David Lyon – Hybrid Capital Solutions for Private Assets

**David Lyon** (0:00)
I always laugh when I tell my investors, people that show you the same decks that say wall of maturities. It's never happened in the history of finance. People say, oh my God, I forgot I have a maturity. Good companies finance those ahead of time. It's only the bad ones that can't refinance themselves, and people figure that out. They talk about fraud in China. They talk about debt to GDP. I call it the boogeyman slides. They're saying, world's gonna end, I have capital.

**Ted Seides** (0:28)
I'm Ted Seides, and this is Capital Allocators.
My guest on today's show is David Lyon, Managing Director and Head of Capital Solutions at Neuberger Berman, where he oversees $10 billion of assets and deploys $2 to $3 billion each year, originating large-scale financing solutions to premier sponsor-backed companies. Over three decades, David was the first arbitrage analyst at Och-Ziff in the mid 1990s, an associate at one of the then largest private equity firms in the late 1990s, and a fundamental distress debt investor at Quant Hedge Fund DE Shaw through the global financial crisis. His experiences offer a deep understanding of both sides of the balance sheet, which he brought together in hybrid capital solutions over the last decade. Our conversation traces his journey, lessons learned along the way, and perspectives on today's private markets. We then discussed the need for flexible capital solutions to address private equity liquidity challenges, competitive differentiation in the space, and the process for making it happen across sourcing, creating solutions, and managing risk. Along the way, David shares his refreshingly honest views on investor expectations, leveraged capital structures, good and bad investments, and incentives that help navigate an increasingly crowded marketplace. Before we get going, it's that time of year when we turn to traditions. Like the tradition of Thanksgiving, gathering family and friends to share what we're thankful for. One of which is the ability to eat enough turkey and tryptophan to fall into one of the best slumbers all year, that nap on the couch while watching football. While I'll spend the turkey days with my family, I'm particularly grateful this year for the incredible team of professionals that brings together what you hear and experience with Capital Allocators. That's Hank, our CEO, Morgan, our Head of Ops, Tamar, our Head of Business Development, and Liz, our Head of Content. I put our starting five up against any NBA All-Star team.

**SPEAKER_4** (2:39)
Off the court.

**Ted Seides** (2:41)
Our values of quality, entrepreneurial spirit, intellectual curiosity, respect, generosity, and fun win championships. Although I can't say the same on the court for my getting dunked on, because at 6'1, I'm the least vertically challenged of our starting five. Outside the office, I'm grateful for you, for listening, engaging with our guests, and sharing kind words all year long. This podcast is the gift that keeps on giving. So before you start the mad year-end dash to calculate performance, conduct 360 reviews, and shop, take this time to be grateful for the many gifts in your life. As my friend Dasha Burns recently shared on the occasion of my 55th birthday, may the best of your yesterdays be the worst of your tomorrows. While you're feeling all warm and fuzzy, don't forget to spread the word about Capital Allocators to those closest to you, to give them the gift that keeps on giving. Capital Allocators is brought to you by my friends at WCM Investment Management. WCM has the courage to back future histories not evident today, informed by their unrelenting focus on mode trajectory and elevated by insights on corporate culture. WCM's deep roots in public markets set the foundation for its approach to private investing. They didn't just want to enter the private markets, they wanted to improve the investing model itself, build something better aligned, more thoughtful, and truly long-term. As a firm owned by its people and grounded in Laguna Beach, WCM is built for alignment and independent thought. Rather than chasing a scoreboard, WCM invests with a partnership mentality to build meaningful relationships with founders reimagining their industries.
They show up earlier, stick around later, and let value compound over years. WCM's style is their edge. Authenticity over formality, two-way learnings over checklists, and stories over slide decks. To learn more, visit wcminvest.com.

**SPEAKER_4** (4:55)
This testimonial will be provided by Ted Seides and Capital Allocators, who have been compensated a flat fee by WCM. This payment was made in connection with Capital Allocators' testimonial and production of podcasts, and does not depend on the success or level of business generated. The opinions expressed are solely those of Capital Allocators, and may not reflect the opinions of others. Investing involves risk, including the possible loss of principle. Past performance is not indicative of future results. Please visit wcminvest.com for WCM's ADV and further information.