Key Takeaways

  • Ares investor Joel argues that in private, illiquid credit markets, sustained deal flow and better risk profiles stem from a firm's consistent reputation for delivering on commitments, not just optimizing individual transactions.
  • This long-term approach means prioritizing counterparty alignment and understanding their core objectives, which often leads to preferential deal sourcing through sophisticated "yours if" calls.
  • Joel contrasts the short-term, "poker-like" mentality often seen in early career dealmaking with the necessity of building a lasting firm brand that ensures repeat business and expands network referrals.
  • The emphasis on trust helps manage deal risk by allowing for structures that genuinely benefit both parties, moving beyond purely contractual returns to foster more robust, collaborative relationships.

The Art of the 'Yours If' Call

In the opaque world of private and illiquid markets, Ares investor Joel points out that dealmaking quickly moves past pure analytics into the realm of relationships. Unlike public securities, where market depth can smooth over individual counterparty quirks, private credit hinges on trust. Joel stresses, “Your best sourcing comes from branding, which is being established and known that if you say you're going to do X, you're going to do it.” This isn't just about being a 'nice guy'; it's a hard competitive advantage. When a firm consistently delivers on promises, executing deals as stated and on time, it builds an invaluable brand. This reputation leads to "yours if" calls, where potential deal counterparties offer opportunities to Ares first, bypassing a competitive process. These are deals where the counterparty trusts Ares to understand their needs and close the transaction without surprises, granting a crucial first look in a tight market. It’s a direct function of market efficiency and information asymmetry, where established trust reduces transaction friction.

Beyond the IRR: Structuring for True Alignment

Joel cautions against the common pitfall of hyper-optimizing every single transaction for maximum contractual return, especially in credit. He notes the irony: “What you realize is by the end of it, congratulations, you structured a great deal, and you are never going to do a deal with me ever again.” This highlights the tension between a short-term, winner-take-all mentality and the long-term imperative of repeat business and network expansion. Joel advocates for a more nuanced approach centered on alignment, posing the question: “How do I look at what you're doing? And how do I try to put myself in your shoes... What are they solving for?” By deeply understanding a counterparty's objectives – beyond just their stated asks – dealmakers can structure solutions that genuinely benefit both sides. This collaborative mindset, Joel argues, leads to better risk management and increased deal flow over time. It transforms a potentially adversarial negotiation into a partnership, where each successful engagement becomes a referral. Joel adds, “Every good deal I've done with you where I've done what I said I could do, you're talking to three or four people. It is the brand and you're telling them actually you should work with Joel, you should work with All Credit, you should work with Ares on these situations and it expands it.”

Why It Matters

This perspective from Ares’ Joel signals a shift in the competitive landscape of private capital, particularly within credit. As more dry powder chases fewer deals, and as economic uncertainty persists, the ability to source proprietary deals and manage risk through trusted relationships becomes paramount. Firms that prioritize consistent execution and genuine counterparty alignment are positioning themselves for superior long-term returns, not just by winning bids, but by consistently being the first call. This elevates "relationship capital" from a soft attribute to a measurable driver of alpha, distinguishing market leaders and hinting at a premium for platforms with deeply embedded trust networks in a fragmented and increasingly competitive private market.