Good Morning! Morgan Stanley and Goldman Sachs hijacked private credit’s record-breaking deal for Ardonagh Group. Thanks to rent-stabilized apartments, NYC landlords are selling apartment buildings for half off, vaporizing $75 billion in property value. Meanwhile, your go-to NYC food cart lunch is now costing you double what it was pre-pandemic. Plus how your body's packing its own version of Ozempic, no prescription needed. 

2024 Comp Survey: It’s that time of the year again. Please fill out our compensation survey here. Every response makes the overall results more accurate, so please submit a response if you can (all responses are strictly confidential).

Zyn Usage Poll Results: 44% of you say you’re packing Zyn at the office. (more than we expected!) Some of you aren’t packing Zyn but say your office won’t crack down since it boosts productivity.

_{SQUEEZ OF THE DAY}

PE Giants Shifting Comp Structure

Private equity firm Ares Management is shifting its compensation strategy for top executives, increasing stock-based compensation in exchange for a reduction in fund incentive fees (the “20” portion of the “2 and 20” fee structure).

As part of the move, CEO Mike Arougheti and Credit Head Kipp deVeer will each get 1.6 million RSUs valued at ~$200 million, based on current share price.

These RSUs are subject to a 4-year vesting schedule that will commence in 2026 (~$50 million per year).

Ares is following in the footsteps of other PE firms like Apollo and KKR. These firms are transitioning their compensation models as they evolve from private equity-focused operations into publicly traded alternative-asset giants.

Ares' decision is also underpinned by its strong performance in the market over the last year. The firm's shares are up ~50%, driven by higher interest rates and the golden age of private credit.

Ares also plans future compensation adjustments, retaining the option to reduce incentive fees for additional stock awards.

Takeaway: Expect more public PE players to shift to this comp structure. The strategy aims to steer top execs towards prioritizing long-term and overall business growth over short-term, incentive-based performance. If Arougheti and deVeer succeed in boosting Ares' stock over the next six years, their total earnings could be a lot higher than the current $200 million valuation.

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_HEADLINES

Top Reads

• Morgan Stanley and Goldman spoil private credit's record deal (YF)

• Why your lunch from your NYC food cart has gotten so expensive (NYT)

• Why NYC apartment buildings are on sale for 50% off (BB)

• U.S. companies say it's harder to make money in China now (CNBC)

• The S&P’s top stocks haven’t been this concentrated in 50 years (Axios)

• Powell insists the Fed will move carefully on rate cuts (CNBC)

• Blackstone’s $80 trillion opportunity (Forbes)

• Why Wall Street is still bullish on stocks even with March rate cut hopes dashed (YF)

• LVMH takes aim at $30 billion watch market with high-end pieces (CNBC)

_{CAPITAL PULSE}

Markets Rundown

Stocks closed lower as bond yields surged.

Movers & Shakers

• (+) Estée Lauder ($EL) +12% because the cosmetics company surpassed expectations on both top and bottom line.

• (+) Nvidia ($NVDA) +5% after Goldman Sachs increased its price target to $800 per share from $625.

• (–) Air Products and Chemicals ($APD) -16% after the chemicals company cut full-year guidance.

Private Dealmaking

• Novo Nordisk bought Catalent for $16.5 billion in cash

• Merck bought Elanco Animal Health’s fish health products business for $1.3 billion

• ProducePay, a financing and marketplace platform, raised $38 million

• Albedo, a satellite constellations maker, raised $35 million

• Oobit, a crypto payment app, raised $25 million 

• Captura, a carbon capture startup, raised $21.5 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

_{BOOK OF THE DAY}

Your Best Year Ever

We all want to live a life that matters. But too often we find ourselves overwhelmed by the day-to-day. Our big goals get pushed to the back burner--and then, more often than not, they get forgotten. It doesn't have to be that way! This is the year you finally close the gap between reality and your dreams.

In this new, fully revised and updated edition of Your Best Year Ever, Michael Hyatt shares a powerful, proven, research-driven system for setting and achieving your goals.

You'll learn how to design your best year ever by discovering what's holding you back, how to overcome past setbacks, how to set and pursue worthy goals without quitting, what to do when you feel stuck, and much more.

If you're tired of not seeing progress in your personal, intellectual, professional, relational, or financial goals, it's time for you to have your best year ever!

“One of the biggest reasons we don’t succeed with our goals is we doubt we can.”

_{DAILY VISUAL}

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_{DAILY ACUMEN}

Room For Error

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This concept is essential for navigating environments where significant gains are rare and require time to materialize, allowing individuals and organizations to withstand volatility and adverse conditions without succumbing to catastrophic failure.

Far from avoiding risk, incorporating a margin for error enables strategic risk management, ensuring one can endure downturns and capitalize on the compounding effects of opportunities that only emerge over time.

By providing the ability to persist through challenges, a well-calculated room for error not only prevents premature exit from the playing field but also enhances the potential for achieving substantial long-term success, distinguishing it as a proactive approach to embracing and managing uncertainty.

_{ENLIGHTENMENT}

Short Squeez Picks

• How to have a more productive year

• Why crypto is like a cockroach

• Mark Cuban on the moment he knew he wouldn’t succeed in corporate America

• Why introverted leaders have an edge in the post-pandemic workplace

• Your body has its own built-in Ozempic

_{MEME-A-PALOOZA}

Memes of the Day