Capital Markets

What’s The Deal? |  The power of data in private markets 

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Rebecca Thorton: Welcome to another episode of What's the Deal? I'm today's host, Rebecca Thorton. There's been a lot of activity happening in the venture capital market, and J.P. Morgan recently acquired a data company called Aumni. And that's what –we're here to discuss today. I'm delighted to welcome the CEO, Tony Lewis, and our colleague, Mike Elanjian, head of digital private markets for J.P. Morgan. Welcome.

Michael Elanjian: Thanks, Rebecca. Nice to be here.

Tony Lewis: Thanks for having us.

Rebecca Thorton: So Tony, let's start with you. It's safe to say that your career started off in a unique direction, as you were headed down the path of big law. Tell us how you came to co-found Aumni.

Tony Lewis: Well, I did work, for a number of years, in so-called big law. That was Latham & Watkins and then later, Wilson Sonsini, predominantly as an M&A and venture attorney. And a couple of themes emerged while working at each of those institutions, and the appetite for market data related to the investments that our clients were putting to work, continued to grow. And at the firm, you try your best to share information from attorney to attorney, but it's a real struggle. And so, you do your best as an associate, to think about those last five to 10 transactions you just did, to provide market data on any given financial, legal, economic term that our clients were looking to invest across. So, I knew that there was a strong desire for more market data. And also, I worked in venture capital for a while, and it was very clear within this venture institution, that we wanted, as a partnership, to make more data-driven decisions. There was this need in the ecosystem that we identified at Aumni, for accurate, structured data of the legal and economic rights underpinning investments in any private alternative asset. And that's exactly what we set out to build. And to date, Aumni has now analyzed about $3 trillion worth of company investments, and we have this wealth and data pool now, that we can provide these market analytics back to our venture clients, which include about 400 venture institutions today.

Rebecca Thorton: That's a great pivot for us to learn a little bit more about our other partner here. So, Mike, let's move to you. You've spent your time in banks, always working on the next innovative project. Tell us about how that brought you and Tony together.

Michael Elanjian: Yeah, thanks, Rebecca. I've spent my career really investing in building businesses, both externally in third party companies as well as building new initiatives at firms and really running innovation projects at banks. And as J.P. Morgan has been increasing our presence in venture over the last several years, one of the critical pain points that we constantly hear from our clients is just the lack of data in the private markets. And unlike the public sphere where there's an abundance of information available to investors and corporates to benchmark an industry or company, or even get broader market insights in trends, in the private markets, access to that sort of data is either impossible or incredibly difficult to access. So, in that context, we really prioritize trying to find a solution and a partner that could help us shine a light on what's happening in these markets, and that's really what led us to Aumni and Tony.

Rebecca Thorton: What was most compelling about their solution?

Michael Elanjian: The critical thing that we liked about the Aumni offering is that they provide portfolio analytics and solutions to both GPs and LPs, and as a result of that, they can piece together to really give you a sense of aggregate anonymous view of what's actually happening in their space. Because their database, which covers a huge portion of the venture ecosystem, is built on the core underlying legal agreements that underpin the transactions, they can give our clients a trustworthy and reliable view into private market activity, which aligns with how J.P. Morgan wants to do business.

Tony Lewis: To add to that, in Aumni fundraising journey our first price equity financing round, we received two term sheets with different valuations, except for the higher valuation deal had liquidation preference mechanics that paid the investors two times their money back. Whereas the lower valuation term sheet was the standard formulation in the market, which is a 1X, nonparticipating preferred. What that means in practice is that investor gets one times their money back before participating pro rata with the rest of the common stockholders. And so, for us founders, it was really challenging to make that decision with no data on hand, despite the fact that we were very experienced venture attorneys. And our thesis was that if we introduced deal structure early in the history of the company, we thought it was more likely that deal structure would continue to exist throughout the life cycle of our subsequent rounds of financing.

Rebecca Thorton: What do you mean by deal structure? 

Tony Lewis: By deal structure, what I'm talking about are legal levers that impact the financial outcome of all investors, and particularly common stockholders.

Rebecca Thorton: So how would Aumni help with that today?

Tony Lewis: Well, Aumni is compiling this master database to give insights into the legal economic rights, and in particular the concept of deal structure. So this is where the liquidation preference is going, for the most part, to the preferred shareholders and sometimes the most recent preferred shareholder, the latest money in. And if I would have had that data at the time, I think I could have convinced that investor to match that other valuation that the competing institution was offering us, and we ended up going with that investor regardless, at a lower valuation because we thought that they were best for the business. And I found optimizing for your vision the right team and best fit was better than optimizing for valuation. 

Rebecca Thorton: I love that example. And I think it really brings to life the power that data can give you as you make decisions in your business. So maybe we can double-click into the data a bit. We've had some pretty tenuous markets over the last 18 months. Earlier this year, Aumni put out a report on the private markets, that really delves into some of the insights that are possible with your dataset. We all understand it's been a difficult period for venture, but what data does Aumni have to quantify the shift and better understand how businesses are behaving?

Tony Lewis: Yeah, so everyone in our client base is also asking those same questions, "What are you seeing in the market? What's your database showing?" And I would say that we have near realtime performance metrics underlying the database, and that we're ingesting all of this investment data as they're basically being completed in the ecosystem. And so the analytics that we can drive for a client base in the ecosystem is very up to date. And so what we've seen in our database is that valuations really peaked around 4Q '21 or 1Q '22, and those valuations were up almost 100% year over year. I thought I would just share some data points between the peak and now, and what we're seeing in valuation, but also maybe some things that are more unique to Aumni in terms of deal structure. So, at peak, the post-money valuation for a series A company was $80 million. Compare that to the most recent quarter that we just got out of, it's 42 million. Series B, 265 million peak. This recent quarter, down to 115 million post-money. And if I aggregate C+ transactions, the median post-money valuation was $1 billion in Q1 '22, and that dropping all the way down to 398 million this prior quarter. And so, obviously there's been a big valuation reset, and what we're also seeing is an increase in deal structure and down rounds. With down rounds, for example, in Q1 2022, only .4% of the transactions that we ingested into our database had down round applications on the price, meaning that the post-money valuation of that most recent round of financing was lower than its prior round of financing. 

Rebecca Thorton: Based on your experience as a founder who raised $100 million, what challenges are you seeing and what would you counsel other founders who are raising capital in this current market?

Tony Lewis: I think now's a real challenging time for founders. What you have is evaluation peak approximately 18 months ago. It happened to be a time with a lot of deal volume. It also coincides with the median time between financing rounds, between C and A, A and B, and B and C happens to be approximately 18 months as well. And when raising that capital, I bet many companies were budgeting between 24 and 30 months of runway. And so they're right now at that decision time. Do we go to market and raise capital? They know valuations are down and some of them, the reset is 60, 70%. So, the questions that they're asking themselves are do I extend a runway by making further cuts to the team or just raising hiring? Do I do a bridge-round financing, not reset the valuation, but maybe take a valuation haircut and dilution related to that note financing and get enough money in the balance sheet that I think that I can weather the valuation reset? Or do I just do the priced round right now, reset the valuation as something that I can grow into overtime? In my experience, I tend to find that founders can be overly dilutive and sensitive to dilution generally speaking.

Rebecca Thorton:  And what does that mean exactly? 

Tony Lewis: Most important is having a great outcome and if you're performing well and your company's doing well, I find that investors are willing to rally around the founders and the common stockholders to increase pools and take care of those executives as the life cycle of the company gets more mature over time. And so I think that that's most important is to just go about realizing your vision and make sure you have the adequate capital to realize the milestones you're trying to prove before that next round of financing.

Rebecca Thorton: I think that's great advice for our founders that are listening. So, Mike, let's move to you. What's the end state here? How do you see this all coming together, and what's the benefit for the ecosystem?

Michael Elanjian: Yeah, I think what Aumni’s done a wonderful job of, and why we're excited about the acquisition is really providing more transparency and more portfolio analytics and performance reporting solutions to venture capital firms and general partners that invest in companies. I think the other piece that we really wanna do is to extend that to the fund market and so there's plenty of limited partners that are investing in new managers and emerging managers and so providing more transparency to the fund space as well and really aligning the interests across the capital stack between companies reporting up to GPs reporting up to LPs. So I think that remains a really big focus. But the overall end game for us is not just to provide portfolio analytics and reporting solutions and market insights and trends, but how do we pair that directly into a platform that we've been building called Capital Connect, which is really focused on helping companies better raise capital in the earlier markets from investors and helping emerging managers and ECs get better access to some of the institutional LPs to raise their next fund. And again, the more that we can provide market insights and trends to help investors do research, the more that we can help companies and funds, raising capital, get a better sense of what's happening in market standard, the more that we can make that process easier coupled with software and workflow tools along the way. Over time, where I think we see this going is leveraging that data to really provide liquidity solutions to the market to make sure that we have a healthy, vibrant market structure where there's issuance, data analytics, portfolio monitoring, and trading in the private markets. No different than what you see in the healthy public markets.

Rebecca Thorton: It sounds really exciting and I can understand why Aumni was just a valuable complement to what is being built with Capital Connect. I think that's a great place to wrap up. I know I've learned a lot. I wanna thank our colleagues, Tony and Mike, for their time and insights today and to thank our listeners. We hope you'll join us for next week's episode of What's the Deal? Mike, Tony, thanks again.

Michael Elanjian: Thanks for having us.

Tony Lewis: Thank you very much.

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What’s The Deal? |  M&A and LBOs: Financing trends across the leveraged capital markets

Kathleen Darling: Hello, and welcome to What's the Deal. I'm your host today, Kathleen Darling from J.P. Morgan's debt capital markets team. I'm excited to be joined by Todd Rothman, managing director of our North American high yield and leveraged loan capital markets team, to discuss the 2023 activity being seen across M&A and leveraged buyouts. Todd, welcome to the podcast. 

Todd Rothman: Thanks Kathleen, great to be here, really appreciate you having me.

Kathleen Darling: It would be great if you could share with our listeners your background at J.P. Morgan, both in the US and abroad.

Todd Rothman: Sure, so I'm a lifer at J.P. Morgan. This July will mark 24 years. I started my career in our Global Syndicated Finance business in New York, ultimately moved to London in 2010 for what was supposed to be two or three years, ended up staying 11 and a half years. Came back to New York about two years ago now. I started my leveraged finance career on the origination side, I moved to the capital markets desk about seven years ago. Earlier in my career as an associate, I actually spent a year in our Natural Resources IB Coverage team where I focused more on equity and M&A. So those are areas that are dear to my heart as well.

Kathleen Darling: That's great. Turning to this, the M&A pipeline was quite dismal in the back half of 2022 and through the first quarter of 2023, as we saw uncertainties from geopolitical events, Central Bank rate policies, US regional banking turmoil, and just an overall economic slowdown, which really put an element of uncertainty into markets. As some of these factors begin to abate, can you talk about the activity you're seeing in the leveraged finance capital markets for both M&A and leveraged buyouts?

Todd Rothman: Sure, so I think before we dive into what the world feels like today, it's helpful to take a quick step back into what the world looked like in 2021, pre-Russia/Ukraine. So, if we go back to the 2021 period, that's when we hit a post-financial crisis peak with 105 billion dollars of underwritten loans and bonds in the US market, 141 billion dollars globally. Now, if we roll the clock forward to today, those numbers are roughly 43 billion dollars for the US, 52 billion dollars globally. And if you strip out some of the more corporate style 364-day bridges in there, the amount of paper that's actually going to come to the institutional debt markets is a lot lower than that. So, comparing that to the amount of cash that's sitting on the sidelines, it's really a blip on the radar that isn't going to make a dent. The good news for companies who raise capital today for M&A, whether it's LBOs or on the corporate side, is that we are continuing to underwrite new transactions in the modern world that we're living in. Whether it was the regional banking crisis earlier this year, or any of the other macro events that have taken place. I think the big difference that we've seen in 2023 versus what the world looked like pre-Russia/Ukraine is really the structure of what those deals look like. So, the LBOs that we've seen so far in 2023, common themes have been equity checks that have been north of 40%, credit profiles that are more defensive in nature that the buy side can take a view, will be a lot more recession resilient depending on what your view is on a potential recession later this year or next year. Lower leverage, versus was a credit really could support, versus where some individual credits had been rated historically. And then ratings are the other factor, whereas in the past we would do a lot of LBOs with B3 ratings, today it's really been strong single B or worst case mid-single B, that we're solving for.

Kathleen Darling: Todd, thanks for covering the landscape over the past two years. Maybe can we talk a little bit about what's next for 2023?

Todd Rothman: So, in terms of what we're looking for to see momentum change in the way of M&A financing and LBO financing activity, I think there's really two things that management teams, boardrooms, and the buy side are really looking for. One of those is a better feel for the form and the timing of any type of recession, whether that's later in 2023 or in 2024. And the second thing is a clearer path on the actual horizon for when rates stop hiking, when we actually see rates flatten out, and when people can genuinely believe that rates are going to start getting cut. Putting those two things together is really what we need to get more equilibrium between what buyer and seller valuation expectations are. That'll also lead to more robust financing activity that's possible to fund those larger transactions.

Kathleen Darling: On a previous episode with Brian Tramontozzi, we spoke about cash balances remaining strong. Do you expect more of these cash reserves to be deployed for M&A, or do you still think there's an underlying cautious tone from both investors and lenders?

Todd Rothman: So, similar to what I talked about in terms of underwriting activity, I think the buyer side's operating under a similar set of parameters. So, I think that the money is out there to fund new transactions. I think really what we're seeing is the buyer side pick their spots for the credits that they like, the deals that they feel have been well-structured. So, cash balances in the high yield market remain quite strong, just under four percent. The loan market technical has gotten a little more challenging, but again, for the right deals we've seen that market show up in good size as well. Part of what's driving that is what we've seen in terms of CLO issuance this year, which right now is down year over year, $54 billon this year. Last year, we were at $73 billion. When you combine that with the fact that you have a large portion of the CLO market that is continuing to roll past its reinvestment period, we are seeing the availability of dollars and euros shrink from where it has been previously. And that's part of why we really encourage investors and lenders do two things from an issuer and borrower standpoint. One is for those that need to raise capital, the strong advice is to go take advantage of the money that's available out there now and refinance debt that's coming due. Not just in 2023 and 24, but also in 2025 and 2026. Part of that as well, we often talk about new money transactions being, new M&A financings, new LBO financings. But what we're seeing in a number of these term loan refinancings in particular is that not every existing lender is capable or willing to extend their maturities and roll into a new deal. And so, some of the new money that is available on the sidelines today is being used as part of that refinancing activity. So, I think the message is that the loan market will continue to be challenging for larger size in the near to medium term. For the right credits, the market is absolutely there for folks. And I think what this means as well is that also accessing the bond market, also considering to access the European market for credits that aren't just US but more global in nature, are going to continue to be more important.

Kathleen Darling: You opened up the podcast saying 2021 was a notable year for M&A and leverage buyouts. With many of these transactions being funded majorly with debt, as rates have increased, resulting in more expensive capital, how are you seeing companies assess pro forma capitalization for these acquisitions?

Todd Rothman: As I talked about before in terms of what the prototypical LBO looks like in 2023, part of the way we're adjusting that very problem is lower leverage. So, a deal that might have been able to be levered at six, six and-a-half, seven times two, three, years ago, today we're doing that deal, a turn, two turns, three turns lower leverage, in part because of investor and lender caution given the economic uncertainty. But also, because interest rates are simply higher, companies can't support the same amount of debt that they were able to before. I touched on the loan market technical and how that part of the equation has been a bit more difficult this year. Part of the way we fill that void has been introducing secure bonds a lot more into the equation to help raise the amount of debt capital that companies are looking to put on the balance sheet. One thing we have not really tested yet, though, is the market for triple C unsecured LBO bonds. There have been a couple of successful refinancings of that ilk so far this year, but I think that's really going to be one of the key components to unlocking more LBO activity in terms of being able to get a little more leverage and be able to stretch a little bit more in valuation versus where the expectations are for people that are selling their company, whether they're publicly listed or held privately today. This year we've seen very little in the way of junior capital, whether it's subordinated bonds, unsecured bonds, second lien loans, that have come to market. In fact, only $5.1 billion of unsecured paper has been underwritten so far this year, which is about 18% of total volume. That's down substantially from where things stood pre-Russia Ukraine.

Kathleen Darling: Great. And where exactly does private credit play in here?

Todd Rothman: So, we talked about secured bonds and also accessing the euro market as a way to find incremental capital to fund leverage buyouts and corporate M&A. Private credit has been another avenue that's been utilized. I'd say that's been a bit more prevalent in the middle market space. We have seen it in a couple of larger scale LBOs that have come to market. What's interesting, though is as the market has improved over the course of 2023, we've actually seen financial sponsors see the merits of refinancing those private credit deals in the broadly syndicated loan market due to their lower costs, being more scalable in nature over the course of time, and ultimately more borrower-friendly terms.

Kathleen Darling: Going off the overall structuring that we're seeing for these deals, there's also the documentation element. Can you touch on the trends you're seeing there as well for deals getting done in 2023?

Todd Rothman: What we've seen from both BOND INVESTORS AND LENDERS this year really has been an increased focus on, how do I protect myself? We continue to be in an environment that has macro uncertainty, the risk of recession coming, an expectation that default rates are going to continue to rise in both the loan market and the bond market. And what you're seeing is lenders and investors really dig more into the documentation and figure out, what loopholes are there that could be used by a borrower or by an issuer that could potentially dilute the recoveries of a secured lender or bond investor today? Whether that's moving assets to unrestricted subsidiaries, whether that's raising capital at non-guarantor entities. And so, you've seen a lot of focus on the proverbial protections like for Chewy, J. Crew, Serta, and Provisions. And that's really been the focus that we've seen from the buy side.

Kathleen Darling: Todd, this has been great. We touched on a lot, from M and A, leveraged buyouts, documentation, overall structuring, and the trends that we're seeing from 2021 versus today. I think it'll really give our listeners a lot to digest, it was an absolute pleasure having you today on What's the Deal.

Todd Rothman: Kathleen, really appreciate you having me.

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What’s The Deal? | A conversation with Liz Myers, Global Chair of Equity Capital Markets

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Catherine Guan:  Hi, I'm Catherine Guan, a member of J.P. Morgan Investment Bank's corporate finance advisory team. Today, I'm joined by Liz Myers in this episode of What's the Deal? Liz is the global chair of investment banking, equity capital markets at J.P. Morgan. Prior to her current role, Liz was our global head of ECM, leading the team responsible for advising our corporate clients on equity capital raising in the Americas, Europe, and Asia. She has been named one of the Top 25 Most Powerful Women in Finance by American Banker magazine and won Barron's 100 Most Influential Women in U.S. Finance.

Liz Myers: Thanks, Cat, it's great to be here with you.

Catherine Guan: This episode is part of a special series entitled Conversations with Deal Makers, where we speak with the makers behind the deals, and delve into the stories behind the headlines. Liz, I have been looking forward to this conversation ever since launching this series. Since joining the firm, I've had the pleasure of working with you on many transactions, and you always bring such differentiated insights into each discussion, be it pressing and offering volatile markets or advancing women in the workplace. For our conversation, I want to start at the very beginning of your journey at J.P. Morgan. After graduating from Princeton, what made you choose this firm above all else, hmm?

Liz Myers: Well, I was an economics major at Princeton, and so it was somewhat natural to think about finance, but there wasn't a lot of information about it. The internet didn't exist, and I knew no one in investment banking. So I really learned about the industry by going to interviews; not a strategy I recommend for today's college graduates. But I did end up with several offers in the field, and I accepted J.P. Morgan, really, for the quality of the training and the culture. Our training program was known to students as the best on the street, and even though I was an economics major, I knew I had a lot to learn.

Catherine Guan: And after joining the firm, I know you had a broad array of experiences across mills and mining, technology, media and telecom, as well as consumer M&A. What were some of the most memorable moments from those early years?

Liz Myers: Well, as you said, I had a number of different opportunities, and it was a great way to get to know what was different, among different sectors. When I joined the M&A team, I was in the consumer team, and we focused our sub team on food and beverage clients. One of my favorite transactions of my career was Anheuser Busch's first domestic Chinese acquisition that I had the opportunity to work on. They targeted the Junga Brewery, which was interestingly headquartered in Wuhan. I had one day's notice that we needed staffing on this deal over in Asia. I flew to Hong Kong, and I joined the Anheuser Busch team at Wuhan for the due diligence on the brewery and the dinners with management. It was the first time I'd ever been in Asia, and it was fascinating. This was right when the world had started to realize China had a lot of people that were becoming able to buy more and more consumer goods, and Anheuser Busch was the leader in entering the region.

Catherine Guan: That’s so interesting. Liz, could you tell us a bit more about that?

Liz Myers: When I returned after the transaction, J.P.Morgan’s Chairman and CEO Sandy Warner was on the board of Anheuser Busch, so I was called to his office to give him a debrief on the transaction, kind of an interesting and exciting opportunity for someone who was only 24 years old. And after that, I remember also going off on a tour of Japan to see Kirin and Asahi and Sapporo, the big brewers who were interested in understanding what Anheuser Busch was doing over in China. I almost missed the deadline for applying to business school because of that trip. In fact, I did miss the first deadline and had to apply a couple months later, but I ended up being accepted to Harvard Business School, and I left the firm for a couple of years to pursue that degree.

Catherine Guan: I now know exactly the woman to call if I need a recommendation for Asian beer. And speaking about your experiences at Harvard, I would love to hear about, what made you decide to come back to J.P. Morgan after seeing what else the world had to offer?

Liz Myers: Well, the firm was great in keeping in touch and recruiting me back. And I had looked at some other opportunities, but with a little self-reflection, realized that I really wanted to be in client service, and I loved the fast pace of investment banking. I had tried consulting over my summer of business school, and just really missed the variety of work that came with being an investment banker, and being able to leverage the same skills for different transactions in a way that's really uniquely true in banking versus consulting. When I came back to look at the firm, I looked at a few different areas within the investment bank, and I found my way to equity capital markets, which I had considered pre business school, when I was an M&A, but I was having such a good time in M&A and loved my bosses, and I really didn't wanna switch at the time. So when I returned, it was a clean break.

Liz Myers: And when I was in business school, the internet was just beginning to be pervasive. We all had our new AOL school email accounts, and it was the time when Amazon had made a few offers to people in my class and a job like that was viewed as a major career risk. Within a couple years of rejoining J.P. Morgan in equity capital markets, the tech boom was going full steam, and companies that had no real business plan were going public at eye popping valuations. And we had just gained equity powers in the early 1990s, so we were still learning about leading IPOs, and were successfully parlaying a lot of these client relationships into ECM mandates. And then, in 2000, we merged with Chase, and with that came the HQ franchise, which was a known tech specialist investment banking boutique in California. And soon, most of us in our group, which was still pretty small, were pitching tech IPOs, flying back and forth to San Francisco sometimes twice a week. It was quite a bubble at that time.

Catherine Guan: The financial crisis presented a tremendous amount of challenge, yet this was also an incredible showcase for those with ability. Could you tell us about how you assumed increasing responsibility within the ECM franchise?

Liz Myers: Back in the late '90s and early 2000, we felt it really was a bubble. But the internet, we also knew, was a complete game changer, and investors didn't wanna be left behind. And then it ended swiftly. What a great lesson early in one's career, to see exactly how the music stops and how you have to live through it. So let's just say I was glad I had done some financial services deals before that tech wave, (laughs) so I was able to pivot back into some of these more stable sectors, and did some consumer and industrial deals, as well. It was helpful to have had that diversity, but also very helpful to have had the opportunity to see how such an acceleration in business happens, and then what are the catalysts that cause a, cause a pivot. Starting in 2003, I was charge of the financial services team within the ECM group.

Liz Myers: And it wasn't until the financial crisis that I think I really had established the base of experience and credibility to be promoted, to run the Americas team. My sector had been pedal to the metal in the crisis. We were recapping all the banks across the US when their loan portfolios were deteriorating as a result of the crisis. Corporate borrowers were not repaying their loans, mortgage portfolios were a mess, and many of the regional banks were really struggling. We were the go-to bank in the crisis. We were viewed as the firm that could understand the complexity of deteriorating loan portfolios, and be able to attest to investors what we thought was a reasonable clearing price to raise capital for a lot of these banks. Jamie had made it clear on Capitol Hill that J.P. Morgan was stronger than any other bank and that we didn't need TARP money to stay alive. We took it to be part of restoring confidence in the financial system, but the repayment of that TARP money was a great deal opportunity for me and my team. And that deal was my first chance to meet Jamie Dimon.

Catherine Guan: And Liz, what did you takeaway from that experience?

Liz Myers:  So after the crisis, I was asked to be co-head of America's ECM, and then later, the global head, which I did for seven years. By that point in time, my M&A experience seemed a long time ago, and I'd really become an ECM subject matter expert. And with a focus on a single area sometimes comes a feeling of repetition. And so I really enjoyed the change to take my ECM knowledge to new geographies. There are different securities regimes all over the world, different cultures, different ways people expect to be managed, different levels of success and different goals to achieve. So it was a really fantastic and fun time.

Catherine Guan: And running a global business must have brought such a unique set of rewards and challenges. The two of us had the opportunity to work together on a series of monetization transactions for Alibaba, the US domicile successor entity to Yahoo, which involved its holdings in Alibaba the Chinese tech giant as well as in Yahoo Japan. It was so impressive to see you lead the global execution team involving ECM colleagues across four time zones, New York, San Francisco, Hong Kong, and Tokyo. What was your guiding principle for delivering the J.P. Morgan global platform to clients?

Liz Myers: Well, firstly, have a great team with you, and that included you, Cat. (laughs) You were a secret weapon, I often said, keeping track of a lot of complexity. We sold over $50 billion of Alibaba stock day in and day out over a series of many, many weeks. And that was the type of transaction you needed to have laser focus on at all times.I think it was my experience in running the global ECM team that made me confident we could do this seamlessly across time zones. One of the big priorities I had when I was running global ECM was making sure that there were personal relationships between our personnel across the globe.

We used to run off sites once a year for the global seniors, and people really got the chance to know each other personally. And there's nothing like knowing someone when your phone rings at 2:00 AM. You know that you're going to take it if it's someone you know well.

Catherine Guan: Absolutely. There's nothing like that personal connection. And speaking of our experiences together on Yahoo and Alibaba, we had the opportunity to present to the board together on a number of occasions. Looking around that room, I remember thinking to myself that it was such a sign we had female representation in each of management, the board, and investment bank. As boards continue to focus on diversity, equity, and inclusion, have you noticed any changes to how decisions are now being debated?

Liz Myers: I've seen the progression, particularly in the boardroom of diversity over the many years of my career. and just a few weeks ago, I was presenting to a board that was over 70% women, including the chair of the board. So times are definitely changing.

And I'm so glad we have our Director Advisory Services Group at J.P. Morgan, because so many of our corporate clients are looking to diversify their board members. There are lots of board members that are up for retirement in the upcoming years, and generally, corporations are replacing board members, with a priority towards diversity. And we have a database of over 5,000 board members, of which over 50% are diverse individuals. So we can really help clients with what their objectives are and having more and different perspectives and voices in the boardroom.

Catherine Guan: Liz, you have been such a powerful advocate for women in the workplace. Here at J.P. Morgan, Women On The Move is an initiative to empower and advance our women employees. And now, we're looking to build on our c- success and to reach externally. Could you tell us a bit more about your work with Women On The Move as a member of the executive committee?

Liz Myers: Well, I'll say I've always been involved throughout my career in mentoring and sponsoring women. And I've been the beneficiary of exactly that over many years at J.P. Morgan, both by senior men and women. And being part of Women on the Move is just a natural progression of that. We've made a big commitment to our female employees, but also to female owned or managed businesses among our clients, both with support of our capital and our advisory resources. We had our big flagship Women on the Move Leadership Day, which brings together thousands of female employees and male allies and a ton of female clients for a really impressive array of content. I'm really excited every year for that to happen each fall. And we really want our clients to know how much we prioritize helping women succeed in the workplace. We run a lot of client events in the investment bank, and we've made it a priority to have lots of impressive women both in the audience and onstage delivering valuable content.

Catherine Guan: And when you spoke at the beginning of this episode about starting your professional journey at Princeton, it must be especially poignant this year to see your daughter start her freshman year. For young women of her generation, what kinds of progress do you hope to see in the workplace?

Liz Myers: Well, I hope to see that companies across the world will have the same approach that we do at J.P. Morgan, which is we want the best person. What we want is someone who's enthusiastic about what we do, excited to learn, and really wants to contribute and be part of a fantastic team. Those are the types of organizations that will be great homes for women out there that are graduating from college or women that are looking to change their career or employer.

Catherine Guan:  As we turn towards the final minutes of our episode together, I want to turn our gaze to the current moment in time. We touched earlier on your experiences during the volatility of dot com and the Great Financial Crisis. What is your number one advice for clients navigating these turbulent waters now?

Liz Myers: My mantra for clients who need advice in difficult environments is be ready. Nothing substitutes for preparation. And whether it was the tech boom and bust in the early 2000s, the financial crisis, the COVID crisis, each time was unique. And helping corporate clients access the capital they need or consummate a transaction, those have always been our most critical priorities.

Our late vice chairman, and a beloved mentor of mine, Jimmy Lee, always said, "When the going gets rough, just keep calling (laughs) clients." We often underestimate the value of pattern recognition in solving problems. And when clients ask you questions, your off-the-cuff answers can be really valuable.

Liz Myers: When the window opens in the market after a bad period, it generally doesn't open wide and beckon issuers back to the (laughs) promised land. It often opens very selectively and temporarily. And that's what we've seen in 2022, and we've managed to lead the two biggest IPOs of the year, both of which J.P. Morgan had the leading or sole role, and both of which I had the pleasure to work on. The first was the private equity firm TPG's $1.1 billion IPO back in January. At that time, we didn't imagine that would be the biggest one for months later. And then finally, we topped that size with AIG's $1.7 billion carve-out of its life and retirement business core bridge that we just completed in September.

Liz Myers: And in both cases, trying to thread the needle for the perfect moment was the key strategy. Before that was months of preparation and a detailed monitoring of daily events in the markets, daily conversations with investors to understand sentiment. That was person by person, day by day.

In turbulent times, what an investor said last week is not always relevant. Being the most frequent underwriter of new issuance means we have the deepest and most frequent touchpoints with individuals who anchor big mission critical deals.

We succeeded in both those transactions, and the market deteriorated really quickly thereafter. So timing is everything, and if you're not prepared, you'll miss the window.

Catherine Guan: Absolutely. And looking ahead to 2023, what are your top priorities?

Liz Myers: Well, I would say my priorities for 2023 really include helping clients adapt their capital structures to the new environment. There's a clear investor preference now for lower leverage at companies. Coverage levels are becoming more in focus than just leverage levels. The cost of the same level of debt is now more. Recession proofing balance sheets is really important. And in certain sectors, the capital management story, meaning share purchase, dividends, that's a key focus for some companies to help support their stock prices in volatile markets.

And with higher growth sectors, we're helping clients accelerate their path to profitability and redesign their capital raising plans around that transition, because just like the leverage point, investors are speaking loudly about their preference to a very near-term profitability profile for companies they invest in.

Catherine Guan: Liz, it's been absolutely fabulous to have you here with us.

Liz Myers: Thanks so much, Cat, it is always fun spending time with you, and I really enjoyed our conversation.

Catherine Guan: That's all for this episode of Conversations with Deal Makers. Stay tuned as we continue the dialogue with the makers behind the deals and delve into the stories behind the headlines. We look forward to having you join us for the next conversation.

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