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The Good, The Bad, And The Ugly of SPACs: LUMA's Kawaja · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com, you are listening to Bloomberg Markets.
• 0:20
  Speaker 1: I'm Carol Master in for Paul and Vonnie on this Monday,
• 0:24
  Speaker 1: and a story last week that caught my attention. It
• 0:26
  Speaker 1: talked about a speculative frenzy that's swooping Wall Street and
• 0:29
  Speaker 1: world markets. And among the things that this story highlighted
• 0:33
  Speaker 1: was about special purpose acquisition vehicles backs that raise money
• 0:37
  Speaker 1: for a blank check company to buy whatever it wants.
• 0:39
  Speaker 1: They have raised over sixty billion dollars this year. That's
• 0:42
  Speaker 1: more than the previous decade come behind. So it has
• 0:46
  Speaker 1: been on quite a tear. Let's talk about it with
• 0:48
  Speaker 1: our next guest, Terry Kawaja, founder and CEO of Luma
• 0:52
  Speaker 1: Partners Investment Banking. He joins us on the phone in Brazilia, Brazil. Terry,
• 0:57
  Speaker 1: nice to have you here with us, um, how are
• 1:00
  Speaker 1: you doing great to be with you, Carol. I think
• 1:04
  Speaker 1: you nailed it with the adjectives speculative phrasing, because by
• 1:10
  Speaker 1: their very nature, these vehicles are speculative because one does
• 1:15
  Speaker 1: not know when one makes the investment in the I
• 1:18
  Speaker 1: p O of these spects, you know exactly what you're
• 1:21
  Speaker 1: what you're gonna get. And when you mentioned Frenzy, not
• 1:24
  Speaker 1: only is it sixty five billion at this point, that's
• 1:28
  Speaker 1: probably a month out a day. This this craze has
• 1:32
  Speaker 1: been incredible, almost unmatched on wall streets in terms of
• 1:36
  Speaker 1: under udder volumes. You know. That's uplows my mind, Like
• 1:38
  Speaker 1: you're basically banking on the investor. And that's why when
• 1:42
  Speaker 1: there's a hedge fund investor, well known investor doing it,
• 1:44
  Speaker 1: we're like, oh, look at what they're doing. But you
• 1:46
  Speaker 1: are basically banking on their investing prowess to get it
• 1:51
  Speaker 1: right right, because you're basically giving them a blank check
• 1:53
  Speaker 1: invest where you want, hopefully it pays off, correct. I
• 1:58
  Speaker 1: think look what we did a a Loomis gip a
• 2:01
  Speaker 1: market map of all of these different spects. There are
• 2:04
  Speaker 1: over two hundred and fifty just in the class of
• 2:07
  Speaker 1: UH that of UH, you know, and there's still of
• 2:11
  Speaker 1: those hud are still looking for targets. They have sixty
• 2:16
  Speaker 1: five billion dollars in cash, they'll lever that up to
• 2:19
  Speaker 1: I don't know, three four hundred billion dollars worth of
• 2:23
  Speaker 1: enterprise value of targets, and there in life the rub right,
• 2:27
  Speaker 1: I think we're gonna have a scenario where we're gonna
• 2:31
  Speaker 1: look back at this and put it under the lens
• 2:34
  Speaker 1: of the good, the bad, and the ugly. The good
• 2:36
  Speaker 1: is that this is a vehicle to help companies do
• 2:39
  Speaker 1: accelerated I p o s, and that's great, Lord knows
• 2:42
  Speaker 1: we need more public companies. The bad, of course, is
• 2:46
  Speaker 1: that we're clearly going to see some commoditization with you know,
• 2:49
  Speaker 1: so much money chasing UH companies, that we're going to
• 2:53
  Speaker 1: have a demand supplying balance, and that out of commoditize
• 2:57
  Speaker 1: the returns for the sponsor UH. And then the ugly
• 3:02
  Speaker 1: is I think relates to what might happen to public
• 3:05
  Speaker 1: investors in this sector, should all of that money caused
• 3:09
  Speaker 1: them to go after lower and lower quality targets that
• 3:14
  Speaker 1: perhaps are on the edge of whether they're suitable to
• 3:17
  Speaker 1: be public companies in the first Well, well, that's what
• 3:19
  Speaker 1: I keep thinking about. Terry is you know, we have
• 3:22
  Speaker 1: for the last couple of years just talked about the
• 3:24
  Speaker 1: amount of money that's out there to invest, the amount
• 3:27
  Speaker 1: of money to go into start up companies, the amount
• 3:30
  Speaker 1: of money that's been able to go into UH startups
• 3:34
  Speaker 1: and that have been enabled them to stay private that
• 3:36
  Speaker 1: much longer. I mean, there's a lot of money slashing around.
• 3:40
  Speaker 1: It does feel like and I don't know if I'm
• 3:42
  Speaker 1: getting this wrong, because the I P O market is
• 3:43
  Speaker 1: also part of this kind of speculative frenzy this year,
• 3:46
  Speaker 1: but it does feel certainly different from um, how do
• 3:50
  Speaker 1: do you see them kind of the same the frenzy
• 3:52
  Speaker 1: and I P as the frenzy inspects this year kind
• 3:54
  Speaker 1: of the same beasts or are they different? Well, I
• 4:00
  Speaker 1: say they're similar in but the companies that are able
• 4:03
  Speaker 1: to go public in and of their own right tend
• 4:07
  Speaker 1: to be higher quality, right, I mean, yes, the spect
• 4:10
  Speaker 1: can be utilized to accelerate and go to market, but
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  Speaker 1: if your if your quality company, remember that there is
• 4:19
  Speaker 1: a cost associated without accelerated speeds to the public markets,
• 4:23
  Speaker 1: and that is the delusion that you will experience, your
• 4:27
  Speaker 1: your shareholders will experience because of the of the spect
• 4:32
  Speaker 1: that the sponsor gets for free basically, so that promote
• 4:37
  Speaker 1: that the sponsor has will In fact, I mean, equity
• 4:41
  Speaker 1: is a zero sum game, so their gain is U
• 4:46
  Speaker 1: is essentially a delusion to the other shareholders. So it
• 4:49
  Speaker 1: has to be worthwhile. And you I think struck the
• 4:54
  Speaker 1: correct chord at the outset, which is it is going
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  Speaker 1: to place an extreme of focus on the quality of
• 5:02
  Speaker 1: the SPAC sponsor. I think when you get the eight
• 5:05
  Speaker 1: five billion of issuance, everybody and their sister is doing
• 5:09
  Speaker 1: a spact. My dentist, you know, uh, receptionist who's doing
• 5:14
  Speaker 1: a fact, everyone's doing a SPAT, but not all of
• 5:18
  Speaker 1: them will will be successful, which puts all the more
• 5:22
  Speaker 1: importance on analyzing the quality both in terms of you know,
• 5:27
  Speaker 1: operational expertise, strategic oversight, uh and as well the network
• 5:33
  Speaker 1: so that they can you have some sense of assurance
• 5:36
  Speaker 1: that they can not only find a good target, but
• 5:40
  Speaker 1: they can convince them that their sponsor group has more
• 5:43
  Speaker 1: value add than a X y Z SPAC and therefore
• 5:47
  Speaker 1: they don't have to eat. So, I mean, what is
• 5:50
  Speaker 1: it about this year that all of a sudden SPACs
• 5:53
  Speaker 1: You know, they're not a new new vehicle like they've
• 5:55
  Speaker 1: been around, but what was it about this year in particular?
• 5:58
  Speaker 1: Was it just the cheap money floating around again or what? Yeah,
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  Speaker 1: I think there is certainly a lot as it relates
• 6:05
  Speaker 1: to you know, Demando stripping supply. But historically will Will
• 6:11
  Speaker 1: the spacts have been around. I mean they've been deemed
• 6:14
  Speaker 1: somewhat tawdry, right, I mean, yeah, they were kind of
• 6:17
  Speaker 1: vast money vehicles and the like. But now not only
• 6:22
  Speaker 1: do we have quantity, we have quality. So a list investors,
• 6:28
  Speaker 1: you know, Michael Kleins and probably Happy Tea in technologies,
• 6:33
  Speaker 1: I mean at politicians, athletes, celebrities, everybody new in on it.
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  Speaker 1: But but I would really want to focus on folks
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  Speaker 1: that know the industry well or well network that are
• 6:45
  Speaker 1: likely to be able to find target well. And I
• 6:47
  Speaker 1: think about a conversation. We've got to wrap up here,
• 6:49
  Speaker 1: but I do think about a conversation I had with
• 6:51
  Speaker 1: two individuals long time in the restaurant industry, and they
• 6:54
  Speaker 1: had a spack and it was just about looking at
• 6:57
  Speaker 1: the realist the restaurant property specifically as an industry they
• 7:00
  Speaker 1: really really knew and they were out to make some acquisitions.
• 7:04
  Speaker 1: We're gonna leave it there. Terry, thank you so much.
• 7:06
  Speaker 1: Terry Kawasha, he's founder and CEO of Luma Partners Investment Banking,
• 7:10
  Speaker 1: joining us on the phone from Brazilia, Brazil. What's chalk
• 7:16
  Speaker 1: out the Bloomberg terminal Bloomberg dot com and you'll find
• 7:18
  Speaker 1: this Bloomberg opinion piece. It's taking a look at student debt.
• 7:22
  Speaker 1: It's about one point seven trillion. It is up from
• 7:25
  Speaker 1: two hundred fifty billion back in two thousand four. Student loans.
• 7:28
  Speaker 1: They are now the second largest slice of household debt
• 7:31
  Speaker 1: after mortgages, bigger than credit card debt. Will writing about
• 7:34
  Speaker 1: it at about the possibility of for giving student loans,
• 7:37
  Speaker 1: she says it is not a lasting solution. Let's bring
• 7:40
  Speaker 1: Claudia Sums. She's founder at Stay at Home Macro Consulting.
• 7:43
  Speaker 1: She's also a former Federal Reserve economists known for creating
• 7:46
  Speaker 1: the sam Roll, a recession indicator, and she joins us
• 7:49
  Speaker 1: on the phone from Washington, d C. Claudia, nice to
• 7:52
  Speaker 1: have you here with us. So tell us about this column.
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  Speaker 1: I feel like for years, uh, you know, we've been
• 7:57
  Speaker 1: talking about this mounting student debt, and there is a
• 8:01
  Speaker 1: possibility that President electjo Biden could issue an executive order
• 8:05
  Speaker 1: to cancel a portion of it, you say, and you
• 8:07
  Speaker 1: remind us this isn't necessarily something that's going to have
• 8:10
  Speaker 1: a lasting or longer impact, right, Yeah, And first, well,
• 8:15
  Speaker 1: thank you for having me on today. And I am
• 8:19
  Speaker 1: so heartened that this discussion about higher education and the
• 8:23
  Speaker 1: affordability of it has become one the front and center
• 8:27
  Speaker 1: in the Biden administration discussions, largely because they likely say,
• 8:31
  Speaker 1: it's a divided Congress and they have to think really
• 8:33
  Speaker 1: hard about the tools that they have via their disposal
• 8:37
  Speaker 1: of an executive order or just running the federal agencies better.
• 8:41
  Speaker 1: So I think this is important. I understand why student
• 8:44
  Speaker 1: loan debt forgiveness has been the centerpiece, what kicked it off, right,
• 8:48
  Speaker 1: Like a lot of people would like those debts forgiven.
• 8:51
  Speaker 1: And yet I think this is a moment to make
• 8:53
  Speaker 1: sure that we have a bigger conversation about why we
• 8:56
  Speaker 1: got into this mess and why we have millions of
• 9:00
  Speaker 1: Americans who start higher education, whether it's certificates or bachelor's
• 9:04
  Speaker 1: or masters, and never finish. Right, that is a problem. Well,
• 9:09
  Speaker 1: this is what I love. Listen, this is so you know,
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  Speaker 1: I hate to think about, you know, a college education
• 9:14
  Speaker 1: and thinking about the financial impact when you come on
• 9:16
  Speaker 1: the other side. But it's a reality, especially you know, Claudie,
• 9:19
  Speaker 1: when we see a lot of students getting degrees and
• 9:22
  Speaker 1: then struggling in an occupation potentially where they can't pay
• 9:26
  Speaker 1: back all of that student debt. And I know the
• 9:29
  Speaker 1: Obama administration made some steps towards this, creating that college scorecard.
• 9:33
  Speaker 1: I have a daughter who sevent team we're looking at colleges. I'm,
• 9:36
  Speaker 1: you know, having these conversations with her about what are
• 9:38
  Speaker 1: you going to study? What are you gonna do, so
• 9:40
  Speaker 1: that you think about on the other side, But we
• 9:42
  Speaker 1: do need to kind of think about this. This is too, unfortunately,
• 9:46
  Speaker 1: has become because college educations have gotten so expensive, a
• 9:49
  Speaker 1: business proposition, right, And I think I've looked at this
• 9:54
  Speaker 1: often from the lens of thinking about the mortgage debt crisis,
• 9:57
  Speaker 1: because I was at the Federal Reserve during that time
• 9:59
  Speaker 1: and thinking out consumers and household finance and debt is
• 10:03
  Speaker 1: not necessarily bad. It depends on the return you get
• 10:07
  Speaker 1: on that debt. For many, many students, getting higher education
• 10:12
  Speaker 1: is what launches them into a better career, other better
• 10:15
  Speaker 1: career than their parents or grandparents had. But for students
• 10:18
  Speaker 1: who do not finish or do not get a high
• 10:20
  Speaker 1: quality education, they leave with no better earnings than they
• 10:23
  Speaker 1: came in and a lot of debt. Right, So it
• 10:27
  Speaker 1: really depends. And to your point about the college scorecard,
• 10:29
  Speaker 1: the intention of that is to get good information out
• 10:32
  Speaker 1: so that parents, students, people working coming back to education
• 10:37
  Speaker 1: later in life, that they select institutions and select programs
• 10:41
  Speaker 1: that have that high return on investment. Right, It's something
• 10:46
  Speaker 1: don't think the scorecards enough. I applaud you for using it,
• 10:49
  Speaker 1: but like just information isn't going to cut it. Well,
• 10:52
  Speaker 1: give us, give us your checklist of what you think
• 10:54
  Speaker 1: about administration needs to do to make this to deal
• 10:57
  Speaker 1: with this, because the numbers have gotten out of control.
• 11:00
  Speaker 1: I feel like all of the numbers associated with getting
• 11:04
  Speaker 1: a college degree, the cost, the process of getting there,
• 11:08
  Speaker 1: um like a lot of it has just gotten out
• 11:10
  Speaker 1: of out of control. So what would you say that
• 11:12
  Speaker 1: a Biden administration needs to do when it comes to
• 11:14
  Speaker 1: student debts specifically? So the most important thing is they
• 11:19
  Speaker 1: have to focus on and deliver on accountability. Right, So,
• 11:23
  Speaker 1: all three of the proposals that I talked about in
• 11:25
  Speaker 1: the piece the college scorecard, we already talked about getting
• 11:28
  Speaker 1: information taken a really hard look at what these schools
• 11:31
  Speaker 1: are delivering and not fulling punches, and the other two
• 11:35
  Speaker 1: are much more directly accountability. So one is what was
• 11:40
  Speaker 1: on the books as a gainful employment program. The Secretary
• 11:43
  Speaker 1: Gavos has walked this back to some extent, although made
• 11:46
  Speaker 1: some good arguments about why it wasn't good enough and
• 11:49
  Speaker 1: that it was very focused on private, for profit colleges.
• 11:54
  Speaker 1: And I firmly believe and I agree with her on this,
• 11:56
  Speaker 1: and researchers across the political spectrum do to you gotta
• 11:59
  Speaker 1: hold all institutions accountable. I talked with Professor Jordan's Matsudera
• 12:05
  Speaker 1: in the speech or in the in the piece I'm sorry,
• 12:08
  Speaker 1: and he said what he thinks is important, having studied
• 12:11
  Speaker 1: this while he was at the Council of Economic Advisors,
• 12:13
  Speaker 1: is that you should do a program by program institutions
• 12:17
  Speaker 1: is too broad of a blanket because there are public
• 12:20
  Speaker 1: institutions that deliver some great education and they have some
• 12:23
  Speaker 1: programs that really shouldn't be there, and they're getting funding
• 12:28
  Speaker 1: from the federal government through these student loans. It is
• 12:30
  Speaker 1: a huge stick for these universities and other institutions if
• 12:34
  Speaker 1: you say you won't get our federal loans dollars right,
• 12:37
  Speaker 1: And so that's important. And the last one I touched on,
• 12:40
  Speaker 1: which is absolutely not sexy and I would understand that
• 12:43
  Speaker 1: they wouldn't put this friends and center, is the mortgage.
• 12:47
  Speaker 1: The student loans are serviced by private company. This is
• 12:51
  Speaker 1: the same thing that happened with the mortgages that not
• 12:54
  Speaker 1: paying attention to them and holding them accountable cause problems
• 12:58
  Speaker 1: over a decade ago in the mortgage space, and it
• 13:01
  Speaker 1: is it is causing and will continue to cause problems
• 13:04
  Speaker 1: in the student loan space. We have forgiveness programs on
• 13:08
  Speaker 1: the books that like a handful of individuals have qualified for,
• 13:14
  Speaker 1: and part of it as services are not motivated to
• 13:18
  Speaker 1: tell students with debt about those Yeah, to stop, no listen.
• 13:23
  Speaker 1: I remember, like I said, when that first headline once
• 13:25
  Speaker 1: came out, I think when it was it when student
• 13:27
  Speaker 1: debt hit a trillion dollars and doing a story and
• 13:29
  Speaker 1: talking to people who had student debt and you know,
• 13:32
  Speaker 1: their wages were being garnished because of depending whether they
• 13:35
  Speaker 1: had private loans or stuff. I mean, it's just really
• 13:37
  Speaker 1: problematic and we need to kind of all go in
• 13:40
  Speaker 1: this eyes wide open if you will, and some changes. Um,
• 13:44
  Speaker 1: how likely just got about thirty seconds here. How likely
• 13:46
  Speaker 1: do you expect something to come out of the Biden
• 13:48
  Speaker 1: administration when it comes to student loans? Well, this is
• 13:52
  Speaker 1: a lever that they have and they're going to have
• 13:55
  Speaker 1: to use it. Right, They're gonna not have a lot
• 13:57
  Speaker 1: of levers they'd like to putting out. How there's a
• 14:00
  Speaker 1: billions trillions of dollars through Congress. This one they can do.
• 14:03
  Speaker 1: I just want them to take an and both approach
• 14:07
  Speaker 1: and look at a lot of tools. So that's what
• 14:09
  Speaker 1: success will depend on. Yeah, exactly right, multifaceted to get
• 14:13
  Speaker 1: something done. Claudia, thank you so much. Really appreciate your
• 14:17
  Speaker 1: time today. Clodia Psalm, She's founder of Stay at Home
• 14:19
  Speaker 1: Macro Consulting. She's a former Federal Reserve economists known for
• 14:23
  Speaker 1: creating the some role, which is uh an indicator of
• 14:25
  Speaker 1: the recession. But listen, student loans, it's been a problem
• 14:28
  Speaker 1: for multiple years and certainly something that will be facing
• 14:32
  Speaker 1: the Biden administration. All right, you are listening to Bloomberg
• 14:35
  Speaker 1: Markets on this Monday. I'm Karl Master and Travanni Quinn
• 14:38
  Speaker 1: and Paul Sweeney want to get into what were some
• 14:41
  Speaker 1: of the hottest jobs and top paid skills of in
• 14:43
  Speaker 1: a market environment, In a jobs market where we know
• 14:47
  Speaker 1: some folks didn't feel too much pain because of the
• 14:49
  Speaker 1: pandemic and others really dealt a big, big blow when
• 14:53
  Speaker 1: it came to the virus impact on their jobs and
• 14:56
  Speaker 1: their ability to make a living. So let's see what
• 14:58
  Speaker 1: the CEO pay Scale is seeing. Scott Tory is with
• 15:01
  Speaker 1: us on the phone from Seattle, Washington. Scott, great to
• 15:04
  Speaker 1: have you here with us. How are you good? Morning
• 15:07
  Speaker 1: care I'm fantastic. Thanks for having me. Well, it's good
• 15:09
  Speaker 1: to have you here with us. Um, talk to us
• 15:11
  Speaker 1: a little bit about your reflection back first of all,
• 15:14
  Speaker 1: and what you guys are finding about because it was
• 15:17
  Speaker 1: a strange year, to say the least, a difficult year
• 15:20
  Speaker 1: for many, but that didn't mean some people in terms
• 15:23
  Speaker 1: of their jobs and their occupations, they were in demand.
• 15:28
  Speaker 1: They were Dickens was rather prophetic. It was the best
• 15:30
  Speaker 1: of times and worse of times in this market. And
• 15:33
  Speaker 1: I have to begin by thanking the millions of people
• 15:36
  Speaker 1: that that came to pay Scale to share this data
• 15:38
  Speaker 1: that makes our job Trends and Skills report possible and
• 15:41
  Speaker 1: here's a couple of things we found. There are some
• 15:43
  Speaker 1: particularly fast growing jobs in terms of both wages UH
• 15:47
  Speaker 1: and other metrics. Health screeners up a hundred thirty six.
• 15:51
  Speaker 1: You see them out and about every place you go. Now,
• 15:54
  Speaker 1: the number of personal shoppers and the wages associate them
• 15:57
  Speaker 1: have gone up a d But Kara, one you may
• 16:00
  Speaker 1: not know about is r V technicians. Their wages are
• 16:03
  Speaker 1: of ninety seven percent. Actually, that does not surprise me
• 16:06
  Speaker 1: because we know and from a lot of conversations I've
• 16:09
  Speaker 1: had with you know, individuals, certainly in the leisure industry
• 16:11
  Speaker 1: or travel. You know, people didn't get on planes, people
• 16:14
  Speaker 1: didn't go to big hotels. People wanted to go. A
• 16:17
  Speaker 1: lot of people were buying boats, campers, you name it
• 16:19
  Speaker 1: where they could be away from people, for sure. And
• 16:22
  Speaker 1: it's it's a good example of kind of the resiliency
• 16:25
  Speaker 1: and people pivoting to what what we can do instead
• 16:27
  Speaker 1: of always confronting what we can't. Well, it's interesting, So
• 16:30
  Speaker 1: what about the labor trends Scott that we're seeing here
• 16:34
  Speaker 1: in What does it, if anything, tell us about what
• 16:37
  Speaker 1: we might see because I do think in you know,
• 16:41
  Speaker 1: we've said this a million times in in eras of
• 16:44
  Speaker 1: crisis often comes out of it innovation, but sometimes that
• 16:47
  Speaker 1: also means disruption in terms of jobs needed or jobs
• 16:51
  Speaker 1: needed no more. So I do wonder what that means. Listen.
• 16:56
  Speaker 1: I think there are two fundamental trends that come out
• 16:58
  Speaker 1: of twenty that are not going away. One is the
• 17:00
  Speaker 1: pivot that many companies are confronting with remote work um
• 17:04
  Speaker 1: and for those those UH areas of the economy, they
• 17:08
  Speaker 1: can work remotely, and increasingly high percentage of companies are
• 17:12
  Speaker 1: choosing to do so, whether they go remote, hybrid or partially,
• 17:17
  Speaker 1: or they bring everybody back because that's the culture that
• 17:19
  Speaker 1: they need. That trend and confronting that trend is something
• 17:23
  Speaker 1: every company is gonna have to deal with. The second
• 17:27
  Speaker 1: is the shift we've seen, certainly with the social trends,
• 17:30
  Speaker 1: with the trends associate with Black Lives Matter, and the
• 17:34
  Speaker 1: drive towards pay equity and transparency of that. Pay equity
• 17:38
  Speaker 1: is a trend that will will last well beyond and
• 17:41
  Speaker 1: should last well beyond because it's the right thing to
• 17:44
  Speaker 1: do well. Okay, And I do wonder because we've talked
• 17:47
  Speaker 1: also about women, um, you know, women leaving the workforce
• 17:50
  Speaker 1: because of the pandemic um. You've seen some of the
• 17:53
  Speaker 1: numbers that are out there women who are no longer
• 17:56
  Speaker 1: you know in that in that pipeline with p and
• 17:59
  Speaker 1: L profit and laws, responsibility is that they've been taken out.
• 18:02
  Speaker 1: I do wonder how much of the gaps, the inequities
• 18:07
  Speaker 1: that ultimately there are some deliberate actions to kind of
• 18:11
  Speaker 1: make up for lost ground, whether it's women, whether it's minorities. Well,
• 18:15
  Speaker 1: I think there are a number of steps, and certainly
• 18:17
  Speaker 1: within with our company, we're taking delivered steps to ensure
• 18:21
  Speaker 1: that that everybody has an opportunity. And these are particularly
• 18:24
  Speaker 1: trying times. You mentioned women and the concept of working
• 18:28
  Speaker 1: from home, having all the challenges of working from home
• 18:31
  Speaker 1: and not having a place to go to get away.
• 18:34
  Speaker 1: Those are really difficult times and we are seeing that
• 18:36
  Speaker 1: in the data in terms of attrition of this wonderful
• 18:39
  Speaker 1: talent that we need to bring back to have an
• 18:42
  Speaker 1: impact on our economy. But there there are so many
• 18:45
  Speaker 1: things we can do. One of the things we encourage
• 18:47
  Speaker 1: folks to do is really get out and ensure they
• 18:49
  Speaker 1: have the data to drive these effective decisions. So pay
• 18:52
  Speaker 1: Scale has a partnership with the USC Race and Equity
• 18:56
  Speaker 1: UH program to really help companies look at the data,
• 19:00
  Speaker 1: assess this data and get ahead of the trends because
• 19:04
  Speaker 1: the legislation will come. But it's really the important social
• 19:08
  Speaker 1: uh pressure that will will be put upon us. But
• 19:10
  Speaker 1: more importantly, this is talent that you need. It's the
• 19:13
  Speaker 1: talent that will make your business better. Uh, and you
• 19:16
  Speaker 1: need to continue to attract and retain it. Right, it's
• 19:18
  Speaker 1: so basic. We've all seen the research and you know
• 19:20
  Speaker 1: the importance of diversity and d n I when it
• 19:23
  Speaker 1: comes to your staffic. Hey just got about thirty seconds
• 19:26
  Speaker 1: left here. Compensation, how is it changing forever? What's changing
• 19:32
  Speaker 1: forever is the idea that you can work from anywhere
• 19:34
  Speaker 1: and what does that really do for for different employers?
• 19:38
  Speaker 1: People are going to happy looking at what skills do
• 19:40
  Speaker 1: I need to be effective? Where can I find those
• 19:42
  Speaker 1: skills and sees this as an opportunity diverse to use
• 19:46
  Speaker 1: this to diversify your talent pool around the world. But
• 19:49
  Speaker 1: in terms of compensation, which changes just very quickly. Uh.
• 19:53
  Speaker 1: They're going to be in certain industries are gonna be
• 19:55
  Speaker 1: going up in a very highway, and until we get
• 19:57
  Speaker 1: the pandemic under control, there will be challenges in those
• 20:00
  Speaker 1: industries that are struggling the most. All right, should be
• 20:02
  Speaker 1: an interesting year, Scott, Thank you so much. Going to
• 20:04
  Speaker 1: leave it on that note, Happy New Year, Scott Tory.
• 20:07
  Speaker 1: He is a CEO of pay Scale. He is the CEO,
• 20:11
  Speaker 1: I should say, at pay Scale, joining us on the
• 20:13
  Speaker 1: phone from Seattle, Washington. So this story definitely caught our attention.
• 20:19
  Speaker 1: It has to do with arbitration and as I said earlier,
• 20:23
  Speaker 1: coming to a doctor and medical practice near you thanks
• 20:26
  Speaker 1: to private equity. So it is among our most write
• 20:28
  Speaker 1: stories on the Bloomberg Gets. Written by Heather pearl Berg.
• 20:31
  Speaker 1: She is Private Equity reporter at Bloomberg News. She joins
• 20:33
  Speaker 1: us on the phone from Baltimore, Heather Man, this is
• 20:36
  Speaker 1: a like story everybody should read in its entirety and
• 20:39
  Speaker 1: really get through the details. So tell us about um
• 20:43
  Speaker 1: Jesse Harrold and tell us about what she recently did
• 20:47
  Speaker 1: and what she found out. Sure, thanks for having me so, yes. So,
• 20:53
  Speaker 1: Jesse Harroll is a lawyer in Florida who took a
• 20:57
  Speaker 1: binding arbitration agreement all the way up to the state
• 21:00
  Speaker 1: Supreme Court. And one I didn't know that in the meantime,
• 21:05
  Speaker 1: the medical practice that was trying to force patients to
• 21:09
  Speaker 1: sign this agreement. Um had bought her own doctor's office,
• 21:14
  Speaker 1: and then when she went for her annual appointment, they
• 21:17
  Speaker 1: asked her to sign the same form. Right, And this
• 21:19
  Speaker 1: is a doctor she'd been going to for years, right,
• 21:22
  Speaker 1: fourteen years delivered her first child. It was an O. B.
• 21:25
  Speaker 1: G U I N. And his entire group had gotten
• 21:28
  Speaker 1: acquired by the same private equity firm. That's a huge
• 21:31
  Speaker 1: and Florida group. We'll talk to us about this. You know,
• 21:34
  Speaker 1: we talked about binding arbitration, right, and we've talked about
• 21:37
  Speaker 1: this a lot when it came to um harassment suits
• 21:41
  Speaker 1: or you know, pay disputes between men and women on
• 21:44
  Speaker 1: Wall Street. And all of a sudden, we you know,
• 21:45
  Speaker 1: it's come to the forefront that there's lots of these
• 21:48
  Speaker 1: arbitration agreements that basically individuals kind of giveaway not kind
• 21:53
  Speaker 1: of they give away their their right to sue. And
• 21:56
  Speaker 1: all of this stuff happens behind closed doors. This is
• 21:58
  Speaker 1: a relatively new thing for the medical community. It's been
• 22:02
  Speaker 1: happening for a little while, but it was very specific,
• 22:07
  Speaker 1: and now it seems that it's cropping up way more
• 22:10
  Speaker 1: in certain specialties like kynecology. Lawyers would say, high risk
• 22:15
  Speaker 1: where doctors are more likely to get food plastic surgery,
• 22:19
  Speaker 1: and you see it a lot with these private equity
• 22:21
  Speaker 1: own nursing as well. Well. How much is the private
• 22:24
  Speaker 1: equity world, Heather, you know, tapping into the medical world
• 22:27
  Speaker 1: increasingly when it comes to investments, it's huge. I mean,
• 22:31
  Speaker 1: private equity has been investing in every corner of health
• 22:35
  Speaker 1: care and it's just becoming more and more common. Whether
• 22:39
  Speaker 1: it's hospitals, doctor's office, is eating disorder, clinics, name it.
• 22:43
  Speaker 1: I mean, they're everywhere. And we've been reporting on the
• 22:47
  Speaker 1: impact of you know that some of this is having
• 22:50
  Speaker 1: on patient care, whether it leads to them buying cheaper
• 22:52
  Speaker 1: supplies or pushing more procedures. And this story really looks
• 22:57
  Speaker 1: at more of how they're bringing their legal prowess to
• 23:00
  Speaker 1: medicine um and how it really does have a large
• 23:03
  Speaker 1: impact on patients and the rights there for sitting right exactly.
• 23:07
  Speaker 1: And you make the important distinction, Howther, that there's arbitration,
• 23:09
  Speaker 1: which some people can think can be a good thing
• 23:12
  Speaker 1: in terms of you know, leading to agreements, but then
• 23:14
  Speaker 1: there's binding arbitration, which takes it to a whole other level. Right,
• 23:18
  Speaker 1: there's a lot there's been a lot of tort reform
• 23:20
  Speaker 1: and it's kind of very state by state and in
• 23:23
  Speaker 1: most cases, uh, when it comes to out practice, the
• 23:26
  Speaker 1: patient and the doctor would go into arbitration after a
• 23:30
  Speaker 1: dispute occurs. In this case, when we're talking about binding arbitration,
• 23:35
  Speaker 1: this is a form that people are signing before they
• 23:37
  Speaker 1: even see the doctor. So they're giving up these rights
• 23:41
  Speaker 1: before anything ever happens. And in most cases people don't
• 23:45
  Speaker 1: really realize what they're signing and they go into a
• 23:47
  Speaker 1: doctor's office that I'm guilty of it too, like give
• 23:50
  Speaker 1: me stato forms and I'm like, okay, I just want
• 23:52
  Speaker 1: to see the doctor and signing. So, you know, there's
• 23:55
  Speaker 1: a real question especially considering these groups are using finding
• 24:00
  Speaker 1: arbitration agreements that was already you know, considered void by
• 24:04
  Speaker 1: the Florida Supreme Court, that you know that there's some
• 24:08
  Speaker 1: sort of patient intimidation or you know, other issue going
• 24:12
  Speaker 1: on because the patients signing these forms, if they do
• 24:15
  Speaker 1: know what they're signing, are assuming that they are valid
• 24:18
  Speaker 1: and enforceable, so they're much less likely to do or
• 24:23
  Speaker 1: you know, find the lawyer when they are injured, right exactly.
• 24:27
  Speaker 1: And it's interesting as you say in your story, howether
• 24:29
  Speaker 1: it's said. Even though the document is not legally enforceable,
• 24:31
  Speaker 1: there's nothing preventing the company from asking patients to sign
• 24:34
  Speaker 1: it and refusing to treat them in the future if
• 24:36
  Speaker 1: they don't. To be fair, thirty seconds left here, what
• 24:39
  Speaker 1: do the private equity firms say, Well, they would say
• 24:43
  Speaker 1: that this has nothing to do with their ownership, that
• 24:46
  Speaker 1: it's the doctors who have these agreements with the patients
• 24:50
  Speaker 1: um And in reality, the doctors, once they joined the group,
• 24:55
  Speaker 1: have to agree that all of their patients, you know,
• 24:58
  Speaker 1: will be required to sign this. So sure, the doctors
• 25:01
  Speaker 1: have a little bit of a choice. But you know,
• 25:05
  Speaker 1: if you're a retiring doctor and you're about to join
• 25:08
  Speaker 1: this group with ninety of your colleagues, I don't know
• 25:11
  Speaker 1: that you're going to just give up your job and
• 25:13
  Speaker 1: start over because you don't want your patients to sign
• 25:15
  Speaker 1: this one. It's a little bit of a false Yeah,
• 25:18
  Speaker 1: it's just really kind of shocking. Heather pro great story,
• 25:22
  Speaker 1: private equity reporter at Bloomberg News, on the phone from Baltimore.
• 25:27
  Speaker 1: Thanks for listening to Bloomberg Markets podcast. You can subscribe
• 25:30
  Speaker 1: and listen to interviews at Apple podcasts, or whatever podcast
• 25:34
  Speaker 1: platform you prefer. I'm Bonnie Quinn. I'm on Twitter at
• 25:37
  Speaker 1: Bonnie Quinn. And Ball Sweeney I'm on Twitter at pt Sweeney.
• 25:40
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• 25:43
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