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High level explanation: BDO partners wanted to sell their ownership to the employee stock option plan. Employees obviously don't have cash. So BDO partners negotiate with Apollo so that Apollo pays BDO partners cash and employee stock option plan then pays back Apollo via a loan at 11%.
Still don't have info on the valuation BDO sold for. 8x earnings, 15x, 20x? That matters too. However, EMPLOYEE stock option plan now stuck paying off the loan at 11% so partners could cash out.
I can’t imagine BDO sold for 8x earnings; never mind 15x or 20x. Professional service firms just do not trade at those multiples.
Edit: meant to say non public professional service firms. Public’s can and do have those type of multiples.
Everyone at BDO with a brain saw it as a scam for partners to cash out and hurt everyone in the short term. In 20 years it might be good for employees but in the next 15 years it completely ruins your value and salary
I left 😂
Am dumb please explain better for dumb me
OP, pretty sure BDO did this out of desperation. Rumors are their balance sheet was beyond repair and they had tapped all of their LOC.
Rising Star
Senior partners climbed the ladder then pulled it up leaving everyone else in the dust.
Wow. It’s like those of us with half a brain predicted.
They had to know this would be the result, too. And Apollo is one of the worst PEs to be a portco of. Next step is to start refusing to pay vendors the rates negotiated before the acquisition. Then cut everything to the bone. No more employee appreciation. I would be willing to bet there is also a conversion feature of the debt that gives Apollo the ability to take out profits as though they are equity owners.
For document, page 10 https://www.sec.gov/Archives/edgar/data/1837532/000095017024059502/ads_-_33124_424b3.htm
This is Apollos financial statements which show the rate and amount of the BDO ESOP plan loan.
Can you link? Cannot seem to find the specific FS you are referencing here…not in their Q
Wow, if only the esop had a fiduciary that would need to agree to these things. 11%… 🤯
Lol fiduciary. Welcome to the real world bud.
BDO 4 - why are you still there?! Get out while you can!