Planning and Executing Your Exit as an Investor

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Foreign.

I'm Kisam 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. Hello M A scientists here at M and A Science. Our goal is to continuously expand our understanding of M and A and use that knowledge to create top notch training programs and resources. By visiting mascience.com you'll find all the information you need to take your M A skills to the next level. Get started by signing up for a free weekly newsletter to stay up to date on our latest courses, upcoming events and expert interviews. Again, that's mascience.com I'm your host, Kisan Patel, CEO and founder of M&A Science. Joining me today is Dr. Irit Yaniv, founding Partner and CEO at Almeida Ventures.

Almeida Ventures is the first health tech.

Focused public R and D partnership. They invest on a global basis while focusing on medical devices, digital health, Bioconvergence traded on the Tel Aviv Stock Exchange under amda. Today we're going to talk about how to plan and execute your exit as an investor. Dr. Irit, how are you doing today?

Very exciting.

Well, thanks for taking the time. We're doing this live so hopefully those listening enjoy the fidelity of this. I know it's a little extra effort. Give me feedback too. By the way, can we kick things off with learning a bit about your background?

Thank you for having me. My name is Erit Yaniv. As you said, I'm a physician in education, spent most of my years in operation of medical device and the last 12 years as an investor in medical Device and digital health. Three years ago, me and two of my partners decided to establish Almeida. Almeida Venture is, as you said, public venture fund traded here in Tel Aviv Stock Exchange. And we are investing in medical device, digital health and bioconversion.

You got exposed to M and A as an Investor.

Absolutely. Spending 12 years in this field. I was taking a couple of companies through an M and A. One of them is very successful one.

We talked a little bit about this before, but this is pretty common in your industry that.

Yeah, that's true. Let's speak a little bit about medical device. When you start a medical device company, you spend many years on R and D, then clinical regulatory phase and then you have to take the device to the market, which is a huge change for a small company. Because once you reach a commercialization stage, you have to grow, you have to bring many different people, salespeople, sales team. And sometimes it doesn't worth to build up such a huge structure only for one product. And this is when we as investors are stepping in and try to be more active and look for partnership or actually acquisition in order to take this device into the market. By the ends of the international companies such as Medtronic, Boston Scientific, Edwards, they do have the sales force, they do have the capacity, the experience, the knowledge to bring such a device to the market. So it's much easier for them. For them it's just an add on. For a company it is starting all over again with a lot of money and a lot of sometimes frustration.

Yes, that gives a good sense of what the nature is and why. It's seems like M and A tends to be a pretty favorable exit event. When you do make investments, are you typically taking a minority position? Majority.

We take a minority equity in most of our investment, but at the same time we do want to be active. So when you take a minority, usually you are not active. In order to overcome this, what we are usually doing, we are syndicating with others. So we bring much more money, not all from. And this allows us to take an active role in the company like a board seat, sometimes even a chairman seat, which is very important for us bringing our knowledge to the company.

All right, so you're pretty active. You get involved in company board seat, chair seat in terms of time frame, when you would start thinking about an exit. When or when does that usually happen?

It's a very good question because when we establish Almeida, that was one of the questions on the table. What would be the deliverable that a company need to have in order to create an M and A. We want to have an M and A as soon as possible after a few days after we invest, we want to have our money back at a multiple. But this never happened. When we assess those points, we found out that in medical Device There are two main points for good M&A. One is after regulatory approval, usually products that are disruptive and require a lot of clinical to be done. Strategics and international company would like to acquire them after the PMA after they get the regulatory approval that the risk of the clinical has been mitigated. Sometimes the next point would be after market traction. So if we have a device that is improve me too, we will be required to take it to the market at least for one or two years and to show attraction by the physician for this specific improved device. So bottom line, I would say I'm looking at two points after regulatory approval for disruptive product and post initial sales for improved MeToo products.

How do you get involved with the actual exit?

I said before that usually we are taking an active role in the company. Active on the board. When a company reach this one of those two stages, we start to speak with strategic. We have routine calls with them. We meet them at least once a year during the J.P. morgan. During these meetings we pitch them about our portfolio. We get information from them, what would be interesting for them and when and when the time is right, we call them. We say okay, this company got FDA approval. Let's start the discussion about what is the next step. Maybe you want to think about an M and A. In some companies we involve an investment banker. We approach couple of investment banker. We do some kind of matching between the firm and the company and then they take it to a process with all the strategic that they know that are might be interested in such a device, such a technology.

We got a few things to break down here. It sounds like you're actively meeting with strategics. You're going to the JPM health care conference, I take it?

Yeah, that's right.

Those pick Edwards for example, because Ben Haley was recently on the podcast, you would meet somebody typically in corporate development at the strategic.

That's right.

Okay. And you just introduce yourself.

Many of them know us us. I mean me as Irith, me as Almeida. So we approach them, we set a meeting. During the meeting we introduce them our portfolio. Of course we are trying to work on what fields are there in. So you took Edwards for example. So Edwards is a very valve focused company. So we are not going to bring them urology product. We will bring all our structural Heart portfolio. And we'll start to discuss it with the team, with the BD team, sometimes with the specific department team, then they may say, okay, this is of interest, but we would like to see more clinical data. This is of interest, but we would like to wait until you reach the market. This is the feedback that we are looking for. This kind of feedback we bring back to our companies and we say, okay, we have met the team of Edwards, they would like to see more clinical data. So let's focus now on clinical data. And once we have this clinical data, we can bring it back to their table.

I see. So you're representing your portfolio and you would hone in on the companies that may be more relevant to this strategic. And you're getting feedback in terms of, hey, if our primary goal is ultimately to exit through M and A, what is that going to look like for this company? To build that appetite to do that? And then how do you work with the CEO of the company through this? Because I don't know, I'm trying to imagine myself if I got investors and they're doing all this and having conversations about M and A.

So first, we never do it alone. It's not. IRIT is traveling all around and selling our portfolio. We do it hand to hand with the CEO, with the management, and they know what we are doing, they know that we are speaking and actually they ask us to do it. Think about a young CEO. Maybe it's his first time as a CEO, even if it is his second time as a CEO. He doesn't know all these people. He is new in the world. It would be easier for him that someone else has opened the door for him and say, look, this is my best company, this is my best CEO. Maybe you should listen to him. I'll give you a short one page summary, but I'm going to open the door for the CEO to give you a full management pitch. It's more like a quick dating between me and the strategic or the international. And the results of this quick dating is that the CEO will be in front of the strategic. I don't want to be in front of the strategic. I don't want to be the one that is tailoring the deal. At the end of the day, this is the responsibility of the CEO. But I want to be the matchmaker. The matchmaker. And this is my responsibility as a board member or a chairman.

I see the matchmaking part exactly. Increase the options.

I came today. There is a very large conference here in Israel today, most of the day. What I did. I sat with either Strategics or VC that we can syndicate or they can follow up his investors after me. And we discuss portfolio. Like someone else will discuss his children. We discuss our children. So I bring up my portfolio to a colleague venture capitalist, and he brings his portfolio and then we say, okay, this is of interest. Maybe I want to listen more to this company. And he will say, this is of interest. Maybe you can introduce me this company. Yep, matchmaking.

How do you manage all this? Honestly, I ask you because I personally struggle with this, where you have so many conversations. You're working with different companies that have different goals for what they're trying to acquire. How do you keep track of all of that?

I'm taking notes on at the end of the day. Usually I go over all my meetings and then I say, okay, I have to send this to this and that to that. We are exchanging emails. So I know that I met you. So after the meeting I will send you the full presentation and ask you to remind me which companies you would like to see. So, and third, this is our job. This is what I'm doing. At the end of the day, this is my work. So I'm trying to keep it in my head.

I'm just not very type A. I need to find an app or something to organize it better. That is a key part, really being able to maintain a lot of those relationships with these strategics. Identify ones that could be good suitors, introduce them to the executive team.

I would add one thing to that. I think it is very important to be also a very good listener. Sometimes they say something and if you are not listening very carefully, you can miss it. For example, you come with a technology that the company decided to take it for a specific indication and the technology can fit to other indications as well or to other patient population. Maybe you change a little bit the definition of the patient population and then you reach a different market and you come to those meetings and strategic may say, if you would move the needle a little bit to that direction, it might be more interesting to us. And you have to listen. I'm not saying that you have to do whatever they say because you don't know if they will acquire you at the end. But you have to listen and you have to take this information back home and digest it and decide if you want to move to that direction or not. But if you are not listening and if you are always continuing on your way and not look around, you may miss the target. And there are some companies that I saw that they Decided their way and that's it. At the end of the day, we could not sell them or we could not create M and A because the market changed and strategic are looking for something else. Unfortunately, we left with them and we had either to shut them down or to sell only the ip. And this is, this is bad, this is bad for the vc, this is bad for the economy and this is bad for the macro economy.

In Israel, building a network is the key to finding the right buyer. Can you tell me more about your approach? Are there any things that you specifically look for that are good signs of a potential acquirer of networking? Yeah, just through your approach. Networking and what are maybe good indicators.

I don't have, sorry, a way to define it or to identify it. I would say what I'm trying to do is to build up, okay, I have a list of strategic that I have to work with and then within this strategic, who was the best contact for me as Irit with whom I could manage to have a discussion, open discussion. I can learn from him, he can learn from me. He listened to me, I listen to him. At the end of the day I'm open to any discussion. Because you don't know which door that you open. You will get something. I always say don't close any door, just open doors. You don't know what is next. But for long term relationship, I would say I try to keep it with the people that I feel that there is a chemistry between us and I'm not only giving but is taking. I'm giving, I'm taking. Is giving.

What does that entail? What are some of the key things you do to maintain those relationships over long term?

So we are trying to set regular calls with them. We do attend specific meetings that we know that we will meet. I mentioned the JP Healthcare conference in San Francisco. There are at least two very large conferences in Israel that many foreigners are coming and visiting. We send some information outside about our fund kind of newsletter information updates and so on and we are getting updates and newsletter from others. This is the way we are keeping relationship.

Okay. The catch up calls, attending the same events, tracking them down when you attend those events and then being able to share information. If you have some report you published or specific updates, you share that with this group as well.

Yeah, that's right.

Good approaches, holiday gifts, anything else?

We are getting the same. All the large VCs are sending new newsletter, quarterly newsletter. Another way of keeping relationship is during board meetings. When we sit around the boardroom, we meet some of our colleagues because if I invested in one company, usually There are other VCs that invest in that company. We come together to a specific board meeting. So either there is a dinner before or a dinner after or during the board meeting. There is enough time to maintain relationships. Speak a little bit. Not on that specific company, but on other companies. Companies. This is another perspective why you want to have other VCs around the table. Because this is a specific deal that you did with this specific vc, but you may do another deal with that VC because of that relationship. You know each other, you know how it interacts during the board. And by the way, it's another way of how to do intel about VCs. Because if I'm sitting on a board and there is another VC that sits there and I see how this specific VC behaves, sometimes I say, okay, I don't like this and I'm not going to be with this specific VC on another deal because I don't think he's behaving like the way I behave. The same ethical codes and so on.

When it comes to exit planning, do you ever have disagreements with other board members?

Yeah.

What does that look like? What are some do's and don'ts around here?

It's a good question. The answer is yes, because sometimes you have some VCs that would like to take, they have enough money and they would like to invest another tranche and take the company to another stage and maybe do a larger exit in two years from now. And other VCs are small and they would like to do an exit just now because they need the money, because they need a successful story or whatever. There is always a debate about when is the right time to do an exit. Or most of the time there is a debate how you make a decision. It's a tough question. We usually use a lot of knowledge from investment bankers because they have data that they can present to us, comparison data. Okay, what would be the exit size now? What would be the exit size in two years? What do we need to do in order to get an exit in two years? How much risk does we take? At the end of the day? One group has to convince the other group in order to reach an agreement. And sometimes it is tough.

Do hold periods come in play? The different VC firms, which most of them operate out of a structured fund would have like a specific hold period and that would vary because now you're dealing with multiple rounds and so forth. Does that come in play at all.

In terms of yes, yes. The investors will want to see an exit, an M and A or money back before they finish the life of the fund. Nobody wants to end the fund life and then stuck with few companies or that are still there because he will have. He needs to continue and manage them or take care of them or sit on the board and he doesn't get any fee for that. Everyone would like to see an exit within the life span of the of a fund. So yes, it is counts very strongly. And this is why you have this different opinion on the board, that at the end of the day someone has to take a decision. And I said usually it's the betting and one convincing the other, but at the end of the day there is the articles and the one that invested the last one has more power on the rest. So you have to look on the articles and understand who is controlling this company or who is this specific decision in order to do that exit in.

Terms of who controls the board and then who controls the exit decision, does that vary quite a bit? Because could you have a certain person that has that sphere of influence on the board and they can drive a lot of the exit decisions or do you see it go back to the executive team? They're driving it. Who's ultimately it's a final say, final.

Say are the shareholders. And within the shareholders there will be some groups that will have more power than the other. Depends on the articles. But then it varies. So I'll give you an example. We step into one of our investment as the last investor, as Series D I think it was, we said, okay, we want to control when is the exit. So the majority of Series D shareholders will control this specific timing. And then came a very early investor. And they said, look, we invested and if you control the timing, we may get nothing because you can decide on an exit at $50 million. You will get all your money back and we will get zero because of the waterfall. So we said okay, but we need to come up to an agreement what would be the solution? And they said ok, what we would like to say is the following. And we agreed at the end up to $1 million, we have the power. When you take a decision, you need our vote as a shareholder in order to make a decision on an exit below $100 million. Because as long as it below $100 million, the chances that we as an early investor will get something is very low. So we want to be involved in that decision. Once it is above $100 million, it's fine, you can decide. We are okay because we will get our money Back and that was the solution. So it varies. Depends on the life of a company, how strong are the parties, how dynamics is the discussion. At the end of the day it is interesting.

Yeah. You got a lot of variables. Teach me. How do you convince people? I can tell you're a good negotiator.

I am.

Yeah. What do you do to leverage that?

First I'm trying to look from the other side. So I'm trying to understand what is really important to the other side. Once I realize or identify the most important point to the other side, I'm trying to give it a lot of attention to that point and then I can take the other point to my benefit. And sometimes people think that all of us are the same and this is not true. Sometimes for you, what is important is to get some money at the end of the day to another one. It is to get more money because it needs to do something else. You have to realize what are the needs and then the cake is large enough. As we said before, there are many ways to cut the cake. This is what we need to do. So we have to look at term sheet or articles or sba. Whatever you do in order to make the agreement as so many terms that you can always negotiate between the terms. And at the end of the day it's a puzzle. You give up on valuation, but you take something else. You give up on this specific right. You take the other right. So all you have to do is look on the other side, try to understand what is important to him or her and then build up the right agreement.

Listen first.

Listen first. We spoke about listening.

Yeah. This is my biggest. The theme for today.

I always listen. Some people think I'm quiet because the first time they see me is usually I'm not speaking a lot about myself and so on. But it is because I'm trying to learn first who is in the room, what are the incentives, what is going on, what is the politics behind the people. And then you feel much more comfortable to speak and to interact and build up relationship, especially long term relationship. But you have to understand the other side.

Yeah, I think there's a lot of psychology at play because then they don't get defensive or have the cards up.

That's true. You don't want to reach a negotiation place with a lot of emotion. You want to reach there with good feeling. And then you can build up first a good agreement, strong agreement and something that you can rely on. I always say the agreement is in place to avoid places where we are going to fight. In the future because me and you can agree easily but we would like to cover all the places where disagreement will occur in the future. Usually we will be on the. If we work together we will be on the same side because this. On those points we can agree easily. But you have to understand that the agreement is not on what today is on the future.

That perspective is different for each person. The bankers, you mentioned the bankers as an information resource which yes, they compile a lot of data nature of what they do. But how do you decide when and where to engage with the banker? Because you just mentioned networking, all these strategics and if you're doing all that, then why would you need to hire the banker?

We don't need a banker all the time. So we speak with strategic and sometimes we engage one strategic to give us an offer or to start to discuss an offer. And when you want to shop around, I prefer to shop around with a banker as a third party and not myself because I'm usually involved in this specific call or talk and the banker can do shopping around for a better deal or similar deal or to understand if we can get something better from this specific deal. So this is one opportunity when I use a banker to shop around. When I have a deal in my.

Head, I'm thinking long game versus short game. Long game networking with strategics directly being very opportunistic about those relationships and what they can turn into. And the short game is let's put a timeline and let the bank run a process and have them.

We have a company now that we know we are going to get a term sheet soon from one strategic because they are around the company for a couple of months and we estimate that if everything works well we will get a term sheet from them. But we want to understand the market dynamics. So we are going to engage a banker in order for him to go around and look, okay, maybe you mentioned Edwards. Maybe Edwards is the right partner or maybe someone else is the right partner because it gives more money because he provide more capabilities to this company. So before we sign with one strategic or specific deal, we would like to understand the landscape. And in order to do that we will use a banker.

Wouldn't you fear that would put the deal risk? Because if I was looking to buy one, airport goes and all of a sudden you're telling me you're going to hire a banker and shop it around.

It will not harm the deal because everyone knows that this is the way the industry is acting. It will harm the deal. If I sign an exclusivity or I sign a term sheet and then I do it. And this I will never do. I will go and shop around before I sign something. But once I sign something, then it's going with this specific partner. But before I sign something, it's a free award. I have to shop around.

Do you get a lot of time bomb offers? They're not really, hey, this is going to offer be done if you don't sign it by this date?

No, they are. Okay, but then you take a risk. If you decide to sign, you sign and that's it. You did your calculation, you take the risk that this is the good part. Look, we spoke about M and A in general, but not all M and A or not all exit are good exit. So you have to find the right partner. And sometimes the right partner is not the one that give a company the most expensive deal or the largest amount of money. Sometimes the right partner is the one that will give a lot of benefit to the workers, to the employees, or keep them for two or three years before he lay off them. We have as a board, when we take a deal, when we decide, we have to look on not only on the amount of money and the return to our fund, but we have to look globally. Okay, what's going on? Are they real? Are they serious and they will take this device to the market or they are going to take this device and put them on the shelves and this device will never reach the market because they don't want to cannibalize their own product. Sometimes it happens, they have a product, they see your product, which is better, they will buy your product, they'll put it on the shelf and they will continue to market their product. You have to think more and not just on the specific amount of money. At the beginning I said that I was involved in one deal that was very successful. It was a small company. We have started and invested in this company almost since formation. I would say this company was an incubator company here in Israel. And then it grows and we continue to invest. We invested in all the stages, in all the rounds. And the company completed clinical study and reached regulatory approval. And then the board decided that this is a good timing for the company to be acquired because the board didn't want to go and sell the product or to ask the company to sell the product by themselves because it was an R and D cultural company. Okay, no commercial team, no marketing. Even the CEO was more R and D than commercial. We engage in banker. That's another timing where a banker is Important because we felt that a banker can do a better process and give us the best deal. And the banker approaches all the strategic, the first tier, the second tier and the third tier. And we got several offers and at the end of the day we decided on one offer. The decision was made on very different parameter. One was money, how much money we are getting. Second is what's going to happen to the employees. Remember, the employees were R and D guys. So it was very easy for this company to lay off everyone and close the site in Israel. But they promised us that they are going to continue and work with this specific site. And this specific site will be their R and D site. So at the end of the day, we have now an R and D site of this company here in Israel. Building up machines, continue to do R and D and improve the product. So it was money, it was employees status after the deal. And this company, for them specifically this deal would create a huge benefit for their revenue because they had moderate revenues on other product. And we knew if they were, if they are going to be successful with our product, this would be their star product in two or three years. And this is what happened. So they took the system to the market, they kept the employees. The employees are still working, including the CEO. That was the CEO of the initial company and we got our money. This is a successful story for me.

This was the highest offer.

Not really.

No, no, not really.

It was not the highest.

Yeah, no. These factors matter, I think more and more. So we were seeing that. Being that you're based in Israel, do you see differences in how deals are conducted between Israel and other countries?

I think yes. First, since we are very far from the market and we are more R and D and clinical expertise, I would say less than marketing. You don't see as many marketing and salespeople here in Israel in this specific field as in the US So we usually reach the point of having an M and A much earlier than in the us. In the US many of the investors will take the risk of commercialization while we, as an Israeli investor, we will do an exit a little bit before because of the difference of people type. I would say because of the market distance. Okay, the market is not in Israel, the market is in the us we have a product, they developed the product, they did all the clinical. But now they have to move to the US in order to sell the product. So maybe this is the right time to sell a company. I would say we are more eager to sell a company before commercialization in Israel. That's one of the difference that I see because it's a very small and condensed ecosystem. There is a lot of rumor, a lot of knowledge that are sharing on the good side and the bad side. So you have to be very careful when you speak about deals. Here in Israel, everyone knows everybody. They share information. In the US There is a company in Ohio, nobody heard about it. They may do a deal and nobody even care. In Israel, everything is being shared. So sometimes you have to be more discreet than anything else.

Yeah, Got to be careful who you're saying what to.

Exactly.

It sounds like that leveraging the expertise blended with that risk tolerance lends to the appetite and how long you stay with your deals.

Yeah, that's right. Now that we are very open to the macro economy, to the world, to the global world. Zoom made our life much easier. So we do much more. More on the zoom and we don't need the flight. So we keep relationship, we maintain relationship, we speak with other investors and we learn much more. This allows us sometimes even to progress and not sell companies at a very early stage, but maybe try to go.

To the next step, the game changer. We've had a whole element in terms of our relationship development, having more frequent conversations.

Yeah. Unbelievable that the corona that was the COVID that was actually put each of us in his room or his house and there was no friendly connection. Actually did the opposite. Now we are more connecting to each other because of the zoom and because of the emails and because of all the tools that develop around us in order to make it easier. So, yeah, absolutely.

Big change how that happened. Do you have experience doing M and A with other countries besides the US.

I don't have an experience, but there are several companies that do have an experience. So I have the knowledge. It is more complicated. We have to learn new cultures, but obviously there are companies out of us and we have to think about it. So we have to consider possible exit from Asia, possible exits from Europe, sometime Australia. As investors, the easiest way is to think about the US it's the largest market we know, the international company, the acquirer. We maintain relationship and all what we have discussed. But sometimes the good deals are out of the US So my advice to all of us is to open our mind to other regions and maybe there is a company somewhere in China or somewhere in India that would be the right fit for this specific product that I have. And maybe I will get out of my comfort zone to sell it to the US Acquirer and look for an acquirer outside of the US And Maybe this would be the best deal. It is more challenging, but it's worth trying.

That's a big challenge to get out of your comfort zone and really learn a lot of the nuances of doing deals with a whole nother country.

I agree it takes a while, but worth thinking about it. Maybe not to all companies, but to some of them, it's a growing market. We are back to travel. We spoke about the Zoom, but the other side of the Zoom is traveling and we are back. We see delegations that are coming to Israel. For us, it is much more easy to go to conferences around the world and this is where new deals might happen.

What would be your advice for either executive team board members to plan their exit?

You never plan an exit. Okay? You have to build a company. That's what I'm telling the CEO. You have to build a company. Always think about how I bring a successful product to the market. If you believe in the market, make the best clinical work that you can do. Build up the manufacturing as you are going to bring the product to the market. Exits are happening and during the way. Sometimes earlier, sometimes later. But if you build up the right company, the exit will come because whenever and strategic will come and visit you. They will see a great manufacturing side. They will see a great team. As a CEO, you cannot build up a company for an exit.

Your philosophy is not to build a cell, but to build for the mission.

Exactly. You have to think about how I'm going to. Someone is going to sell the product, how to bring it to the customer. What would be the patient journey in order to get such a device? Because all these questions are important and they will be very important during the due diligence process of a strategic. So you have to think about everything, you have to realize it, you have to solve it and then exit will happen.

That's a good point. When you said that there are bad exits, what do you mean by that?

Sometimes you are starting with a very good product. Unmet need, everything is good and someone is buying you to put you aside and not bring it to the market. This is a bad exit. Maybe I'm getting my money and my.

Almost like ethically bad.

Yeah, it's ethically bad. So if I said, okay, bad exit is if I'm not receiving my money back, that's a bad exit.

Fundamentally, yes.

That's okay, that's easy. Okay. But for that I don't need to be here. Everyone will say to you, right? Everyone will say to you, bad exit. I put $3 million. I'm getting $1 million. That's bad. Oh zero. That's bad. That's for sure. I'm assuming that we are getting our money back. Okay, that's the initial assumption. But on top of it, there might be bad exit like okay, I sold the company, I got my money back. But the people, the patients are not seeing this technology because the mission didn't continue. Yeah, because of other initiation. We are in a life science business and this is the best thing, why I'm waking every day and coming to work with a smile. Because at the end of the day, we are going to bring better medicine, better health to our patients. So yes, the process involves a lot of money return, a lot of negotiation agreements, sometimes debating and arguing. But at the end of the day, if someone is at the end of the process, if a patient get benefit from what I did in the last 10 years, this is doing my day. This is something that we all have to remember. The journey to that point is very long, very bumpy. We see companies that are seeking for money. They cannot bring the product to the next step because they don't have enough money because it is struggling. Macroeconomy these days is so tough. People are not raising enough money and you have to think about creative way to survive. But in order to cross this journey and to overcome the bumps, you have to think about the mission. And the mission is bring better health to patients.

Yeah. Stay true to the mission of these companies. You're sponsoring any other takeaways for a CEO?

What is really important, except from everything that we said, is to have a very good team. A team that you can rely on. You are not a solo player. Investors like to see a management team like to see that responsibilities are sharing, that there are people that you can share information with them and bring you more knowledge. This is important and I think that also strategic when they do M and A appreciate it that there is more than one person in that specific company. Another takeaway is don't cut corners. Sometimes it's easy, okay, I can reach an FDA with only 20 patients. Maybe I'll do 20 patient and get an FDA approval and then I'll take care of more patients. I think this is wrong. You have to walk on the main path. You have to find the right path. Don't waste money, don't waste the time. Find the optimal, I call it capital efficiency. Use the capital in the best way in order to get deliverable. And this is good CEO in my eyes. Speak with people, open doors and listen and then you can make A better company.

A lot that goes into this. And you got to be along the ride, building good rapport, being a good board member and get your voice in there. Then you could have influence on the exit.

That's true. That's for our investor. And always as investor find partners. You don't want to be alone in one company. You want to have other people, other smart people with their own network. It's so fun and so important when you have three or four people coming from different either countries or even in the same country, a different networking. And when you reach a point that okay, this is the time for an M and A. Each of us bring his own networking. And then, okay, you speak with this, we speak with that and slowly we build up for the right exit.

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

That's tough. There is one story that we sold the company, we got part of the money and the acquirer wouldn't pay the second part or the rest of the part and we got the company back.

Deja vu. I just heard this story not too long ago.

Maybe it's the same company.

I hope not. Something very similar. Break this down. You had a company that you were. That was selling.

We sold.

And then. So you sold it, signed purchase agreement.

We got money.

You got all the money?

No.

Yeah, part of the money. What was the rest? Was it on an earn hour or just.

No, it was on milestone.

Milestone. Okay.

And when the company reached a milestone, the acquirer said he could not pay because of the situation, because many things that relates to him. We said, okay, bring us back to the company.

Did you have to pay the money back? No, no. Wow. They just.

Yeah, they lost the money. The agreement was as such that of course I'm speaking it only the highlights, but the agreement was as such. That was a good agreement that if they cannot fulfill the milestone, we get the IP back.

Specific performance. Yeah, they didn't meet all the requirements.

So that was a crazy one for me at least. Maybe others that have more experience than me saw it before the. There was another one which was. It didn't happen to us, but there was a strategic that acquired a technology. It's not even a company. It was a company that developed a technology after very little human data. When they reach the large scale human data, they understood that the device doesn't work and they had to close the deal. It was a great deal for the company, but bad deal for the strategic.

They skipped some diligence.

It sounds like probably I don't know. I don't want to blame. It was a very small data set.

Wow. You're taking risk and all this stuff.

Yeah, sometimes you take a risk and you don't know what happened. That's the beauty of it. No venture capital.

Yeah. You're taking more of the risky side.

Yeah, exactly.

This has been a great conversation. I appreciate you shedding some light in how investors can influence and exit we did it. You've helped me become a better M and A scientist. Those of you still listening, thank you and until next time, here's to the deal.

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