The Complexities of Sell-Side M&A

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Welcome 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 newsletter. Every Monday we share highlights from our interviews and publications so you can continuously improve your M and A skills. Again, that's mascience.com I'm your host Kisam Patel, CEO and founder of M&A Science. Joining me today is Noah Waisberg, recent co founder, CEO of Cura Systems, current co founder and CEO of Zuva. Today we're going to talk about understanding what goes behind the scenes of sell side M and A. How you doing Noah?

I am actually on the other side of a cult, so my voice does not normally sound sort of like the Dodge Truck man, but here I am. This is good.

We have a special edition of you. Can we kick things off with a little bit about your background?

I started out my career as a corporate lawyer, mostly doing M and A and private equity stuff, but also some securities at an excellent firm called Wild Gaucho in New York. Really liked that job, but it wasn't what I felt like doing for the rest of my life. At a point I decided to quit. Summer of 2010 I did. And when I quit, I was thinking a lot about the idea that junior corporate lawyers spend vast amounts of time doing work that they hate, that they're not that good at, that's highly repetitive and the clients don't like paying for it. And that's highly expensive. Back in the day it was $350 an hour for the most junior lawyers. Now the five hundreds are above, and that to me was unfun work when I was a junior. But it also seemed like an opportunity. It just did not seem sustainable that work would continue this way into the future. I spent time after I quit just sitting and thinking I was thinking about a couple different business ideas and this seemed like they'd be okay, but not amazing. But then I started thinking about contracts and I realized, and contract review. And I realized that they fit the theory perfectly. Junior corporate lawyers spend huge amounts of time reviewing contracts. Literally 30 to 60% of the legal fees that you get on an M and A deal are due diligence. And most due diligence is contract review. So there's a lot of time spent doing this just in that area. And in fact it happens in other areas too. So number one, a lot of time spent. And number two, even at the world's best firms, people make mistakes at this work all the time. Number three was realizing that a lot of the time when people are reviewing contracts, they're looking through them for the same things over and over again, because people are looking through contracts for the same things over and over again. I had the idea that you might be able to build software to help people find that stuff and pull it out. So back in January 2011, I got together with my co founder, Dr. Alexander Hudek, and Alex has a PhD in Comp Sci from the University of Waterloo, which is like the MIT of Canada and I'm Canadian. So that's how that came about. We set to work and we thought from talking with Alex and Other guys with PhDs in comp sci from Waterloo that it would take us four months to harness the state of the art in machine learning and apply it to our problem. We thought it would take us six months to raise. And so we're like, why don't we just start building and then we can raise afterwards. So we set to work and after about six months realized that it was a much trickier technical problem than we realized. In fact, we weren't sure if it was going to be another three months or 10 years to get the software to work. At that point we decided we couldn't raise that NOVC was giving us money to solve a problem that we might fix in the next 10 years. And so we just kept our heads down, kept working after about two and a half years, got the software to work, had a second problem, which is no one had ever paid us to use it and didn't think we could raise on that basis. So just kept pushing. Eventually got people to start paying us in 2013, but we were a four person company with sporadic revenue in 2014. And then things started to change and started getting people signing up and we went from four people to eight people by the end of 2014. We were up to 30ish team members by the end of 2016 and just kept growing.

What changed? What was that thing that set you in a different direction?

It turned out there was a big four firm looking for something very similar to what we were trying to build. And we hadn't even thought of auditors and consultants as potential markets for this software. We didn't realize that they also did tons of this work. It turns out that what we built was very well suited to their work and they looked at a lot of different stuff and came onto us. So that one big contract and their support really helped us in a lot of ways financially, but also in terms of just scaling up our software to meet a kind of more enterprise use case. And then beyond that, we started to get firm. We'd been working. You always hear with law firms that they have this 9 to 18 month sales cycle and the corollary to that is so you better just get going on it. And eventually places that you've been talking to for years start to come through. And they started to come through and we spent some of the money we've got from customers on hiring out some sales and marketing people and they started to connect with customers and it just started to work in a repeatable way. We grew to over 100 people before we took in outside capital for the first time at all. So we raised summer 2018 up to 100 people.

No outside capital yet.

No outside capital. First outside raise was 2018 and we were like 100 people at that point.

This is pretty cool, you know, hearing many stories of lawyer and data scientist coming together and starting a company.

We accomplished a lot of really good stuff together. Some of the real fun, not fun in certain ways, like we had no customers and there was no prospect of having customers. But in the early days of just getting to work on the software itself, super great. I learned a ton about machine learning. So much so that I became author of the world's first children's book on machine learning. I think my co founder learned a ton about how legal agreements work. I think could probably match up pretty well with a big law associate in terms of spot in the change of control or exclusivity clause. So I think we both learned a ton from each other and I think worked very well.

Awesome.

We raised from Insight in 2018, did a minority round with them for $50 million, which back then was a pretty big raise. And now it seems quaint little thing that someone with a million dollars in revenue does. But once upon a time I think we were the largest legal AI raise at the time. Actually a pretty big legal tech raise and a pretty big raise for Canada at the time. Took that in and continued to grow. We built CURA to the point where I think 18 of the top 25 M&A law firms were using our tech. So it was pretty good. And not just in the US and Canada, but also in the UK. I think we had 11 of the top 12 revenue firms in the UK using our software. That's included in that 18 to 25 number. But really pretty global usage. Best firm in India using our tech, Australian firms using it, Germany, Denmark, all sorts of places using the tech parts of all the big four using it. So it's pretty good. We basically realized though that we had built a really strong professional services business, but we always thought there was so much extra potential for underlying technology in corporates for them to use the technology themselves. I don't know what the right or wrong thing to have done as a business management thing was. We would have been better to have just stuck with professional services and just said maybe you could use our tech in these other spaces, but we're just going to stick to professional services. But we always felt like there was this great opportunity in corporates as well and so we tried to do both. Eventually realized that we needed to build new products for these new markets and we were kind of embarked on that Covid hit. We had kind of a flat 2020 because of that. There were parts about 2020 that I felt good about, felt really good about how our team handled the event. Even though I don't think we had a great year, I think we had a better year than our competitors and I think we were lined up to perform pretty well as things recovered. But who knows? In the start of 2021 we had some places approach us and just ask if we were interested in joining them. And our reply at the time was like, no, we're not interested. We had a flat 2020. Didn't seem like all things being equal, opportune time to hit the market, number one. Number two, we were in a pretty good capital position so we didn't see a big need to do a deal. And number three, we had these two new products that were in development that we felt really good about, but that we weren't going to get any value out of them on a deal because they weren't generating revenue. We felt good about them, but we, we didn't think anybody would pay for that. We told places that came to us come back in a year Then maybe we'll be more ready. One of the places Latera was like, no, we still, despite all that, we still would like to do a deal. Talked to Insight. Insight's like, you might as well just give them some information and see if they come back with something compelling. So we did. And so this is like early 21 gave them some information and they came back with a number that was good and, and fair, frankly, life changing for my co founder and a deal that Insight thought was worth doing for them. But we were disinclined to do the deal. My co founder and I were. Insight were like, if it were us and we were you, we would do the deal. But for you, it's your choice. Do whatever you feel like doing. My co founder and I were disinclined to do the deal. And then almost just before we went back to them, I started to reflect on the offeror and I realized they only really cared about law firm markets. Like they deeply cared about being the one vendor to law firms and that they cared a lot about ebitda. And I realized that these businesses that really excited my co founder and I that we were building, we loved the professional services market, but we were also really excited about these corporate businesses that they were targeting corporates, not law firms. And so Latera might not even feel like them. And they were basically money pits at the moment. We were just putting massive amounts of money into developing these products that no one was paying us for yet, but we thought people would. But even when people did start to pay us for them, we didn't think it would be law firms. So I was like, as a CEO of Latera, I would probably shut these products down and that'll have a lot of cost for them. And so I wonder if Laterra would be willing to do a deal where we get a copy of the underlying technology, we get these two separate businesses, we get the appropriate people to run these two separate businesses and we've been running them fairly separately internally. So it wasn't that complicated to figure out the people side. I wonder if they'd go for that. And so I sort of pitched it over to Insight first and they were like, that might work actually. And we pitched it over to Laterra and they were actually quite enthused about the business idea. It had some attractive attributes for them because it would immediately and significantly decrease the burn. And so we did it. It was complicated, but it got done.

Yeah, you sold your business, but you essentially carved out these business lines you're incubating and ran off with that, at.

The end of the day we were about 180 people. We took 34 of the people to Zuva, left Latero with nearly all the revenue, probably 95% of the revenue. We took really small little portion. We got a copy of the underlying technology that enables you to find information contracts. But we left Latera with the specific technology that's used by all the professional service firms, the sort of workflow project based contract review tool that gets used on tons of MA deals, left them with that and most of the people and we sort of went off on our merry way, had a transition services agreement that we've now completed most but not everything of the sort of work to do under and got the deal done. It was definitely more complicated to do it that way at a straight sale or something. Like a lot of tricky IP issues that could have kind of sunk the deal, but it got done.

There's a lot of lessons learned to unpack with that part. There's helping them with integration and then carving out your business. You already mentioned TSAs, which people in the industry know get sticky rather quickly. Our audience are all practitioners that are striving to be the best. They want to learn from the best. And your perspective is unique. We don't always get it.

I don't know if I'm the best on this, but it is a weird deal.

I get the corporate buy side and we always hear that story. So a lot of it's what are the lessons we can learn in your experience in going through it? And it's also valuable for other folks because it's more of like a one time event for a lot of founders to have that M and A exit. I wanted to hear just the front end and get some of the lessons learned there. Who at Litera engaged with you? Was it their CORP dev team? How'd they reach out?

Word of Litera so Litera is a hg good sort of European private equity sponsor, HG backed company that has rolled up a whole lot of legal technology companies and as I mentioned, aspires to be one of the only vendors a law firm chief Information officer would go to to get all the different things that they need. I had known and got along pretty well with their CEO for a bunch of years. I also happen to know their biz dev person pretty well. I think their biz dev person reached out at the start of the year, but I happen to already have a pretty good relationship with the CEO.

Okay, so then when they reached out, they expressed the interest, had a bit of the Cordy nature in terms of let's have a conversation. And I'm curious how they brought up the idea of acquiring your business. Was it easing in with a partnership or.

We'd known each other pretty well. It was, hey, we'd love to buy you guys. We think you guys have fit really well inside of us. Your company, we'd love to buy. Here's like indicatively amounts that we might be willing to pay Just from being a CEO in the industry, you tend to be buddies with CEOs of other companies. And so I sort of knew what a fair trading multiple was for companies in our space. Nonetheless, I still wasn't too excited about it. Number one, for those three reasons that I mentioned, I just didn't think the timing was right for us. And number two, we also had kind of questions about what the transaction consideration would be. I personally, my co founder, both of us own the majority of the stock of Kira, had interest in rolling perhaps some of our money into Latera. But ultimately if we were going to exit, we felt like mostly cash. And so we weren't sure how much that would be on the table. But it turns out that was something that was totally fine by Litera. We had some calls with them with Littera. We also dealt quite a lot with the private equity firm hg. Had some conversations with the head of Corp Dev and the CEO, but ended up really doing a lot of the deal as well with a couple of guys from hg.

For them, that initial pitch to you was here's our deal rationale, why we think you'd be an interesting company for us to acquire and they gave you a multiplier range and where they would transact.

Yeah, basically we'd love to do a deal with you. We think we might be able to pay something like this other company got. I knew what that other company got and thought it was okay.

But you were playing hard to get.

I wasn't like playing hard to get.

I get it. You weren't in market, there is no real urgency or you're not driving a process. But for them, I think right now, most people on the buy side would say the worst thing to go through is the bank process in this market.

The question I reflected on is if we were going to do this deal, would we have been better off once we had the idea of doing the spin out, which is something that had been floating around in our heads since probably 2018. John Rosenbaum had at one point pointed out that if we were successful in building out a great corporate business that you'd end up with a problem. If Salesforce was our eventual buyer or something like that and we had a $40 million or a 20 million dol million or whatever revenue legal business that would not have value to someone who would buy us for our corporate business. And so we'd have to figure out a way to get rid of that in the context of a deal with a great corporate acquirer. And so I'd always had that floating around in my head. The thing that I've wondered about is would we have been better off doing the spin out ourselves and then going to market for the professional services business, we could have certainly had a more competitive bidding process. I don't know. I'm happy with the deal that we did.

That's where it gets interesting when we look at M and A.

It's.

It's either a proprietary transaction you source and you go through. It was typically you get more time, better considerations. Right. If we just look at the fundamentals of making decisions, you can control the timeline. When you go through an auction process, everything is highly compressed, so be it. All this planning that we need for post close execution of all the integration.

And valuation activities for the buyer's perspective, by being really flexible, it enabled them to get a deal done when I can't imagine there could have been too many other companies that could have done that deal. And it was a deal that was pretty appealing to us. The financials were fine, but I think other people could have paid that amount of money. I think we got a fair and solid good price. Not unhappy about the price. I do think it was fair and good. But it certainly enabled Litera to not have to end up in an auction situation by being willing to do a deal that was kind of unique and.

Weird and on your end that might have been a viable option to run an auction process.

The other way we could have done it though it would have had significant risks too is we did the spinoff as part of the deal, but we could have done the spinoff pre the deal and then done a deal and it would have been a lot simpler. On the other hand, the deal that we did even without the spinoff was a good and fair deal. Insight thought it was the right deal to do without the spinoff. And I think the spinoff was a way of creating extra value for our shareholders out of nothing. If Insight would have done the deal without the spin out, then the spin out's just extra found money in a way.

Just getting up to initial conversations to close what were Some of the lessons learned and things you would do different.

One thing I definitely think about is whether we should have done the spin out on its own first. I don't know what the right answer is on that. I'm happy that we got the deal done at all. I think it was a crazy and aggressive deal to try to do the spin out. Getting that done is pretty cool. The spin out did make things more complicated. We spent a fair bit of time, I think it was time well spent at the term sheet stage getting the IP around the spin out right. And it was really helpful that we spent that time. That was something that kept getting re raised as we went through the deal and we were able to go back to the term sheet and be like, hey guys, this is what we agreed to. This is a deal that can work. Other IP constructs can't work. So you're doing a spin out. Getting the IP right is super important and I think it's important to get it right at the start when you're doing the term sheet. So it probably took us a little bit longer to negotiate the term sheet, but it was time well spent. That's one lesson learned. We used reps and warranties insurance on this deal. That was an interesting experience. The quirk of it was as we were going through through the deal, negotiating up to getting the purchase agreement done, I think it made things way easier. There were all sorts of things where we probably would have fought for a while if we didn't have insurance. It would've been a fight over who paid for it. But in this case it was just as long as you're not lying to us, you're good once this deal's done. And as a seller that's very attractive. Being able to take the money and just be able to live in peace afterwards is a very nice thing for me and I think a very nice thing for even our smaller shareholders. But once we got the deal signed up, it drove a lot of extra complication where the insurer and the insurers council had quite a lot of things that they felt like running down that I think a normal acquirer probably wouldn't have cared about. I would say come out a little bit mixed on reps and warrants insurance overall like it, but I do not know that it actually made things simpler.

It's interesting how the insurance industry can create another sub industry with products like that. That's the challenge. Do you just stick to holdbacks or leverage those kind of products?

As a seller I found it appealing, but it was not as easy as we initially thought it would be. It felt really good up until signing. Then it got trickier, mainly because of.

The diligence they do to write the policy.

Yeah. And basically exclusions, essentially, if they can't answer a question, it gets excluded from the policy. As a seller, it's not actually your problem, but you're trying to be a good seller.

Anything else?

There were some hairy bits during the tsa, but I've been shocked with mostly how well it's gone after the fact.

And the TSAs are between what you're carving out and the company that you're selling.

The company that we carved out had 34 people, Kira. We probably had 40ish people who were focused on administrative stuff. HR, finance, maybe support, Salesforce, administration, legal, IT. Super important things. Talent acquisition keep the company running. At Zuva on day one, it was me, my excellent but part time EA and one excellent IT dude. We had no finance, no hr, no talent acquisition. We weren't sure how long it was going to take us to fill some of those roles. One important thing in the TSA was making sure people get paid, getting all sorts of policies set up, even just getting employment contracts done with people with a new entity, figuring out how to get bills paid, figuring out how to get your bank account set up, expenses reimbursed. A lot of TSAs around, that kind of support and that went exceedingly, well, exceedingly quickly. I think we were basically through by maybe mid November. I think we announced around August 8th or 10th and the actual split happened September 1st. That's pretty good to be done with all that transition stuff. We came out pretty well with hiring thanks to help from Kira people. But we were able to hire in some people into some key roles in Zuva. So we were able to hit the ground running. But that TSA support was pretty important. A second type of TSA support is there are some shared customers and so you got some rules governing how you help each other serve those customers well. And the third thing is there's some. So 34 people weren't administrative. The people that came with us, 28 or 29 of them were technical product type people. Some of them had some knowledge and some stuff they were working on that we needed to and continue to need to deliver back to Kira and Latera.

Going back to Latera side, did you have to help integrate the business with them? They just gave them the keys and that was it.

We help where we can, but I think they're pretty practiced at this. Latera as a Company that has a lot of companies has a pretty clear idea how they like to do integration.

Usually they bring the head with them and retain them for a couple years.

And that was part of the original talk with them about doing the spin out. When you think about what I do, if you bought Kira and I came with it, you'd actually have to figure out what to do with me. What would my job be inside Litera? In a way, when I think about my job at Kira, large parts of it are setting strategy, helping manage an executive team or things like that, communicating with your investors. When you think about the Fred Wilson formulation of what's a CEO's job? Set and communicate strategy, hire and retain the best team, make sure you've got enough money in the bank if you think about those three functions. And then I did a fourth thing which was I was fairly involved in some sales and marketing stuff. In fact, those first three items are stuff that the acquirer is going to do.

I agree, I agree.

So if it's just you need me to do 20%, talk to some customers and stuff like that, at various points, I'm happy to do that. And we came up with a services agreement for me and my co founder to be available up to five days a month. In my case, I happily do that time when people there need me. Like over the weekend someone had a question about something they were working on and like I happily got back to them quickly. Totally happy to see the business succeed and thrive there. But unless you have some particular role for the founders to do, I'm skeptical how much value they add or how much value I would have added.

There's a lot in your brand identity that came with the brand for them.

I don't even know how much of the brand they would like to retain as like an independent thing versus pushing it into a broader Latera brand. In fact, I don't really have inside information on this, but my sense is what Latera is trying to do is create this one vendor. So that means there might be a Kira sub brand within the Latera family. But I think they're really trying to emphasize the Latera brand. Kira is part of Latera and in fact, having a co founder around who has a relatively strong sort of personal connection with the thing may not help you in your ability to create one broader Litera brand. I don't know that it was crazy to do this kind of deal and I suspect it solved a bit of a problem for them. I don't know if you watch Silicon Valley at all but one of the secondary characters, this guy, Big Head, who ends up on the roof drinking, just sitting around with all the other founders of companies that this giant Silicon Valley company has acquired. I don't know if that really helps that much. It's a great thing and I really admire that. It and Latera were able to kind of say like, we don't need this.

I'm curious to hear from their end, how did integration go in a way.

Because of the TSA and like the need for so many Kirins to really help Zufa get on its feet, I think that ended up pushing out their integration schedule a little bit. We left behind a really strong executive team who were the ones who actually did a lot of the day to day stuff. I think it was okay. The other thing that made integration probably a little bit easier, basically selling to the same customers. Litera has exceedingly strong professional service firm relationships. I remember there was one CIO who talked to often and the CEO of Litera had a weekly phone call with them. So it's not like they need me to transition the relationship. There are a few things maybe where I have to do some phone calls for them, but I think they're doing just fine because it's their market.

Yeah, that's interesting. That ends up working out well. Frees you up to focus on the next thing where you were after to begin with. So it sounds like it came out really well. Going back in, thinking of other entrepreneurs going through this exit because it's unique. What are some of your thoughts on that advice you would give to somebody that's going to go through that similar transaction? Being a lawyer helps maybe. Did you go through your own PA agreement?

I was reading that stuff very thoroughly. It was a rough summer. We had good lawyers on it, but definitely did not do it ourselves.

On that.

We had McCarthy's representing company and Osler representing Zuba, which are both excellent Canadian law firms. I think something I'm proud of with the deal was just being creative sitting there and saying, I don't like this deal. The standard purchase of the company being empathetic to the buyer. Is there a deal that I might be willing to do with this buyer? And I think we did a really good job of just being creative there and getting that deal done. And I think it created a lot of extra shareholder value by doing that deal. But we'll see if it did or it didn't, depending on how XIVA comes out. It was a neat deal to do and we did it by being creative and Empathetic to what the buyer was.

Thinking about, Alexandra says. What sort of strategic operational support did you find helpful as you negotiated terms, navigated the overall process?

I had a co founder in the business. He and I spoke heavily about it, as did I with a couple of our execs as we were negotiating. So that group of us provided really good support to just help think through different angles of the deal insight. Also our investor, I think we're pretty used to doing the deal process and I think we're quite helpful as we thought about it and also quite helpful about thinking about how a private equity buyer would look at us. So I think they were very helpful in the deal. We had good lawyers and tax help. That was super important as well. So that was our main support network in the process. We didn't use bankers. It was such a non standard deal. That's where we go back to that conversation we were having a while ago with would we have been better to have done the spin out and then gone to market with the process? And I think if we'd done that we could use bankers and I don't know that we would've gotten a ton of value out of bankers on this particular deal because it was so weird. I don't think he could have gone out to market with more people. I don't know that anyone else could have done this specific deal. But if we'd done a more normal deal, I think bankers could have been really helpful in the process.

How do your counsels structure their fees? Care to chime in on that?

Yeah. So frustratingly, as someone who's in the legal tech space, our fees were unfortunately just boring hourly. Though I will say that our choice of counsel definitely was influenced by firms that we thought were pretty good at leveraging technology, especially Osler. A bunch of reasons that we chose them to represent Zuva, but it definitely caught our attention how good they were at using Kira and that was definitely a big plus. But in terms of the fees, I think they just charged us the same way they do most people, which is the suboptimal way to do it, but just hourly.

So I always ask what's the craziest thing you've seen in M and A? Which I know you haven't done a ton of M and A, but even on this particular transaction, what was the craziest thing you've seen?

I would say just like the transaction itself is crazy. We did a deal that we and our investor are financially happy with. The acquirer got something they cared deeply about. I would Say the premier legal AI company and a company with a commanding presence in the professional services market for use on M and A and other contract review projects. So they got something really good. In the meantime, we got a copy of our underlying tech and a fantastic tech team. Most of the people who build the underlying tech came with us and we get to keep rolling. And we got as part of the deal we were able to drop an extra 20 million Canadian into Zuva. So we got great IP, great team to work on it, enough money to go after it. Just as a crazy thing, it's crazy that we were able to get this deal done. I think it was a total win for buyer and seller. I think both felt happy about the deal. It was good for customers. Our existing customers ended up with a buyer who cares about them and who they have good relationships with in many cases. And I think optimistic that many of our employees will have good opportunities within latera. But I think just the overall deal itself was crazy. You don't see many like this and I think that's cool.

Anything's possible. It is a really creative deal that you got done. It's interesting because there's likely other companies in that similar potential to do something.

A takeaway I come away with from this. You could probably do spin outs a lot more than they get done. The business advantage of being more focused on a narrower set of customers is huge. I think now that I've done it, spin out was not easy. But it's totally, I think something I would recommend and could be done more often with some work though the jury is still out on how Zuvo will come out. Maybe it will not have been worth it, but I'm feeling pretty good about it so far.

Hey, I like that we're very adjacent. Solving some of the problems are. Do you have use cases with Zuva for M and A?

Yeah. So with Zuva we get two pieces to Zuva, sort of two product lines. One is out, one is not yet. So the one that's out is Doc AI. Zuva's Doc AI product enables others to build contract analysis features into their own apps. So more our target. There is other software vendors or system integrators, places like an Accenture or IBM or Deloitte or one of those kinds of places who build custom software for others. They can take the dock. Not to say that any of those places are our customers or anything like that, but just someone like that could take Doc AI and build it into another piece of software and get the best in class contract analysis. AI in their own app, Stripe or Twilio. But instead of credit card payments or text messages, it's contract analysis that you can build into another piece of tech. There's definitely a lot of parts where contracts are super important in the M and A space. And I can certainly imagine other M and A focused vendors finding our software, the docket software, useful to incorporate into their own apps. And then with the other product that's not out yet, I suspect there could be a corporate focused M and A angle. But let me come back on that as we get it a little bit closer to market.

Now the docker sounds interesting. Already thinking of use cases with our own product. You know, I'm becoming a huge fan of licensing middleware. We launched this M and A Science academy last year and essentially built the whole thing off of four or five licensed products, stacked them together, went to market and profitable within six months.

You think about what do you need to be good at with M and A Science. Is it building like an actual academy or is it like the content for the academy?

Exactly. We have our deal room product which we sell to corporates as life cycle management solution. So the main markets are 1 billion plus market cap corporations and PE backed roll ups. But a lot of the diligence management with multi party nature of it is there back and forth similar to the data room. The workflows are there, but adding that kind of contract analysis. If you're looking at, hey, can I do diligence across a bunch of HR contracts, a bunch of vendor contracts and pick the unique differences. That would be a perfect use case if you guys do that.

Ultimately building it yourself takes a lot of work. That whole bit. When you. We were talking right at the start of the podcast about how we thought it would take us four months and instead it took us like two and a half years and then we kept working after that for a whole lot of time, a lot of expense, a lot of time. It's really hard to get it working right. We think we can save companies a whole lot of time and uncertainty and just get them to something that works without having to do too much effort. I think it's pretty good.

Han, did the whole process take in your deal from LOI to closing?

We had initial conversations probably in January. I think we started doing an LOI in probably May. Probably took us two or probably about three weeks to negotiate the loi. Not full time on that or anything like that. I think we got it done around the start of June. We got the deal signed around the end of July, like 20th or so. We announced around August 8th and we closed September 1st. Not a good summer. That was a long summer, but good use of time.

Yeah. Hey, thanks for doing this. I appreciate it.

I'm glad I was on.

Awesome. Meanwhile, I'm going to be poking around the site, learn about more AI tech for our industry.

It's a lot better than building it yourself.

Oh, I'm a huge fan. We've just got a big deal. We did. I guess we can just say we've got looker that we licensed and we're implementing in our product. I love cura. I was a huge fan of what you're doing there. That was a big thing, seeing how you guys evolve with the technology. Because you're absolutely right to be a domain expert. It takes a lot of resources.

I don't think we were done. Software was pretty good, but there was still lots more stuff we were keeping on working on. And that was the only thing we really did, apart from these corporate things, which were still relatively the same thing. One of the things that's so neat about the spin out is just get into focus really narrowly, like even more narrowly. And I think it sounds like you're super focused on something narrow, and I think that's a great way to be.

It takes time. You evolve that way. You start off with this really broad scope, wide lens, and then you learn to laser focus and solve more complex problems. Bigger problems and better outcomes altogether.

You've pretty much got it as like a strategy thing. Either go wide or go narrow. If you're Microsoft, you can go wide or even latera can go wide. But for us, first of all, I think we were more narrow people just by our nature. Like, we preferred to do a limited set of things, number one. But number two, I think if you're not that big, you can be a lot more compelling. If you don't do something that's that wide, you gotta be a bit, as you say, wide at first to figure out what resonates with people. But after you figure out something that resonates, then do that thing and do it well.

It's this, like, maturity of that startup. You get there, then you create a bunch of business lines and have a bigger problem to deal with and then.

You spin the boat. Yeah, there you go. It's easier than you might think, though. Not easy.

All right. No. We'll talk again soon. I wish you the best of the holidays. Take care. Thank you for taking the time to explore the world of M and A with our podcast. Please subscribe for more content and conversations with industry leaders. If you like our podcast, please support us by leaving a five star review and sharing it. I enjoy hearing feedback and connecting with our listeners. You can reach me by my email. It's Kisan. Kisonealroom.net M&A Science is sponsored by Dealroom, a project management solution for mergers and acquisitions. Additional educational content is available on Deal Room's blog@dealroom.net blog. Thank you again for listening to M and A Science. See you next time. Views and opinions expressed on M and A Science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.