Random War Story
I had a PTSD episode writing this
*the below story happened to yours truly a couple years ago*
It was 7pm on a Friday, and I really wanted to go home. Or at least do work that doesn’t require brainpower. Spreading financials and mundane portfolio work can actually be a nice breather from digging in and presenting data in a salient manner that says in bright flashing letters “this company fucking rocks despite the disgusting EBITDA adjustments and other questionable traits it has.” For real though, after cutting up a data cube for a couple hours straight, my brain feels like it has insufficient amounts of oxygen flowing through it and my ability to do mental math is reduced to a 3rd grade level.
But instead, this late Thursday call required maximum brainpower. We had taken a deal up to IC the day before, and got absolutely shit on. They asked a bunch of detailed “gotcha” questions and I swear you could see the drool falling out of my mouth when I tried to answer. We were caught flatfooted and looked like oafs.
Typically in these instances, you can comb through the data room, deliberate with the sponsor and come to the exact conclusion that IC needs in order to green light your deal. But here, we were pressed for time and we weren’t going to get any better information. So after our public shaming at IC, we retreated back to our underwriting cave, defeated, and tried to reload the clip with new ammo to get this fucking nightmare deal approved.
We needed to slice and dice the shitty data we already had in order to make it look good, or as the infamous banker line goes “put lipstick on a pig.” The problem was the cat was already out of the bag and IC had already seen the questionable trends we laid out in front of them, so if you tried to re-arrange the numbers to look a different way, they are going to make you tie everything back to what you already showed them.
So we do our best to get our shit together and threw a couple pages together to explain some of these trends (which mainly related to working capital, billing cycles, and contractual nature of organic growth.) While all of the IC members hated our guts on this deal, one boomer curmudgeon stood out as the biggest opp. So we decided before we could heard all the cats of IC, we needed to isolate the raging bull and tranquilize it. Which is why we had this 7pm call. Another important note: this was the only deal standing between me and a vacation. I was so close to the mountains, yet so far away. Sure we got chewed out earlier, but we did some extra work and in a smaller setting should be able to explain this quickly and move on with our life. Maybe we’ll even get approval via email!
This optimistic thinking quickly turned into a stark reality. We get on the call with the raging bull IC member and give a little preamble of our recent findings before asking what questions he has for us. I kid you not, the line goes dead quiet for 15 straight seconds. This dude literally assassinated me with his silence. An absolutely legendary pause. Doesn’t sound that long, but count to 15 right now and you will realize how disrespectful this man was lmao. This was me stewing around uncomfortably during it:
He finally goes “so……….…uhh…………...still doesn’t look great.”
Awesome. Great start. We then explain again in a very logical fashion what is going on and why. While the trend wasn’t great, it was fairly explainable and not something you would ever kill a deal over.
“I see what you’re trying to say, I just don’t believe you. I haven’t had time to read any of this, but I don’t think this is right.”
??? the fucked up part here is the genuine disconnect. I don’t know what he’s not understanding. He is super smart and shrewd, so maybe we’re really missing something. But these vague ass responses aren’t helping figure out what that is, and he literally just said he didn’t even read any of it (we had sent it to him 5 hours before, which I think is plenty of time) so its hard to respect his take. So we explain again our point again.
“Hmm. But what about this EBITDA adjustment? I didn’t even notice this earlier. Is this really going to roll off in the next few quarters?”
This is when I realized we were fucked and my vacation was going to have to wait. He gave us no indication that we answered the main question he had, and instead decided he was going to dig deeper and deeper. From this point on, he jumped around to everything he hated on the deal, becoming increasingly dissatisfied with every answer. We tried to tranquilize the bull and got the horns.
At the end he goes “so what’s the point of this call? Are you guys honestly trying to get my approval with this junk?” and we sheepishly go “uhhh. Yes.” And he laughs and responds “get deeper in the numbers and come back. Appreciate the work, but it’s game over on this one guys and you lost this round.”
A live look at me after hanging up.
We ended up getting the approval, but the story just goes to show how stressful and hopeless this job can feel at some points. A lot of high finance is just figuring out what people smarter and more important than you are going to question you on.
