PE Beat: The Token Phone Call

The Token Phone Call

Jon Apter says the leaderboard inside his own firm flipped in half a year. "6 months ago, we were celebrating people who had the highest token usage. Now, like, if you have the highest token usage in the organization, you're getting a phone call saying like, what were you doing?"

Apter is CFO of Accordion, which sells finance work to sponsor-backed companies. His colleague Justin D'Onofrio warned here three weeks ago about uncapped token budgets. Same firm, one step further. "Like most people are spending more on AI than they should be." The bill will follow the company to sale. "I imagine when all these companies go to exit, like there will be some normalization around AI spend these quality of earnings reports"

He goes past the budget to the committee. "I think every sponsor is gonna have AI sitting on their investment committees." "And they're going to actually have a vote on investment committee." Accordion says it builds those agents for sponsors, so treat it as a forecast from a seller.

Charlie Rose draws the opposite line, in a paid slot on the show. Invesco's head of real estate credit says the firm is using AI constantly, inside limits. "We certainly can't have AI agents making investment decisions or presenting faulty information that is used for investment decisions." It is also staying out of the AI build itself. "We are not lending on data centers."

The allocator view is quieter and harder. Stephen McLennan, co-CIO of Ontario Teachers', on the asset class: "We would take the view that it has become more competitive for private equity in terms of prospective returns." His shorthand: "more competition just means compressed, expected returns." His remaining edge is time, the same one GTCR argued for last week. "but it is a difference versus a GP or another entity that might have a fixed life and has to do certain things with their portfolio." Apter, from the operating side: "Like this concept of everything is going to be exited in 5 years is just not reality anymore."

The exit series that ran here last week reached the people. Ellen Havdala of Equity Group Investments: "They're like getting married to a management team." Ted Bililies of AlixPartners, which sponsors the series, on where sponsors slip: "So the mistake I see most often is that GPs treat alignment as a one time event at the deal close."

Three weeks ago the token bill needed a defense. Now it has to survive diligence.

Sources: Interviews from Private Equity Funcast (Oct 7, Jon Apter of Accordion), Capital Allocators (Oct 8, Charlie Rose of Invesco; and Oct 5, Stephen McLennan of Ontario Teachers' Pension Plan), and Private Equity Spotlight (Oct 6, Ellen Havdala of Equity Group Investments and Ted Bililies of AlixPartners).