Sourcing Companies that are Not for Sale

Hello MA Friends. This podcast is brought to you by Firm Room, an M and A Science company. Twenty years ago, virtual data rooms would come to your office to scan documents to put on servers. That's why they charge per page. However, now in 2022, with everything in the cloud, it makes no sense to charge per page. That's why we created Firm Room, a virtual data room that's intuitive, built for public company security standards at a fair price. It's only $500 per month. Check it out with a free 14 day trial. Visit firmroom.com again. That's firmroom.com I'm Kisan Patel and you're listening to M and A Science, where we talk with deal professionals and learn valuable less from their experience. This podcast focuses on stories, strategies and what actually happened during M and A deals. Hello M and A friends. Before we kick things off, I'd like to send a big thank you to you all, the listeners of the M and A Science podcast. I was just reading some of our recent Apple podcast reviews and feedback emails. I'm truly flattered and grateful we have listeners that are getting real value out of our podcast. Also wanted to point out that between mascience.com and deal room.net we now have over 1500 pages of content online. It's the largest publicly available collection of M and A content on the Internet. Anyways, thank you. Now on to the interview. Welcome everybody to M and A Science where leading M and A practitioners share lessons learned from their experience. If you're interested in keeping up with the latest from M and a science, visit mascience.com and subscribe to our free newsletter. Every Monday we share highlights from our interviews and invitations to events as we build the greatest community of forward thinking M and A practitioners. Again, that's mascience.com I'm your host, Kisam Patel, CEO and founder of M and A Science. Joining me today is Rishabh Mishra, Vice President and Head of Corporate Development at Infostretch, soon to be rebranded as Apexon, a Goldman Sachs portfolio company and also a leading digital software engineering business. Today we're going to talk about why and how to source companies that are not for sale. How are you doing today Rishabh?

Good. Great. Thank you for the introduction and thank you for picking up this topic. This is one of the most exciting and closest to my heart in the M and A world.

Well, I'm looking forward to it. Can we kick things off with a little bit about your background?

The first and foremost important thing is that all My working life I have just done M and A&IPOs and capital market transactions. This has been a good journey of last 21 years. The first 15 years were doing M and A as an investment banker, cross industries. But last five, six years were predominantly media and technology. And then got greedy with myself and said I want to do more and long term. So I got into corporate development leading M and A for companies that I work for. In the last six years you got.

A pretty good mix there. Could have done it all around the.

Deal cycle, fair mix of both buy side and sell side and all kinds of transactions. Highly competitive auction processes as well as proprietary deals. So I have seen a variety of deals of all sizes, all nature, domestic cross border, some very distressed situations, some very healthy companies, reverse mergers, horizontal and backward integrations of companies, completely unrelated companies being bought and sold, management buyouts. So yes, I must say I have been lucky in my career. And most importantly, I've seen this space evolve over two decades. How deals were done 20 years back is very different from how they are getting done today. Both in terms of the processes as well as sourcing. A lot of things have changed. The processes have evolved, professionals have evolved. The good news is that this is not going away anywhere by any technology, AI or anything. Just on a lighter note, I want to share when people talk about how AI is changing the world and everything will be run by computers. When Google was presenting AI in the beginning years, they said there are two jobs which will be very difficult to replace by AI. The last to get replaced will be a CEO's job if it ever happens. And the second last was an M and a professional's job. They feel that AI cannot because every time there is some complexity or the other in M and A process, the markets shrink over a period of time because the participants keep increasing while the number of deals are constant. But in M and A that has not been true. So it has been evolving and I see a very good future for M and A.

You're telling me I can't build a bot to replace you?

Absolutely not.

We have an R and D team and I just saw earlier today they announced a Project X. I was thinking one or two things. Either they're not very creative on branding our projects, or maybe this is actually that Project X where they're building a bot to do M and A. But no, I get it. You're absolutely right. It's all back to people skills. At the end of the day, it's difficult to replace that.

And just to add to what you're saying it is people skills and a lot of times you are making judgment calls. It's not easy for everything to be perfect in work. So you have to learn to live with some things which will not work out. You have to weigh what was more important for you and just give up things which are not important. Otherwise it's like finding a perfect life partner. You will never find one. You have to make choices what you want.

I want to know about the proprietary deals. Why do you think it's best to source targets that are not for sale?

Traditionally, everybody has believed that M and A is only done in a marketplace where you have a willing buyer and a willing seller. My philosophy, and it has worked is that all entrepreneurs, all CEOs, they are building businesses which eventually they will sell. Companies all of us know our perpetual existence existence legal entities. They are not human beings. They can perpetually exist. But the shareholding keeps changing, right? Even in a private scenario, you can't expect the founder entrepreneur to run it beyond his lifetime. So eventually companies get sold. But if you see the companies which are available in the market, most often they have been dressed up for sale, they have been prepared for sale. They are under invested for growth and maximized for profitability and value. The ones which are not ready for sale are the ones which have the maximum potential of growth, are being built for future. They're not dressed up. So if you are able to find those are the best acquisitions for any buyer, for any investor, even for growth capital investors, if they go into the market, they are looking for teams which they can back and support. But those teams eventually have dressed up the companies that they're showcasing, finding the companies in their growth phase, investing in them or acquiring them, seeing them raw, most importantly, getting the information which is not dressed up, which is not cooked up. You don't get a very decorated marketing collateral which they call confidential information memorandum. But getting the raw data and analyzing it, preparing it accordingly for integration or growth, whatever is your business of acquiring the company, it's a lot of hard work. By the way, Kisan, I must say this adds to the work being done by our investment bankers, sell side and financial advisors. But finding them raw, you find good deals and those are the most accretive investments or acquisitions.

But wouldn't you want them prepared? I've talked to corp dev practitioners where a good majority I would say would prefer that target even though they sourced them directly to go get a banker and help with the process.

I remember very well this was your recent conversation with one of the most renowned cop debt professionals who does, I think several deals a year. And I remember he mentioned, even if it is a proprietary deal, he prefers to get a banker on the other side to run the process because it is difficult for the seller to digest first of all what the process is and how it works. In my case, you can do the same job which the investment banker is doing on the other side. If you have a bank, you will probably do it better because the investment banker in between the sell side advisor and obviously will lose certain messages in the translation and communication. Essentially, what bankers do is not just help the company put together data, help negotiate, but also educate that their clients which is the seller in this case of what is the buyer asking for? Why is it important to them things like those? So you can do that education yourself. What is difficult to do is establish trust between two parties which are negotiating tooth and nail for every dollar, every penny. That is the most difficult part. In my case, it came with a lot of experience of deals and people and how companies eventually performed after the acquisitions. How the founders of these companies eventually made wealth, lost wealth, felt that they sold their companies cheap or got a good value after a few years of doing the deal. I have brought all of those experiences together to build trust with the counterparties. In fact, some of them, you go to my LinkedIn profile, have written that he acted as an investment banker on both the sites. So ultimately, if you're doing the right thing, if you're dealing fairly, you will be able to achieve this. Yes, you may not be able to run 50 processes in parallel, but you will end up closing good deals the same amount as you would by running 50 parallel deals and negotiating with the investment bankers on the other side. One thing which is very important, and I'm sure, sure you will cover it in this discussion, everybody would be wondering is why do I prefer to do these deals rather than the ones which are available for sale? The biggest reason is when there are more buyers for the same asset. Whether it typically said seller's market, we have been in seller's market. Whether you look at even houses or in M and A world, there is lot more money chasing very few opportunities. So it's a seller's market. And when you see a seller's market, the sell side investment bankers will bring a lot of competitive pressures in the process. So for the same asset which fairly valued X, you end up being X and a half more than the real intrinsic value of an asset which you will derive in a non seller's market. So to Eliminate that competitive pressure to eliminate. And there are a lot of buyers and investors who are more hungry than you are for that asset. There are others who may be more hungry, so they are willing to pay high. Two things happen, not just the valuations go up, but your success ratio also comes down. If you channelize your energies in chasing five proprietary deals, most likely you will close one. If your channel is your energies chasing 50 competitive deals, probably you will still do one or may not even get that one. The choice is very simple. You focus your energies on proprietary deals which are not necessarily in auction process.

I always think about the timeline. Is there some big benefits of the timeline between doing an auction process and a proprietary deal?

Unless the audience here is very knowledgeable and experienced, there are many. It will be counterintuitive to them. Proprietary deals are much shorter and faster than the competitive sell side auction processes. And the reason is that in a proprietary deal you're getting raw information. Process it according to your own taste, according to your own decision making ecosystem, your own board, etc. In a competitive deal, where you get the book from the sell side Investment Banker, firstly, 100 page actually has only meaningful information of 20 pages. So you are wasting a lot of time removing the gloss from the real asset and trying to get the message, cutting the noise from the messages. Then you keep waiting. You will get a process letter, the first round pay, then they down select and they will have a management meeting. Scheduling is difficult because they're talking to many other buyers. All of this takes a lot of time. And then the worst is that they give you a format of the documents that you have. You mark it up and then there is a lot of back and forth. Whereas in a proprietary deal, once you get going, the parties at least agree to explore the path together. You're asking for the information which matters to you. If they are giving you the raw information, you process it in parallel. You can do financial diligence, documentation and wrap it up quickly. You don't have to wait for the process to run out, pan out and the seller has 20 offers and they're down selecting. So all of those wasteful exercises are not involved in a one on one proprietary.

That's true. Now I think about it end to end. It is technically a long process because there's a good amount of time for prep and all those steps through the marketing phase. Now initially I was thinking on the proprietary deal in some ways the timelines are longer, but to your benefit, where you can do good diligence, you can do the activities you need to really prepare for integration in a mutual way where it's not artificially compressed for the sake of keeping a schedule intact. It's more of let's problem solve these things that bubble up. Actually even contrasting that if you have a view between a bank process and a proprietary and just managing the process itself. I think you mentioned a little bit earlier when you got the direct communication doesn't get loose because you're working directly with them. So again, probably comes to a series of problem solving, decision making and you're able to approach those different or better.

I'm very glad that you mentioned this. In a competitive scenario, integration planning starts when the deal is about to close. And the problem there is that you are always trying to optimize for the seller in the transaction structure and all the various nuances of a structure apart from the sellers, how will you structure the retention package and all of that. Whereas in case where you're not dancing to anybody's tune, the seller, the management team or the target company yourself, you're all trying to solve everything through the documentation structure, retention package here, even the brand for that matter, you can decide during the structuring of the deal. So a lot of things go on in parallel. Also the diligence findings, they straight away go into the integration planning. There is no adjustment of ebitda. Okay, this expense will be required going forward. It's very clean. Having said all talked about all the good things about proprietary, there is one thing which definitely takes a lot of time in my experience is getting a company, or rather the seller or the owner of the company, to agree to a sale process. Normally there is this tendency of okay, if I'm deciding to sell, let me at least find out what the market is. How do I even know what my company's worth? I need to see at least five offers or at least talk to five other buyers. So it also depends on every sector. Fortunately, where I have been focused in last 10 years, M& A is a lifestyle for companies. This is tech services. So you have enough and more data available for benchmarking for transaction comps, trading comms as well as various slicing and dicing. You can do what kind of company has what value. So it's very established in sectors, let's say aviation, where there are very few players, like hospitality and the deals are very few and far. It becomes difficult. Unfortunately there these are difficult to do unless there is some other compelling reason, maybe debt, which is difficult to manage for a target company. There are also certain psychological things that play in the seller's mind. You will be surprised to know some of the founders don't want to be seen as a seller because to their teams, to their management team, they're saying, we are building this company for our generations. We want our kids to work here and we'll achieve this in 5 years and that in 10 years, etc. Etc. You can't achieve a sale unless and until you involve at least the top tier management team. So they are very hesitant. You can as a buyer, as an investor, it is very important to very quickly analyze the seller, their psychology, what would work with them. There's no one size fits all. There's different strokes for different folks and different situations in every industry vertical. And then there are cultural issues also. And you'll be surprised. Within the United States, a seller in the Midwestern region behaves differently from a seller in the Silicon Valley to a seller in the New York, New Jersey or East coast area. So various things go into all of this. Essentially what you're doing is doing the investment bankers role. Investment bankers do all of this work for their clients and they over a period of time, you know what they do. You can start doing it yourself if you want to source deals yourself.

We got a lot to unpack here, my friend. Let's back up a little bit and start in the front end. We're going to walk through this like a little bit of a timeline. So I want to walk through pipeline development, thinking through how do we start that. Because I think of all this, we definitely that's really important. We just mentioned it's not a quick process. Everybody's got a varying timeline and even just getting alignment on the vision of what they're trying to do. Do you use a set of criteria to source targets? How do you approach that?

These days you get a lot of databases and a lot of details on the companies. When I started all this was not easily available. You will find this funny. If I was going for one meeting and I see a directory board outside a building or at the reception, I would take a picture of the that come back and research on those companies or anything like that. If I'm looking at somebody's LinkedIn profile, I would see where all they have worked. If I find a company, just click on it, see what the company does, write down the name, do some research. So over the years in at least in the industry that I worked, I have built a huge database and I have been able to track some of those companies which seem to be of interest and keep researching on them. I have Google alerts on news on those companies and things like those. But answering your question directly, sources of names can come from anywhere. Talking to your friends, family, where your cousins work, or anywhere in your office environment in your company. The talent acquisition team may be hiring from somewhere that could be a potential target for acquisition. They could be sales guys complaining, we lost a deal to this, that company, whatever. Just all of these are acquisition targets for you in the long run. So just keep compiling all of this and then whenever you need a certain technology capability, market access, anything, you will always have your names ready to go after.

This is a pretty qualitative approach. I would say a part of this is keeping in touch with those sources. Sounds like your leads internally having conversations. Who do you talk to? Like let's identify those people.

I find anybody in the office or anywhere. I just ask them what they do and then they would not even realize what I'm doing. But I am trying to understand about the companies and potential targets. For a period of time this has become my second nature. But a good M and a professional, I've seen a lot of people do this. Ultimately, knowing companies in your space that you work is the biggest asset of an M and a professional. Even if you are in a situation you have to value one company, you need comparable transactions, you can do as much dcf, you may do as much whatever financial analysis. Ultimately transactions happen at market comparables. So you need to keep track of what is happening, who are the players, what is which company is being sort bought, sold.

So you're doing both, you're doing the quantitative using the third party data sets, really looking through and kind of getting that market map developed. But then you're also looking at this other work stream of qualitative having all these conversations. Do you still talk to the bankers?

Absolutely. There are a lot of them are my good friends. In fact, you can never discount the value they bring to the table. No matter how much you do. They are institutionally doing this and their access to the information, the openness of the their clients, which is the target companies, is much more than a seller would ever open to a buyer or an investor. So it's a triangulation of leads from investment bankers. A lot of times you actually have to help them. Say for example, if you are chasing a company which is not going to sell, you realize it. I sometimes share the names with the bankers also and help them build their pipeline, go pitch and they give you a favorable treatment in the process. Sometimes you get an early look. So it works both Ways, a simple reason. Like I said, there are two guiding principles why I prefer and increasingly I'm seeing the companies that I work for, their boards have also started looking at proprietary deals more interestingly than they did earlier. The two reasons are valuation and second is competitive situation. Avoiding these two things is the key motivation to go for proprietary deals.

I like the approach of making friends with the bankers. That's good because you're not an absolute one way or the other. Is there anybody else that you're talking to sounds like you're open to talking about anybody. Understanding their perspective of the landscape, how they look at market, how they compete in the market.

I have a lot of CopDev friends and I keep understanding their company's dynamics, how they source, how they execute. Normally COP dev teams work in silos. They don't mix up with the rest of the organization because they're not required whenever there is a deal situation. They would pull teams for diligence on commercial diligence, business diligence, HR finance, legal and all of that. But on a day to day basis they don't work that closely with HR teams. Talent acquisition teams, procurement teams, business teams, sales team. I try and spend a lot of time whenever I get an opportunity with all of these teams. So I was giving you an example. Right. The talent acquisition teams have actually been the best source of names for proprietary deals. Where are you hiring from? Why are you hiring there? What kind of capabilities does that company possess? It also works the reverse because you are not under a strict NDA of investment bankers. You can pass the name. Say let's say for example I was chasing a company which decided not to engage with us for M and A because you've never signed any confidentiality with them. You can pass on the name to your talent acquisition lead. Why don't you look at people from that company? So it works both ways. So this is another good source. You can also talk to consulting teams like Bain & Company, McKinsey, BCG. They have very deep knowledge in all industrial verticals and they understand the businesses. Private companies data is normally not available. I will not name any databases, but there are a lot of them right now and some of them are big which claim that we have information on 50,000 companies and all. But if you look at your own company database, the information is wrong. That has been the case every time.

Is there any of them that you like?

I would not name anybody.

That's fine.

You should understand how their things work.

I do. That's why I was saying I'm curious Because I looked at a lot of data and I agree there's no one all be all data set out there, especially private company data. It's a joke.

These consulting organizations, they have a lot of data which is accurate. So if you are able to make them friends and it works both ways, nobody gives you information unless you give them some business in return. For example, I involve these companies in the consulting companies in the diligence sometimes so over a period of time, if you want to succeed in M and A, try and build ecosystem around you. Of lawyers, of accountants, of consultants, lawyers, by the way, they are good source because even if they're working on labor or consulting or anything, they would know Companies in that space, if nothing else, they do take on formality. So they get a lot of information on the customer, even if they are doing a small job for a corporate. So all of these are sources of deals.

How do you approach it in terms of just managing those relationships, especially those different providers? Is it, hey, let's just get together and compare notes. How do you frame that?

Okay, so this is the most difficult part. I don't know whether your question was for all these ecosystem participants or the companies, the targets.

We're going to get to the targets. I'm talking about just my referral sources because that's a lot. I get the value of it. How do you sort of manage your flow just to keep in contact with everybody? Do you have a coin to make a touch base once a year or obviously based on value, that relationship. And then how do you approach it? Are we just going to grab. Hey, you want to grab coffee, compare notes? What's your approach to just getting that? Because you got to do it at a volume, so you can't just take it lightly.

Absolutely. No, you're right. So firstly, how do you come in contact? You come in contact when you do transactions. These are all the people who are involved, either on your side, on the other side. But you spend so much of time, you end up building some relationship with them and you form perceptions about them. As many deals, your ecosystem will keep going. Like any other business, you have to put an effort to keep in contact, maintain relationships. So what I do is whenever I'm visiting a city, this was pre Covid, I would look at my LinkedIn contacts and I would reach out to whosoever is available, even if they don't give you time. Then they would catch up on phone or exchange texts, or you can catch up later on Zoom or something like that. So that's how I keep Doing it for some of the more important ones, say for example investment bankers. I actually have a cadence of three retail list. One that I have to talk to them at least once a quarter. The other list which at least a month. Some of them I speak every fortnight, just generally they benefit from the conversation. We get new ideas from them over a period of time. We'll put them in different baskets and keep a track. It's not very rigid that I have to speak with them. And over a period of time, the list keep changing. If for example, there are some who just chit chat, you don't benefit, they don't benefit. Those drop out and some of them you want to talk to, they don't find time. So you make time, however, whatever time they're available and talk to them. Yeah, it's a lot of hard work.

So you track all these relationships, you get some insights, you get, hey, have you heard about so and so company?

That's exactly what the question was.

You take what you learn. You're doing some homework online, checking out our third party databases to see if there's some more clues. Then what happens? Do you reach out? What does that look like?

Like yeah. For budding M and a professional, I create a short profile, even if it is a five lines on a Word document. And then in different situations, you may be looking for different assets. So two things happen. One is whenever a teaser comes, a lot of times I'm able to make out what this company is about. You ask the counter side, oh, this is this company. How is it doing? Half of their story is gone, which they were trying to build around it. Try to change the positioning of the company so you get to see the thing. That's one thing which happens. The second thing what happens is let's say in a boardroom a CEO says oh look, we need to get into this market or we want to acquire this technology or whatever the inorganic growth plan is, you are very quickly able to bring five names, 10 names, as many names as you want. This is what is happening. These kind of players are there. So your own brand and profile in the board meetings and the ecosystem keeps on improving. Like in the long run, this is priceless for our career progression.

What you're saying is period, just to be able to talk to the companies, learn about them. Knowing that allows you to take that knowledge into the boardroom to show that. Here's all the stuff, the insights I'm bringing from the marketplace, even if you don't have forthcoming deal to bring this year or next year. There's a lot of intelligence you're gathering that's allowing you to foster more of the strategic thinking with for the broader, even board kissing.

You're basically getting a lot of details of the secret sauce. But I will give you one more at least. What happens is, let's say you reached out cold to a founder to sell their company. Even if they don't want to sell their company, even if this is not going anywhere, they would like to know about their own competition. So what happens is, let's say I'm talking to you, Kris, and why would you sell me a company? The conversation will be 90% around what distance competition is doing. You will be very interested in knowing. Oh, that one. Tell me more about what happens is when that same founder is talking to 10 other people, he will remember that this gentleman is very knowledgeable about the market. I want to maintain this relationship that goes in the back of the mind. And you are the first recall. In various management meetings I come across people I have not met in last 10 years, but they remember some very good things about from last 10 years or 5 years or what. Everything comes together and nothing is a waste of time. When you're tracking the industry that you want to do M and A, you're.

Crowdsourcing a lot of intelligence, just like I do on this podcast. I crowdsource all this.

There you go.

How do you reach out to these companies? What does that line look like? Is it, I'm Mr. Corporate Development? I wanted to grab an intro call, or do you frame it a little better than that?

This is the most difficult part, by the way. Every situation is different. Sometimes I'm circumspect of companies which respond immediately because those may be not the right ones because they're ready to talk to you, they're desperate to talk to you. So usually there is a pattern which has emerged over a period of time and normally connect with the founders or the board members or the shareholders on LinkedIn. LinkedIn has been the single largest tool which I use in all of this and that's what I think the bankers also used. So LinkedIn is the best source for all of this and try and assess their interest in exploring a transaction on the LinkedIn chat itself because they don't want such emails all the time. The CEOs have email access to their executive assistants or secretaries. They don't want these kind of emails hitting their mailboxes. So LinkedIn is a good tool. Nobody gives access on their LinkedIn to anybody else. So that's the first thing, a lot of times you don't hear back. You may not even have their email addresses. So you made permutations and combinations of let's say K Dot Patel at so and so, Kissan Patel, Caper tail, all of those. And you put all of them in BCC and send them a cold email that look I have been tracking. You need to write something about them or their company that will catch their attention. It just cannot be about yourself and what you want to talk about. It needs to give them a message because they would be getting several such emails, especially if they're a good company, something which you would have read, especially if it is not the recent news or something about their past, something you would have done, one that catches their attention, that forces them to read the email. And even then they may not. But normally if you are able to connect with something which matters to them or something which the public doesn't know or recall, that creates this thing. And then you ask for an intro call and you want to tell them that I want to talk about ourselves and given production and all that. But write it very brief, make it a teaser of sorts. Don't make it an encyclopedia nor very superficial. Over a period of time, people realize that it is a teaser that gets the best response.

Agree.

Subject is the most difficult one. It is somebody who you've even met, even if you've not met, you were in a conference where they were there. They would not remember everybody that they met in a 500 people, 200 people conference. So you can write reconnecting that. It's a better response than somebody who's just reaching out cold. So the subject is most important, the art of teasing the email is very important. Last but not the least, there have been situations where I really wanted to talk to the CEO and those turned out to be deals and they were not responding. I kept cold calling them on the phone, literally on their board lines. If I got access to their direct numbers, I have done that too and said before you disconnect, I want 10 seconds. This is what I have written to you and emailed. Give me five minutes to talk and that five minutes. Obviously they give you five minutes, then you know that if they have time then they will talk to you. One bad thing which has happened in Covid is while the deals continue to happen, M and A is very difficult to do remotely. You have to be in front of the people, the person for such thing. So I travel a lot, used to travel a lot. I have started traveling again. Go meet people Just pick a city, try and extend meetings there over a course of two days and to fix 10 meetings you've reached out to 50 people. Go attend conferences. The best source of deals, by the way I forgot to mention is conferences. Whether it is industry conference or normally the CEOs go to these YPOs, Young Presidents Organizations or CEO conferences. One needs to find a way of getting into these and then you can talk to them. Obviously you do a lot of hard work research before you show up. It's not just traveling and showing up. You need to do a lot of hard work behind that. Even if you get two minutes from them over drinks coffee and you're able to connect the right whatever you want to talk about and it is of interest to them, come back and fix the time and take it forward.

I like this. This is a great approach. I had one question on the email because I feel a lot of this. You're going to send email or LinkedIn message which I completely agree. You tend to get a higher response through. I've gotten through multiple public company CEOs through LinkedIn as opposed to any other channel. The customization I'm curious about because it's why you. Why am I reaching out to you now? How detailed do you go there? Is it pretty high level? I read about your recent funding announcement or congrats on that or are you getting into some more specific. I've talked to somebody in this company and trying to connect the dots here. I've seen that, I was reading about this.

No, CEOs are also human beings, right? They have doubts about themselves, they have big egos, all of those things, right? Fortunately or unfortunately, all my life, since I was in early 20s, I only worked with CEOs, CFO, board members and all of that. And that's what happens in M and A. You don't deal with anybody else except for this people. So what happens is if you're able to find something they did five years back and they spoke about it, just look at press releases from few years back. I'm giving you an example. It could be anything. They spoke about certain things which may have been failure or worked out very well or they were in a different company, I would say that I have been tracking your success, your growth since so and so time. Instead of saying that, you know, I read about your recent funding or congratulations on your recent funding or I spoke to so and so, all that is fine. You want to give them an ego boost by telling them something which may be close to their heart and the world has forgotten about or something like that or I remember you mentioned this and I have been chasing, following, whatever, okay.

Like really make it meaningful and distinct. We're going through this process of building our pipeline, we're reaching out to prospects, we're out going to conferences, we're meeting them. Can you walk me through that first conversation? What is it like when you're getting to know their company? Are there certain key questions you're hitting on?

So two, three guiding principles. I'm very happy that you're asking the right questions. Firstly, all of these people have no time to waste for pleasantries. I have been, I don't know whether people like it or not, but people always give me this feedback when I'm meeting them for the first time. They say I like the candor, we like the openness. We like that you come directly to the point. So you keep a very brief introduction and why this request for this conversation and what are you going to deliver to them out of this? It can be very high. This is an opportunity for getting wealth for yourself, whatever it may be. It may be wealth creation, it may be finding a good home for the company that you're building or whatever it is. Make the message very clear from the 50,000ft level, starting going to the ground very quickly in two to three months time. This is what, what it is. This is how I was thinking about going about this transaction. Don't try and mince words. The attention span is very short, especially of these people. If you want to acquire, say that you want to acquire and this is what is in it for them compared to any other options that they may have at that point in time. We are a differentiated buyer. This is how we differentiate. It can be as simple as that. We feel this is the right time for you to partner. I have been researching your company. I feel that this is an area where we can to help you. It could be anything. Access to a market, customers, technology, talent, whatever it is, capital, anything like that. So try and solve their problem. Also, if you are able to talk about their problem, that's the best. And within the first 10, 15 seconds talk about something that may be bothering them. We feel the capabilities you've been that the company has built can be sold in abundance to such and such, market such and such, clients to such and such, job, whatever it is. And that will get them excited and then the conversation becomes very easy.

You don't dance around it. You're not trying to introduce the soft, hey, maybe a little partnership would be nice. You lay out A pretty compelling vision of what you're trying to do, but also for them, where these synergies would fall in play to benefit both companies.

That is right. Absolutely.

Cool. Anything else to manage the conversation or if somebody's flat out, hey, we're not interested, the one that wants to be the choir and they take a little offense to it, how do you handle it?

Absolutely. So you take a step back and say, irrespective, it is good to know you. I have been fond of your business and yourselves and going forward, anything changes, by the way, I was talking to so and so, then you change, then you show and demonstrate your knowledge of the industry. And I have seen, even if the first response is no, if you are able to tell them about their competition, they're always interested and then you can come back back. So in those situations where they don't want to be seen as a seller, you take them to the longer run, you get them excited with some other thing and then try and push in your edge in that. And even if then they don't want to be, that is, you continue to have them in your long term pipeline. That's it.

Do you think a lot of it is the culture thing? Do we just get along as friends or not?

Yes and no. I grew up in India, I do most of my business in the us I cannot talk about football because I don't know about football even if I want to. Sometime back we were talking about golf. A lot of these CEO that I can't talk about golf, I don't know golf, so what? In my experience, these things are good. For a few years I was not drinking, but it's considered to be easy to have these kind of conversations. Even when I was not drinking, I didn't find any difference. The thing is you talk to anybody, not just M and A, you talk to anybody about their interest areas, about their pain points, they will get excited and interested. Even if you meet at least stranger and by chance you end up talking about things of their interest, their concern, their areas, they will get interested in talking to you and learning more. And for a CEO, for a shareholder, if you're talking about their competition, their area of interest, or whatever is bothering them, they will get interested in talking to you. I don't think culture, as far as my cultural background or anybody's cultural background is different. Culture difference is there in different markets. When it comes to M and A in the United States, which is the best place to do business across the world, M and A is a lifestyle in all industries. In Japan, another very, very developed economy, M and A is not so prevalent. They grow organically. If you are M and A professional, you will probably not flourish as much as you do in the us. Uk also, it's not as much as us, so their transactions are of different nature. They're mainly capital markets transactions and not M and A. Culture differentiates in terms of the volume of deals, how equipped they are to manage the processes, etc. But not otherwise.

Fair enough. So there's a little business to business. You took a whole new level, by the way. You went international on me and then came back to domestic, which I completely.

Agree with, by the way. Why I went international is because maximum valuations and I did this analysis comes from cross border transactions in any space, any industry, anywhere.

That's a great point.

So you cannot ignore an M and A scenario, especially if you're a sell side person. Then you should not ignore the international cross border transactions and the several buyers.

I'm thinking of the other opportunities. That's not just M and A. You've got partnerships, minority investments, joint ventures. Is that something that you just come with that in mind to begin with? You've already done your homework. Or can some of these conversations where maybe your intention was for M and A shift over into a different avenue?

If the conversation is going towards more of partnership, let's explore. I get turned off and I switch off off mostly. Unless there is equity participation of some sorts, unless there is inorganic wealth creation of some sorts. I pass it on to my business development colleagues and that opportunity goes out of corporate development to business development. When you have the art and science of abnormal wealth creation through inorganic means. I absolutely waste no time on the regular organic slow growth, which is very important by the way. But you need to choose your time wisely.

Fair enough. I got to ask, what's the craziest thing you've seen in M and A?

I can tell you about a deal. We worked for three months together. In the last one week we were logged. And this was many years back. So everything was done physically. Physical data rooms, physical page, turn of documents and not digital. For a week we were logged in. Some of the people didn't even go back to their homes. They took themselves in a hotel and 10 in the night the CEO of the seller says, look, we've been working on this. We may miss out on some things. Let's sleep over it. Morning, 6:00am, we'll meet for breakfast. 8:00am we'll sign. And the next day, morning. Those were the good old days. Of newspaper. I read about that transaction going to somebody else and finishing and closing that deal. What happened was they stepped out of that room 10 in the night, went to the other party, renegotiated that whole deal based on us. Only the names were changed. The press went into that. So I've seen those kinds of things in M and A. Wow. The biggest learning, and I spoke with some very seasoned M and A profession is that you can expect anything to happen till the deal actually closes. You need to have a very big heart at all times and willing to see it die any moment.

That was like a movie script right there. That could be Wall Street 3.

I like it and you'll be surprised. I had put in a lot of effort on that one. So my managing director that time I was an investment banker made me speak with some of the very seasoned bankers on Wall street and this is not the only isolated moment that I had. In fact, on a lighter note, like it is a saying, it is better to have loved and lost than to have never loved at all. It is good to have had such experiences. Eminem they make you really strong. You're prepared for all eventualities in M and A day.

Completely agree. I completely agree. Rishabh thank you so much for this conversation. I enjoyed it and learned a lot.

I love talking about this space so I enjoyed it as well. Kissen I must tell you I don't miss an opportunity to listening to any of your podcast or whenever you are live. Even if I'm doing something else, it will keep running in the background and I'll try and pay attention as much as I can. Thank you so much.

Get some great details today. Very practical. I'm really flattered. I appreciate it.

Talk to you soon. Thank you.

Here's to the deal.

Foreign.

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