal, Orcan Pest Control, we put at nineteen sixty-four.

The first sub-investment grade non-bank credit, of course, came through Michael Milken's innovations in the late seventies.

So infrastructure, as a result, may be the oldest investment in human history, but it is a very new institutional asset class by comparison.

We've created a custom charting experience, better citations, an SEC filing viewer, and much more." Sundeep Srivastava writes, "It's not a general chatbot with a finance skin.

It's aimed squarely at what junior investment bankers spend their weeks doing: company research and equity analysis, LBO modeling and buyer screening, pitch books and client decks formatted to the firm's own templates." Now, as you might expect, this is opening up some questions about whether those junior associates are going to be replaced.

But I think it's important to note that it's not particularly realistic to think that high-level bankers are going to be making their own models and slide decks just because the agents have gotten much better at that core work.

There's still questions of accountability, iteration, and all these things which more senior level bankers are not gonna wanna do.

I'll give you one statistic.

So you look at '21, '22, about two to three hundred billion in LBO software transactions happened with over two hundred billion in debt taken out.

The average valuation for the software deals were twenty-five to thirty-two times EBITDA.

Those companies today are worth probably half that.

We have a dedicated financial services team.

And what that allows you to do is it makes you better, makes you smarter on the LBO financings that you're doing, but it also puts you into the room, um, going direct to company with CEOs, with really differentiated industry knowledge.

So when you step into the room, you're not learning about a company.

You're sort of already well kind of steeped in the vernacular that comes with some of these more specialized industries.

I think that over time has continued to drive our outperformance.

I don't know if it's necessarily new entrants, but certainly folks that don't have those advantages, i.e. are smaller or less diverse in terms of what they're able to source.

There is adverse selection, whether it's an LBO financing.

If you're a private equity firm that's trying to raise, you know, a billion dollars to go do a deal, you don't call 25 people.

And what happened post-Nabisco is bondholders learned.

They learned in what way? They started putting special clauses into bonds to protect themselves against LBO-like activities, the same kind of activities that made Nabisco bondholders worse off.

So bonds became puttable, which meant that if you did an LBO, those bondholders could take those bonds back to the company, put them back to the company, and get their face value back.

If you lie to financial markets, we know what happens.