Everything is Hard and No One Has Sympathy
Early in my career I was chatting with my boss about a prospective deal and I said something along the lines of “we’ll get this one signed up quickly, sell off one part, renovate and re-lease this part, sell the asset and crush it”. I was banking the returns we would make before we even had the deal under LOI. My boss laughed at me and said “This is hard. Everything is hard. Getting a deal across the finish line, no matter how simple the deal, is hell.”
At the time I shook this off — we were working at a multi-billion dollar investment firm with the best lawyers, accountants, tax consultants, and third party diligence providers available. When we were working on a live deal our job was to take these disparate threads, pull them together to analyze all facets of the deal, and then decide whether or not the deal’s risk/reward profile was a fit for the fund. Another way to look at it was that we didn’t do a lot of the “stuff” that actually got the deal done and in my perch at the firm we were somewhat insulated from the hard work it took to close a deal.
Now that I’m on my own I have a much better understanding of what my boss meant. I’m working on closing two lives deals in the next two weeks, and during the two months of diligence there have been a veritable cornucopia of problems that I’ve had to troubleshoot. The interesting thing is that none of them are related to the actual investment analysis I performed when underwriting the deal, they all involve either legal, lender, or insurance diligence. When you read about investing, most of it is focused on how hard the actual investment analysis that leads to an investment decision is. They aren’t wrong, it is incredibly difficult and you often don’t know whether you were right for several years. But when you’re closing a deal every single piece of it from the legal, insurance, and lender aspects is incredibly difficult. Those ancillary parts of the deal are just as important and just has hard as making the investment decision itself.
