Hunting Deals in M&A

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I'm Kisan Patel and you're listening to M and A Science, where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during M and A deals. Foreign welcome to M and A Science Live, where leading M and A practitioners share lessons learned from their experience. When you use proven techniques in M and A, more value is created. If you're interested in keeping up with the latest from M and a science, visit mascience.com, subscribe to our newsletter. You'll find tons of free resources on our website. Again, that's mascience.com Kisan I'm your host, Kisan Patel, CEO and founder of M and A Science and Deal Room. Joining me today is Justin Indihar, Director M and A and Strategic Alliances at the Lubrizol Corporation. Today we're going to talk about how to hunt for deals in M and A. Could we kick things off with maybe a brief background on your M and A experience?

Yeah, that sounds great. I look forward to joining the conversations at Keystone. I've been with Lubrizol now last eight years. The last four and a half has been in the M and A space, primarily in the corporate development team. And my role has been heavily focused on front end deal origination. Up until last year it was in support of both divisions and all the business units. However, in Q3 of last year we decentralized the function and now I report directly into our additive segment. Head up M and A for that business. But again, my primary focus is front end deal origination, shareholder management, things like that.

Right? Let's talk about how to hunt deals.

In M and A once targets are identified. Fun begins depending on the company situation. There's a lot of private companies out there. Shareholders or owners really don't want to be found. They want to continue running their business. So for me, there's two components to trying to hunt deals. One is who's the Appropriate person to start the dialogue with. Who's the person for the target company that has the authority to influence a potential deal and then once you find that person, how do you find their contact information, which is often a lot of fun. First one is finding the right person. I start inside out. You have to be incredibly resourceful. But I start inside out, meaning I start with my colleagues within Lubrizol to figure out is there any connection that we have to the firm, any intel, any insights that we have into the business. So I'll obviously start there. From then I expand outward. Then I go to my professional network, past colleagues, LinkedIn connection, trying to figure out is there anybody there who could make the introduction, who could share some insights on how to uncover who the right person is. If that doesn't work, then I go to secondary online research, right, it's social media, CAP IQ, PitchBook, other online sources and just start digging and digging to try to find who is the owner, who is the shareholder. Sometimes that doesn't work though. And then you might need to engage either consultant or find former employees and do some blinded calls with them and try to uncover intel that way. Maybe engage M and A advisors or even some investment bankers. I try to start inside out, keep turning over every stone and eventually you're going to find the right person.

Do you come across that where people intentionally just don't want to be found and they really stay under the radar and sort of. That's part of the challenge?

Yeah, there is, especially for some third, fourth, fifth generation family owned businesses where the families are the owners, but maybe they're not actively involved with running or leading the business anymore. It's just part of their portfolio, but they're not involved. Few years back when I was doing some work for our engineering materials business and a few family owned businesses in Europe that luckily I found them through, there was a reference to an article they published through a foundation, family foundation that they had, that had nothing to do with the business that I was after. But the article referenced family, foundation reference, clearly someone's name. And then in that there was a kind of a throwaway line about church. I think a minority shareholder in the business I was after and then I just started kind of turning over those stones. So yes, there are those situations where some people just don't want to be found. They're not active in the business and they want to stay at a distance.

Once you start identifying these people, how do you get them to take a call?

My mindset is what's in it for Them, you always need to think about what's going to resonate with them. And it's hard because you don't know them yet, you haven't even talked to them yet. But try to do the front end work, try to spend time time digging online, talking to as many people as you can who might have some intelligence there to understand what might be their motivators, what are their passions, what are their interests, what are their hobbies, what sort of initiatives do they stand behind, do they get involved in charities or education or whatever it may be. Just try to find something to make the pitch or make the outreach a bit more personal to them. My approach is never to have a copy and paste message for anybody because if they're reading it and it feels like I sent that message to 50 other central owners, that likelihood that gets opened or responded to.

Wendell, are gatekeepers still a thing or is now everything directly accessible?

There's a good amount of gatekeepers out there. My mantra is generally do enough front end work that I get directly to the individual I'm seeking. So I'd rather spend a couple extra days, have a few more conversations to get a direct access to that individual rather than going through a gatekeeper. So that's usually what I spend my time on, is really trying to bypass the gatekeeper at all costs. It's hard sometimes.

Does this approach change if you're approaching international deals?

Absolutely, absolutely. But in my view, every deal is different anyway. So again, my approach, it could be the same space, it could be the same vertical, the same sort of company. But my approach to each individual owner is going to differ anyways, regardless of location. But absolutely, once you bring in international deals, you have other variables you need to be thinking about. You need to be thinking about language, need to be thinking about culture, time zone differences. So each deal is definitely going to be different. There are certain regions that I'd say are a bit more formal. So you take companies in Asia for instance. I generally start with last names on my first outreach anyway, Mr. Or Mrs. In Asia, what I would do is if I establish contact with an owner, I stick with Mr. And Mrs. Until they tell me otherwise. Normally they'll say, hey, call me Fred or call me Richard or whatnot, but until they correct me, I'm sticking with the formality of it. But also when you deal with other regions, especially different countries where the culture is so different and the language barriers high, there's just going to be times you might need an intermediary, you might need them to speak on our behalf confidentially or not confidential and try to unlock that relationship early on. So I don't claim to be able to unlock every single door. What I try to do is figure out who's in the best position to unlock that door and try to adjust it based on the type of deal I'm going after.

Once you sort of get to this point that you can get the intro conversation, what does that look like?

They all look a little bit different. Heading into the conversation. I spend a lot of time mapping out all the different scenarios that I can see happening. How's the conversation going to go? How are they going to respond to this, what are they going to do, where are they going to take the conversation? So I try to do that work up, but once I start to call, I actually try to forget about all that noise. I try to focus on active listening. So all assumptions leave them all at the door because it's just that they're all assumptions going in. But when I engage in the dialogue, I want to keep it open minded. I want to keep it open questions and just get them talking and seeing where they take the conversation. I want to uncover what their motivators are. I want to uncover where they're trying to take the business, what sort of business are they trying to build? Are they in it for the long run? Is this a family owned business that they plan to pass down to their next generation? And the next generation, I just try to ask open ended questions, try to give them a view of who I am on a personal level, but then also try to give them a view of what Lubrizol is all about and stay true to our culture. Because at the end of the day, I want to understand what their culture is, but I also want them to understand what our culture is as well. And if it's not a cultural mess, we might as well find that out sooner rather than later.

This is interesting. Your intro call, pretty open, just like a general intro call you'd have with anybody else. You sort of learn about what their goals are, what they're currently focused on. Maybe they got some new initiatives, products that they're putting out there. A lot of them really talk about those things that they're interested in, kind of like dating and then the culture piece where you're talking about your organization, emphasizing what are some of the cultural values and things of that area and really trying to get almost an understanding of how that fits in or contrast with their company culture.

Yeah, your analogy to dating is spot on. It's very much feeling each Other out putting your best foot forward, but then also again, listening, making sure you're in tune with what that person's saying. I try to give them an idea of what Lubrizol is all about at a broad level and not go into the specific area of business that might be most applicable because we, we have so much more to offer than just the product line synergy or whatnot that maybe I'm thinking about in my own mind. But you're right, it is open questions. It's dating. What obstacles are they facing? What are their personal goals, what are their aspirations? Why do they do what they do? And then hopefully some of that information can be used to then tee up the next conversation and just build the relationship over time.

But this call, we're not talking about, hey, we have general interest to buy your company or anything like that.

In my view, I'm pretty transparent. So I am intentional and explicit with our interests. So when I have a conversation with the owners, do I tell them, hey, I want to buy your company? No, I'm not that forthright in the first conversation because actually I don't know that yet. I don't know if the desired deal at the end of the day is a true outright acquisition. I go in a bit open minded. What I do say is, hey, we're intentional about a given space. We want to invest in XYZ space. We're going to be intentional in this. I've done the landscape and your company is near the top of that list in terms of partners that we're seeking. And so I want to be intentional. I'm highly interested in learning more about your company, the sort of partnership I don't know yet. I don't know anything about what your desired outcome is. I don't know much about your company yet. So I don't know what the end goal is, the end result is. But I do know I want to get to know your firm a bit more. I think together there's opportunities we can strengthen each other's business. But no, to answer your question, Kisan, I don't just tell them no, I want to buy your business because I really don't know that answer yet.

How do you go from this conversation to getting the first meeting?

So it's all about how that first conversation goes. If it's an awkward conversation and if they're really guarded, if they're really closed and if I get the sense that one, they're not going to sell ever or for a few generations or if they're not interested in partnerships, it's very tough to immediately push for a second meeting. So in those situations, what I'll do is I let them digest the meeting, digest the information I just shared with them, give them some time to figure out how that might apply to their own business, then maybe follow up a few weeks, few months later with, hey, here's something else we're working on. Just was thinking about you. Reconnect. What I don't want to do for those sort of owners, I don't want to be overly pushy because Lubrizol, we look for companies and leadership teams to stick with us post quote, we don't buy companies, take out the leadership, put our own people in place. That's not what we do. And some pushy from the start with a shareholder, especially if that shareholder is active in the business business and we intend to keep long term, that's not going to do us any good in getting the deal over the finish line. And it's definitely not going to do any good if they eventually join Lucrazole. So it all depends on how the first conversation goes. On the other end of the spectrum, if I get the sense that, hey, they might be open to some sort of an investment or maybe eventually an acquisition or something a bit more both parties have skin in the game, then yeah, I'll push for, hey, I'm going to be in your area at a certain time. Let's plan to meet up, have lunch, get to know each other a bit more. Maybe I'll bring in my deal sponsor at the time or my business colleague and get the two parties talking more. So it really depends on how the conversation went and reading the individual, that.

Makes a lot of sense. So say you enter this conversation and the target isn't willing to sell, how do you make them more amicable?

So really tying it back to what's in it for them. At the end of the day, a deal is not going to get over the finish line if it's not win win. So if a party truly is not interested in selling and I look to be creative over time and pitch, maybe an investment makes more sense. Maybe it allows them to keep majority shareholder, but also helps de risk some of their investments. If I feel like that's potentially of interest to them, if they're extremely wealthy and they're not interested in any sort of an exit, then I figure out how can Lubrizol partnering with them with some other deal arrangement help advance the causes they're passionate about. And sometimes there's an angle there, sometimes there's not. Sometimes there's companies that we're interested in, but as I learn more, it's just not a match. And for those, I kind of part ways I'll stay in touch with those folks and if things change, then I'll reach out to them. But maybe they move down our target list and others move up. Ultimately though, with each conversation, what I try to do is, all right, if this company's not interested in selling or if we can't get some sort of an investment stake in what a non investment sort of partnership for this company, be better than an acquisition of our second best or third or fourth best option. And then you got to compare and contrast and then figure out where you spend your time.

What about when you're sort of looking at how do you develop your approach within your organization to work with your business leaders? How are you coaching them to broaden their thinking in terms of target identification?

Yeah, it's always a challenge. More often than not, they want to start with who's their closest competitor. Maybe they have two or three names of hey, let's just go buy competitor A, competitor B, competitor C and that's it. And the deal's done and that's where their thinking starts and stops sometimes. And so for me, it's really two components. It's finding a deal sponsor, finding the business leader within your organization that has the enthusiasm and the appetite to truly get deals done. If you don't have one within your business that's excited about it and accountable for it, responsible for it, it's going to be tough to drive any deal over the finish line. Because what I found is if you have leaders who are really only focused on the next three months, the next six months, the next year result, there's no performance objectives, no incentive compensation tied to getting deals done, then their risk tolerance is usually pretty low. And getting an M and a deal over the finish line is a ton of time, ton of resources. When push comes to shove, that sort of person, if they're not accountable for it, if they're not incentivized over it, they're not going to spend the time needed to drive a deal forward even once the deal teed up for them. And so if you have a deal sponsor that the right objectives are in place, the right incentives are in place, the right appetite there, then the conversation can shift to let's think about your business today and then let's be aspirational. What's your business look like 5, 7, 10 years from now? Paint the picture for me cane it from a market level standpoint, gain it from what's Your market position 10 years down the road in a given market, what's your offering look like, what's your capabilities look like at that point? What problems are you solving for customers and which ones aren't? What's your geographic footprint? What's your asset base look like? So get them to paint that picture and show me what the finished product looks like. And then I like to work backwards and say, karna, what's your current business look like? The gap should be fairly obvious. Once you get them to articulate the 5, 7, 10 year vision down the.

Road, you're helping them get a good strategic view on their business and walking through that. Those questions to help them really detail it out and then think through backwards how they're going to get there.

That's essentially what we do. What I found is normally when you talk to someone in the business, they may have a target in mind. Again, it might be competitor ABC and they want to immediately talk about a target, which is great. I love talking about targets all day. But then what they'll do is we'll learn more about the target and then we'll let the target shift the strategy. We'll have the target tell the story around why the deal makes sense. Most of the time that's not going to get over the finish line. And so what I try to get them to do is develop the vision, the strategy in the business case for doing M and A first without any target in mind. Let's put the storyboard together first. Let's sell that storyboard through leadership first. And then, by the way, a few months later, once we cast our net, once we identify targets, once we open up the door for targets, then we'll introduce the target, close the gap in the storyboard that we already sold for the last several months. And I find that if we do it in that order, the success rate, getting a deal over the finish line, getting the green light at the end of the day goes way up.

Getting better alignment and it makes more sense. What's the actual outreach approach? Is that sort of similar to what you're doing in terms of working with them, like who's managing it, what does that look like?

I own the accountability for the outreach, but there are times when it's not me doing the outreach. I take it on an individual basis. So if it's a public company and we want to carve out a specific business within that public company, or if it's a larger public company, That's a peer company of ours, then maybe the division president or our senior leadership is the person that does the outreach. Right. To a shareholder, if it's a private company and we have no connection to that company, nobody's worked there, nobody's selling anything to them, nobody's buying anything from them, then I'll make the outreach. It'll come from someone who has an intentional accountability around M and A or strategic alliances. So they know when I make the outreach, I'm not trying to sell them something, I'm not trying to buy something from them. They know I'm looking at partnership. And so it really depends on our relationship with the assets, our familiarity with the business and, and then trying to align internally who's the best person in a position to unlock that first conversation. Like I mentioned earlier, there are times that maybe it's not someone within loop resolve. Maybe for competitive reasons we want to keep it confidential. So maybe we'll use an intermediary to have a conversation or two with a target company to do it on a confidential basis, to not say anything about loop result, but just go have the conversation, see if the owners are even interested in potentially discussing the exit. It's really case by case basis.

Great. What tools are used to build pipelines?

I'm going to take it as they're asking about external resourcing, about trying to find company names. I use CAP IQ, I use PitchBook, I use Lux Research, and then I also just do advanced Boolean searching. What I do is put in terms that make sense and try to just cast a broad net. And what I'll do is just find names of companies and just populate them in our internal deal flow system and then eventually go back to them and start to figure out, all right, is this company actually doing what I thought they did when I populated them? PitchBook, Cap IQ, Luck. There's probably a few others I'm not thinking about as well.

Okay, so you using the data sets, start shortening or going through curating your target list that you're going to reach out to. How about in terms of managing that sort of pipeline or funnel that you'll create in house? Is there anything that you're doing there? Is that just typical Excel or.

So it used to be Excel. We actually found a quasi CRM system, but doesn't have nearly the functionality you would think about. But it works exactly for what we need. It's through Savanta. It's called Deal Flow. One word. So Savanta. Deal Flow. It's a great tool. We look at 150, 200 deals a year for Lubrizol across the board. So the volume isn't overly cumbersome. But for our needs, Savanta Deal Flow works very well. It's a mini CRM system and we have a few users. It's got nice reporting capabilities, it tracks each stage. You can configure it in a way that makes sense for your workflow. And so that's the system I work through.

Got it. Yeah. It's interesting because I've seen companies do a lot of different things for it, anywhere from Google sheets to using like a lightweight CRM and so forth. When you go through and you're starting to create this essentially like a funnel, who's got access to it? Is it just primarily yourself and Corp Dev, or are those business leaders get access to it?

We keep it pretty confidential. So it's only three or four people internally that handle the access to our full system and all of the deal flows. However, it's my role within our additives business and then I have two colleagues that support the other two divisions now that do something similar where we engage the right VPs and the right GM and make sure they have the right reporting needs they have for their business. But we generally keep information tied to other businesses separate and make sure really only the people that need to know are actually aware of the deal flow going on across the organization.

When it comes to reporting, what are you tracking specifically?

So there's different reporting needs. Our CEO and our CFO like to see active deal flow on an ongoing basis. And those are really deals that in our view, it's NDA and beyond. There's much more in the pipeline that we're working on and we're trying to get to that point, but we don't report out on that until something gets real, until we start to date, so to speak. But then there's the business leaders themselves. Like to see the broader funnel. Not the CEO or CFO, but the division president and the VPs like to see. All right, well, what does the top of that funnel look like? And report out from as early as just a name. Right. Someone sends me a name of a company via email and says, hey, this company looks interesting and that's the extent of it. So what I'll do is I'll put that in our system and it could be the lowest level lead that we have all the way up through leads that are vetted, leads that are qualified, leads that are engaged, relationships already unlocked, NDAs in place. So we build the Pipeline all the way through. But our system has the ability to report out on pretty much any step we want it to.

And then you're also tracking these conversations that you're having with these different companies. What are some of like the key data points that you're tracking through the different funnel stages.

So I try to do an ROC for each call and embed it into the deal flow system. Obviously if there's confidential information, I try to redact some of that information. Or if it's a deal that moved through later stages but then for some reason never got over the finish line, what happens is most of the time you get an email from the seller that says, hey, you need to delete and destroy all confidential information. So in that case I'd have to go back through and delete and destroy all of it. So the information I put in our deal flow system is usually not confidential from a standpoint of it's information that we're going to be okay with keeping long term. However, what I also like to do is all the pitch decks that we work on for each business case, for each strategy that we present that has gaps identified, that has their M and A needs identified, and then has our targets listed. We'll have one page profiles developed for each target. And within those profiles, what I try to do is keep a running tab of where's that relationship stand today. It's not going to have details of all the information, but if it's a relationship that we have three or four meetings with a shareholder, we think they're getting close to opening up the book, then I'll probably put something like that in there. If it's a, hey, had an intro meeting with the shareholder and this person's not going to be interested in selling anytime soon. They made that quite clear. I'll put that in there, but I'm not going to detail out very specific components of the conversation in that. But I do like to keep a running course of it in that file. The reason is if my job changes over time or if I move into a different business, I want to make sure that we build a MA process and system internally within the business I'm supporting now that can keep going. So three, four, five years from now, someone brings up, hey, why don't we look at this company? They can look back and say, oh wow, here's the profile we had, here's the dialogue we had with them back then and here's where it ended. So I want to keep that running.

Does this change between proprietary deal versus A Bank deal.

Yeah. Yeah, it does. So if a bank brings a deal, normally they'll come with a profile, they'll come with a teaser, they'll come with something. So clearly they've done a little bit more legwork than we have up front. That changes quite a bit. Usually if a bank brings a deal, maybe there's. The actionability of a target is different. So the willingness to engage, the willingness to get into an NDA is probably a bit higher. So you skip months and months of work that it takes to get a deal to the dating phase. So they definitely change. And we do like to capture where our deals come from. So we do capture when they come from a bank, when they come from an advisor, how many we find on our own, how many comes from existing relationships versus blank slate. I found the name of the company. It's brand new to us. So we try to capture all the sources of our deal flow to see where we get the most bang for our buck at the end of the day.

Sounds like you're a lot more excited about proprietary deals than bank deals.

Yeah, I am. I am one. That's, that's why Lubrizol hires me and a couple of the other people. That's our job. Our job is to go find deals, hunt deals. But at the end of the day, if a bank or an advisor brings us a deal that makes strategic sense, I'm all ears. So it needs to have a balance for both. But I can't just rely on inbound deals. I need to go out there and hunt them on my own.

That makes a lot of sense. How does I get more credits? Like you get a full on star if you source the deal and maybe only half a star if it's a banked one.

Yeah, maybe. In my own mind, I'm not so sure. Right.

Otherwise you're just one of those guys that likes the thrill and the chase.

I do, I do. But what I found is deal flow is good externally. Right. Bankers, advisors, people bring ideas, but I can't just rest on those. It's not going to be enough to get our pipeline full enough. So I need to be explicit with our interests. I need to engage external parties. I need to be out there pounding the pavement to broaden that funnel. And if we're just resting on the 40, 50, 60, 80 deals that we get inbound a year, I'm not sure we're going to get the right deals. We need to go hunt them. We need to go find the ones that make the right strategic sense for us.

Well, you have less competitors too.

That's true.

What general advice would you have for other practitioners that are working to improve this phase of their deal process?

On the front end, I would build on what I just mentioned. It's be more proactive than reactive. It's too easy to just rely on deals to come to you, rely on people to find you, rely on advisors to bring deals to you, and then you screen them out. That's helpful. Keep doing that. But I would suggest be proactive, get your interests out there, make them known, engage with your peer companies in the space, engage with startups, engage with the venture capital community, engage with private equity, engage with as many people out there as possible to make your interest known, to increase your deal flow inbound, but then also unlock proprietary deals as well along the way. And so that's my advice. Be proactive more than reactive.

We didn't talk much about developing a market map, but is that like an exercise you go through?

It is. Me personally, it's not a space I'll get involved in too much, but we absolutely will engage internal resources. Whether it's strategic marketing, we'll get some of our technology folks involved to try to map out a space, especially if we think it's an adjacent space to maybe what our core is. We'll get some internal people involved and then we'll usually hire some external folks as well to help portray a landscape or market map, so to speak, of a given space. And therefore what that'll do is that'll help advise our strategy and our end game before we start to bring in names of targets. So we'll help our leadership team see, hey, here's the space we're talking about. Here's how and why we think we can win. Here's what the end game looks like, here's the major players, here's why they're successful. But we're not saying we want Target XYZ yet. We're just saying here's what the market looks like and here's how we're going to be unique in it. We still then need to take that list, cast even a broader net most likely, and then filter that list down to criteria. That's going to close the gap that we identified on the front end.

That's interesting how you get marketing and your product folks involved with that, which makes a lot of sense. And this exercise typically would happen before all this outreach. Essentially, part of shaping, informing your strategy is maybe doing one of these market maps and just identifying where the white space is in your industry.

Absolutely. In my view, you have to do the landscaping up front. If you just start to do outreach, if you start to jump on any company that seems interesting without really knowing the space, in my view, you get a lot of false starts. You would engage an owner and have some good dialogue only for a month or two later to realize, actually this isn't the space for us. And in my view, that hurts my own credibility, but it also hurts Lubrizol's credibility. If we did that, it would make us look like window shoppers. And I don't want us to look like window shoppers. I want us to be recognized for business that knows where we're going, understands what we're trying to get done long term, knows the spaces we're going to invest in, and when we say we're going to invest in it, that we actually get it done rather than, hey, we're interested, let's date, and then a couple months later, I was just kidding. We're actually not interested in that space. So that's why we try to do the front end work.

Makes a lot of sense. What's the hardest part of going through this process on the front end? Sourcing.

You get a lot of notes. I probably look at 100, 150 deals a year on my own. And you get a couple over the finish line. So just that in and of itself is a very low success rate. And so you got to be accustomed to hear a no or not yet or some other way to say no without saying no. And then you just got to be persistent and not take it personal and just work on the relationship over time. Because most attractive companies that we're trying to go after are not actionable when we initially make the outreach, but they will be at some point. We want to have the story told. We want to have the storyboard already approved internally. So when that does become actionable, that company thinks of us and we're ready to move very quickly when they're ready.

So how many no's do you get before you get a yes?

I've lost count. I've.

Is it like 101? 50 to 1?

It's probably close to 100 to 1. I get some.

Really?

I assume the answer is no going in. But again, you try to put your best foot forward. You try to understand where you're trying to go. And again, I don't lead with, hey, I want to buy your business. Are you ready to sell today? That's never part of the conversation. I'm looking for partners more than just A commercial transaction. And here's what I know about your company, here's what we're capable of, here's what I think we can do for your business. Do you want to keep talking? And most of the time they're willing to engage in that. But then it takes time and time and time and time for that owner to realize, oh, there's actually there's value in our two businesses coming together and merging or establishing a jv or there's value in Lubrijal investing in us. But that takes time to get to that point. It takes a lot of time, a lot of nurturing.

Is there anything you do though to nurture that relationship over time? Periodic check ins, Just giving check ins for updates. Giving updates or any content that you send or anything like that.

So it's all of the above. I try to make it specific to their business. So if I find a news release that they, they put out there, I find a LinkedIn post that they publish. How does that relate to us? Can I add any value if I loop them back in sharing something we did in a similar space? Or again, on a personal level, does the shareholder get involved in certain charities or find any connection you can to get in front of that person? Whether it's on a business sense or on a personal sense, I try any connection I can. And then if there's any big milestone that Lubrizol hits, whether it's annual report or certain threshold we hit, clearly I'll try to send out an update and make that an opportunity. Engage when the time's right for that. Good question.

What's like the most memorable deal that you sourced?

So last year we, and it's public knowledge, I can talk about, we closed a deal for a company called Avid and we closed Q3 last year. Tremendous business. It's part of our engineering materials business now. They're a 3D printing service bureau and design business. So we're excited to be a part of them. They bring some new capabilities to our traditional material business, our internal business, TPU material mainly for injection molding and other traditional manufacturing processes. 3D printing, additive manufacturing is clearly emerging, booming, taking over many industries, influencing many industries. So we realized we don't have line of sight into those needs and we don't have the capabilities to serve material needs for additive manufacturing. So we needed to go out and do a landscape like you said. We needed to go understand who does have line of sight into these needs. When big manufacturers have additive manufacturing needs, who do they turn to? And they turn to these 3D printing service bureaus, and there's hundreds and hundreds of them. So we did the landscaping, we figured out what's our end goal look like and we worked back through what's the gap that existed. And we quickly took a list of over 100 targets down to 15 or so that we believed had the capabilities that met our needs. And then we narrowed that down to really our top 5, 6, 7, and avid was right at the top. And so I remember when I reached out to the owners, a couple engineers, fantastic guys, they have a passion for their business, they have a passion for staying in the business long term. And going back to a comment I made earlier, Lubrizola doesn't look to buy businesses, change management and then put in our own people in place. We need those owners, we need those leaders to stay in place to deliver the value we need at post close. And so had a good conversation with what they were interested in, understood their motivators, shared with them what we were trying to get done in this space. And they could see the fit. They saw the fit as quickly as as I did. And then we just slowly built the relationship over time and introduced more and more people from Lubrizol and made sure that they can assess the cultural fit because they want to know the organizations they're going to be a part of matches what they intend to be a part of long term. Right. So I made sure that they met the right people within Lubrisol and over the course of nine months or a year, we eventually got the deal done. It was exciting. It wasn't a massive deal from a Lubrisol standpoint, but could be transformational. It's in a different space than one that we didn't have capabilities in up until that point. One that's a bit different than Lubrizol's done in the past. It's not a chemistry or it's not a material play. So we're excited about it and so far we're really pleased with that acquisition and I believe the two owners are pleased to be a part of our organization.

I think it went really smooth.

Yeah, there's a couple of hiccups in the road that I left out, but that'll be a conversation for another day.

Dustin, what's the craziest thing you've seen in M and A?

There's always going to be some terms and conditions or some multiple that shareholders might expect to get for their business. We think you've seen it all. But when a shareholder or when an entrepreneur is probably a Better example, when someone finds their own business, when they develop their own business from scratch, they've invested 15, 20, 25 years into this. It's like they're a baby. And for them to eventually sell the rights to that business, you get some really inflated multiple. And where they got them, the Lord only knows. So I've seen some crazy multiples or crazy stipulations and most of the time when they're that outlandish, the deal is just not going to happen. Because again, it's got to make sense for us. Got to make sense for them. I can't get too specific in some of those multiples and some of those situations, but they're just crazy situation.

That's today's normal now, isn't it?

Yeah. Multiples are high regardless, but even these would be 2, 3, 4 times the industry average and just kind of made up numbers.

Yeah, I can see that. Especially if it's not something they put in market, they can swing one way or the other and have overzealous expectations should be expected.

Right? Someone who's, who's founded a business, who owned a business and grown a business doesn't necessarily mean they know how to sell a business. Right. And if they haven't engaged an advisor to help coach them through that. Right. They don't know how to market their business. They don't know how to value their business. Right. For those types of individuals, it's a learning experience and sometimes the expectations just aren't going to match ours. And here's what it is. I try to coach and advise along the way, but it's ultimately their baby. And if that's the number they have in their mind for whatever reason, then that's the number they have in their minds.

They probably look up your market cap and add a zero to it. So what's happening there?

That's that simple.

Hey Dustin, thank you so much for your time today. I really enjoyed this conversation and look forward to continuing another time.

Absolutely. Thank you, Keith. I really enjoyed it.

Thanks. Here's the deal.

Foreign.

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