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📉 Private equity’s public misery


In today’s email:

  • A&O’s tech exit

  • Dentons’ delicious deal

  • The world’s first spam email

  • The Dutch take a bite out of Apple

  • Finish your tutorial reading 3x faster

  • How McDonald’s can predict the economy

  • Banks are the real winners from the interest rate hikes

… and more!

If you take just one thing from this email…

Interest rates (and the cost of borrowing money) are high at the moment.

The way to get the best interest rate is to ensure the lender is comfortable that they’re taking on less risk.

In private equity (PE), borrowing is typically done by the portfolio companies that the PE firms own. But lenders see them as more risky so PE firms are starting to borrow at the fund level (i.e. the fund borrows the money instead of the company). Lenders see the fund as less risky, as it has more money, and are able to give it better rates.


The main reason law firm applications get rejected is probably because the answers are generic.

The answers are generic because everyone does their research in the exact same place.

So, my advice for standing out? Seek insights from unexpected sources.

Look at:

  • law firm’s annual reports,

  • publications that law firms prepare for their clients (not for applicants), and

  • things like the Law Firm Survey by PWC (it gives loads of insights like the impact of interest rates on profit margins and spending trends across cost different categories).

This is how you can craft unique application answers that set you apart. 

- Idin


📉 Private equity’s public misery

What's going on here?

Private equity (PE) firms are facing the worst year in a decade for selling companies in their portfolio.

What does this mean?

It’s been a hard year for private equity firms.

PE firms made $584bn from either selling companies outright or through taking them public (e.g. through IPOs). While that sounds like a large profit, it’s actually more than $100bn less than what they made in 2022.

And it’s two-thirds below the record $1.4tn made in 2021.

👆️ Value (in US$) of what the PE industry raised each year

So, what’s caused the downturn?

In short, interest rates are up so private equity is struggling.

PE firms are having problems in selling portfolio companies at the price they (and their investors) want. Potential buyers and public investors want lower valuations that reflect the current higher interest rates and weaker economic outlook.

If they portfolio companies fail to sell at the right price (or at all), investors in the PE funds can’t get paid — which means they’re not happy.

So what are PE firms doing about it?

According to Linklaters partner, David Martin, private equity groups were getting “more creative” in finding ways to borrow money.

PE firms are using unconventional tactics like borrowing money ‘at the fund level’ to allow their investors to cash out.

What does borrowing ‘at the fund level’ mean?

PE firms buy companies. Generally, when they borrow money, it’s at the company level (the companies are the grey rectangles at the bottom of the diagram below). So the companies they acquire gets loaded with debt which they use to operate.

However, some PE funds have started taking on the debt themselves (the red rectangle in the diagram below), as opposed to having the company take on the debt. This has a lot of investors worried.

Why are they doing this?

Borrowing at the fund level (and in other creative ways) means they can get cheaper debt — debt at a lower cost. That’s because a lender sees it as less risky to lend to a big fat fund with loads of money and assets than a struggling company, so it can offer the debt for cheaper.

This money can then be used to either allow an investor to cash out or keep the portfolio companies running with the hope that the right buyer will be found later down the line.

Why are investors concerned?

Investors are concerned whether they’ll get the same high returns. If the debts that the fund has taken out cannot be paid back by the companies (and given the current economy, that could happen) that could really hurt returns, because that money has to be paid back by the fund.

What is the bigger picture?

For the last 10 years, private equity has been a simple business:

  1. Buy a company using cheap debt and long-term capital from investors,

  2. improve the company, then

  3. sell it for a profit.

But the high interest rate environment is challenging this model.

With the higher cost of borrowing at a company level, it makes sense to borrow at the fund level — at least to wait it out until a better time to sell comes around.

Why should law firms care?

Loads of law firms in London (especially the American ones) bring in a lot of their revenue from private equity work — firms like Kirkland & Ellis, Latham & Watkins, Linklaters, and Weil, Gotshal & Manges. So, for them, understanding the changes in the private equity sector can help them tailor their strategy.

In particular, as these new and “creative” forms of borrowing are becoming more popular, law firms need to keep up to speed with them. The ones that can best show their experience in dealing with these new issues that arise could be able to win more work.


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Eat McDonald's ➡️ save the economy


  • 🏛️ Allen & Overy is selling its legal tech unit, aosphere, to private equity groups Inflexion and Endicott Capital in a deal worth over £200m. After the sale, Allen & Overy will retain a minority interest. This move is part of A&O’s business transformation following the merger with Shearman & Sterling. Aosphere provides online legal services and will use the private equity investment to expand into new markets and develop new products.

  • 🍳 Dentons advised Premier Foods on its £34m acquisition of FUEL10K, a breakfast food producer. This move enhances Premier Foods' presence in the breakfast meal market. FUEL10K offers a protein-enriched breakfast range, targeting a young demographic, and is available in various UK shops (here’s Dentons’ press release on it).

  • 📱 The UK's Online Safety Bill has become law this week. The bill aims to protect children online by holding tech firms responsible for content on their platforms. It grants regulator Ofcom more powers and introduces new offences like cyber-flashing and "deepfake" pornography sharing. Some critics say it infringes on privacy as it means encrypted messages must be readable. Violations could result in fines up to 10% of global revenue or £18m affecting both Big Tech and small businesses. We’ve done a full report on this if you’re interested!

  • 💰 HSBC has reported a more than doubling of profits to $7.7bn (£6.3bn) in the three months to September, thanks to rising interest rates. The bank benefited from higher interest rates, allowing it to charge more for lending to individuals and businesses. This profit surge led HSBC to announce plans to return an additional $3bn to shareholders, totalling $7bn this year. However, the profit figure fell short of analysts' expectations of $8.1bn. Operating expenses increased due to performance-related pay, higher tech costs, and inflation. HSBC generates most of its income in Asia and also faces a $500m hit related to China's property market troubles.

  • 📱 The Dutch consumer watchdog is challenging the fees Apple charges dating app providers in the Netherlands, as part of an ongoing case over app store dominance. While limited to the Netherlands, this case could set a precedent. Apple had been fined €50m for alleged EU antitrust violations, leading to a reduction in commissions for dating apps. The dispute now revolves around undisclosed commission-related matters.


  • 📚️ Study: Speed through your tutorial reading by using this site, which helps you read up to three times faster with colour-coding of nouns, verbs, and adjectives

  • 😍 Cool: This is an awesome online museum of artefacts from the early days of the internet, including the first spam email, the first website, and more!

  • 📕 Books: If you’re looking for your next book, you’ll love this collection of 9,500+ book recommendations from the most successful and interesting people in the world!


  • 📣 Advertise with us: If you're looking to reach an engaged audience of over 9,000 aspiring lawyers, drop us an email.

  • 📹️ Free application help: If you're applying to commercial law firms, check out my YouTube channel for actionable tips and an insight in to the lifestyle of a commercial lawyer in London.

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