For Greg Pessin, coming up in the leveraged buyout boom of the mid-aughts was like the wild west – intense, cut-throat and rife with opportunity. Pessin, a young associate at Wachtell at the time, possessed an ability to sit in the eye of the storm, weather it and learn from the talented folks around him amidst the chaos.
Early on in his career Pessin worked with Home Depot to sell its HD Supply business line to a consortium of private equity sponsors. The deal unfolded as Wachtell was expanding its debt financing practice – and at the start of the financial crisis. It taught Pessin about the importance of understanding the client’s needs and shaping a deal around that business imperative.
“People come to us in their most career-defining moments,” Pessin says. “Part of my role is to make clients feel as comfortable as they can and as easy as they can about the process.”
Pessin, now a partner in Wachtell’s Restructuring and Finance Department, focuses on financing for transformative corporate transactions, like mergers and acquisitions and spin-offs, and on high-stakes conflicts involving debt, financing and distressed entities. He has an appreciation for the complex and nuanced nature of the work, but his approach is a no-nonsense one.
“There's no hiding the ball, there's no squirrely drafting,” Pessin says. “We are here to do deals, not to stand in the way of deals.”
Pessin’s nearly two-decades of experience in deal financing in good times and bad came to good use when Twitter engaged Wachtell Lipton last year to hold Elon Musk to his $44B deal to purchase the company. Pessin, who advised on financing-related elements of the litigation and then the final push to closing, refers to the experience as “extraordinary – a career highlight.”
Pessin is a member of The Lawdragon 500 Leading Dealmakers in America.
Lawdragon: How did you land at Wachtell?
Greg Pessin: I grew up in the Midwest and didn’t know the world of high finance. When it was time to research law schools, I did some digging on firms to understand where graduates of certain schools ended up in their careers. There was some information, spare as it was, about Wachtell that made it clear it was a different type of place.
Leading up to law school, I had thrived in environments where there were smaller groups of people, and Wachtell was a place where that was the model. In the back of my mind, I always thought it would be an interesting place if the opportunity ever arose. I was lucky that it did.
LD: How was your experience as a summer associate at Wachtell?
GP: Growing up, my strengths were always in things like writing and public speaking. So naturally I thought maybe I should be a litigator. When I came to Wachtell as a summer associate, I rotated through a number of departments. I spent some time in litigation and corporate and some time in the restructuring and finance groups. One week into my litigation rotation, I realized that being a litigator wasn’t going to work for me. Just knowing my own neurosis, it was clear to me that if I was a litigator, I would be consumed by anxiety.
LD: What was it like for you in those early days as an associate?
GP: When I joined our group in 2005, the LBO boom was happening. More often you were seeing M&A deals being financed with debt rather than equity, or stock-for-stock deals, which had been the bread and butter of our firm. Our group had historically done some financing work when required by our M&A practice, but it was a very small part of our practice and we were far from industry leaders in that respect. It was becoming important to our clients that we'd be able to bring financing expertise to bear in the context of an M&A deal. So, there was an opportunity to build our capabilities and that was happening at the moment I arrived at the firm. It was a really good time to join. I got to be very hands-on in matters early on. In some ways, it was like Wachtell on steroids – working directly with partners and doing more sophisticated work than my peers at other firms.
LD: What were some of the deals as you were accumulating your experience that you reflect on as being important in your evolution as a leading finance attorney?
GP: A key matter in that phase of my career was Apollo's acquisition of the logistics division of a Dutch company called TNT. They called the new company Ceva. This was the go-go 2006-2007 period – tons of acquisition debt, very complicated transactions, cross-border, the whole nine yards. I was the guy who was going to be at the center of it. I was in London, then they sent me to Amsterdam. I did more travel for that one deal than anything since then combined. It was hectic and chaotic and time-sensitive, and the seller was very tough. At the end it all got done and it got done well. I was in the center of that storm and everyone was happy with the outcome. It was a moment where I felt like, “Okay, I can do this." Being at the center of complex, cutting edge transactions is a trademark of being a Wachtell Lipton attorney.
LD: That’s a significant moment.
GP: Then the second deal that was really important, was when we represented Home Depot when they sold a business called HD Supply to a consortium of private equity firms.
That deal was also signed during the go-go period of 2007 but it hadn't closed before the market started to collapse. It was one of the deals that was the canary in the coal mine of things falling apart. I remember there came a time where folks were making noises about maybe the financing banks won't show up, or maybe the buyers want to walk away. As a young associate who had worked on this acquisition contract, I was thinking, "It's rock solid.” The wiser folks said to me, "Listen, there are business imperatives here. The management wants to sell this business. We need to solve that problem and by the way, we need to solve it fast."
This was the go-go 2006-2007 period – tons of acquisition debt, very complicated transactions, cross-border, the whole nine yards. I was the guy who was going to be at the center of the deal.
At the end of the day, I think we took around $1B off the purchase price and we sold the business rather than engaging in a drawn-out litigation into the teeth of a financial crisis. In a matter of a year, the business was worth a fraction of what we sold it for. So that was a brilliant thing. But that also taught me about understanding the business imperative at the heart of a deal.
LD: That makes sense. You have to find the best solution within the context of the market landscape.
GP: Exactly. You have to give yourself time and space to think through problems and make sure you're seeing around all the corners and identifying all the risks. You have to then negotiate and close out issues quickly and efficiently – and as favorably for the client as you can. You have to set up a process that does that and then draft precisely based on the agreements that you reach. There's no hiding the ball, there's no squirrely drafting.
People come to us in their most career-defining moments, whether it's the acquisition that's going to define their time as CEO, or when Covid is threatening the very nature of their retail business. Part of my role is to make people feel as comfortable as they can and as easy as they can about these complex processes and high-stakes situations.
LD: How does your bankruptcy and restructuring work fit in these days?
GP: Our practice is designed to be responsive to the market. So if acquisition finance isn't happening, we can pivot and do distressed work. When distressed work isn't happening, we can pivot. Those two practices inform each other. They're both about debt fundamentally – what happens when debt’s good and what happens when debt’s bad.
I spend much more of my time on acquisition financing these days, but one particularly fun element of our bankruptcy practice is representing our strategic clients as buyers in sales of assets by a company in bankruptcy. You're sort of a white knight coming in and trying to solve the problem. You're lubricating the situation with your cash, right? If the creditors are going to get paid, you're the source of payments. There's a lot of parties and it takes a lot of creative work and massaging the personalities of others and really understanding what everyone's core needs are.
A number of years back, we represented Google when it was bidding on a giant package of IP assets from Nortel. Google had been a serial acquirer, they had a whole ecosystem that was in charge of doing acquisitions, mostly mid-size or small acquisitions. But they were new in the bankruptcy space, so teaching them about rules that aren't necessarily intuitive in front of a court that some would say plays a little bit by its own rules too, was interesting. These guys hadn’t done M&A like this before, so that was a lot of fun.
LD: Let’s talk about Twitter. How was that process?
GP: It was extraordinary – a career highlight. It was also the most stressful and strategically demanding project of my career, no doubt. It came to us after the deal was signed. Once it became clear publicly that Mr. Musk was not so sure about whether he wanted to consummate the deal, it became obvious that financing was going to be a key issue in the matter. The deal was structured like a private equity deal. If the financing failed, there was arguably a limitation on damages that Twitter could pursue against Mr. Musk. So the remedy was to force Musk to perform and get the money from his banks. Absent the ability to do that, this was going to be a very unhappy resolution for Twitter and shareholders. The difference between $44B and $1B.
LD: It would have been devastating.
GP: The financing was core for us and for Musk in order to get to a fair result. At the beginning, the team was two of my corporate colleagues and me on the finance side and then a group of deal litigators. There's no one better in the world in litigating deals than Bill Savitt and his team – their expertise is unmatched.
People come to us in their most career-defining moments. Part of my role is to make people feel as comfortable as they can and as easy as they can about these complex processes and high-stakes situations.
It wasn't clear that the deal was going to go south at the time, though I think we all had strong suspicions about that. Once things fell apart and this became a proper litigation, my role was really to work with the litigators and experts and use my expertise about this key issue in the case to help them in any way I could. I also had to stay up to speed on the discovery that came in as it related to the financing so I could put the pieces of the puzzle together – which wouldn't be obvious to somebody who doesn't play in this role all the time.
Once Mr. Musk said he wanted to close the deal at the agreed price after all, there was about a three-week period to get the deal done, and then the spotlight was on me and my corporate colleagues to make it happen.
LD: Like having the whole world peering into your office window.
GP: Exactly. With the eyes of everyone on you. It was super fun and interesting and extremely stressful, too. I'd never done a deal against that type of specter of litigation. We were interacting with Musk representatives every day and every word that was said mattered and could be used in court against you. It was fun to challenge yourself in that way.
LD: What an experience.
GP: It was so much fun. We are a small firm, but my path doesn't often cross with the litigation team, so to be on call strategizing with Bill Savitt and Chief Justice Strine and Sarah Eddy, and Ryan McLeod who’s this Delaware law genius – what a privilege to work on a deal of these stakes with people like this.
LD: It speaks to the culture at Wachtell.
GP: Definitely. It’s a very cooperative culture, because there's nothing to compete about. So, everyone's always rowing in the same direction in the service of whatever the client's objective is. No one's trying to elbow someone out of the boat.
LD: Can you recount any other formative deals that you did as a young partner?
GP: We did an acquisition of a company called Express Script for Cigna, a number of years back. It was a huge deal, $67B. The structure of that transaction was very unusual. It was called a double dummy or top hat structure – deals are almost never done that way. What made it even more complicated was that the target itself had acquired another company in a double dummy structure, with debt at three different levels in the corporate structure. As a young partner this is a giant deal, very high profile, very high stress and the numbers are just mind boggling.
Then you realize – we can't just do the deal and leave this company to figure it out. We've got to give them a multi-year plan on how to work their way out of this very complicated capital structure and put themselves on the road to have a capital structure that is natural for a company of their size and scale that is easy to administer, that's easy for them to run their business. It was hard and novel and high-profile, and a lot was riding on it. It was very gratifying when it all worked out.
LD: What do you like about acquisition finance?
GP: Debt-related issues are very interesting and complex. I like that. M&A agreements last from the moment they're signed until the moment the deal closes, but the debt that companies incur to finance those acquisitions lasts for five years or even up to 30 years sometimes. The real hard work for executives often is not in the closing period, but once you've actually bought an asset, how do you integrate it? How do you run the business? How do you achieve the goal that drove you to make this purchase in the first place?
LD: What would others say is distinctive about you as a deal maker?
GP: People appreciate that we at Wachtell are practical, honest and relatively no-nonsense. I think that's consistent with my personality. I hope that people view me as someone who understands that we are here to do deals, not to stand in the way of deals. Our goal is to understand the client's core business objective, and not let pointy-headed lawyer stuff get in the way. The drafting has to be precise. The risks have to be identified and covered off and advised. Those details can't ever be sacrificed, and I try to put clients in a position to make informed decisions. But nobody wants to be bogged down on every issue so I always keep the final goal front and center.