The following is an excerpt from Practice Perspectives: Vault's Guide to Legal Practice Areas.
Katherine (Katie) R. Reaves is a partner based in Cleary Gottlieb’s New York office. Her practice focuses on debt finance transactions.
She regularly represents leading companies, private equity sponsors, and their portfolio companies in connection with a variety of secured lending and other corporate finance transactions, including acquisition financings, high-yield bond issuances, bridge facilities, syndicated credit facilities, and ABL facilities.
Katie joined the firm in 2010 and became a partner in 2019. She received a J.D. from the University of Chicago Law School and a B.A. from Yale College.
Describe your practice area and what it entails.
I am a partner in the Debt Finance group. That primarily entails working with private equity sponsors and their portfolio companies, and corporate clients to work on all of their financing transactions. This can range from acquisition financing in connection with M&A or bankruptcies to refinancing of existing capital structures. I negotiate the documentation with the banks and the client relating to such financings, which may be in the form of term loans, high-yield bonds, asset-based credit facilities or similar structures.
What types of clients do you represent?
I work with a variety of different types of clients, including private equity sponsors and their portfolio companies, corporate clients and occasionally individuals. Some of my private equity/sponsor clients include Warburg Pincus, TPG, Altaris Capital, ESL and Carlyle. I also represent both public and private corporate clients, and some of the public clients are Google, Honeywell, Verizon, General Mills, McCormick & Company, Cushman & Wakefield, the company formerly known as Sears and Sotera Health—so, it’s a really good mix.
What types of cases/deals do you work on?
Most of my calendar is comprised of acquisition financing, when a client (private equity or corporate) uses new debt financing as a component of the cash consideration—a leveraged acquisition. Additionally, I work on opportunistic financings/capital raises and refinancings that are not related to M&A. Since becoming a partner, I have worked on numerous acquisition financings for Warburg Pincus and their portfolio companies, and I worked on the 363 bankruptcy sale of the assets of the company formerly known as Sears by ESL Investments. I’ve also worked on financings in connection with spin-off transactions.
How did you choose this practice area?
Honestly, it sort of happened serendipitously when I was trying out different practice areas as a junior associate. I knew I wanted to do transactional work as opposed to litigation, and I had worked on some M&A deals and some Capital Markets deals and then I was staffed on a Debt Finance matter and it was a good fit. I like the nature of the work as its challenging and always different and I seemed to have a knack for it, I like the pace of the deals as they usually are only a couple months from beginning to end, and I really liked the partners I was working with.
What is a typical day like and/or what are some common tasks you perform?
There isn’t a typical day for me, which is part of the reason I like the debt financing group. As a partner, most of my days are filled with taking calls from clients who want to understand how they can operate their business under the covenants that are in their debt financing facilities, or helping clients think though the structuring and terms of new debt raises. When not acting in an advisory capacity, I’m working on active deals, marking up commitment papers, merger agreements, and the financing provisions relating to an acquisition. I also spend a lot of time doing non-billable work that includes business development presentations, work on the talent and summer associate committees, meetings with my partners, mentoring, etc.
What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?
I think the most important skill, if you call it that, is to always be open to learning new things. In debt finance, there is always going to be a steep learning curve. I encourage people to be comfortable with not knowing everything and wanting to learn from others. I would also recommend to anyone, and again this isn’t necessarily a skill, to keep up with the market and read publications that talk about actual loan and bond terms. It’s great to keep up with what’s new in technology and what’s market as far as terms go in financing agreements, so you can get smart and be able to advise your clients about what they should be negotiating for. It’s helpful to understand on a macro level what is going on in the world because that impacts the markets that we work in.
What do you like best about your practice area?
What I like best about my practice area is the pacing of the work-life balance. In our group, you’re either really busy or you aren’t that busy since you don’t have a ton of deals, and I like that sense of feast or famine. It makes it easier to find balance in the famine parts and then get really into the work when deals are going crazy. Another aspect I really like about the practice is how much interaction with clients you get. In the M&A group, you have a lot of contact with the client but once the M&A deal is over you sort of go away off to the next deal. In Debt Finance you have to have contact with the client during the M&A process but then between signing and closing there is a lot of getting to know the client and pulling all the closing documentation. After the closing, it’s a very long-term relationship with the client which can include helping them understand the covenants, helping them do new debt raises, helping them understand all the transactions they might want to do and how it fits under their financing documents, refinancing, etc. For example, I have clients that I have been working with since I was a second-year associate that I still talk to all the time. I love being able to build those long-term client relationships and that’s something that is unique to our practice.
What misconceptions exist about your practice area?
One of the main misconceptions that exists about Debt Finance is that you have to be good at math or really understand financial models. I think being knowledgeable on those things to some extent certainly helps, and you learn them over time, but it’s not anything you need to know or understand going into the practice initially. I think some people get scared or shy away from seeing numbers on a page or dollar signs or balance sheets. It’s similar to any other practice area, and that is you just have to learn the jargon of the group. Another misconception is that it’s really hard and difficult since we don’t use terms that you learn in law school. We use terms that you have to learn on the job and no one has ever been taught, which is why there is a steep learning curve, but it’s not as scary as people think.
What are some typical tasks that a junior lawyer would perform in this practice area?
The most standard task for a junior associate is when we’re actually doing a deal and being in charge of the closing documents. That means really digging into the corporate records of the company, organizing all the certificates, drafting corporate resolutions, working with local counsel to get their opinions to help draft our opinions. It’s essentially managing the closing process from a documentation standpoint. I think what’s really unique about our group is that junior associates get an early opportunity to interact with clients because all of that work requires a lot of back and forth with the company and gaining that client development skill early on is a really great opportunity.
What are some typical career paths for lawyers in this practice area?
I’ve seen alumni from our group end up in a variety of positions. Some will go in-house to banks, others will end up as general counsel for startups and smaller companies, and many have gone in-house to work at larger companies, like Tom Ford and Jet Blue. We’ve had people go work in government as well. I think that doing finance work gives you a really good opportunity to see all sides of a business and understand covenants, balance sheets and how a company operates, which allows for a lot of options for people who leave the group. There’s no typical career path and our alumni have a lot of choices.