The Big Shift from Corporate Development to Private Equity

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I'm Kisan Patel and you're listening to M and A Science where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during M and A deals. Hello M and A Scientist. 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 the products and services we develop to support world class M and A teams or want to get involved with our community of forward thinking M and a practitioners, visit mascience.com and get started by subscribing to our free weekly newsletter with all the latest insights and events. Again, that's mascience.com I'm your host, Kisan Patel, CEO and founder of M&A Science. Joining me today is Joe Metzger, managing director at 777 Partners, Triple Seven Partners, an alternative investment platform that invests across a number of high growth and attractive verticals with a strong focus on financial services. Today we're going to talk about shifting from corporate development to private equity. Joe, how are you?

I'm great. How are you Kisan?

I'm doing great. I'm excited to have this conversation. This is a topic that comes up pretty often. I talked to a number of corporate development practitioners and they're like, hey, I've been doing this for long enough. Where else can I go? Where can I pivot my skills? And I've seen a number of folks that take your path where they go from corporate development to private equity. So I'm looking forward to taking that apart. But before we get started, can we kick off with a bit about your background?

My background is I graduated from NYU just before the financial crisis, so I actually entered banking right around the time of the last great financial crisis. I did that for a little over four years or so, and as most people who end up doing banking for that amount of time. Say it wears on you because it is a grind. You end up developing a great skillset but you may not want to work the 100 hour weeks all the time. I was looking at getting out of banking. This is probably around the 2012 type of timeframe and TIA CREF, which was a sleepy sort of at that time, probably 95 year old insurance company originally founded by Andrew Carnegie I think in 1918, was looking to develop M and A as a capability TA CREF was a well known company serving people in the not for profit field for their retirement. They had never really done M and A programmatically before I joined. They had done two proper M&A deals in the 90 plus year history of the business. They were really looking to develop M and A as a core skillset and this was sort of part of Roger Ferguson's mandate as CEO to transform the company. I was probably the first or second person who was ever hired full time at Tiacraft to do M and A. And so that was really interesting and unique experience. So I was there for just shy of five years or so, worked on a number of transformative acquisitions and then went over to another life insurance company called Guardian Life with the view of a rinse, lather and repeat. And we can get into a little bit probably in sort of the next questions around that four or five year type timeframe in corporate development, which does seem to be about the lifespan for corporate development professionals especially sort of a more senior leader was at Guardian Life for just shy of five years and was at that point looking at different opportunities and had spoken to a recruiter who was focused on call it the southeastern us had some family connections to Florida at that point and made the move to 777 partners in August of 2021. So have been with 777 since then and today lead their insurance investing vertical which kind of cuts across life, property, casualty and health insurance.

Can you share the journey? When you specifically went from working in corporate development to transitioning into the private equity sector, what were the drivers that made you switch?

There's a few things you realize in corporate development there are finite lifespans and one of the reasons for that is that it typically is oriented around a particular corporate strategy. Right. You're in many ways at the whims of the C suite. If there is an executive team that comes in, typically they have a mandate that may or may not involve M and A or otherwise joint ventures, other strategic partnerships and for whatever reason it seems four to five years is the timeframe that you get to develop that prune entities or subsidiaries that are not core to the future strategy and then at that point you move on. As an example, my former boss at TIA Cref, incredible guy, had been an M and A practitioner in different roles for different types of organizations for over 20 years. He is actually still at TI CREF, but after we completed a lot of the M and A that we had done, he actually moved into sort of a product role as the strategy shifted. When I looked at the future, I love doing M and A, I love doing deals. I saw the opportunity in moving to private equity really to be in many ways a corporate development professional for a number of different entities. 777 today probably owns, call it 60 odd portfolio companies. I sit on the board of about five or six of them and in addition support a number of others through corporate development type activities and in some cases operational activities. That's what makes the transition so exciting is you still get to do your corporate development work but you really get to do it across a number different entities. And typically there are multiple mandates involved. There's not typically one central corporate mandate. We're going to get out of this business line, we're going to get into this business line. There's typically more of an opportunistic bent and frankly the ability to move a bit more nimbly and more quickly. The joke around corporate development, especially for larger corporations and both of the ones that I work for with Fortune 500, it's like steering a battleship. Getting it to turn, getting it to shift the strategy. A monumental task. It can take in many cases that four or five year period just to reorient the business, reorient the board towards a different approach. It's especially true for the two companies I worked for were 160 years old or something at the time I left. It's different. Whereas place I work now, you have in many cases about probably about half of the companies I should say that we own were internally developed. So that means they were developed in the past four or five years. It's a very different kind of framework and approach. There's positives and negatives to both. But for somebody who wants to keep doing M and A, which was the goal that I had, the private equity role can be particularly rewarding because there's definitionally, there's always companies that need to be harvested or potentially opportunistic acquisitions to be made.

I want to click into this Joe, because so far I'm hearing when you're in corporate devrel, large Company mature strategy, they're not going to change it up on a dime. And then when you're working in this PE environment, you're, you're working across a portfolio of different companies that are at an earlier stage where you're involved and things are shaping and changing pretty quickly. Did I get the gist of that right?

That's absolutely true. In some respects it has to do as much with the size of the company and sort of the stage of development of the company that you work for. I suspect for the mega cap private equity firms there probably is something more programmatic that may resemble the large corporate environment, but obviously the firm I work for is on the smaller side. Probably have about 9 billion of assets or so across the platform. There is definitely a much nimbler environment that you're working in.

Can you contrast the day to day difference between being in that corporate development role and being in this PE role? I'm trying to get a sense of are you more of an advisor to these companies and you're just telling people what to do or what does the day to day actually look like between the two different roles?

Yeah, sure, absolutely. I would say that a huge contrast and this kind of goes into what you as the kind of corporate development professional, sort of private equity professional actually does on a day to day basis. When you're in corporate, especially a larger corporate environment, you typically have a lot of resources available to you. You've got shared services. And especially in those environments, the shared services professionals, those guys, they want to work on M and A, right? They might spend their whole day on HR or IT. M&A is fun, M and A is sexy. So when I remember we develop a really good cadre of professionals internally at both of the previous organizations I worked at, you'd say, hey, we've got another deal coming up. They were always excited to work on it because even though they were doing it off the side of their desk, even though it wasn't necessarily part of their day, that was really exciting for them. It changed up the typical day to day for them. The difference is in private equity, especially a firm where you have disparate businesses that may not necessarily have linkages to each other, your shared services doesn't tend to be as robust. So you tend to be. Your efforts, your attention are required a lot more. As a corporate development professional kind of help out operationally, someone needs help with a particular, let's say HR issue, employee matters, you are typically the person who is connecting the handful of HR professionals you might have at corporate who have the subject matter expertise with perhaps the one HR professional. Because these are small companies, these are growing companies, they don't have a sort of an HR department. They have one person as the, let's call it the intermediary. You are making those connections. You're spending a lot more time handholding, for lack of a better term, to connect resources at your portfolio companies with whatever resources you might have internally. And in some cases you may not have that resource internally and therefore you're not going to have the resource internally. You might have to go externally. That's also something that's particularly important. You might go to an external advisor.

Sounds like a lot of program development. You're essentially scaling across multiple companies.

These are companies especially, we tend to be sort of an earlier stage investor or sort of someone who's developing companies from scratch. So as a result there's always more development that has to happen. Right. You're not going to be building out just because the businesses can't support the cost. You're not going to be building out full HR departments, full IT departments, full accounting teams. You're going to be leveraging some shared services. But often there is still a lot more coordination that's required. So it's probably a matter of scale more than anything else. If I had to guess, the mega cap private equity firms probably have some level of shared services provision that's equivalent to what you might see at a Fortune 500. But certainly it's not going to be the case for most of the mid cap and smaller cap.

If I'm the P firm, I'm looking to bring in these partners such as yourself. I'm going to look at this space and the ecosystem and probably first look at the operators, folks that got a track record of running a company in a C suite and growing it. How do you position yourself as a corporate development background to have a competitive advantage when you're seeking these kind of opportunities?

So you're talking about from seeking sort of employment opportunities?

Yeah, cause myself as a P firm, like why am I taking Joe over the CEO in the space that senior tenure, whatnot.

First of all, the skill set, kind of the technical skill set is just so similar. You might have different return hurdles in corporate versus in private equity. You might have different sort of investment time horizons. You frankly might have different criteria as to why you're buying company, why you're investing in a particular company. But at the end of the day that's just different formulas. In Excel, the core skillset really is the same and the Ability to speak intelligently about transactions. It's a skill that's relevant across. And so I would say that if you have the technicals down, you have a tremendous opportunity to make that transition. Sometimes there is sort of a bias against professionals who are coming from the corporate world. Often because you are using external advisors. For example, on the banking side, we PI craft at Guardian, you acquire a large business, you sell a business, you're using investment bankers. The bias is, well, it's the investment bankers who are doing the work. That's not often the case, especially when you are the one who is presenting to your board or to your key constituencies, demonstrating that you have that core skillset which frankly you learn in your days as a baby investment banker. I think fundamentally that carries you through a lot of this transition. The other thing that frankly is important when you are a corporate development professional is Rolodex development. Your relationships when you're in corporate are very critical for bringing those over to private equity. Because the key in private equity is making sure that you are in the flow, right. Everything else that's going on in the marketplace in your particular industry. I was fortunate at both Guardian and tia. These, these are large companies. Wall street wants to cover them. Wall street sees a lot of fee opportunity covering those places. And so I developed relationships with people from the bulge bracket investment banks all the way down to the real boutiques and have carried those relationships with me. That's fortunate because it's enabled me to see all the relevant industry deal flow throughout my transition from corporate to private equity. My joke is I've gotten a lot of investment bankers paid really well over the years. It's nice when they can return the favor often, especially a smaller, perhaps lesser well known investment firm, you may not be covered by the street, but if you're bringing those existing relationships then you have a tremendous leg up. We recently announced a transaction at 777 where the banker who was on that transaction was someone who I had been in talks with about different opportunities. Frankly I think going back to my TIA cref days and had never worked on a deal with them, just that continued discussion and they were sell side on a recent opportunity. Knew that we were interested because when I first joined 777 I let them know what our mandate was and sure enough we were on their buyer list and ended up winning the auction. Maintaining that Rolodex and cultivating that almost as if you are still a banker is pretty critical. I remember in another case when I was an investment banker, someone who I was across the table from and had always had a good relationship with on a particular transaction. We knew each other from 2009. He ended up being our advisor at Guardian in 2021. It's a really long sales cycle, but it's important because bankers know that. So maintaining those relationships in order to stay in the market in the know is pretty critical.

The big differentiators that you position yourself around is the technical deal skills and relationships that you have those deal skills. I just have a note here that says something about efficient frontier concept. Do you have any idea what we were talking about on that?

I was talking about the efficient frontier in the context of M and A in corporate versus in private equity. There is this dichotomy and I can go into that, right, because your traditional concept of efficient frontier really relates to optimizing your investment portfolio return for a particular level of risk. I was using the term to describe optimizing your M and A returns relative to the intangibles that are very difficult to measure with the Xirr formula. In Excel, you talk about why M and A fails and I think you hear statistics. Two thirds of all M and A deals actually fail. We don't tend to speak of economic losses in the first instance. When we talk about MA deals, sure, we talk about a business perhaps underperformed. But if you think about it, really, that's not why it failed. It failed because of culture. It failed because of what I'd call the soft factors. It's how did the integration go? What was integrated? What was housed locally? What kind of treatment or incentives did the management team get? What kind of oversight and governance was the target subject to? Was it an overbearing corporate parent versus one that was hands off? Those issues tend not to be in focus as much for financial buyers of businesses in the way that they are for strategic buyers. So I think that as a corporate development professional, interestingly enough, you are looking much more at that efficient frontier optimizing return for the amount of intangibles because you have typically a lower return hurdle when you are looking at deals in the corporate side than you do in the private equity side. You can sacrifice a few points of IRR in order to get the deal right. I'll give you an example. Typically when you're doing a deal, you're buying people, the management team, the employees, very important. And how they're treated is very important how they feel in an environment. When you're in the middle of negotiating the transaction, you're often typically negotiating employment agreements for at least the key professionals. You have to think, even if you are able to complete the transaction, you have to think about how do those employees feel when you are negotiating really aggressively with them on their employment agreement? Is that approach necessarily going to be conducive to a long term beneficial relationship? You do get the deal done. But if you've really put the screws to this particular management team and given them employment agreements that they may feel like are onerous or unfair or off market, but they agreed to it because they felt they had to, as opposed to sort of holding their hand, bringing them along, making them feel like they're going to be valued members of this new organization that you're acquiring. That's just one example of yeah, sure, you might have been able to extract more irr because you are, let's say, paying them less or giving them less in the way of sort of future equity optionality. But at what cost? At what cost? At the overall, those sort of soft factors, yes, you can get away with that probably as a financial buyer. If your hold period, for example, is three to five years, you can't get away with that as much in corporate. And I just might make the distinction because while I do work for a private equity firm because we are structured as a holding company, we have really partner's capital at play and not limited partners capital that we have to return after a certain period of time, we do have a little more flexibility in how we can approach it. And to go back to that recent acquisition that I was discussing that we just announced, that's a deal where we looked at that company and said this is going to be the centerpiece of our strategy going forward, full stop. As many private investment firms are looking at now, we're transitioning to a bit of an insurance funding model or using the insurance balance sheet to help fund other activities in a capital efficient way way, we see that business as a critical strategic component for us, not as something we're going to flip in a few years. So I've seen that kind of from both sides, both obviously in corporate and private equity, but also even within this private equity environment where it's not a flip. And it was really important for us to make sure that the management team in this case felt valued because we want them around for a while. They've grown the business to a place where we wanted to buy it. In that case, why wouldn't you treat the management team with respect? Even within the private equity realm, you can certainly see things as more strategic than financial. And maybe I'm Seeing that more than most because of the way that insurance is transforming the alternative asset management world today. Probably a different M and A science topic.

You bring a strategic mindset to the table.

Absolutely.

Are you happier in private equity than in Corp Dev?

I don't know that happier would be the right term. I think I'm always happy when I'm working on deals. You can be unhappy in both environments if there isn't a whole lot to do. That can certainly happen in corporate. I might maybe say something a little controversial here. If you look at corporate, one challenge that can arise is that you may at times feel like politics is far more involved in the decision making process than, let's say, meritocracy. And that can be true for transactions, it can be true for HR matters, but especially Fortune 500America, you tend to see a little bit more of that as a result. That can probably stifle or slow your sort of deal activity. You've got programmatic M and A organizations out there. One in particular in and around MySpace that I think would get very high marks. And I've been across the table from them and they're great. Is UnitedHealthcare. They're programmatic about their approach. I don't know that they have a lot of downtime. They have basically what looks like a mini investment bank within their business. Because they have such a large corporate development team. I hold them in very high regard. But I think there are corporates out there who probably will let M and A or corporate development or other types of activities lie fallow. Which if you look at a lot of the reports from the consulting firms out there, is really something that you should never do. You should always be thinking about how you can transform your business. When that happens, it's not just not good for business, it's also not good for the employees who are there wanting to do deals. Because that's why we're here. That's sort of our raise on debt. When you're working on transactions in this type of role and with this type of background, that's when you're happiest.

Fair enough. That was actually a softball question. Because what I really wanted to know is if you make more money in the private equity environment than in corporate.

Development, typically private equity environments give you the opportunity for more upside. And I would say that's true both of private equity itself and private equity backed entities. So if you end up going and working for a business that is run by, is owned, managed by a private equity firm that has an exit opportunity where you're really earning your keep is in that carry. But it's not always carry, whether it's phantom equity, profits, interest, things like that, typically you have greater upside for that in private equity than you do in corporate. I suspect that's not true, frankly, for some of these tech companies that have seen their share prices appreciate. We're just giving out shares in lieu of cash compensation. Over the last decade or so, you've made people fabulously wealthy just as employees of those companies. But obviously in my sector and financial services sector, where you tend to have companies that are more mature and they tend to be more oriented towards base bonus, maybe some sort of profits interest to try to match a little bit where people are coming from, which is typically the investment banking world, you tend to just have a bit more of a cap upside in the corporate world than you do in private equity. In private equity, if you can, for example, let's say you can attach to a deal where you did a deal, you work it through that three to five to seven year hold period and participate in its exit. If you've gotten points, quote unquote, on that deal. That's where the real kind of upside takes place. Because the capital appreciation has happened. Right? It's purely a capital appreciation game. But from a cash compensation perspective, you tend to find things are largely equivalent, especially at the more senior levels. It really, your delta in the upside tends to be more around that carry, profits, interest type of thing that is again more commonly distributed in private equity.

So that's the upside is being able to capture some of that carry and profit interest. Can you teach me how to negotiate that? If I was one of these roles, obviously they put an offer out. We got a lot of folks here that may be in that position here soon.

Typically what you'd want to do in that case is you'd want obviously in your employment agreement you'd want to see. And again, when somebody is looking at. Now, are you talking about a case where you are already owned by a private equity room or were you about to be acquired by one?

Oh, I was thinking if I'm going to go sign up for your role, I want to be the next successor for your role. Teach me what you learned and how to negotiate. The thing is, this is new to me. So I learned from you and say, hey, where do I negotiate?

Is there a certain range on carry.

That I should be negotiating? Is it per Porco, what does this look like? Is it overall for the fund?

I would say that in general you take a lot more ownership of your portfolio companies, the things that you're responsible for in private equity, because it's again, typically a leaner environment, you have just a lot more direct access and influence to success or failure. Ultimately there's a management team and there's macroeconomic factors that can be at play, but you have a lot more direct access to those returns. So typically what you'd seek to negotiate is some level of, let's call it a piece of the upside, so some level of performance. To keep it really simple, you end up with an employment agreement where for every transaction that you work on, there is typically a baseline valuation that the entity that you're working for has to essentially catch up to it. So there's your minimum hurdle. And then above that, you would typically be entitled to a percentage which would have to be negotiated obviously with your employer, of the upside return associated with that. To be really simplistic. If they buy an asset for 10 and sell it for 20, and those are your only elements of cost basis, which is never the case, but for simplicity, right, perhaps you would be entitled to 50 cents of that incremental upside or a dollar of that incremental upside. It really is going to depend on the size of the firm. I am familiar with people at private equity firms who these were three or four man bands and they bought something at 10, sold it at 20, and after their LPs got paid, everybody got a few dollars. That's a really big windfall. That's the kind of thing where you're making your outsized return. But it typically is something that you'd want to negotiate in your employment agreement. Entering. What kind of percentage return do you get as a proportion of kind of the overall pot?

Got it. So that's something you can negotiate and come counter?

Yeah, absolutely. Some firms will be more specific about it and some will essentially be vague. Certainly the case of my friends who work at hedge funds or sort of alternative credit managers, oftentimes those things are left fairly vague and they just get a big chunk at the end of the year. Sometimes, however, it will be specifically based on the performance of your portfolio or particular kind of investments that you're overseeing. There are some people who like to keep it vague, sort of at a senior level to preserve optionality around how much they have to pay you. But obviously the more specificity you have, the more you really know how much earning opportunity you do have, and you can gear your work towards that.

What are other terms you may want to negotiate? Private jet access. What are the other things you want.

To negotiate private jet access is typically not something I've seen in employment agreements for. But it's possible, maybe at a bit higher level than I'm at with respect to negotiating your employment agreement in private equity. What's really important is to understand, and this is something new frankly, because for the last decade or so, up till the last year, inflation wasn't really a thing. You typically had base salaries that didn't move all that much. They might be different by location, but at the end of the day they didn't really move. And from 2011 or 2012, 2013, if you're your base salary isn't moving up while you're in the same role, you're probably not really noticing it that much, probably not really noticing a raise now that inflation is as relevant as it is and probably will be somewhat stubbornly relevant for a little while longer. One thing that's really important to think about nowadays is cost of living increases. Cost of living increases are something that we had forgotten about. So I think that's maybe the first thing with respect to base salary bonuses. Cash bonuses are typically going to be less oriented towards perhaps a specific deal and again more generic. And I say generic meaning that you're going to have a target. You'd negotiate your target cash bonus and you would expect that unless the sky falls or unless you do something and you've helped the firm hit a home run, and maybe you don't necessarily have an attachment point to that home run, you'd expect to be somewhere around your target. This hews pretty closely, frankly to how corporate is. I remember we were at both Tiacraf and Guardian. You basically had target bonuses not dissimilar to what I'm talking about annually. And I think 80% of the firm got paid essentially within a few points of target on either side. You had a bell curve basically in many respects you want your target to reflect something that you feel really comfortable about, that you get a little ups on it, you're really happy in a particular year, but you want to negotiate a, a target that you can live with, not with the expectation that you're always going to be paid above target. Finally, where your upside comes in is around that carry that we discussed. That's definitely important. I always say as well, and this may be the risk averse person in me and maybe the guy who has seen a lot, especially starting my career in the great financial crisis, a lot of this is you probably want to pre negotiate your severance. You really want to make sure that you understand what happened. If, for example, the business changes its tack, right. If the battleship actually does turn it and turns in a direction where your role is no longer necessary, you want to make sure you understand what that is. Pre negotiating a severance is a little like signing a prenup. You don't really want to have that conversation because you're forecasting something bad happening in the future. But it's an important insurance policy because if something bad does happen, that's the wrong time to be negotiating that you want to have that sort of negotiated at the outset. I would argue that having a severance provision, which obviously, and I've seen severance provisions in contracts and have seen them actually acted upon, and if you do right by the employee and let's say you're more generous than the provision, everybody's happy, as happy as they can be in that situation, that's probably where you want to be.

How are they typically structured? Is it months of salary? Give me a lump sum.

It's a combination of months of salary and years of service. Typically, the longer tenured you've been, the more recognition you will get in your severance package for that. In some cases, you might just look for a lump sum. That's not too common, though. I can't say that I've really seen that. People tend to like to keep it consistent for every employee. You don't want to look like you're playing favorites, typically doing some kind of months of salary. Obviously, if there is a severance event mid bonus year, you also want to make sure that whatever bonus had been accrued, which, by the way, accounting is certainly accruing. So it's not like they can say, oh, no, you're not entitled to any of that. Everybody knew that accounting was accruing for sort of a portion of the bonus. You want to make sure that you obviously get that beforehand.

These are helpful tips. Joe, let's break down the how can you give me a playbook on how to land one of these roles?

How do you land one of these roles? The higher you get? It depends on where you are, I'd say on the career hierarchy, but the higher up you get. I have tended to find that it's more about the network. And it's not like, you know, a lot of guys at JP Morgan or Goldman or something like that, and you're going to get a job there. It's more because those guys are so in the flow of everything going on in the market, they know who's changing strategy, they know what direction companies are taking they will know, oh, that company, they're going to be staffing up their corporate development department because they're going to need to, they're going to grow. You should talk to so and so over there. They will have kind of that pulse of the market. That would be sort of one place I would say is pretty important, goes back to the Rolodex thing. It's pretty important to continue to maintain those relationships because those people will have an idea of who's hiring, et cetera. And then of course, you have recruiters with respect to the 777 role that actually came about through a recruiter. So there are certain recruiters that you probably want to get to know in your space. As you develop your relationship over the years, as your sort of resume evolves, there's a handful of people who will tend to cover the space. Just like bankers, just like lawyers. There's actually recruiters who tend to be industry specialists. Making sure that you're on their radar at all times is pretty important because ultimately, and perhaps it's a bit surprising because you always hear about network. I am always shocked at the number of roles and the types of roles that recruiters are used for. We are not just talking about C suite, right? We're talking about up and down the chain. Recruiters are perhaps equally as important, making an impression with them because they're seeing opportunities every day. That's their job, making an impression with them early on. Even if you're not, for example, ready to move, let's say you like what you're doing now. But just making sure you develop a dialogue with them again, no differently than you would with sort of bankers or lawyers is actually pretty important. Industry conferences is another thing. As you go along in your career, you will probably end up specializing in something. I fell into financial services. I certainly, when I was growing up, did not think, hey, I really want to be a financial services investment banker. But once you end up getting into a particular industry, you tend to stick with it in some way, shape or form. And so whatever industry that is, you want to make sure that you're going to the conferences, you're doing the networking. Insurance is a small. It's funny, it's a very small group of people. It feels like it's a huge industry and yet it's the same basis every time you go to conference. That's not a bad thing. You want to make sure that you're constantly making those connections and hearing what is on the radar. Because out of that come opportunities.

Are there any other Advice you'd give somebody considering transitioning between corporate development and.

Private equity, getting the best and most comprehensive deal experience in your current corporate development role, there's no substitute for that. There's no substitute for having great opportunities to speak about. There's no substitute for having those kinds of engagements. Because if you can speak intelligently and articulately about deals that you've worked on, the role you played, how you influenced the transaction, even if you're junior, hey, you know what? I just ran the model. There's a lot to say. If the only thing you did on a transaction was run the model, that can take up an hour of an interview, there is no reason why even at a more junior level you can't leverage that experience into something else. And so I would say there's just no substitute for doing. There's no substitute for actually doing the work today and continuing to build the experience and to make that experience part of your repertoire. Every deal is different. Every deal you're going to learn something new. There is no such thing as a rinse, lather and repeat on deals. There's a lot of similarities, but there's no two deals are the same.

I like to get the deal experience and then Vanessa with some storytelling skills. I'm going to try to get one of these Q and A questions in here. For someone with a VC background and M and A financial skills, would it be a good idea to directly jump into the roles within PEN or do you recommend working as a corporate development as a transition phase?

If you're in VC today? What's interesting is there's a lot of corporate VC roles out there. A lot of corporations, especially over the last decade or so have developed corporate VC capabilities. If somebody is in VC today and wants to transition to pe, I would say probably the best thing to try to do is go to PE directly. What I think a lot of corporates are going to do is they're going to look at your background. They're going to say you're great. For our corporate VC team, not our corporate M and A team, I would probably just go directly to PE because some of the skills are going to be similar. Especially if you're talking about more like growth equity type roles. If you're talking about the earlier stage type companies, the skills and the work that you do on a day to day basis is going to be pretty similar. So I wouldn't worry about making a step especially because from a corporate lens they might view you more as a VC professional who some going to be Pigeonholed into vc. The last firm I worked at, we had a very specific delineation between who worked in the vc, the corporate VC area and who worked in the corporate M and A area. And they didn't really cross pollinate. Do your best to grow direct, but focus the search on those smaller, earlier stage growth equity type firms, not the mega caps.

Joe, what's the craziest thing you've seen.

In M and a craziest thing I've seen in M and A was the deal that I was working on literally when Covid hit. And I remember this so distinctly because we were starting to get reports of the virus. It was early March of 2020. I remember being just crammed into a conference room about 25 other people that certainly barely fit into the conference room as this deal was going on. And we went fully remote before the deal was able to get to the finish line. But what was crazy about it was that the deal actually didn't quite get to the finish line. And the reason for that is that the business that we were selling at Guardian was a dental insurance business. If you think about the economics of dental insurance, you get paid when people are putting hands into other people's mouths. That's dentistry. Think about what was happening during COVID Nobody wanted to touch vegetables in a supermarket, much less go and have a dentist put hands in your mouth. This was a business whose premium revenue was still coming in and at the same time we were not making any claims payments. So we were two days away from selling this dental insurance business that was going to generate the highest margins it had ever generated. And the executive team decided to pull the deal because we were going to make so much money on the business. The prediction was nobody's going to the dentist for the next little while. And sure enough, that happened. So we pulled the transaction and ended up still selling the business. But it was about a year and change later to a different firm. But yeah, we were pretty much on the two yard line and it was decided, hey, this business is going to generate outsized EBITDA margins because nobody's going to want to be sitting in a dental chair for a really long time. That's probably the craziest thing that I ever saw at M and A. We were getting the deal announcement ready, we were getting the tombstones ready, and the deal was pulled at the last minute.

That's probably a whole series that we could do on these kind of COVID.

Deals that I'm sure everybody has their Covid deal experience. I just remember if you were going to apply the multiple of earnings to the future earnings that ended up happening. We would have been getting as a seller a terrible deal. You had this kind of outsized earnings. You were like, no, we're not selling on that basis of ebitda.

Hey Joe, thanks so much for taking the time to have this conversation. I learned a lot. You helped me become a better M and A scientist today.

Thank you so much, Kisan. Great to talk to you today.

Those of you still with us, thank you. 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 back. Tag us on a LinkedIn post, add a review on Apple Podcast. 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 Reflection 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.