YouSaid · the spoken record

Jon Ballis

lines on the record: 60
first: 2022-10-24
most recent: 2022-10-24
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“It's when I react too quickly. I'm the type of person there's a problem arises I want to take care of it. I want to deal with it right now. Part of it just sort of get off my plate because I got a lot to do. But part of it is I don't want it to fester. But as I've gotten older, I've realized that sometimes it's not just okay. It's better not to deal with the problem right away. Let it sit. Let the water settle. Let emotions calm down. And then you can figure out what the right path is. My instinct to deal things right away sometimes pulls me that way.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“My first high school basketball coach, tremendous influence on me, taught me the importance of teamwork, hard work, preparation. It's all about, you play against yourself. You really can't help if the ball goes in the hoop. You can't help how good the team on the other side is, but you can control how well you play, how well you prepare. In managing Kirkland Ellis, I think about that all the time. Can't tell whether it's going to be a good deal environment, a bad deal environment. All you can do is put yourself in the best position to succeed. The second was my first mentor when I joined Sidley in Austin in 1994. He taught me how to be a professional. He taught me that the little things matter when you're talking to a client, have your shoe shined, make sure your suit is buttoned the proper way, make sure that you appear to your client to be prepared. And that actually you are prepared. Those are the people that pop in my mind all the time.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Lawyers sometimes think it's their deal instead of understanding it's their client's deal. Their lawyer's job is to provide advice, the client's job is to decide how to take that advice. Sometimes lawyers, particularly in large institutions, mix up that equation.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exercise physical activity of some sort. It is my oxygen, particularly when I'm stressed. There are many times my wife will look at me and she's like, you need to either go for a run, go work out, or do something, but you need to get out of the house. Physical activity has always been my relief.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Like Kirkland and Ellis, and large financial advisors do a large sovereign wealth fund need ultra protection to negotiate against a private equity institution? They know what they're doing, and they can hire people to understand what they are and sort of to impose regulation and private contractual ability where one party really doesn't need the protection. That seems a little inefficient in my mind.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not a lobbying organization. We don't lobby Washington to do X or to do Y. Of course, many of the law firms often participate in white papers and will come together in expressing a particular view about why regulations are needed or why, as written, this seems to apply to X and that doesn't seem to make sense. Our biggest participation, counseling our clients, is how to navigate when these regulations come to bear. The focus on regulation and the private capital space is increasing. It's particularly increasing. The latest administration. In my own view, not the view of our institution, some of it you can understand when retail investors, particularly people that are not as sophisticated in investing in these kinds of investments, you can understand why there should be regulation to make sure people really understand what they're getting into with these products. With institutions that hire law firms,”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“piece I'm curious to ask you about is regulation. The SEC touches on the public side and increasingly on the private side. There's tax issues, there's carried interest issues, there's all kinds of things that come up. How have you participated in that discussion as a firm?”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have made a conscious decision to essentially remove ourselves from the narrative on these highly politically charged issues.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Rolls, at least in every administration I know just off my head, since Bush forty one through Clinton, Bush forty three, Obama, and Trump. And now Biden. We've had people in very senior roles throughout all of them. And when they go there, they go there, when they come back, sometimes they come back. We all are on the same team. But we decided that it was best to stay apolitical, stay neutral on highly politically charged topics, which, by the way, happened not to be the core of what we do. That's not what we do as a business. We decided it's asymmetrical downside. Because if you get involved in one of these matters, you're going to alienate some part of a relevant population. And that's your employees or your clients or both because irrespective of what it is, people are all over the spectrum.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“When I started in this business, I didn't look to my employer to be the spokesperson for causes or issues. That was my personal life. Civic, charitable, things that I wanted to participate in, donate to. And today, that's not really the case. The young workforce looks to their institutions often to get involved or comment on these types of matters. So what I'd say is this. We are an apolitical organization. We have people across the country in various parts of the political spectrum, as wide as can be. Honestly, we're proud of that. We wear that as a badge of honor. We welcome people across whatever spectrum you think of, whether it's political or racial or sexual orientation. We're quite proud of that. What we care about is do you do good work for clients? That is our focus. We've had people in significant”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the last couple years, there's been more and more importance placed on social issues broadly in the investment world, the impact of private capital on businesses and on people. Given your perch, I imagine lots of these issues have come across your desk and would love to hear how you've handled some of the tricks.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Capital being allocated to this space from the retail side of things is very large, and the amount of capital in retail retirement pools across the globe dwarfs what's in the institutional space. It's one of the reasons why, again, we lean into this space. And it's one of the big investments we have made. We're investing heavily in attorneys that are experts with retail investors because we see the industry moving that way.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the market. It's one of them which I could have said when you asked earlier about the change of terms. It's really not a change of term. It's a change of flavor. And certainly the huge syndicated deals are out there, but that private credit operates at a level that it never has before. And I don't see it slowing down. And one of the reasons this bleeds into maybe other areas too, particularly real estate and eventually equity, but retail. The retail investor, high net worth investor. Previously had no access to this world. It was institutional capital. Many of the large private equity firms now have big credit, big real estate platforms where they are providing access to the retail investor. And the reason the credit appeals is that their yield producing, again, not the types of returns, but also not the type of risk a private equity.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Take those returns. First, it was some of the traditional types of people that provided capital had historically provided capital. And now it's lots and lots of people, people that you typically would associate purely with private equity that are also providing debt. It does get a little tricky for us at times because we represent mostly on the equity side and particularly in the restructuring space where oftentimes our clients are then on the credit space and we have to navigate those things. That's life in the big city, as they say. They have filled a void. The terms are different often. One thing that sponsors love about the private credit space is that their certainty. They're not syndicated. It's not one of the big banks looking to syndicate out the loan. They buy the deal. The private credit providers, they're the ones that are going to provide all of it. There's no flex on terms. You know exactly what it's going to be. It's historically been a little more expensive, but it's been a very significant change.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a great question taking a step back from it. It's the perfect example why I will bet on the private capital industry every day of the week. One is an investor I might say, small investor, but more importantly is a service provider because they find the opportunities. They find where there's a crack in the seam, where there's the soft spot, the low leg on the pool table, as they say. And they saw an opportunity, and this obviously was coming out of the great financial crisis when the regulators really cracked down on the large financial institutions as to how much leverage they could provide in many of those deals and the type of capital they had to allocate to deals. And so the private capital industry found an opportunity where they said, we could fill this gap. They found an investor base that obviously different kinds of target returns than on the equity side, but an investor base that was very willing to”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“As private credit has replaced a lot of the lending that happened on the banks. Curious what you've seen over the years in the differences and how the private credit lenders behave and what they look for compared to what the banks did in the older days.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Zero revenue for the first six months and without certainty as to when it actually would get turned on. We had a pretty good idea. I don't remember the return on it, but it was a lot closer to double digits than it was to zero. The ones that really stick in my mind are the messy ones. Sure, there are great transactions where everyone's bidding on this beautiful diamond, just bidding it up. And yeah, but the great ones are the messy or the difficult or the ugly.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because we couldn't operate this business without the supply chain that came through the prior parent and we weren't going to be able to do it on our own. So we needed to make sure that they gave us sufficient supply to get this business going. That takes a lot of time, a lot of energy, a lot of brain power from the whole team, and it ended up being a great deal. Another one that comes to mind, we bought a business. I remember thinking it was almost a joke. The business was prohibited from operating via a regulatory decree a year before we bought the business and for about six months after we bought the business. But this sponsor had a vision, first of all it saw a path and we helped give them input as to that path as to when with the regulatory issues be resolved they had a vision through their business diligence about the ability of the business to bounce back that its brand wouldn't have been harmed. We bought a business with zero”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Allow them to grow. The messy situations, I think some of the best private equity firms are the ones that really lean into the mess. A couple things come to mind. Carve out transactions, transactions where you're buying a division of a business, trying to get that business to stand on its own. Sometimes they're easy because the business was previously acquired at standalone, has its own management team, its own supply chain, and other times it's completely intertwined. It's a mess. We did a deal and this business, it was hard to even separate it, hard to even understand what it is. So the target came up with financials. It's hard to get them audited because it was very intertwined. We had 12 different agreements that we needed from the seller to allow this business to be in standalone. It took us months and months, first of all, to figure out as well as to negotiate. Some of them were transition. We need this for a year, this for two years.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Representing Antacross One of the great things about the private capital industry is that they're not afraid of risk. They are not afraid of messy situations because as we all know sometimes the messiest situations are the best investment opportunities. And that's one of the things that I do think many people get wrong when the press in Washington, a lot of people think private equity is really just financial engineering, maybe back in the 70s and early 80s where people were putting up single digit amounts of equity and borrowing 90 plus percent. Maybe there was a lot of that. Today that's not what it's about. It's about improvement, improving businesses. The best private equity firms, the ones that sustain, the ones that perform, the ones that around for a long time, they make their portfolio companies better. They make them better businesses, whether they stabilize them, better capital structures.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Too tight for you, too bad. Because by the way, if you don't do it, someone else is going to. When markets slow, so right now, for example, there's a little bit of a, I want to say a lull, things are pretty busy, but it's not like it was a year ago. And what's going on? Things are taking longer. People are taking their time. There's not as much pressure that if I don't get this done in six weeks, someone else is going to. Speed of deals might be one of the great litmus tests of how much leverage a buyer, the sponsors have versus the targets.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“So when the market's really hot, certainly in 05, 06, 07, until mid-07 and 17, 18, 19, and then after the pandemic, at least after the initial part of the pandemic, 20 and 21, deals were super hot. And what I mean by that is a target would say, all right, so this is it. It's an auction. You have X amount of days go to a client this was back in those heydays of 0506-07. I was like, you don't understand. We can't get this done in seven days. Well, I'm going to have to drink a lot of coffee because that's all we got. You see how pace of transactions is often driven by how much leverage, how much market power targets have. And they can dictate, we're going to do this in a week. We're going to do this in a month. And I'm sorry if it's a little too.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“The market power on the financing contingency clearly shifts towards the acquired targets. Now you're talking about a third party, an insurer coming in and building a business out of taking out that risk on either side. What are some of the other key things that indicate where the balance of power has shifted between companies and private equity firms?”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Has popped up. We're now the large insurance firm, they underwrite the exposure, and therefore the negotiation over these topics has gone from a ten to like a three. It's still there, but it's a lot less important. When I think about that, when it makes me old because I realize what I used to do is a lot different than what people do today, but those are two huge sea changes. A reverse termination fee if you don't get your money and rep and warranty insurance to cover those matters and indemnity matters.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Then proverbial mortgage rates go up in the interim, or the markets get choppy and the debt providers have to use flex terms and increase rate or increase the discount, the OID on it. That's a huge sea change in a ton of negotiation goes around those terms because a dollar is obviously going to get pretty big. Until 2005, there wasn't even discussed. The second one is with respect to representations and warranties. If the roof is leaking, and I sold my house to you, do I owe you money? That and the indemnity provisions. What representations are you going to give me and how much do I owe you? Or how much do I have to set aside in an escrow, for example, in case the roof leaks? Within a year or two years you negotiate how long it took, what are the reps are, how much indemnity, how much escrow, those were the core provisions of an M&A lawyer. A number of years ago, but not that many, three, four, five representation warranty insurance.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've got a mortgage contingency in my contract, and there was a debt financing condition, and if I couldn't get my money, I'd walk away. No one liked to do that. It was reputational issues, but there was no financial aspect to it. In 2005, that heyday, then the huge deals like SunGuard and HCA, big club deals, multibillion dollar deals, that shifted. And what happened is that the sellers, the targets said, no, no, no, I'm not signing up for this with a debt financing condition. If you do get your mortgage, I can force you to close. This is the part I'm really getting at. If you don't get your mortgage, it's going to cost you a pretty penny. And that's referred to in today as a reverse termination fee, a reverse breakup fee. It's become ubiquitous where if the buyer, the sponsor, can't get its debt financing, they owe a fee to the targets. Rarely does that happen, but it provides a heck of an incentive to go close on money even if again.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“First of all, I grew up as an MA attorney, not a funds attorney. So this will be a bit of a 2080, but I'll say it this way, as more and more capital has chased more and more private capital firms, the private capital firms have garnered more leverage. So they've been able to drive terms a bit more than the limited partners have over time. Now, again, everything's relative. But the general partners have had a bit more leverage. On the M&A side, it's been fascinating to see. There's a couple huge differences getting back to when I really got into this business and versus where it is today. The biggest one I'd say is with respect to debt financing. So when you do a leveraged buyout, the L of the LBO is borrowing money. Till 2005, the way deals worked is that the private equity sponsor would say, I'd love to buy your business for $100, but I'm borrowing $50. And if I can't get my mortgage,”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“With this significant growth in the private capital markets, what you've seen on the impact of both fund terms and deal terms. So why don't we start with fund terms? What have you seen in the evolution of fund terms, say, over that last 10 years of rapid growth?”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“IBM or General Motors. They don't want to see a 35 year old. All these things, they're all part of one ecosystem, so I don't want to get too hung up on the compensation. It's all part of an ecosystem where it works for what we do. And a big piece of that is that the private capital community, they promote people, they believe in younger people having the baton who are super talented. It matches how we operate, or I might say we've matched how they operate.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it is there's some natural curve, if you will, that fits with our model about giving people the ball and all that comes with that at earlier stages in their career than lots of other places. The reality is also our businesses had tremendous growth, and that also provides a lot of liquidity, if you will, to the system. It fits what we do. The reason why giving people responsibility early for the kinds of matters we handle goes back to this private equity alternative capital model. You can have a deal that there's, of course, more senior people in the background, but the person on the front lines, he or she could be 35 years old. In multi-billion dollar transactions, making big decisions. And their outstanding performers, and therefore they're comfortable with their lawyer being a similar age. Lots of kinds in the legal world that isn't the case. It's different than walking into the boardroom of the professional.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“So on the margin, it sounds like in this area of compensation, there are a couple of these vignettes, people that you're rewarding behavior above just that economic contribution. And ultimately a fixed pie, that has to leak out the other side somewhere.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“About it at our partner meeting, and I talked about how this is the kind of behavior that we reward because that's what takes the business from X to 1.5x. And yes, is there some capital investment, prepayment, if you will, associated with that? Yes. We try to reward the kind of behavior that has the team win, and the team win for the long term. We're all doing quite well. We're not trying to squeeze every last nick out of every year. What we try to do is make the institution better for the long term, more sustainable, more stable. Compensation is one of the great incentivizations for people to do the right thing if you use it properly.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, compensation is a real factor in this one. I mentioned earlier how we reward the right behavior. Give me a little vignette. We had an opportunity, a client of ours was growing like a weed, going into many different strategies, partner there who was outstanding, who, by the way, was in the prime of his career late forties, working night and day, and I just saw the numbers go up and up, the revenue and also how hard this person was working and his team was working. And I said, you need to bring in someone else. Oh, and I got a bunch of these younger people. I said, no, no, no. You need to bring someone else at least your senior. Maybe more senior. We're going to miss this opportunity. And you can see what's going on in the person's mind. Like, how is this going to impact me? And of course, I told him it wouldn't. That business grew from acts to 1.5x for us, grew really nicely, but now in theory was divided among two people instead of one person. That person who brought in the other person, his compensation went up significantly.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“The other thing you mentioned in managing this organization is the willingness to yield a stick when warranted. How have you learned to do that in such a way that you can continue to motivate people, keep them on the path and keep the culture intact?”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have to know what you're doing real quickly, but because it's not part of the daily stuff, it's not front of mind. So on our intranet, we have a module for earnouts. It's got form provisions. It has links to the cases that talk about which issues have gotten people in trouble. And then it has basically a checklist where if you're on the buy side, make sure you've covered this. If you're on the sell side, make sure you covered this. Within an hour or two, you can bring it back to your front of your brain. You can get up to speed and you can get the 80-20 real quick. Getting back to your question of how do you know who's doing what, it's these sort of systems and processes that we keep working on to try to ensure that people know what's going on in the institution. But again, not turn us into some bureaucratic kind of place.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just did in the latest deal. This is what the Delaware courts just said so that we all have it at our fingertips for when our clients call or when we're pitching new business. Another thing that we did is we built an intranet, and this helps more junior lawyers get up to speed quickly on things that they are confronted with. So the latest one that we just put up relates to earnout transactions. Earnouts aren't that common, and my own experience, they come up at 2 in the morning when you're trying to sign a deal before the market opens, the two parties decide, all right, I can't bridge that last click of value, so we're going to go with an earnout. And to craft an earnout, it's almost inevitably under high time pressure because it comes up late in the day.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Information about who's done what, as well as information substantively, what's going on. One of the things we do, we've always done it fairly well, but we've really amped it up over the last five, seven years as our growth has accelerated, is reinvesting in the way we operate. We now have 25 partners whose sole job is to make the revenue generating partners better. Those 25 partners are not client-facing. They facilitate revenue generating. They're just not client-facing. They make all of our jobs easier. They create best of class forms of documentation. So we know exactly what deal terms are being used. Every time there's a new exciting deal that comes out, every time there's a new Delaware case that comes out with what's going on, an email goes out explaining to everyone this is what XYZ”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“A great question. One of the things about our growth is how do we put in systems, processes, procedures that fit a 3,000 attorney organization, sixty five hundred personnel, which is different, by the way, than 1,000 lawyer organization, but not lose that entrepreneurial crazy spirit that got us to where we're at. The way I often say it in our meetings is we played aggressively, we played proverbally with reckless abandon on the field. We took chances, we weren't afraid to lose. That's what got us up twenty points in the fourth quarter. We have to do certain things, but you don't want to start playing conservatively. It is something I think about a lot with the job I have now, is how do we put things in place? And that's one of them. How do we disseminate information?”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“And you're not good, or you don't have the skills I thought you had. It's the exact opposite, of course. I was building a home five, six, seven years ago, and the general contractor said something we're doing here. I've done it a few times, but I want to bring in a civil engineer. I want to second opinion. I just want to make sure I'm doing it right. I thought that was wonderful. I couldn't be more grateful. Lawyers, particularly when they're younger, are sometimes mess that up, so we focus on that. The reality is, every now and then when someone doesn't do the right thing, there has to be a stick, and we're not afraid saying that. And again, to consent that right behavior, build that right culture, that team first share the ball culture.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Going back to how we compensate people because the old adage is true. Your compensation system. Because we don't have a commission eat what you kill kind of system. If you're working on a transaction or a restructuring mat or a litigation matter and there's someone down the hall or across the country who's just done that and is better qualified to do it, you better bring that person in to run that matter. When a person brings in someone else and gives the other person the shot, we reward that with compensation. We talk about it. We parade it around because we want to incent people to do that because that's what clients want. They want us to bring the best resources to bear irrespective of who it is. And a lot of young lawyers, they think that if you tell a client, I could do this for you, but my partner down the hall, she's the best at this. She's the best we have when the best in the country. I'm going to bring her in to run this for you. And I'll be there as well. A lot of times lawyers think that their client will think”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Comment on one thing you said. I'm not sure you get the most out of people by compensation. Yes, there's a carrot, but my own view is it's a thin carrot. Culture is very important, going back to the sports analogy attracting and retaining the talent is key in compensation is a piece of it, but then you have to create the right locker room. It's my job these days I view myself in many ways like a coach, and you have to create a system and a locker room where you attract great talent and they're willing again to keep with the metaphor, share the ball, ensure that you're focused on the team winning as opposed to what shows up on the box score, and doing the right little things for long-term success and in our business that's the highest quality and capturing growth opportunities. So we talk a lot about culture. We talk a lot about sharing the ball, doing the right things. And what I mean by that is getting the right people for the right opportunities.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“The third area you talked about in talent is getting the most out of the people and certainly compensation is part of that. But I'd love to hear how you thought about the culture of the organization and the non-economic aspects of getting the most out of the people on your team.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“long-term views and look when you're younger it's often how you're investing in people in potential you might say it that way when you're older and the higher compensation levels that gets into more focused economic contributions we have tax people who in a traditional sense you might say generate no business they help on deals but they're some of our highest paid people why because we can't do what we do without their skill set”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Great question. So let me take a step back. We are not a commission-based system or a sometimes people describe it, eat what you kill system. We all share from one trough and we all have partnership points. Those points are reallocated every two years. We don't have bonuses. We don't have cash compensation. Everyone just gets distributed on their partnership units. And obviously, while we are religious to merit-based, we also don't gyrate up and down people's lives and things like that. So we take long views on these things. If there's a down market in restructuring, for example, it's not like the restructuring business doesn't get paid well that year. If we believe in that business, which we do in spades, by the way, and it actually is, for better or worse, depending on which lens you're looking at it, coming back quite significantly right now in many ways, with higher interest rates and people worried about lower growth, recessionary environment, we really try to take”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“So you have that vector of where someone is at the stage of their career and producing and getting paid. There's another when you get into areas of expertise. So you mentioned earlier restructuring, okay, there hasn't been a lot of restructuring. How do you think about compensating the people that that year their particular area of expertise that you want on the team for the long term, there just isn't that much happening that year?”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“You got to compensate them well enough where they're ready to do that and ready to do other things. We've been fortunate that our business has been profitable enough where we can do that and keep that virtuous circle. But it is real. If you can't do that, the reality is you're going to lose top talent.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“Ensuring that our younger superstars are compensated properly, the way to do that is we don't have a lot of people in their 60s, let alone 70s, stay around our firm, particularly on the private equity side. Litigation can be a little different, but certainly in the private equity, private capital side, that's fairly atypical for law firms. But we think it is the only way to recycle those opportunities and the related compensation to the younger people coming up. And honestly, that's how we attract a lot of people who are in their late 30s, early 40s, who feel like I'm ready for more, but I'm still sitting at the kids' table and am getting frustrated. Now, in order to do that, you have to be able to compensate people at a way where it's okay. They understand the deal is in their mid to late 50s, they start winding down. And so it's a bit of a virtuous cycle.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“We are religiously merit based with our compensation. Many in your audience might be scratching their head and say no blank, Sherlock, of course your merit base. How else would you compensate people? But the truth is the legal industry for many years compensated people based on seniority called lockstep, which was how many years you were a partner depended on how many partnership units you had, and that was what your compensation was based upon. Kirkland has never done it that way. And we are religiously the opposite. As we say, we call balls and strikes. It's pure business. It's not personal. But we compensate the people who we feel contribute the most to the institution, and that's how we divide up the so-called pie. One of the difficult things with compensation at a law firm is that the more senior people get, they often stay around, and we're very careful about”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, once you've brought these people on the team that do fit, you mentioned you have to compensate them, and you're in a competitive industry. How have you thought about compensation relative to the other alternatives that someone on your team would have?”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a lot easier with a lateral who's been practicing for five, six, seven, eight years or 15 or 20 years, and it is my kids who are in college hate when I say kids, and particularly when their kids in law school, but at my age, I'll say kids, 23, 24-year-old. It's a lot more difficult to figure it out. That said, there is a vibe of someone who is willing to get their hands dirty, not be afraid to make mistakes. People that have scrapped their way, scrappy is a theme that I talk a lot about within our institution. Scrappy works for us as opposed to Ivory Tower. During the interview process, you can tease out. I always say to people when I interview them, we're not better or worse than the other outstanding places you're looking at, but we are different. And you always try to find, does your key fit our keyhole? It's often difficult to do in an interview, but it's not impossible, and it's certainly narrows.”
2022-10-24 · Capital Allocators · Jon Ballis – In the Room Where Private Equity Happens at Kirkland & Ellis (Capital Allocators, EP.277) · IDENTIFIED FROM THE TRANSCRIPT · source