M&A Deal Sourcing in the Tech Space

Emerson Block, Cardinal Health, Broadcom Toast, Energizer Jam Treehouse Food Forame there's too many to list. What do the best corporate development teams in the world have in common? They use Deal Room, Add a crappy data Room, and Excel trackers. In 2021, Emerson did an $11 billion acquisition on Deal Room. Then this year, a $14 billion platform divestiture to Blackstone. Even with every big bank name involved in the deal, they all had to use Deal Room. Learn why the best in MA combine diligence and integration into one workflow so they can get both diligence and integration done faster. To execute M and A like the Best, you have to know how to use Deal Room. See for yourself@dealroom.net Again, that's dealroom.net let's get to the interview. 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.

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Scientists welcome to the M and A Science Podcast where we learn from the best in M and A to uncover proven techniques for enterprise value creation. If you're interested in learning more about how to optimize your M and A practice, or want to get involved with our community of forward thinking M and a practitioners, visit mascience.com and subscribe to our free weekly newsletter. If you want to keep up with us on the go, head to LinkedIn and follow M and A Science. Joining me today is Steve Lucas, CEO at Boomi. Steve is a multi time CEO with nearly 30 years of leadership experience in enterprise software. Boomi provides an integration platform as a service, otherwise known as I Pass, that allows businesses to connect applications, data sources and devices across different environments. Today we're going to talk about AI framing M& A for success and a bunch of other things. Steve, how are you doing today?

I am great. I'm also thrilled to be here. Thank you for inviting me. I can't wait to talk about that.

I think you invited me. We're here at Boomi World in Denver.

You were like hey at a podcast. And then I was like hey Boomi World. So maybe we invited each other. But yeah, we're here at Boomi World and we're talking all things AI.

Can we kick things off a little bit about your background?

It's a little scary to hear somebody else read that. I've been doing this for almost 30 years, but yes, I'm the CEO of Boomi. This is my third time as CEO. It's weird I have to count now, but it was the CEO of isims. Prior to that I was the CEO of Marketo. Marketo was acquired by Adobe. Most people know that. Spent 10 years, or not quite 10, but almost 10 years at SAP, salesforce.com and businessobject. So a bit of an eclectic enterprise career. This is all I know, man. Like it's either this or flipping burgers. So I'm sticking with, sticking with software. Been in Denver, Colorado with my wife and two kids for 30 plus years. And that's great.

You have had exposure to M and A. Some of the companies you've been involved with have been acquired. So you've been on the sell side then you've been on the buy side.

The first kind of call it 10, 15 years of my career was a lot of getting bought. So I started at a company that if somebody recognizes this, please drop me a Note, especially on LinkedIn. I started a company called Seagate which made disk drives. But I worked for Seagate Software which made software. And the crave crazy theory like almost 30 years ago was hey, we make disc drives. So let's do software that'll fill up those disk drives with data. Then we'll sell more disk drives. Yeah, okay. Sort of okay. There was a whole Silver Lake private equity firm that kind of came in and they acquired the Seagate software business and it became Crystal Decisions Made Crystal Reports. If anyone recognizes Crystal Reports, shout out to my Crystal Reports peeps. And then that company was acquired by Business Objects. And then that company which did analytics was acquired by SAP. I had the same desk for a long time, but it was four different companies just in succession, one after the other every couple years. I guess I just thought that's how software was and I kind of missed the whole.com, let's go workforpets.com type revolution. I was deep in enterprise software, but man, a lot of M and A on the buy side now post that. The Otherworld. Yeah. Bought a lot of companies, especially as I've come to run them. Gosh, in the past 10 years, maybe a dozen companies that I've acquired. So it's a lot.

It is. The coolest thing about doing this interview at your conference, you gotta walk the floor and I gotta chat with everybody. Got a chat with your partners. I got a chat with a lot of your colleagues. They like you. The two big themes were down to earth and they're like, you know, a lot of CEOs talk about being A visionary, but, like, Steve is actually a visionary. They held that up with a lot of pride.

Wow.

But with that, I got asked, what's the vision for Boomi?

First of all, I mean, that actually means a lot. I am a big believer in just being a real and normal human being. And I don't know why that's so difficult for a lot of tech CEOs. I just don't get it. There's this compulsion to rewrite your narrative. Oh, you weren't really born. You came down on a mountain on a unicorn, and you just have all these great ideas. That is not real. The reality is that you have to, at all points in life, acknowledge, like, there's a tremendous amount of luck and good fortune that put you in the seat that you're in. And there's a lot of people that voted you into that seat. Whether there were votes or not counted, you're voted into that seat. I think about that every day. Now, that being said, we had Coach Prime Deion Sanders join us today at Boomi World as well. And one of the things he said is you got to put in the road work. Like, you got to be willing to work for it. But on the visionary front, it's really a matter of how hard are you willing to learn everything that you can about the business that you're in. Number one, but then number two, and it's something Steve Jobs talked about. I think he called it zooming. It was this practice of, okay, this is where I live and kind of my street address, but let me zoom out a little bit and think about the city, Let me zoom out and think about the county, let me think about the state, the country. Zooming is. It's tough because we get into the daily grind of, oh, I got a company and I got a thing, and I got to build this product. So we forget to zoom out. But after I read that, I really leaned into the practice of pausing and zooming out and doing it frequently. So once a week, I'll find myself feet up just thinking about world around me. Like, I gotta think about take AI and I know we'll get to it. But how does that change the world? Not just my industry. And you gotta zoom out to that level. When you do that, then you can start to fill in the blanks on the vision. But I will tell you, if the vision ain't perfect, the one thing I'm willing to do is outwork everyone around me.

Yes, I 100% agree with that.

There you go.

That's a big part of the discipline.

But look at Boomi. The other thing is back to the unicorn coming down a mountain type thing. Let's stay with that for a minute. I like to look at these organizations. You take a look at some brilliant, brilliant people. Look at Mark Benioff. Amazing guy. He really is. He's amazing. He should get credit really for darn near inspiring an entire industry to move. It was kind of funny today. Someone made a comment in one of the sessions, like in the beginning there was Salesforce. They really were the company to say, hey, this whole cloud computing thing for enterprise organizations, it should be a thing. Let's go embrace it. I know he gets credit for it, but he really should get a ton of credit for moving an entire industry. He was a visionary there. The thing about it though is he was bold enough to make that assertion. What right did Marc Benioff have way back then? I mean, he has a right, certainly earned that. But what right did he have? He's just Mark from Oracle. He saw the opportunity, he made the assertion, he inspired people to follow and move. He hasn't gotten everything right in his career. Kind of choice wise, decision wise in terms of software is what I'm commenting on. But man, his ability to see that and inspire people to move, that's unique. And I admire that. Not just about him, but I also admire the fact that he stuck with it. He could have sold salesforce.com a hundred times over. You remember like way back when they were talking to Microsoft about whatever, but it is about, are you willing to put yourself out there and take a risk? Here with Boomi, I'm like, hey, we do integration for enterprise organizations, but we can be so much more. And my thing is you've just inspired by people like Mark and others. Like, you just got to put yourself out there. You got to take the risk you've gotta assert and then inspire people to follow.

I wanna talk about strategy.

I love strategy.

This came up. I was chatting with one of the analysts earlier today and the question is, how is Boomi gonna defend its position against these bigger companies with all these resources? It was interesting you mentioned Salesforce. Cause they bought the Mulesoft product. And one of the things they're not very good at is integrating. They work on market economics. You get a lot of press around things you acquire and it keeps your market cap high. Not so much recently. How do you approach that? Like how do you think through strategy. And some of those views. I agree about the zoom out looking at the broader view of what's happening But I guess, what's your personal view on strategy for the company?

I think strategy is the confluence or convergence of a few things. I think number one is what are you extraordinarily good at? You always have to approach strategy from a position of strength. To a certain degree, it gives you permission to build things. But then the other is what opportunities do you see within your existing customers to solve really painful things? And the good news is, even in this modern world that we live in and like AI is just going to magically fix everything in a few years, things are still very complicated for customers. Finding those problems, solving those problems. If you do it and you do it well, generally you are economically rewarded. So that's the second piece. But then the third is again, coming back to the zooming is you have to think, they call it different things. The moonshot and the big hairy, audacious goal. We've relabeled what that is. But it's also asking yourself, like, hey, if we swung for the fences and we just sent it, what would that be? What would it be? Here at Boomi, I sat down with my engineering team and I said, all right, we're seeing radical changes in the world with large language models and small language models and vector databases. Should BOOMI be something more? Maybe we need to be a database vendor. It's kind of a silly notion to say those words, but if you're not willing to say it, you'll never be it. We're not going to be a database vendor. That's not what we do. But you have to be willing to challenge those notions. Great strategy comes from a convergence of those three things. It's that position of strength, it's understanding the problems that you can solve that are really challenging for your customers and then being willing to dream big and you converge on those things. But it's not a one time activity. It's got to be all the time. You always have to be rethinking your strategy. What works today, what we announced here at Boomi World, it's not going to work a year from now.

Good point. So we got play from the position of strength, which I feel like how you guys are really set up and focused in the space is one key one.

Yep.

Second is solve painful things for your customers. Really being deeply rooted in that and then swinging from the fences. What does that big vision look like? And we'll talk more about that because I seen some cool stuff with these AI demos we did earlier.

One particular leader, when Adobe acquired Marketo, which I was the CEO of Marketo and Shanjan Orion, who is still this CEO of Adobe and deservedly so. The guy's a borderline genius. He is amazing. Now he shuns that kind of stuff. But I have been in the room. There was a term that he used to use. This was in my 40s. I found myself still learning from the guy. You'd sit there and go, ah, I just did this great thing with Marketo and you just spent all these billions of dollars on it. And you walk into a room and you get quickly humbled by someone that smart. But he would talk often about altitude in strategy. We'd be talking about the strategy for the business or sub segments thereof. And he would often ask, are we at the right altitude? Which by the way, sometimes people get too high or too low in altitude and you're, you know, so. So if I could add a bonus fourth to strategy, it's you got to fly at the right altitude with your strategy at all times. We've seen great products that get introduced too early or they're a little too high level, they're almost there, but not quite that last little bit. I've just learned so much from people like that in my life. Maybe the key to all this is like always be learning. I meet people like that and no matter how far you come in life, you go, wow, there's always somebody smarter out there.

Were you involved in the negotiations when they made that deal?

Yes.

How'd it go down?

We were private equity owned by Vista, which is a large private equity firm. Truth be told, they were. Obviously Vista was leading those negotiations. And to be clear, a CEO's first job is do a good job, you're building a durable asset. Forget the negotiations. There's nothing to negotiate if you haven't built a durable asset. A great company with a great solution that solves big problems. If you don't have that, it doesn't matter. So check did that first and foremost. But beyond that, now you start getting to, okay, well, privately held company, what's the value of this organization? And you and I both know those valuations have changed. Once upon a time, Forex became the new 2x, then 8x became the new Forex and blah, blah, blah. And I think valuations for software companies peaked in 2021. But back in 2018, when Marketo was acquired by Adobe, the first series of conversations actually started with a couple people, not Shantanu, that were involved in that negotiation. So it was many people. Once we started getting engaged with them, then obviously Vista, being the owner of marketo as they were. They had a specific return that they wanted, expected with that, I'll call it a group negotiation.

You got the private equity.

Yeah.

Parents.

Yeah, yeah. They want their 3x plus always.

Yep. So they had that in mind.

And they're one of those unique private equity firms in that hyper collaborative. It wasn't this. Hey, Steve, we'll let you know what we decide. It was. What do you think? What do we think? But a group effort.

I love that you announced some acquisitions today.

We did.

I love how you just put that right into the narrative. In your keynote you had meshery and a PDF.

Yeah.

And it sounded like the narrative was really around capabilities. Like you're extending the capabilities of what the company can do and tying that into this greater vision.

Coming back to strategy, our position of strength is integration and automation. This is what we do for 20,000 plus companies every day. What we do, in fact, just to call it chest thumping or whatever, but just to reassert the leadership that we provide. We talked about the billions of messages that we send on a weekly basis, hundreds of millions per day events and messages and the like through these very complex enterprise applications that we have to integrate for our customers. So we. That's all great. That's our position of strength. We are trusted. We can connect complex enterprise systems and do it at scale. Position of strength. You mentioned Mulesoft. Mulesoft is a terrific technology. Admittedly, it's a little heavy to deploy and manage, but it's a terrific technology. They were true innovators in the world of API management. Then they get acquired by Salesforce, then talent leaves. Then you start to lose sight of what your strategy is. What we just talked about, the vision that creates opportunity for Boomi. There's a vacuum in the market and I saw that vacuum and I'm sitting there going, yep, we're going to take advantage of that. And Boomi was building in addition to our integration, the other side of that integration coin is API management. And I get the thesis, oh, this cup right here needs an API so I can talk to it. Everything needs an API. And if everything has an API, then developers can get these things to talk to each other. And oh, by the way, we'll catalog the APIs, you can inventory them and query them and all kinds of good stuff. Makes sense to me. But Boomi was not the leader in that category. And between the kind of demand from our customers plus the vacuum created with the Salesforce acquisition of Mulesoft, there's a golden opportunity right there. So we started shopping. I don't know if it's the right analogy, but there's just a lot of dating that has to go into this.

We call it sourcing.

It is absolutely sourcing. Yeah, there's a lot of dating, there's a lot of sourcing. I think, I'm not joking. I think we talked to every API management independent one company on the planet. It was exhausting.

How involved are you with?

Oh, very with the shopping. Oh, very involved with the shopping. I think you have to be a company like Boomi. Even though we're half billion recurring revenue and growing quickly and all those great things. Look, if you're going to own the vision and own the strategy and drive that as a CEO like you have to be involved. This is not inconsequential. So very we're sourcing and we're shopping and we learned very quickly that the vast majority of these API management vendors that are out there, they're still like, I was really surprised, go check on Prem. The vast majority of their technology is still deployed on premise. And I'm looking around going, are we not in 2024? Boomi's a cloud management like integration company. I no, we're not changing who we are just because that kind of works that way. So we ended up finding a technology mashery which has actually been around for a number of years that is a kind of cloud native API management solution worked perfectly for us and it ties perfectly into what Boomi does. It just so happens that company and technology was owned by the Cloud Software Group, formerly Tibco and Citrix that came together. So through a long but nonetheless very productive negotiation process with them, we agreed and have now agreed to acquire the whole business from the Cloud Software group. So that's done. So that's one and then the other thing. Now here's the zooming part. The reason we bought that technology is because there's enterprise gateway capability, there's reliability scale, the scale out, scale up framework that we want to put behind what we do. We want API management to be as big, as scalable, as reliable, trusted as the integration automation that we do today. Ergo the investment. However, the second thing that we know is everyone in their dog has at least one, but more likely two, five, ten API management solutions. It's not one and we're not even going to pretend to be the one. We acknowledge this reality, especially when you get up into the enterprise. Enterprises love standards, they have all of them, the irony and all of that. So what we did was we zoomed out and we said, what if we had the ability to kind of deliver a universal control plane that could manage multiple API management solutions all at once? So we found a company based in Germany named Apida Apiida and Apita provides a federated solution for API management. So we had the infrastructure, what Boomi's currently doing, plus this federated approach, long story short, creates a unique solution for Boomi. Even if we lose, even if someone picks mulesoft over Boomi, it can still use our control plane to manage multiple API management solutions. So this is a. Even when we lose, we can still win.

Yeah, I got it. API manager. Manager.

There you go. The manager of the manager. Yeah, exactly.

Still shopping. It's a lot of relationships you got to get to know. I take it mostly CEOs of these companies that you're really focused on the.

Relationship you're always walking in to a certain degree with the CEO because they want to be the first touch point in these conversations. I want to get to the head of engineering very quickly.

Okay.

I want to understand who they are, what they can actually build.

Yeah. Because you know how quality of a shop they got.

That's it. You know, if it's like, well, I got like four dudes and most of our stuff is done on upwork, it's not that interesting.

How's the approach with building the relationship with the CEO to get the relationship of, hey, we're just industry folks. Let's get together, compare notes versus you could be a good target for us. Is it build a relationship first and then bring that up more casually or pretty direct about it up front?

Unfortunately, there's no bumble for M and A yet. You have to figure out what people's objectives are in all of this. I am really direct right up front, which is to say, look, I have a simple job and that is to build our company to a position of leadership and dominance in every category that we play in. I realize that you are building an amazing company and I realize that you want to turn this into a multi gajillion dollar. Tell the unic story. Coming down on the mountain, we're either going to build this ourselves or we're going to buy you. That's the conversation. I find it in a good way, polarizing kind of get real quick the sense for. And by the way, I actually think the right answer is we don't want to sell to you. We think we can do this better than you. That's the best answer. This is the best answer. Now I'm leaning in Now, I want that company, and it's irresistible. Generally, if they say okay, it's actually the wrong answer.

Okay, let's talk this through. So up front, like, even on the outreach email, is it, hey, this is what I.

Okay, it's probably not the outreach email. It's the first conversation.

First conversation.

First conversation.

So first email, it's, hey, we're in the same space. Why don't we grab an intro call, get to know each other?

Yeah, we'd love to catch up. Generally, I'm looking for warm intros. Like, I know somebody that knows you. Rarely am I dropping in the cold note. 30 years of a network, I can.

You could get one. Yeah, I agree. Yeah, I saw we had 126 common connections. There's a lot of.

I know, it's great.

Yeah, right. We'll figure out.

It all works. That's right.

So we get the introduction intro and then you. Let's get to know each other. And then that first conversation, you bring that up. Now, it's interesting that you mentioned that, hey, we're going to build this. Tell me, why is that such a strong indicator for you as opposed to, yeah, I'd love to talk to you about selling our company.

The kinds of entrepreneurs that you want to meet, interact with, and ultimately might end up at your company. I want entrepreneurs that can put me out of a job. I want people that can take my job. That's what I want.

Top talent.

What I don't want is, yeah, this woman or this guy who was just, like, looking for the first opportunity to dump an asset. That's not interesting. But if I find that person that says, look, she's sitting there staring me dead in the eyes, and in a good way, I'm getting a little nervous. You could just actually take my job. That's the right feeling. And so it's that level of kind of like entrepreneurial aggressiveness that I'm looking for. And I want to know how they respond to my assertion. I want someone that can say, you can't build what I've got. And I'll tell you why I want to be proven wrong.

Teach me how to convince someone to sell their business that doesn't want to sell their business.

Oh, that's what took forever. Like, a year and a half ago, I got to Boomi, and the first thing I said to my board was, hey, look, API management, kind of important here. Millsop, blah, blah, blah. Everything we've talked about. Year and a half later, we finally got to acquire these technologies. It's because entrepreneurs are passionate. That being said, what I know is I know how to scale. It's a thing I've learned. I know how to take a good company and make it great. I know how to take a great company and make it unbeatable in many cases. If you take a look at Marketo, this is not the Steve Session to run around patting myself on the back. But really, if you look at Marketo, when it was acquired, taken private by Vista, they only paid $1.2 billion in cash. 400 million in debt, I think so $1.6 billion buy price, 24 months almost to the day, two years later, not 10, not 5, 2. We sold it for 3 plus X, almost $5 billion. What did you see that other people didn't see? Because no one else was bidding on it really. And Vista was able to get a really. Well, people were bidding on it, but certainly not for multiple billions of dollars. So what did you see? What I saw was a platform that characterized the right way instead of the knock on the door, hey, this is a marketing automation tool, you should buy it. No, we're actually an experience and engagement platform, a rethinking, if you will, but that rethinking of how to characterize it and then how you ultimately unpack it with a vision, blah, blah, blah, that enabled us to think differently about Marketo, to offer new solutions, build in new directions. So we did all that. The reason I share that story, coming back to your question, is I know that people buy products, companies buy platforms. And I know platforms, lots of people say platforms. They really don't know it. If you look at what I did at SAP. So Vishal Sikha, Dr. Vishal Sikha, who was part of my keynote today, he's got an amazing company they build, called VI and I, they build a conversational finance solution using large language models. Very cool. We've integrated that with Boomi. But when he was building Hana, I was asked when I was at SAP specifically, all right, how are we going to take an SAP database to market? Think about that before Hana, that was a laughable concept. SAP database, what are you talking about? SAP resold Oracle. It was not a thing. Vishal defied that notion, built an SAP database that is a very legitimate powerhouse for SAP customers today. I had the great fortune of working very closely with him and other brilliant people, but the notion was we're going to build a platform where we have really no right to win right now. We're not Oracle, we're not these people. And so when I'm pitching the entrepreneur. I'm saying I can help you find that right to win. I can give you the network that I have, the ability to scale and build a platform I get, if you stick with it for another 10 years, may work out for you. But if you become part of our organization, we will double, triple, quadruple in size and reach a scale globally that maybe with my help you might be able to get to. I don't want to fall into the unicorn coming down the mountain category. That's not it at all. But I just think after 30 years of doing this, I know how to scale.

Let me see if I'm here and you're here. Strength, like knowing your strength. Talked example around scale. I think there's this element of your bringing this combined vision to the entrepreneur and that correlates with this combined vision of getting there faster with a higher level of certainty.

A hundred percent. We know all the scary stats around X percent of startups fail, blah blah blah. And that is true. The road is littered with lots of failed technology startups. I think entering into that synergy and combined certainty, the right entrepreneur will find that compelling.

What does it look like if we roleplay that out? Hypothetically, if you're looking for M and A software you're trying to pitch and what that would look like, how would you approach it?

So like a combined M and A software and boomi.

Yeah. All right, now we got full cycle, we got the whole front end pipeline diligence and we can actually do integration. We're going to talk more about this, but we can actually help companies combine their data so they can hit their realization on their investment thesis much faster. Such a beautiful story.

All right, here we go. So maybe I gave you too many.

Clues on that one.

I got it, I got it, I got it. I got this. First of all, Boomi's got a platform of over 20,000 customers. It's a good start. The vast majority of those being mid all the way up to the world's largest organizations. We like that. It's a good starting point. The second thing is we're connected to every single critical application and database in the world. For those customers, all of them, we have customers that use BOOMI to connect thousands of applications, creating tens of thousands of business processes. We have the data that matters. When you talk about the world of M and A, want to drive M and A and science, I believe the convergence of those terms is compelling. You need information. Not a little bit, a lot of it. And the more information that you have access to the more information that flows into your application, the more compelling your solution becomes. There is no company that can walk you into that level of information like Umi can.

I love it. We should do this.

We should do this. It's great.

I'm sold. Let's get into negotiations. Speaking of negotiations, I'm wondering if you're seeing some value gaps. I mean, just announced two deals and I always feel like it's just we had some great run in 2021.

The 2021 vintage. Yes.

Unbelievable. I had a friend told me a term, she had 20x and I was like, what the hell? Revenue. Revenue.

Yeah, take that.

I told him, yeah, for some reason, they had a reason to get out, but still really high valuation. And then these firms are trying to cling on to how they're going to get that money back. Expectations on exits are still high.

Yeah.

So how are you managing bridging those gaps? When you're dealing with negotiations, first and.

Foremost, the hard part is there's still a lot of hangover from the 2021 kind of funding craze. Right. In the valuations. The first thing I always say in these discussions and negotiations is, look, if you're aware of a multitrillion dollar stimulus package coming down the pipe, I'd like to know about it. But those days are gone. That happened during COVID potentially the financial crisis of 08. We had a stimulus package right after that. But the multiple multitrillion dollar stimulus packages that just flooded the market with cash and raised the ability for organizations to accrue and raise ungodly sums of money. I'm unaware of that happening currently, number one. Number two is I get the expectations that were set with those 21 multiples. Totally get it. That's awesome. All you have to do is look at math. We have myriad publicly traded organization examples right now. And even in our industry, look at, we had Silver Lake that bought Software Ag. I think they acquired Software ag and that's a good company. See, big revenue, blah, blah. And then IBM bought the web methods chunk of that. So again, we get a multiple exposure. I generally point to what are public markets actually dictating from a payment standpoint. Now look at the Wall Street Journal. Just three weeks ago, there was this whole rumor mill that Salesforce might buy Informatica. And the rumor was somewhere in the 12 to 14 billion dollars range. And Informatica is a good company, but that would be sort of knowing their revenue. I can't say it exactly. It was like a 7x multiple. Would be my guess on revenue. 7, 8, something like that. So that's not 2021. Hey, I'm going to get 20x or 40x or whatever the crazy talk is. It's still a good multiple. I think we live in a normalized environment, not an abnormal environment. What we saw from 2020 to potentially the late 21, early 22, that was abnormal. You have to look at the macro for 30 years and multiples minus that kind of spike in that time steadily improved, blah blah, blah. But my argument is always the same is show me how you're a durable company that's going to grow greater than 20, 30%. Show me how you're going to be profitable greater than 20 plus percent. Then I'm willing to pay a high multiple. I got asked to come into Boomi. Boomi's been a terrific consistent 20% plus growth company even at half a billion dollars. Continue to grow north of 20%. That's good, really good. In fact, the challenge with Boomi was are we profitable? Can we walk and chew gum at the same time? And everybody started to ebb towards oh, profitability's a good thing. You can pay your bills. And so this year Boomi will be for the first time in its history a rule of 40 or better company. So we'll be 20% plus growth, 20% plus profit at scale that's unique. If someone can bring that to me.

I'm all eaters upfront on the parameters that really are attractive for pay a premium. Otherwise you're looking at the multiple exposures that you can fine private republic.

Yeah. The reality is I'd say it's a dime a dozen the entrepreneurs that can take $100 million and turn it into zero. Right.

Any other tips on negotiating lessons I.

Can learn from you having that strong vision for your own company, what we already talked about and leading with that number one. But number two, finding like minded people but they're willing to challenge you. Those are the kinds of people that I love to be around. So that's number two. Number three on negotiating is always level setting. As we've talked about. If you're owned by a private equity firm and you live in real someone else is owned by a venture capital firm and they don't then it's really important to quickly align on those elements. Don't waste each other's time. They want 20x, you can pay 6, whatever that multiple may be. So those are things to think about. But I would also say helping these entrepreneurs understand the kind of network that you can Build. I'll give you a case in point. Without getting into too much detail, there's a company which when I was running CEO of isims, this is before TA Associates came in and bought half of the company with Vista Co Invest. We bought a video hiring technology with a brilliant founder, brilliant guy. I remember saying to him, I know that you may not be getting the price that you perfectly aspire to, but if you do this with me now, I promise you I will come to your aid and help you in your future endeavors. He has a new startup. We just demonstrated their new technology on stage today. It was part of the demo at Kalpa. So it's the technology that's there. Less of a pitch and more of helping entrepreneurs understand that this software world is as much about the network as it is the technology itself.

Yeah, that's true. And if I think I know what you're talking about, I'm pretty sure it makes sense because we talk goes back to the scale thing because they got that business to a point when the scale factor really wasn't in reach. So strong vision, find like minded, willing to challenge, level set the network.

The network.

Let's talk about BOOMI itself because M and A. There's a use case for BOOMI and M and A. And I wanted to hear a little bit from you about how does that work?

The currency is data. I think we all know that. And when it comes to M and A, like there's a lot of use cases in M and A, but the biggest one is you can only move as quickly in M and A as your ability to integrate and metabolize companies. Not how quickly can I sign agreements and buy them. That's the easy part to a certain degree. The hard part begins when you're tying in culture and human beings and process and data and systems and all the stuff that comes after M and A, there are really two use cases. One is Boomi being able to find, discover, connect and access data that can help you in these M and A situations. The other part is can I fold this in? Can I tie in the business processes? In fact, that is a massive use case for Boomi is, hey, I just bought a company, I need these things to talk to each other and quickly. By the way, BOOMI is often spun up for the hey, you've got Oracle, you've got SAP. How are we going to produce consolidated financials?

Enter Boomi integrating data. I feel like this is the biggest thing I'm seeing when I talk to integration practitioners. Yes, there's A lot of talk about culture, the leadership, alignment, those things really important. But so much is becoming more around the data. How quickly you can get the data integrated so that you have access to it. And obviously people want to get the quick wins. You bid this ambitious investment thesis you're betting on all these synergy realizations involves the cross selling which everybody always puts in there. You can't have two different databases the data sits on and we can't have.

The redundancy of I'll kind of adjust my jacket. As I say, we've all won acquisition arguments based on very strong cross sell synergy projections. We have the very next thing that comes out from that is all right, how many of us have experienced, okay, we bought the company, that's great. But this one salesforce over here, that came from acquiring parent a other sales force over here from just got bought company baby. None of the salespeople can access an opportunity or they're stepping all over each other. That is so fundamental and basic and it's tropish almost. Come on, man. We live in 2024. This should not be that hard. We can share information across different CRMs and financial systems. It just tends to be an afterthought. I would actually just ask a really basic question up front before you go into M and A which is how are we going to share information between. I'm talking data, not like I'll email you about an account later once I establish it as mine in the CRM system. But how are we going to share information? How are we going to collaborate? Those questions are often asked too late.

I was going to say do you use boomi Then how do you make your integration successful?

We use boomi. That's it. We're boomi on boomi here. That's the thing as we talk about boomi on boomi and we will be with this solution as well. The reality is smart people with secure but unfettered access to real data and information. Smart people and access to information generally make really good decisions. They generally do. But how often have you heard about the project, the acquisition that failed because we just couldn't get these teams to talk to each other. Oh, we couldn't report out to the board on were we actually cross selling the things that we wanted to sell? It's too late when we found out. And I just find that these fundamental questions around access to information, sharing the data, if it's an afterthought, you've already failed.

What are the top three to make integration successful? Obviously you got the booming data integration. But I don't think just in your philosophy of setting this up with leaders to make their deal successful.

I'm going to change my altitude for 30 brief seconds. Here we go. And then we'll come right back to it. So, borrowing Shantanu's change in altitude statement from earlier, I believe that data is not. There's that whole phrase data is the new oil. I could even just say data is the new. And I'm pretty sure every listener would say oil. It was a whole thing. We're all guilty of saying it. It was a cool thing to say 10 years ago. We all said it. I believe that data is not oil. I believe it is sand. It's infinitely abundant. There is a ridiculous amount of it. Some of it's useful if you melt it, turn it into things like silicon chips and glass, but there's an enormous amount of it. You just have to be really picky about what data you use. And that's the whole thing with Boomi. It's not, let's just carpet bomb the heck out of data. It's precision strike data. What matters when you get it. So the three tips are, know what information you really need, what do you really need? That's the whole data is the new oil, blah, blah, blah, sand thing. Time will tell if that metaphor just worked there. But it's knowing what data you actually need to be successful. That's number one. Then number two is knowing how do we move information between our different systems to create outcomes. And what I mean is I think oftentimes organizations will say we're company A and we're buying company B in an M and A scenario. And one company has a culture of we have an inside sales motion and we move very quickly with our sales model. The other company would have a, maybe an enterprise sales model. And these deals take three times as long and they're more complicated. I would say that the second point is the cadence of data. How are you moving it? When are you moving it? Where? It's more the when and how quickly are you moving data? But I'd say, what data do you need? How quickly do you need it? Is it real time in nature? Should have just started there. I think that's the second thing and then the third. And really this is the most. One of the most important things is how will we consolidate our data over time. At Boomie World today, we showed off a technology that with a few clicks, using an AI agent can synchronize all of your data across salesforce and Shopify and the list goes on. And why would you want to do that? I can guarantee you there is not a company on the planet that has a single definition of the word customer. You can go into one application and find the word customer. That's terrific. Go into the UK and that word is household or account. Go to another country and it's so you'll find account, household, customer, whatever it may be. They all mean customer, but not really at the same time. So you have to find a way to say, how do I make a kind of golden record for me to have common conversation if I'm going to buy a company and I'm betting big on the cross sell upsell. That's great. What if my data's wrong? What if I don't have an accurate definition of customer between company A and company B? And we can solve that. That's part of what we do is say, hey, we can come in a few clicks later and you've got this magical golden record across customer. So I'd say making sure that you have accurate information is critical to success.

So focus on the information you really need, how quickly need the information, and think of your roadmap in terms of consolidation of that information over time.

Exactly. It has to be right now. I'm sure I could have gone with the whole four V's of data veracity, blah blah, blah. But I think what matters is really those three points in an M and A context.

You're a tech guy, I'm a tech guy. Let's talk through the AI affecting the M and A space. I saw some kick ass demos and my favorite was taking like qualitative instruction. This is what I want to do. I want to connect this data set with this data set and it builds it all out. And I was like, this is like the power of AI. Where do you see it? I want to. Let's get to the AI vision.

Most people are going to label me as like the AI. I'm on the bandwagon in a fanboy, whatever. Look, I haven't seen a technology in my lifetime where I can type in an abstract concept and then somehow this technology, in this case, it's using parameters and reward tokens and all of it's powerful technology, these large languages, language models that can then come out and take a specific and darn near exact action based on an abstract ask. That's what humans get paid to do for, right? It's like, oh well, I have an abstract situation, I'll look around, figure this out. And then I'LL get very specific in software, clicking buttons and moving records and things like that. What we've introduced is based on large language models. Credit where credit is due. The world is changing at a rate and pace I've never seen, not in my 30 years of tech. And that rate and pace includes. We introduced a series of AI, what we call agents today. And these agents, they're helper agents that can do things. Like I could say, hey, I'd like to take the most recent five records or purchases in my Shopify system every Tuesday and move those over into netsuite. Just do it. And it just does. We've kind of reserved that work for the gods, the humans. We're like, hey, well no, there's not really an AI system capable of A, understanding what you really mean and then B, connecting those complex enterprise systems, C, verifying the security, D, identifying those records and then going, yeah, I'll just move that and create an automation to do it every Tuesday. That's a human activity. And we just introduced our orchestration agent that can do all of that. So it's literally taking your abstract request or notion and then turning it into a specific set of ones and zeros and ask. And I look at things like that and I just can't help but think that every single enterprise application, everything we've imagined for 30, 40 years, it has to get reimagined. These applications will. They'll begin to reason, and they should, because infrastructure is too brittle. I always use the example of I was meeting with this customer one time and they use BOOMI to screen scrape websites to collect data. I'm not saying that's good or bad. That's just what they do with boomi. Now they're doing that with their partners, they have permission to do it. But in that screen scrape, if the field moves one pixel, it breaks the integration. Shouldn't it be smart enough to just adapt and go, oh, it's the same field, it just moved one pixel to the right. I use that as an example of technology is too brittle. It's not malleable. If you have small language model SLM based connectors that go, oh, actually it's the same. I'll make the adaptation here and then I'll just let you the human know and you can approve it. That's great. I also use the example of expense reports only. I'm just on a holy war to get rid of expense reports. I hate expense reports.

I'm with you.

I hate it. I hate filling them out and I don't really fill them out anymore. My assistant does that. But I do approve them. And I hate approving expense reports. But it's the perfect example of work that's going to go away. Because improving expense report is the convergence or confluence of human judgment and corporate policy. Those two things intersect. Yes, this is a good expense. Yes, I will approve it. No, the fun trip out to Vegas not approved, whatever that may be. Organizations in this space, they're training models to do a better job at approving expense reports than humans. Two years from now, no human will approve expense reports. It's crazy talk. Why would I ever want to do that? But that's an example of a decision that's going away that humans reserve for themselves. Today. It won't exist in two years. Time's about 10,000 decisions two years from now. It's going to change.

It's going to change. These are some killer examples. A bunch of people are going to reach out to me after we publish this podcast. We're going to have to come up with list of contacts for them to go talk to.

Sounds good.

Yeah, we'll figure that out.

We're on LinkedIn. It's all good.

I was on the floor yesterday asking, hey, can you ask Steve where the company's going? Are we going to go get ipo? Are we going to. Are we going to get acquired? I think part of it. People got options in the company. They want to know. They got that and the big vision of their own personal lives. I like making people money and the company size. This is a sizable company. How do you think through that between IPO path or the strategic moves you could do with other big players out there?

I think to a certain degree it's private equity firms and I've worked with many and these are terrific firms like TPG and fp. They have their own set of objectives. But what we talk about frequently is just how do we make Boomi that durable, enduring technology asset, that great company? That's where the conversation starts. Ultimately, the decision is not really up to me. As the chairman and CEO of boomi, I am part of that decision. But we have investors. It's partly that the public markets, they are rough. They're sometimes rewarding. Now, say a year ago they were nightmarish. Now they're just rough. And I'm starting to see some dethaw. I think we all are. And that's like I'm cheering for. For every tech ipo, I'm like, go. I think that there is a very strong argument that Boomi could be an extraordinary publicly traded company. I do. Now. That being said, I actually really like being a private company where we can innovate, we can make decisions that it's not about this quarter or next quarter, it's about the next three years. How do we transform? I'm not really sure if we were a publicly traded company, if the public of markets would have signed off on. Hey, hey. Let's have Boomi go build this agent architecture. What we talked about today. I don't know. I don't know.

I was going to ask you how come you're such a hot ticket with these PE firms to come in as a CEO, but I think this interview explains itself.

It's one of those things. I had the good fortune of meeting a lot of amazing people and mentors over many years and building a network, running a software company. What's the old. Like your network is your net worth or something? It's a thing. And when you're running a software company, I'm not sure there is a thing called a software company. There's just people. Just people that care and are passionate about what they do and they want to do amazing things and build really cool products. For me, what has been special about working, the people that I really like working with at Francisco, in particular ntpg, they've given me the permission to just be myself, invent, work with other great people. The cool thing for me at 51 years old is so I got to bring in Chief Marketing Officer Alison Biggins. She and I have known each other literally since we were like, basically kids. We worked together when we were like 25, like at an early company. Amazing human being. Greg Wolf, who's my chief Commercial officer. I used to work for Greg. He was the COO at Crystal, then Business Objects. Brilliant guy. Arlen Shankman, who I've known for 15 years. He was the CFO of Citrix before it got merged and acquired with tibco. We worked together at SAP and the list goes on and on. It's great. People that care. I love that. I love it.

I love how you attributed it back to that. Hey, so I gotta ask before we wrap things up, what's the craziest thing you've seen in M and A many.

Years ago, when Qualtrics was acquired by SAP for an enormous amount of money, it was. I can't remember, it was like 8 billion or something like that at the time.

You're right. Yeah.

I went down in history for saying, man, I don't get that at all. And then actually, SAP spun the company out as a publicly traded entity and. And its market cap just went through the roof. So for me, it's the collectiveness of that craziness. It was private company bought for all this money and then what the heck is that doing at SAP and why. But then they spun it out. In the end it worked out. But that's a lot of craziness. That's probably not the craziest thing I've seen in M and A, but it qualifies as crazy. I'm not sure. The craziest thing that never went down was when the whole I think it was Microsoft Salesforce rumor. That alternate universe that we're living in right now where they did buy Salesforce, that would have been very interesting. It really would have. But I think that the crazy stuff is coming soon and it's going to be because there's too many companies sitting on their hands with this AI stuff. They're. Yeah, I'll just wait it out. Look at what Microsoft is investing right now in AI with OpenAI. It's like $32 billion or some crazy amount in the next couple years. It's insane amounts of money. And then full credit to Sam Altman. For the first time I ever heard a human being utter like, what we really need is a trillion dollars. You remember his quote on that? It's crazy. It is crazy. But is it? There's a moment where I'm like, it.

Seemed crazy and it's going to get.

Crazy, it's going to get crazier. But I think it's these companies that are sitting on their hands not moving quickly enough in and around all concepts related to AI. There will be an extinction level event for many of them. And I think crazy is yet to come.

This has been an awesome conversation. Thank you 100%. Same so much for taking the time helping me become a better M and A scientist. Those of you still with us, you're the true M and A scientist. If you've gotten this far in an interview, I'd love to hear from you. Give me some feedback on what you thought of this interview. Reach out to me on LinkedIn. Till next time. Here's to the deal.

Thank you for taking the time to explore the world of M and A with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you need help standing up an M and A function or optimizing one that you already have, we're here to help and if we can't help you, we probably know someone that can. You can reach out to me by email Kisan K I S o n a science.com or you can text me directly at 312-857-3711. If you just want to keep learning at your own pace, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter. Again, that's mascience.com here's to the deal. Views and opinions expressed on M and A Science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.