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The show featuring luminaries from across the world of private equity.
Brought to you by Affinity Presents. Public conversations in private capital.
Carried Interest Ep. 2 - How Relationships Win IPO Mandates | Brittany Skoda, Morgan Stanley
English (US)
00:00:04.240 — 00:00:47.240 · Sam Andersen
I'm Sam Andersen, the host of Carried Interest, the show featuring luminaries from across the world to private equity. Today's episode is a conversation with Brittany Skoda, the Global Head of AI & Software Banking at Morgan Stanley. Prior to joining Morgan Stanley, she was the VP of investments at Workday and before Workday worked at Goldman Sachs, where she rose from being an analyst to senior vice president.
She has completed more than 75 transactions for companies including Amazon, AppDynamics, Citrix, Docker, Dropbox, Looker, Google, Tableau, Tesla, SoftBank, Zendesk, and others. She earned a bachelor's in accounting and finance from Georgetown University, where she also played NCAA D1 golf.
Well, Brittany, thank you so much for coming.
00:00:47.280 — 00:00:49.360 · Brittany Skoda
It's my pleasure. It's a great way to start the year.
00:00:49.560 — 00:01:39.360 · Sam Andersen
This podcast is focused on relationships and the way that relationships make deals happen. And I think there's probably nobody more central to the relationship nexus then an investment banker, particularly when it comes to running an IPO or any other type of strategic financing. So I wanted to talk about one particular deal and the relationships that maybe went into the process and eventually the outcome.
And I want to pick Hinge Health because the CFO of Hinge is a mutual friend of ours, James Budge, and that was a very successful IPO that Morgan Stanley ran last year. So I would love to hear a little bit about where those relationships started, where the relationship between yourself and Hinge or Morgan Stanley and Hinge really began, and how that relationship evolved into what eventually became a successful exit for those shareholders.
00:01:39.400 — 00:03:42.890 · Brittany Skoda
Yeah, Hinge is an exciting one. It was definitely one of the highlights of 2025 and has been a great IPO and has performed well in the market. Daniel Perez and the team, you know, have built something really differentiated. But that Hinge is a great example of relationships are often multi-pronged and built over many years and in fact, decades.
I had originally met James back when he was at Genesys over 15. Almost over 15 years ago. And our team, you know, crossed. Morgan Stanley had worked with James at different points in his journey, including at, you know, Pluralsight and others. But it wasn't just James that that we knew, you know. Morgan Stanley, you know, were a user of Hinge.
So they had gotten to know the team from from that vantage point. You know, James, number two in finance was someone who I actually used to work with back in the day. And so I had known a woman named Bianca back at that time. And so it was a it was a great expression of relationships actually built over five, ten, 15 years coming to, to, to together.
That ultimately led to that mandate. And at Morgan Stanley, it was a it was a collaboration between our health tech group and our in our technology banking team as well. And so, you know, there's lots of people that come together to drive this success of an outcome. And oftentimes I think from the outside you think, oh, there's a bake off and it's just the bake off.
And of course, you know, when we get invited to Bake Off, that's a real privilege. And our team works really hard and wants to show up and show up in a creative and meaningful way. But a lot of times, it's the months and the years leading up to the Bake Off that are a big determinant of what happens at the Bake Off, and from there, the outcome.
And so the more you know about the people, the company, you know what matters, the better off everybody is. Because if we all know each other better, it's able you're able to deliver a better outcome.
00:03:42.930 — 00:04:01.380 · Sam Andersen
Yeah. I would assume that the relationships pay off not only in the sense of quote unquote winning the deal, but also in the fact that, you know, the company. I mean, you guys are customers. So when you're out speaking to potential investors. You can also represent it in a different way that maybe comes across more authentic because you have known them for so long.
00:04:01.420 — 00:04:37.700 · Brittany Skoda
That's right. And inevitably, whether it's an IPO or it's an M&A or financing, pretty much every deal has some challenge that comes up along the way, and the team collectively has to work through that and some, sometimes, depending on what the challenge is, it can be very emotional. It can they can be challenging to work through.
And if you have those relationships and established trust, then it's easier to work through whatever those elements are together and get to a good outcome for everybody, as opposed to when you don't know anyone and you don't have established trust, that can be harder. It's not impossible, but it can be harder.
00:04:37.740 — 00:05:03.700 · Sam Andersen
Yeah, no, that makes sense. Um, oftentimes in networking, people will say that things feel transactional or they feel maybe just more salesy in nature. In your world, they're often leading to a literal transaction that occurs. But how do you build a relationship or how do you focus on a relationship over time, without necessarily that forcing function of an imminent transaction that you're trying to build towards?
00:05:03.740 — 00:07:17.750 · Brittany Skoda
I've actually always loved people, and so that element of to me is like, it doesn't feel like a job I've got. I love getting to know people, their stories, their families, what motivates them, what their interests are. And I get a lot of personal benefit from that because I just like learning about how other people work in the world and you know what really makes them them tick.
And so I think that probably is a net helpful because, you know, it's not always about, oh, I just want to win your IPO. Like, I'm actually genuinely interested to know about Sam or about whomever, whomever it is. And, you know, as my mom once said, like, you can't have too many friends. And so whether it hopefully, you know, some of these folks become clients, but in some cases, some of my clients or folks that our clients have become great friends of mine outside of, outside of work.
And so you never know where relationships go. And I think that's a big piece of it, of having a long term orientation to you. You meet people along a journey, and it's not necessarily so linear of like, we meet and then we're going to do something a month from now. Sometimes these, as we were talking about in the the hinge context, sometimes you meet people and then the actual transaction is many, many years later and maybe they're at a different company.
Yeah. And I've always felt, you know, having grown up in this business effectively, I started right out of undergraduate and I feel like I have many, many, many years in front of me and, you know, probably decades more that I'm going to work. It's always a great time to build a relationship, because I'll probably be here in 5 or 10 years when even if there's not something to do, do today, and I say it.
So I think that helps remove a little bit from, gosh, it's just this specific transaction. And then having done this now for almost two decades, I've also realized that many times companies think they know what they want to do, but. And sometimes those those deals happen or those specific things happen.
But oftentimes actually it's other things that happen too. And nobody knows it at the time. And, you know, as an advisor and as a participant in the broader ecosystem, in building those relationships, we can bring other ideas. We can bring things to fruition that weren't even thought of before. And so, um, you know, it's not, again, just like the transaction that maybe is at hand.
00:07:22.470 — 00:07:53.710 · Sam Andersen
A lot of listeners to our podcast come from the world of private equity, and obviously, you guys are a critical component of the private capital ecosystem, both for buyers and for sellers. If you look out and you see the world of private equity today, and you think about the relationships that are happening in that space, I guess what forecasts you have for how that that world is evolving now, and how are the relationships that you see there today?
Kind of a part of that evolution?
00:07:53.750 — 00:09:57.120 · Brittany Skoda
Well, private equity has been evolving a lot even in the last ten, 20 years, and particularly around tech and particularly around software. You know, the fund sizes are larger than they've ever been. You have, you know, funds who have developed real specificity and competence and core sectors like software.
You know, we've had the likes of Thoma Bravo and Vista and, you know, Valley among many others who have demonstrated, you know, you know, real, real depth there. And I think because they have been so resource and so successful, the types of transactions that they're looking at have evolved as well. You know, back in the day, we would have said old school private equity would have looked at more classical, you know, melting icebergs, good companies, but maybe X growth.
And, you know, we're we're really going to be driving profit to their business models have evolved meaningfully to. In some cases, looking at growth companies and figuring out how we can grow these companies and deliver profit. And gosh, you know, these the Tams of these businesses are so substantive.
Um, you know, we can do that in the economics and business context. You know, make a lot of sense now. I think, like anything, the industry is going to keep evolving. Um, you know, we have a mix of private equity funds who own large scale, very mature businesses. They own some more growth oriented assets like HD auto bought, you know, last year as an example of that.
And now with AI, just like everyone in technology, everyone in the world is trying to figure out what AI means for its business. What are the risks or the opportunities? That's going to be another overlay that private equity is going to have to think through, because the traditional private equity model would be, I'm going to make this investment and I'm going to exit three, five, ten years.
Yeah. And so when the world is moving so fast, you're going to have to come to a very clear point of view on what does AI mean in that context, three, five, ten years from now? Because that's my investment horizon.
00:09:57.200 — 00:10:17.280 · Sam Andersen
It's interesting because I think what I hear in the subtext of what you're saying is that the relationships become even more important as as this world evolves because they're making these decisions, but it's still humans that do the deals. I mean, regardless of what happens in the world of AI or other things like that, it's still people.
Ultimately it's.
00:10:17.280 — 00:11:09.530 · Brittany Skoda
People. People are at the heart of everything. They're the ones who are coming up with businesses. They're creating businesses, they're growing businesses. They're working at businesses. They're the people that are coming to the table. As or as in our role. Architects often of transactions of putting buyer and seller together or putting capital against a, you know, against a company.
And so, you know, the more that you can develop those relationships And ultimately, you know, I think work from a foundation of trust, but then also mindshare, uh, in, uh, in this context, because the world is moving so fast. Like, I like to say, it's like you can't have too many smart people around the table.
And the more you can leverage that collective brainpower, that brain trust, the better it's going to be for your business. Regardless of whatever that business is. You're you're running the private equity firm, you're running your corporation, whatever the case might be.
00:11:14.970 — 00:11:52.490 · Sam Andersen
Um, in our world, in the world of venture, we've noticed a huge shift over the last 3 or 4 years in terms of what's required to raise capital, what traction and metrics we look at in order to get a seed round or a solid series a round done. Um, and a lot of that has to do with the introduction of AI. A lot of it has to do with the shifting capital markets and availability of capital.
Talk to me about what you're seeing in the IPO space. What does it take today to be IPO ready for a company? What metrics should people be looking at or thinking about, if they themselves are in a company that's beginning to prepare for that?
00:11:52.530 — 00:11:53.690 · Brittany Skoda
The bar to go public.
00:11:53.690 — 00:15:31.660 · Brittany Skoda
Today is definitely high. It's higher than it was certainly a few years ago. Looking at, you know, comparing it to 2021 for for example, you know, we ended last year at around 20 IPOs, about just about a typical year in technology would be about 35 IPOs a year. Um, you know, 2021, we had 124 IPOs. And then 22, 23, 24 we had, you know, handfuls.
Yeah. And you know activity had really had really come off. But what's happened is because we had so many companies come public and you know, the years leading up to 2021 and 2021, there is no shortage of public investment opportunities. You know, you have in software alone, as an example. You know, over 800 companies that you could, could look at.
So if I'm a public investor, I'm sitting there saying, what is it so special or so unique about this company? The setup, the pricing, the narrative, whatever the case may be, that I need to own this versus this already public company, that's liquid. I know how it trades. I have a longer track record that I can rely on.
So the bar is high and you know, there's not everyone always wants to know a specific side of it. And it's not necessarily always one size fits all. And so like you can speak in generalities. And then there's always some exception to that rule. But you definitely want to be hundreds of millions of revenue at this point.
Like you want to be multiple billions of market cap. You you know, you don't want to be a subscale public company. It can be a tough or certainly for very long. It can be a tough place to live. there. You're not liquid enough. There's not enough, um, that shareholders money shareholders can put to work in those types of companies.
And so, you know, if investors could, public investors could have it all. They would want. Great story. Gross profit. You know, great metrics. We say act two so or act three. So understanding okay this is what got you here. But what's going to be what continues to be part of your durable growth story. Because ultimately investors want to invest behind companies that are going to not just grow for the next quarter, but grow for the the several more quarters from here.
And so how are you going to maintain or, you know, your, your growth rate and or deliver more profit on that journey? Now, definitely, AI has complicated, you know, the investment landscape in the public sense, um, in the sense of when there's so much uncertainty. I think it's hard to argue that AI is a huge opportunity and it's going to transform not just technology, but industries, all industries all over the world.
But because we don't know how it's fully going to play out yet, you know, it's it's been easier to say, okay, well, I should just invest in the Mag seven or, you know, Microsoft and Nvidia, you know, these, these, these large scale companies who, you know, have resources, you know, have some strategy. And I'll just wait on, you know, some of these other younger companies or companies I just don't know as well to.
It's more until it's more clear I know what their strategies are. And so that's definitely added another dimension. I would not want to take a company public today without having a really clear understanding of how am I going to stand up there and say or give the answer to the public investor who is inevitably going to ask, why is AI a tailwind and why is it a headwind?
Of course, if you can't articulate that, it's going to be a tough road show.
00:15:31.700 — 00:15:34.870 · Sam Andersen
Yeah. No, it makes sense. Is there a
00:15:35.990 — 00:15:46.550 · Sam Andersen
I guess a general consensus on is the IPO window opening or closing? Is is now the right time? Where are we at in the cycle? What what is the thought there?
00:15:46.590 — 00:17:01.350 · Brittany Skoda
Markets are definitely open. And I would actually argue they weren't ever really closed even since 2021. A lot of we just had less activity. Yeah. But you know companies could have gone. Maybe it would have required more of a discount at certain points over the last couple of years than it does today. But markets are open and I think we are going to see this year assuming things stay relatively stable from a geopolitical macro perspective.
I think this is going to be the year where we're going to be more towards that 35 type average that we had previously seen for tech IPO activity, and there is a large backlog of private companies that, you know, need to get public or need to get some sort of liquidity. Yeah. And that's venture backed companies.
I mean, there's by our account, there's over 1300 so-called unicorns, you know, that got funded through 2021. Now, all of those wouldn't be unicorns in today's multiple construct and or just how their businesses have performed. Um, but there's that group. And then there's also a lot of private equity owned assets where, you know, the private equity funds need to get to liquidity as well.
And so there's scaled assets there that I expect will come to market over the next set of, you know, a couple of years.
00:17:01.390 — 00:17:51.960 · Sam Andersen
Yeah. You know, private companies are staying private longer there, whether it's the proliferation of venture capital, the entrance of, to your point, kind of private equity growth funds that are willing to invest sizable amounts of capital for companies in that middle stage. Um, the impact of that is that obviously liquidity is more limited.
We're seeing a rise in secondaries. When you look at some of these trends that are happening where it does feel a little bit less driven towards an exit of IPO. Do you see any I don't know, any consequences or any shifts coming because we now have. I mean, I think over trillion dollar size private companies talking about maybe potentially exiting later this year.
Like what is the consequence of private businesses being that large.
00:17:52.480 — 00:19:38.130 · Brittany Skoda
Well, we're going to you know, we're going to test it, you know, or maybe test it again and again over the next couple of years here as some of these super large scale privates go public because there's only so many, you know, there's the market hasn't seen companies of these sizes really go public certainly at any scale.
And so it is going to take a potentially different playbook of, you know, who are the investors that are going to underwrite checks, you know, to get to a minimum float, the the the amount of capital that's going to have to be in some of these IPOs is actually pretty significant. Yeah. And so, you know, can the market support, you know, this long list of these super scale companies?
Maybe. Maybe not. And what does that look like and what is that strategy. And so I think that's going to be a new strategy or a new playbook that, you know, hopefully we're on the forefront of, you know, helping many of these clients figure out. But it's yet to be tested. And I don't think everyone is going to just go public either this year or next year.
I mean, markets are open, but in some cases the there's a lot of there's a lot of depth in the private markets. You know, most of these businesses are generating cash at this point. Yeah. And um, you know, they've solved some of their cap table challenges. Challenges in a natural sense of employees need liquidity after a certain period of time, or you have RSU or option expiry and you have to deal with that.
And that often requires a lot of capital. Um, and so I think we're going to see a mix of some of these mega scalers try to get public. And that just gives you, you know, kind of permanent liquidity. It's easier to buy other companies if that's a path your employees have, you know, perpetual liquidity in a very meaningful way.
In some cases, it can help you build your brand. It can help deepen your access to capital. But I don't think it's going to happen all at once.
00:19:44.010 — 00:19:45.530 · Sam Andersen
So this this question.
00:19:45.530 — 00:20:41.330 · Sam Andersen
That came out of my time at Bain and Company, I was on the the Bain Private Equity Group, and we did we were writing one of those PDFs they put out every January. It's like 50 pages long with all the infographics, and it delineated the do one giant transaction, or do they call it a string of pearls? And our research showed that 80% of M&A transactions don't call me on that.
You should delete the citation from this. But a large portion of the M&A transactions that were done ended up being valued, destructive, either flawed integrations or implementation. Yeah. Integrations either. You know, something went wrong in the pricing I don't know. The customers didn't want to buy it.
The synergies were calculated incorrectly. When you think about M&A in today's world, what makes it work? What differentiates that 20% from your experience that really leads to a value creative M&A transaction?
00:20:41.570 — 00:22:24.980 · Brittany Skoda
Well, first off all M&A isn't accretive. And that is, I think, been proven time and time again through, through through data. And sometimes deals can actually look good and be good on paper. But then it's the integration is not successful. You have nothing. And so I think as a as a first order, you have to believe that you can be successful in the integration of whatever you're buying.
Because if you can't figure out how to sell it to your customers, how to get the teams to work together, etc., you're never going to see those synergies that you talked about. And so people can we can do modeling all day long on what synergies look like. But if you can't actually put it together on the ground, it's never going to happen.
And in in that I think is something you can do some planning for, but you can't. A B test, an actual integration. Yeah. And but I think a lot of it comes down to and it seems like a soft thing to say. But once again, the people in culture. You know, can two companies come together and work together to get to a shared outcome because it's people who are ultimately running these integrations and trying to instead of it being, you know, well, it's my stuff and it's your stuff.
It's our stuff. Yeah. And so how do you get people to work more under the constraint of our stuff to, to get it to the other side. And I would probably argue and I don't have hard data on it, but if, you know, it's not that all of the deals are value destructive because they're bad ideas, there's probably a handful of those like they just were not good ideas.
The strategic logic that someone was going through just didn't play out. The industry didn't play out that way. I would I would expect that's a bucket, a bucket of the bad deals. And then I do think a big bucket would be just couldn't integrate it.
00:22:25.020 — 00:22:29.260 · Sam Andersen
Yeah. Like just something went wrong after the transaction or just.
00:22:29.300 — 00:22:35.460 · Brittany Skoda
But it doesn't mean that it was a bad idea. It was a great good. It could have been a good idea, but poor integration into.
00:22:35.460 — 00:22:36.300 · Sam Andersen
The hands of a different.
00:22:36.340 — 00:23:03.380 · Brittany Skoda
The more when you're walking into certainly transactions of, of size or, you know, of significant consequence, the more you can think through how this might be on the other side, can these teams actually do this together? What is this going to mean from my customer lens? Because ultimately customers are the ones who pay the bills, if you will, or buy something, the better off you'll be, but you're never going to be able to fully pre anticipate all of the issues that might come up on the other side.
00:23:03.420 — 00:23:26.460 · Sam Andersen
Yeah. When you are chatting with your clients about a potential acquisition idea that they have, what guidance do you give? Obviously you guys aren't the ones doing the implementation. You're not the consulting firms that show up to project manage it through. But what advice do you give? Or what do you look for to help them see that it will be successful over the long term?
00:23:27.340 — 00:23:28.660 · Brittany Skoda
You do need the right team.
00:23:28.660 — 00:24:16.620 · Brittany Skoda
In place on your on your side. And sometimes we work with companies and they just really don't have the resources to to be able to operationalize this transaction. And so I think that's one thing. And you have to be really honest with yourself of if we were to ingest XYZ company, can we handle it. And that's a big deal.
You know, I mean and you're definitely taking people you're taking IP, you're taking probably other assets. And so I think that's, you know, one big piece to work through. And then thinking through incentives, you know, are people incentivized to collaborate or not. Because even with good intentions, if the people that are actually on the ground having to have a conversation of how we're going to get our team to work together, if there's not a good incentive for those two people, it's probably going to be pretty hard on the other side.
00:24:16.660 — 00:24:17.940 · Sam Andersen
Yeah. Makes sense.
00:24:18.950 — 00:24:44.270 · Sam Andersen
You have gone from being an analyst, fresh out of undergrad in investment banking to now being a global leader in the tech banking space for Morgan Stanley. What advice would you give for a graduate in finance and accounting? Who's stepping fresh into Morgan Stanley or any other, any other bank who sees and wants a career in this field?
How would you help or what tips would you give?
00:24:44.310 — 00:25:53.230 · Brittany Skoda
I always like to say like, don't be confined by convention. You know, even I would argue banking is a pretty traditional field. You know, I feel lucky that I've had a lot of a lot of opportunity very young and was able to capitalize on that and worked with some really great mentors. You know, across the organizations that I've been at, you know, who kind of took my hand.
But then I also met the challenge, you know, to kind of take, you know, take the next step. And, you know, I don't I don't think you grow when you're comfortable. I think you grow when you're uncomfortable. And so finding the roles or the opportunities or the transactions where you're actually a little bit more comfortable is where you're going to grow the most.
And so, um, you know, being willing to go outside of the comfort zone to, to put yourself in those situations, I think is the maximum growth opportunity. And, um, you know, people, lots of people. Someone once said like, advice is free. Yeah. You know, you have to decide what you want to do, and you can pick the advice that you listen to if you listen to any of it.
And so, like, you have to go dream your own dreams and, you know, uh, chart your own path and I think believe that it will work out on the other side.
00:25:53.230 — 00:26:11.310 · Sam Andersen
And when you see the analyst classes that are starting, you know, this year, last year at these banks, is there anything where you're noticing, hey, the real standouts are doing X or the people who are really going to be successful at this, and I can see it now have y attributes.
00:26:12.190 — 00:26:52.880 · Brittany Skoda
A lot of it, I think, comes down to intellectual curiosity. Are you curious about the the business we're in? The products we sell, the products we offer to our clients, the advice that we're giving, how we come up with our advice. Who cares about the clients, their technologies, what they're building.
And you know, that's going to be what puts you in a position to come up with ideas and give advice. And so I think a lot of it comes from from that as opposed to, you know, the actual mechanics of, of a model, for example. That's just math. Yeah. Like that's not the secret sauce. It's all the other stuff, you know, that comes together and comes together in harmony with other people.
That's the real differentiator.
00:26:52.920 — 00:27:07.240 · Sam Andersen
Well, Brittany, thank you so much for coming on Carried Interest. It was a great conversation. I really appreciate it. And if you'd like more podcasts like this, feel free to follow Carried Interest on Spotify, Apple Podcasts. Wherever you get your podcast, make sure you follow Affinity on LinkedIn.