"The Pulse" --#83 / Our 2024 Wins & Losses

Recruiting Timeline:

Banking:

Where We’re At:

• SA 2026: Ducera Partners and Javelin Capital opened their summer 2026 apps. 26 firms are actively recruiting for summer 2026 positions. We got detail that early January is poised to be a huge month for app openings 

New SA 2026 Applications:

• Ducera: Rx-focused boutique (SA 2026)

• Javelin Capital: Boutique focused on sustainable banking (SA 2026)

See below to gain access to our premium database, updated weekly, which houses the application processes for over 300+ banks/consulting/buyside firms! Gain an edge over everyone else by not having to spend countless hours tracking applications and deadlines.

Consulting:

Where We’re At:

• 55 SA 2025 applications have been released along with 62 FT 2025 apps. This process is mostly complete.

• 2026 Recruiting has started but is in the very early days. There are 2 open applications–we don’t expect additional apps to open for a few months.

SA 2025 released apps:

• Attain Partners - Consulting intern (SA 2025)

FT 2025 released apps:

• None

SA 2026 released apps:

• None

Apply ASAP if you’re interested!

Buyside:

Where We’re At:

• SA 2026: Investure and Temasek announced their SA 2026 applications. Currently 19 buyside firms are recruiting for SA 2026 seats 

New SA 2026 released apps:

• Investure: Charlottesville, VA based asset manager (SA 2026)

• Temasek: Investment intern, Singapore-based asset manager (SA 2026)

The database is updated weekly and contains 300+ Investment Banking and Consulting internships/full-time positions along with:

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• Interview prep material

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• Insider information about the application process

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• Buyside deadlines, interview prep, and people to network with for the sweatiest of students

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Market Update:

Our 2024 Wins & Losses

We don’t do that much predicting in our market updates, but wanted to share our results for the predictions we did make:

Wins:

• “Lenders will take the keys of more PE-owned businesses given the higher rate environment”—HH #15, 8/23/2023

• “Amend and extend will be the story of 2025” —"The Pulse" -- #24, 11/13/2023

• “Rate cuts of 75-100bps in 2H24” —"The Pulse" --#28, 12/11/2023

• “2024 deal flow will rebound” —"The Pulse" --#32, 1/8/2024

• “The unemployment rate closer to 4.5% and inflation closer to 2% will lead to a cut”—"The Pulse" --#46, 4/14/2024

Losses:

• “Likely to see ~300-400 IPOs in 2024” —"The Pulse" --#31, 12/31/2023

• “40% of CLOs exiting their end-of-reinvestment period will lead to far less liquidity in the leveraged loan market”— HH #17, 9/25/2023

Wins Commentary

The way this is going to work is that I will list the name of the publication and the date, then discuss why our prediction panned out.

HH #15, 8/23/2023:

Lmao this was from way back when The Pulse was named ‘HoosHelpers.’ Ifykyk.

In this piece, we predicted that 2024 would be a year where lenders took control of businesses from private equity sponsors, specifically through restructuring processes. In 2024, this happened a bunch across cases such as: Pluralsight, Wellpath Group, and ATD Holdings. Notable sponsors such as Vista Equity, Ares, HIG, and TPG took some sizable losses here. When lenders take the keys (own the business) this is called ‘equitizing’ your debt. So, listen up if you’re interested in Rx.

There were 3 underlying legs to the stool in this prediction:

1. Higher interest rates would lead to many more restructuring processes which inevitably leads to an uptick in lender ownership

2. Lenders would take advantage of limited liquidity, distressed situations to pile against PE sponsors who abused cov-lite docs and leaned on low rates for business performance

3. Some PE sponsors would be dealing with too many leaky ships to save those sinking the fastest

Look, all 3 legs of this thesis played out. If rates jump 500bps from near 0 within 1.5 years, you can bet that some companies will feel stress. There wasn’t a single PE shop on the planet baking in 9% inflation or 5% base rates into their models back in 2020 / 2021. Back then, the ‘downside’ case was probably like 2-3% base rates, maybe 5% inflation.

In loan-dominated LBOs, with 65%+ LTVs it can be very difficult to service a 500bps jump in debt expense.

"The Pulse" -- #24, 11/13/2023

In this article, we went deep on private credit vs. banking. Within this piece, we went down a rabbit hole discussing the tailwinds behind greater amend and extend volume in 2025. So, not directly a 2024 prediction, but the trends have certainly been moving in the right direction.

Amend and extend is where a lender and a borrower discuss options to change credit agreement language in exchange for extending the maturity of the underlying credit. Once again, we come back to sponsor-backed LBOs underwritten in the low-rate environment. For all companies that aren’t complete garbage, lenders are usually incentivized to work with borrowers and sponsors to amend documents to avoid drawing a company into default.

Lenders aren’t usually in the business of owning another company.

A default is almost always an immediate hit to a company’s value and may accelerate a bankruptcy process. What we saw in 2024, was a wave of liability management exchanges (LMEs) which often involved a lender reworking old docs to avoid calling default on a business facing refinancing risk or interest rate risk. The influx of new credit, lenders’ reluctance to call defaults, and the opportunity to renegotiate contracts for some stronger provisions were all reasons why amend and extend activity kicked up higher in 2024.

Oh, btw there was also an enormous maturity wall in 2025 and 2026 at the time of writing this piece. So once again, the shear uptick in volume of renewal activity supported greater A&E activity.

"The Pulse" --#28, 12/11/2023

In this piece, we covered our rationale for why the FED was going to cut rates in 2024—specifically 75-100bps in 2H24. This is my proudest prediction of the 2024 season because we were right on the money!

At the time of writing, there was speculation of cuts in 2024, but the big brains out there were all over the place regarding their quantum and timing of cuts. Guys like Torsten Slok (Chief of Economist of Apollo) were calling for 0 cuts in 2024. Meanwhile, December 2023 futures markets were calling for 6 cuts throughout 2024.

We leaned right in the middle at 3-4 cuts mostly on the rationale that a). this is a transparent FED and b). they weren’t going to cut as quickly as they hiked to avoid re-triggering inflation. We wrote about other shit in this piece too, so check it out if you’re interested.

"The Pulse" --#32, 1/8/2024

In this piece, we chopped it up about 2024 deal flow. Yes, there will be a piece about our 2025 deal flow prediction so stay tuned.

Anyways, we presented our rationale that a). a strong consumer, b). locked up markets, and c). imminent rate cuts would yield a rebound in deal volume throughout 2024.

We were right. M&A, IPOs, LBOs, and credit issuance all ticked up from shit levels in 2023.

Credit markets in particular boomed in 2024. The big takeaway here is that whenever you have a cataclysmic shift in rates, there will be more work coming across your desk.

"The Pulse" --#46, 4/14/2024

In this piece, we covered the two necessary ingredients needed to push the FED for making their first cut. 5 months later, those ingredients came to light and the FED made their first 50bps cut in September of 2024.

Our ingredients: a). inflation closer to 2% and b). the unemployment rate inching closer to 4.5%.

From July to August, the PCE ticked down from 2.5% to 2.2%—significant improvement from 9% two years prior. Also, the unemployment rate shot up to 4.3% in July (triggering the SAHM rule) and only skated to 4.2% in August.

Leveraging this new information and probably leaning on some recency bias, the FED made their cut in September. So, the reason this wasn’t an L for us is because we said inflation CLOSER to 2% and unemployment CLOSER to 4.5% would yield a cut. We didn’t make any specific numerical projections because that’s not overly important.

(I would have thrown heavily on Kalshi or Polymarket for a first cut bet in September, but compliance replied to me ‘what’s Kalshi?’ So I knew that wasn’t going to fly…smh).

Losses Commentary

We didn’t take too many Ls in 2024 because we don’t really make too many predictions. So the ones we do make are often bets where we have really deep conviction. You know, to avoid looking like a dumbass.

"The Pulse" --#31, 12/31/2023 

We made the definitive and incorrect prediction that the resurgence in 2024 capital markets activity would yield ~200-300 IPOs. So far, there have only been 220. Crossing my fingers for like 80 more IPOs before the new year, but I think a few analysts would die if that happened…bad optics these days.

Why we were wrong: a). companies love their privacy today and b). 2024 was more of a creditor’s market than an equity market.

Companies want to stay private because there is a shit ton of private capital available comparative to years past and going public is expensive.

The economy started stabilizing in 2024, companies don’t go public without being 100% sure that now is the right time. After all, you can only IPO once.

 HH #17, 9/25/2023

This was a terrible prediction. We essentially claimed that the end of reinvestment period for 40% of CLOs would lead to a material drawdown in leveraged credit liquidity.

Terrible. Think I over-indexed to 1-2 articles crying wolf on this topic and just ran with it because it sounded technical and interesting.

2024 was the year of capital inflow into credit markets. Yes, CLOs do purchase a lot of debt but there was so much new money coming into credit that it really didn’t matter if a few CLOs were technically ending their ability to reinvest funds.

If there is money to be made, capital allocators will make sure to deploy capital—despite whatever current language there is in their fund docs.

I’m going to give myself like a 8/10 for calling shots in 2024. Until next year…..

Disclosure: Nothing written here is financial advice or should be used for investment decisions.

🔥 Technical Thursday 🔥 --M&A Financing

If you're sweating for banking interviews right now, you won't want to miss this week's technical.

Problem: Company A has a PE multiple of 21.0x. Company B has a PE multiple of 19.0x. If Company A acquires Company B, is it accretive or dilutive?

Acquisition financing problems, ie 'Merger Math' can be tricky. These were my least favorite questions when I was recruiting. In fact, they're one of the top reasons candidates get bodied in interviews.

However, you need to think about what these problems are really asking——

It all boils down to the cost of capital--WACC! ✅ 

For the above problem, it's two-fold.

First, you need to ask 'how is the transaction financed?' ✅ 

With that information, you can proceed with calculating the answer using the procedure below:

1. (1/PE of Company A x % of equity in capital structure) + (cost of debt x (1- tax rate) x % of debt in capital structure) = WACC ✅ 

1/PE is an earnings yield--a short cut for cost of equity 

2. Take 1/WACC --this is the earnings multiple of Company A when considering all capital structure components ✅

3. If 1/WACC > PE of Company B, the transaction is accretive. If 1/WACC < PE of Company B, the transaction is dilutive ✅ 

If you can buy a business that costs less per eps than investing in your own business, it is usually accretive. You just bought additional earnings power for the cheap!

Going Forward:

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“The Pulse” #83