What Buyers Want from Bankers and Founders

A few months ago, M&A Science surveyed corp dev teams across the industry on how they're navigating AI in their deals, whether seeing traction, whether or not, and where they think this is all headed. On August 18th, I'm presenting those findings live at the Buyer-Led M&A Summit for the first time before the report is released to anyone else alongside a very special guest I think you're going to appreciate. Beyond the data, you'll hear from corp dev leaders on what shifted and how they run deals. And Dealroom's team is unveiling something new that's worth sticking around for. Every registrant gets a free copy of the State of AI in M&A 2026 report the moment it drops. This event is free, virtual, 11:30 to 1:30 Eastern on August 18th. Register at dealroom.net/summit or the link in the show notes. Again, that's dealroom.net/summit. Now back to the episode. I'm Kison Patel and you're listening to M&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&A deals.

Hello, M&A scientists.

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Build from over 400 of these interviews with practitioners who've done deals and actually closed them. Leave the deal on the outcome.

Let's jump in. I'm your host, Kison Patel, Chief Scientist here at M&A Science. Today, my guest is Andrew Morblitzer, VP of Corporate Development at Life360. Andrew started off as an engineer at IBM, spent 20+ years running Corp Dev at Intuit and GoDaddy. Where he led $2 billion+ in acquisitions, then crossed over to the sell side as an advisor before coming back to the buy side. That round trip is rare. Most people pick a lane. Andrew's operated in all of them. Today we're going to get into what buyers actually need from their bankers and what Andrew learned crossing the other side. Andrew, how you doing?

Doing great, Kison. Thank you.

Thanks for taking a break from doing deals to have a conversation with me.

Love it.

Can we kick off with a little background? Yourself?

I started work life doing all sorts of cool engineering work, got into product and marketing, was fortunate enough to find my way to Intuit where I was leading some work on new business ventures. We had Intuit's first CEO to CEO partnership, which was with Google, with whom we shared a parking lot in Mountain View. I was responsible for a decent amount of the work that we were doing in this embedded partnership, two-way embedded partnership. We ended up doing 3 acquisitions to do our part of the partnership. And for me, it felt like I'd come home. Meeting founders, evaluating companies, trying to figure out how to find the best options to actually create value and just be able to bring everything together from the obvious parts of strategy and business case, but to be able to play to my unique strengths around understanding technology products. From the humanistic side, being able to form a bond with founders, understand what they really wanted versus just marketing them or trying to market to them felt magical to me. And I worked for an individual who's still a prime, maybe the prime advisor in my life, mentor, Stephen Aldrich, who had led all sorts of work, dev, biz dev, strategy, was business unit GM at Intuit. What was interesting to me getting into this was you hear all these stories about half of all M&A fails, and I was determined that wasn't going to be me. When you make a jump into another job halfway through your work career, you have a chance to be more bold. You're more mature, more confident in yourself. I leveraged being at a great company into it. To get introductions to practitioners of M&A throughout the Valley to try and figure out why did M&A fail at such a high rate. I read everything I could. There's a seminal HBR case study called Rules to Acquire By that I recommend people read. It's about Pitney Bowes. It's old style stuff, but the core lessons in there matter just as much in the age of AI as they did back then. And There's a few rules that come out when you talk to people and there's common reasons that a lot of M&A fails. It used to be very personality driven. It used to be very much about the art. A lot of bankers move over to the corp dev side. They grew up in an environment where, you know, it's dog eat dog to get up the ladder, to get up the chain. And when you climb that ladder, knowledge is power. So they hold onto knowledge and I didn't have you. What you've done, I, I mean this with absolute sincerity, people getting into corp dev now, if they just follow what you've built, they're highly likely to be successful. The actual Clayton Christensen data from HBR shows that it's actually up to 90% of M&A fails. And either what you find is there's reactive M&A, there's these knowledge centers, It's the opposite of everything that you teach, which I had to go figure out then because I didn't have you. And that is the 90%. And to flip that script where it's the process-driven, it's the learning-driven approach. For me, as I describe it to people, if you start with company strategy and out of that you develop what's your M&A strategy, your investment strategy, all the things in corp dev, You get your priorities out of those. If you then go for each one and figure out a goal-driven hypothesis, what does amazing look like 24 months from now if we invest in the right thing or we buy the right thing? That should guide your criteria. And then if you've got a list of 5 companies or literally I've had lists that were over 50 in some small business categories, you get to the 3 that are going to be most likely to fit for you as a company. Where this is relevant to our discussion today is if you follow that chain, then pause for a minute and think about when an inbound comes to you, whether it's a banker sending you a teaser on a company, or whether it's a founder who reaches out through a board member or something like that and says, we're going to sell our company. I think you'd be a great acquire for it. Now, think about that company that comes to a public company, an Intuit, a GoDaddy, Life360 where I am. What are the odds that company is going to be one of those top 2 or 3? Company strategy, M&A priorities, M&A strategy within that hypothesis that's based around some concrete goals of what amazing looks like, and then criteria that are specific to the purpose that gets you to your top 2 or 3 out of Uscanned. Now there's a company coming in from the outside. If you just pause and think about that for a minute, that tells you why so much of M&A fails because these companies that come in from outside sources have an infinitesimally small chance of being one of the 2 or 3 that you've said are the top, there are priorities to go with right now, and yet buyers still buy them. Buyers still buy them for very humanistic reasons. I find that we're emotional creatures and we get emotional attachment to these founding teams that we meet, to the idea of what these businesses could be. And it's hard to jackhammer somebody off of an emotional attachment, especially when that somebody is a C-suite exec or the CEO who really wants to go do it. But yet, where I've been able to be leading a team, but I'm only one. The team has to be the team to go do this, where you follow the procedure that you write about, that you've written books on, that you teach on, that you certify on. It gives you every bit of chance to make that 10%, flip it, and make that actually your 90% that's successful.

I think that's a good framing of the problem, that you essentially got this ecosystem where deals are getting marketed, but then when they get pitched, how they get perceived and land. I think that human nature where fundamentally you're trying to grow revenue, then all of a sudden you're going through this exercise to justify and create a business case for doing the acquisition. So it's sort of the inverse that the opportunity comes and you're trying to rationalize it and tie it to the company strategy.

Again, I mean, these are human beings, so they're each trying to do something for the most part that's productive and creative and add value. But the way that bankers show up, and this is a crux of the problem. So I'm saying bankers, but we should actually uplevel the framing of that and say the way inbound opportunities, because they come from a variety of sources. I get easily as many that come in, maybe more that come in through like board members, very seasoned relationships. And those ones have extra special mustard coming in with them because they come in through a board member. So there's something you've got to pay attention to. But they come in through these pathways. And if a corp dev team— I mean, I'm a team of one right now at Life360. I'm super fortunate that there's other people, peers and colleagues who have some responsibility for corp dev, but it's me. And if I don't have this proactive approach, if it's not a buyer-led approach, then anything can look good. You have to put equal time on it. Inversely, if I do have this process and more than that, this overall philosophy established at a C-suite level, it makes it much more efficient for everybody on both sides to look at something that comes in and evaluate whether that is likely to be a fit and turn it down. Now, here's when we talk about— and I may be jumping ahead in the flow, you'd imagine, but If you look at what I thought I could do by going over to the sell side, really there were two reasons. One is I just had a really great opportunity from my second mentor, David Popowitz, who leads Corp Dev at Adobe now, but he was a legendary banker. He connected me with another legendary banker, Storm Duncan, and Storm was generous enough to give me, as a non-banker, the opportunity to come in. So I was going to be able to learn from the best again in the business. The idea was if I could come in having walked miles in the buyer's shoes, that I would be able to help the sell side figure out how to talk to the buyer in a way that put the story of whatever business, whatever tech business, we were representing into context that the buyer could understand. And the reason why that's important, I'm sure it's intuitively obvious why that's important, but I get these teasers all the time, or I get outreach that comes in. That's this inbound that comes in through a variety of sources. It tells me everything about that business, why that product is great, what's the MOW, What's the DAO with the— what's the retention rate? So it's all about them. It's not about me. And I'm left to do the intellectual heavy lifting to figure out, gee, what could be about this? How could it add value? I got to tell you, I'm working long hours. I've actually got— right now I've got 3 projects going. My ability to take something and do 100% of the heavy lifting to figure out why it could be great for us is honestly limited. I just, at this stage of my career, I just, it's easy for me to say no unless it's something that happened to be already on that shortlist. So with me, and I would say for people who follow your buyer-led M&A process, it's really easy for these inbound deals to bounce off of the outside and the effort that I ask, that I go through now, that I've learned to do with outside founders when I first meet them, with representatives, whatever kind they are, banker or otherwise, is to understand our strategy. It's really easy, especially in the day of AI. This stuff is so simple to reframe what's great for me and go further. How could this sequence even share with me what are the risks or the trip points that we would have to figure out together. And it is a difference. It's not what especially bankers are trained to do.

Yeah. You got the same point that it's figuring out the strategic fit and that's the whole exercise you end up still having to do as a buyer. But do you ever see the— whether it comes from bank or other source, will they try to do any of that at all? Or it's just pretty much, here's a teaser, you want to move forward or take a deeper look into this. Is there any, hey, because you're doing X, I feel like this is the AI era, I should help every sales pitch I get in. Feels like that they tried to do, even though you can tell it's very AI written.

I'm just at Life360, have talked to enough banks who are interested in us to get our story out. I'm transparent on what the corp dev priorities are. Both investment and M&A. I'm sharing public information. I'm not sharing any non-public information. This stuff's all in our company strategy docs. It's in our earnings. You can figure out if you pay attention really what our likely priorities are, and then I tune that. If somebody's willing to have a conversation with me, I completely tune, and it changes. As a matter of fact, there's one category that I had early that as we've gotten into it and we've learned, we've met with companies in the category, We're finding out that structurally they're not able to set up to grow and figure out how to go cash flow positive at the same time. So it's not a good business category for us to be in. So the next time I talk with banks, I will have replaced that with something else. So it's helpful to have these conversations every 4 or 5 months. I did recently have a bank that's done the best job yet at taking a worthy company who on the surface you would understand why they would've brought this to us. And they did a lot of work. They probably had 10 pages in a presentation that was handcrafted thoughtfully. I'm sure with a lot of AI as to how it could fit with us, why this would be good for us, how we should evaluate the opportunity. And because they did that work, We were able then to set up a really healthy, in-depth discussion where the value popped within the C-suite for us. And therefore, because that work had been done, they had a chance to be on the big stage with our CEO and staff that they would not have been had they not done the intellectual effort. They wouldn't have passed through. So seeing it, but I will say that there are mostly, I don't know, trying to be kind, but I'm going to say mid-tier banks and opportunities who are just on the spray and pray method. And for those, the teasers, give them a fair shake. Try not to be obtrusively dismissive, but they're just not making it through. To me, if somebody hasn't done the work, then we've all got other things to go be busy on.

So how did it work out when you took an advisory role? Were you able to try different things?

Absolutely. I will say that totally worth the experience. Got to work with some amazing people. I should say there's a couple things to think through and pay attention on an advisory role. One of the things is what we've talked about. How do you bridge a gap between the company that you're representing and the products that they have, how money could be made, and the buyer's story in a way that there's context and that there's information for the buyer that helps bridge the gap. The other thing that I wanted to spend some time on is it's really interesting to me that there is this yawning gulf that's not just the pressure of somebody trying to sell something and seeing if they can find somebody to buy something. But the gap is that if we stick to the banker story as opposed to just a comprehensive view that includes the inbound, the motivation of the banker is theirs to make money. Like bankers make good money because often they're trying to pull something out of nothing. They're taking a company that may be a good company. Oftentimes though, there's reasons that a company's for sale, and it's not staying independent. These bankers, they're leveraging their networks and they are very much trying to figure out how to get an opportunity to close. Now, if the goal is to get a deal to close and that is what a banker's doing, then they're opposed to the buyer and what the buyer's needs are. And here's the reason for that. When A banker gets a deal to close, their job is done. They typically get paid most there unless there's some contingent fees and they move on. They don't have anything to do with it. Venture investors have the same thing. The buyer is really paid to be there for the long term. So for the buyer, it matters a whole bunch what the outcome is because I'm going to be at that company for 2 or 3 years., and my reputation at the company, my ability to go execute on more things is radically tied up in what happens post-close. So for me, a CEO will look at a business, will look at a transaction that we've come in, and they'll start to ask Monday morning scoreboard, Monday morning, how are we doing questions? They don't look back. Typically, I very rarely get asked, "How much did we pay?" or "What was the split of cash and equity?" Sometimes questions around individual key players, maybe how they came out, but mostly they want to know how you're putting points on the board. And that's what I'm getting evaluated on. Is it adding value? Is it matching the business case? There's this enormous gap between what's motivating a banker and what's motivating a buyer. When I went to the advisory side, was bridging that. Not that you were going to change the banker motivations, but being able to get into the mindset of the buyer should help create a stronger relationship, open up the opportunity to actually evaluate what's being presented as opposed to that natural buyer defensive layer. Why are they selling this to me? What should I be looking for? God, I got to go do all the work to figure this out. From that perspective, it was successful for me to make that trial and go over.

Can you teach me how to land the pitch?

Which pitch?

Well, we talk about bridging the mindset gap. I feel like that's the goal here, but like, I want to explicitly get the how.

If you're talking about how as a seller to go into a buyer. So I think target companies, when they're hiring a banker, they need to interview them on this. The top thing, and really this is unbelievably important when you're hiring a banker, is to verify who their contacts are, how real those contacts are, the relationships in the potential buying set. Let's go with my current company, right? Life360, amazing, amazing, amazing consumer tech company closing in on $100 million now, which is shocking to a lot of people. It's really impressive. If we are in the set and somebody's selling location or safety or something like that to us or one of our adjacencies, and they're gonna hire a banker, they need to know that banker can call me, they can call our CEO and get the door open. And the same goes for the next 5, 6, 7 companies. So it's a critical thing to look at. I would encourage anybody hiring a banker, start there., and you gotta find a way to validate it. If you can't validate it, don't hire the banker. But the second thing then is to interview the banker. How do they bridge this gap? And what you want, I would say they're rare, but I hope it's a developing skill and you and I would talk 3 or 4 or 5 years and it's the new thing for bankers, is that their pitch representing that client comes into me having the initial pitch, like the teaser. It shouldn't be the same teaser getting sent when they do their initial outreach. They reach out to 5 companies or 25 companies. Every one of those teasers should be tailored to me, why this is great. And I will tell you from talking to other practitioners and from my own work, that is much more likely to get consideration to happen. So the banker needs to be able to tell you that they're doing that at the teaser level and then For sure, when it's follow-up, if you're lucky enough to get a buyer to say, send me more information, or I'll take the initial management call with it, all of that needs to be telling the buyer's story through the seller's strengths, through what's real about their business, how it would make happen. The seller still gets to tell their story. They should tell their full story, but their full story should be through what they think the buyer's brain is processing at that moment, not through this, here's all the speeds and feeds on a generic data sheet. That's how to bridge that gap. And if they can have that conversation, if they can do that story, I will tell you from both sides of having done this, that is absolutely a key. Every situation is dependent, so it's not the only key. That's a key to getting meetings 2, 3, and 4. Can I say verifiably from the sell side? I just wasn't over there long enough. That leads to radically different outcomes. I would say to me, that's a hypothesis that it would close more deals. I can tell you though, that it absolutely led to more meetings. You made it easy for the person on the other side to see how it could work with them. You made it easy for them to go back up to the division presidents that they had to go to as their clients and represent what could be, that does bridge the gap.

Okay. So let's make up an example. Let's say you're a gaming company, you own a bunch of titles, and I could say, hey, we have this title that we're looking to sell, but because you cater to this unique age group of 13 to 17-year-olds, which is where this demographic fits, This would fit nicely with your current gamers, and you can see that it would be natural for them to want to adopt to it. Something like that.

Yeah.

I think it's really important for a founder and for a banker to do firsthand work if it's a public company. And if not, maybe you've got to do a bit more research, although there's a lot of companies that now publish tremendous amount about who they are. So I'll tell you what my process is. I go out and I look at the investor pitch for the companies, even public companies, they do an investor update annually. Typically, it's got— in modern times, good video presentation, but at least it's a long enough PDF that you learn a lot about what they're passionate about, why they believe that they have a unique relationship with their customers. If it's enterprises, if it's government agencies, if it's consumers. I was reading one today about an up-and-coming defense contractor and what they believe their unique value propositions are. You then start to speak to those. You've got to be transparent. You have to be authentic. I know we use the word authentic a lot, but it has to be real things that passed the initial meeting, passed the sniff test, are real, but if you speak in their language, then they're able to understand what you're representing. So in the gaming case, actually, let me give you one that I do know is real. There was this guy, he built software. He was even out of the Midwest. It wasn't even a tech hub, but based upon what he was building, he knew that his potential exit was a particular company that I know very well, and he went too far. Okay, this is not authentic, but I will tell you this as an extreme example because it worked financially very well for him. He, on his website, modeled company values, how he talked about customers, how he talked about strategy, all the way to brand colors on the company that he thought was his most likely buyer. Went and he met the CEO at a couple of conferences, shook hands at the first one to get a relationship established, got an email, then at the next one set up just coffee on the sidelines of the conference. And it worked. It's an extreme example, but he ended up making it so easy for the buyer to be able to understand how his product would fit their strategy, their priorities, what their likely execution pathway was to create value out of an acquisition, that it was just easy for them to say, hey, we should buy this company, and it worked out really well. What do I do? I actually am watching YouTube videos of interviews that these people will say on stage so that I know what their priorities are, even when I'm going out to buy, because that gives me leverage. If we flip it around, I know what their strengths are, and they'll also talk about what their struggles are, which is really important to me to both evaluate the company and probably value a company. But you've got to do that firsthand research. I would even say do it without the filter of AI because you lose the actual words that somebody's saying or the intensity that they're putting on a focus area.

20 years across buy side, sell side, and back to buy side. Andrew's been in more rooms than most practitioners will see in their career, and most of what shaped how he thinks came from conversations most people never get access to. Even fewer get that on both sides of the table. That's the whole idea behind DealPilot powered by M&A Science. It's a deal guidance layer built on over 400 practitioner interviews and over 10,000 real acquisitions. Organize so that when you're staring at a situation you haven't seen before, you're not staring at it from scratch. You can find someone who's been in that exact seat and learn how they handled it. Check it out at mascience.com.

There's a link in the show notes. This is actually really good, and I feel like this fundamentally applies in a lot of different areas. Essentially, we're talking about landing the pitch, and this is somebody coming external to the company. The big things you want to do is really understand the of the buyer you're pitching to, the values, essentially the culture of that business, the strategy, also where that lands in priorities. And there's signals for that. They put some of those content out there, being a report, could be quarterly earnings or some of the investor type of content they put out there. You sort of build that into, this is why this opportunity would fit with you specifically. It's because of those things that you really did the research on. I had a couple questions on that. One was, how tactical do you get where it's like, we talk a lot about synergies. We talk, hey, here's cost synergies and revenue synergies. Do you want to start doing that or is it more of like, the buyer's already going to do that anyways, but we just want to at least get the business case sort of generally to pique their interest and then let them do their own math the way they do their math?

Oh, I love that.

It's hard to try.

You can almost like sell too hard, you know, but it is hard to go too far. I have had too much content shared with me, like just in terms of volume. It's hard early on to go through 80 pages of something, so it should be tight and compelling and exciting things that I want to share with other people. But doing more of the work shows earnestness of the discussion with company that I represent. It also is likely going to push my thinking. It's going to push our thinking as a company because you're bringing up new options. If you're a founder, you've got a different lens that you're looking through, a facet. You're teaching me things actively about my company, probably, or the perception of my company and the fit with it. So that's really hopeful. Now, I will say there's one thing on that, and it's important to maintain credibility. One of my favorite things to just head people off at the pass and ask for when they're coming out, and I would just so try and help sellers and bankers with this, is that every hockey stick that comes in and some kind of a projection, this is the worst with either super eager founders who just, I think they believe it could be true, but but they want a lot more money for the company. And with bankers is the hockey stick of magical growth always starts the day after I buy a business in any projection. I actually just call it out when I see it because I don't want anybody to think that level of cuteness is effective. What we're forced to do is completely dismiss that and go ask for a whole bunch of extra diligence information early. To see what's actually happening with the business, to see if we want to go any further. Whereas if somebody says, hey, here's like a high case, if all the customer acquisition went right and the retention was X and we could get daily usage of Y, but here's also like a pragmatic case based upon where we've been realizing that integration takes time to figure this out. It's a lot more likelihood with me personally to go further than the hockey stick starting always the day after I acquire. And there's a twin to that. And the twin to that is, you remember in like business school 30 years ago, 20 years ago, it would always be, hey, we've got this great product. And if we can get 1% of everybody in China to buy the product, right? And so that's starting with a TAM and make some grossly unfounded assumption about ability to actually access the TAM. The same thing comes, hey, if Life360 has 100 million monthly active users, we estimate that 10% could— and so this is going to turn into whatever it is, $100 million business, $200 million business. We should get our fair share of that. You know what? Actually, all the hard work of getting to those customers starts after we acquire your business or after we invest in your business and do a commercial partnership. All that asset is worth an enormous sum, much more to us than to you. So thank you. We'll keep that value, substantially all of it. And the value creation that you get is when you come and you get equity in whatever company was acquiring you, the work that you do from that point forward to actually make that story come true as it uplifts the company's fortunes, you participate there. To me, that comes back for this need to have a real connected conversation between the buyer and the seller. And the hard work for that needs to be on the sell side, and it needs to not be, here's a data sheet on this company, can I get you to have a conversation with them? Which is the punchline of this whole discussion. The onus really is on the people who think they're going to get a lot of money money either through the transaction fees or because they own equity in the company being sold to tell the buyer in a way that excites the buyer and meets them on their own turf. It should not be solely up to the buyer to figure out if that thing is a good idea or not. Like that hockey stick, the reason I bring that up is that is emblematic of a complete mismatch. It's like, that's the gap.

Put a foot forward, but be realistic about it.

There was a company I had a relationship with the founders that was more than a 2-year relationship. And by the way, there's, you know, instructive stories and there's another, there's a company that I acquired after, gosh, 7 or 8 years of a relationship with the founder also. So these relationships, the time has to be right in addition to good strategic fit, values, goals, all that. And this company, when the time felt like it was right, they'd actually hired a bank instead of coming directly to me, even though we had the relationship and they said they weren't experts and blah, blah, blah.

And I get that.

Okay, go do that. But it ended up working against them. It didn't work out for this company at that point in time to hire the bank. And the reason was, and this was a top 5 size bank, the actual bankers who won this account had a very, very good track record with them, but it was this old style approach. The bankers did the essential data sheet in a teaser. Here's why this should be great. We already knew a lot about them, but we knew the business. We analyzed it from the outside enough to be able to look at it and say, we think something's broken in the data that you're presenting. And it took a long time, but if they wanted us to be a buyer, we needed them to turn over to us the customer performance data that they had. What the bankers were either lazy about or chose to hide was that the business on every marginal customer that was being added was losing marginally more money. So the lines were diverging. Not converging. The founders didn't understand this because they hadn't spent time trying to understand this. They were just trying to raise more capital to keep growing the business. The bankers should have known this. It wasn't unknowable. It did take us about 7 days because we just had to go through the raw data, really understand their model. We ended up walking away because we, neither we nor they could come up with a way that this business was going to be profitable. But it made us think less of the founding team because this was fundamental to their business. And it made us think a lot less of those bankers, and we could never figure out what the true motivation was. I will say a little advertisement for Agents in AI is this is absolutely a knowable thing that a really good manager, senior manager level analyst finds for you that AI now would absolutely be able to find for you in a matter of minutes with access to the data, which also is why it's really important to get access to the data for both sides. But that's a story of where that mismatch and the belief in a banker who came at this all wrong really lost a significant opportunity and created a lot of doubt. Going forward.

Trust is a huge part.

M&A across the board, you don't have trust, you don't get a deal done. I want to talk about the trust as an element. I think that also ties well into the question I'm looking at now in our chat, but like basically reaching out warm versus reaching out cold.

Cold outreach is fine. Do it with something that's tight, punchy, and I can relate to because I have this company strategy that I am passionate about not deviating from and really give me a reason to believe. And then cold outreach is fine. The warm ones you do have more knowledge of, and that doesn't mean you're more likely to do them. The more knowledge might be that culturally there's not a fit and we gotta rely on these people. It might be that they've started to expand in a customer base that's not ours. So we shouldn't go do it, but at least you're more confident in the decision. And even if you do a deal, you walk in with eyes more wide open. But I would say that the cold is fine. I'll tell you on the trust point, in any business you got crazy stories because it's human beings. I had gone through the whole process that I talked with you about, and we had our top candidates and there was one that looked to be really strong in terms of product performance. The financial fundamentals were strong. My kind of inviolable pre-COVID was we always come together in a room and spend an afternoon building how we would execute together, what was great. You gotta work with somebody where they can't be in an interview scenario and have everything polished and perfect to figure out the personalities and figure out how it works. And it was a crunchy meeting. But I knew that this individual had spent time at an, like an OGA, like a 3-letter government agency. And I didn't know if it was because that was the culture of them or culture of him. So we got in the car and we both happened to be getting on a plane. He had a rental car, so I got in with him and we're driving back to the airport. We're stopped in afternoon rush hour traffic, nowhere to go on the 101 north of San Jose Airport. And he looks over at me and he said, "I don't think I can do this. I just don't trust you." And I was completely caught off guard. I was not expecting that sentiment and the level of directness. And I looked at him and I said, "You don't trust me or it's the Royal, you, like the team that you met with?" And he looked at me and he said, "You." And I was like, "Oh my God." I didn't even know what to do at that point. I'm like, "Okay, we're stopped. Maybe I just open the car door and get out and keep walking to the airport." I've never in my life had somebody say something like that to me. It was a fabulous point on the trust. Like, nope, we're not doing that deal. That's just— immediately I got to the airport and called the team and sent an email and said, we're out. This is kind of crazy. But that's one where we had built up, we'd had multiple conversations. Again, there was crunchiness all throughout, but on the trust issue and on having something warm, we still ended up walking away after it.

Any particular moves that help accelerate building trust?

There's a few. In a daytime work scenario, like what we're doing now, it is driving the conversation, leading with information, making it so that I can say— I was actually on a call this morning that was an hour and a half with a company, with my team, could have gone a lot longer, and the people were sharing information. That was above and beyond what we were asking. It makes you feel like the story they're telling you is true because they just kept sharing and it was based on data and it was based on events and it was based on outcomes that they were having and they were ready to screen share all of this. And there's no replacement for somebody saying, we think we're great because of all these things. By the way, here's some words. To, or some things that we haven't worked through yet. It's that level of where we almost don't have to ask questions because they just keep driving the conversation forward like that. And where it feels like they're really sharing what's real about the company with you. It builds a lot of trust with me. The second thing is, and this is a tip for people, is have a meal together. Dinner can be open-ended, but it doesn't have to be dinner. It doesn't have to be alcohol. It can be lunch, it can be breakfast, just make sure it's open-ended, but get out of the work environment, try and meet in person. There's no substitute for the human connection. You can do deals. I've done deals completely over Zoom during the pandemic where you never met the people in person. It worked out fine because I was ruthless about the process, about your process, and they work out fine, especially if the integration is a crusher. You have to have that amazing integration. But if you can get together and have a meal, you find out more about each other, what makes each other tick, and you get a better sense for fit. And a seller should not be fearful that the buyer's going to find out something that they don't like, because if it was important, they should find it out anyway, because neither side should really want to do that deal unless you're just desperate for an exit, desperate for making that buck. Food over brick and bread together.

So spend the time, make it personable. No shortcuts to it. One more thing I want to touch on before we wrap up here. If you applied buy or let M&A to the sell side, walk me through what that looks like.

For me, that's where in my dream state, the sell side people, whether it's one of your current investors who's got a connection with a board member or a CEO, that they're gonna reach out to on your behalf. I find a lot of attorneys that reach out and represent a company, whether it's a banker or the founder doing the outreach. It's just everything that we've talked about, really simple. It's make it so that the potential buyer sees that you've walked that mile in their shoes. You understand their strategy, their priorities, what's important about their company, why that company thinks they're special, how you're gonna help make 'em more special. It's beyond just, hey, if you have us, you're going to drive this many people to upgrade from silver to gold. It's also, here's how we strengthen your competitive moat. Here's how that next customer that we heard your CEO talking about on the earnings call last month that you're not active with yet, here's how we collapse that time by 9 months that you can get to that customer, or why that customer is more likely to pay attention to you. Now with ours and we've got data on it. Have that bridge always from the sell side. Everything that you've done about buyer-led M&A and it's asking the sellers to onboard that as well.

Yeah. Align on strategy from the beginning and then we'll tie the execution as you move along. Andrew, what's the craziest thing you've seen in M&A?

Gosh, I would say the craziest stuff that I have seen is where there were truly like tragic levels of cultural disaster happening at leadership teams. And I've seen this a few times where they were aware of the level of personal fights, but they have— they've become so practiced at existing with it that they were able in initial meetings and evaluations to hide it. And I've seen this more than once. And this is part of the reason, by the way, that I recommend getting together with people in person, because that's been the only reliable way I found to get underneath that. And I say it's crazy not because it's some wild story like where I've seen people owning condos in New York City and cars and things like that the company paid for that were all personal. I mean, we've all seen stuff like that, but this is more because it's so fundamental to not just as a buyer, something you need to know, but it's just like the human beings who work in in that company and what they're going through. And you or I hit a wall of, I can't believe that I'm seeing this, that this is happening, that people are suffering through this on a daily basis. And then the very pragmatic side is you gotta try really hard to dodge those bullets. And there are people that are really good at hiding them.

No deal comes easy.

That's why I like the job.

I know we got a few more questions, but we're getting close to our hour here.

Yeah, I'm just looking at the questions real quick to see if there's one or two we can wedge in.

Sure.

On the how do you assess a target's culture fit pre-close, what we try and do, I will tell you the hardest way is an expanded version of just what I learned through multiple steps at IBM. Like interviewing somebody is the worst predictor, we all know that now, of fit within a job. The best predictor of fit is to have somebody actually do the job with you in your environment, which is also really hard to do realistically. So the closest thing is to get together and do real work planning and then even trying to execute. That's why so many engineers before AI would do side-by-side coding, probably more important in the days of AI. So you can be sure somebody's not using only AI. So it's multiple interactions. It's not one, it's not one visit to the target site. Where they've got everything running pristine for that day. It's multiple bites at the apple where people are having good days and bad days, and it's different teams having different interactions. You want it to be mixed up. Can you get employee engagement scores and read through? Sometimes. In diligence, hard to get that before you've signed an LOI, that level of diligence. But what you can do, hopefully before an LOI, unless it's a hypercompetitive short long-term process, in which case it's very hard and very easy to fail. It is that, all right, physically we're going to get together or we're going to do a lot of Zoom sessions that last beyond an hour where somebody gets tired, where they can't have everything pre-thought out and you work on things together.

I think we got good coverage in this conversation. Like I said, it's a unique topic. We don't really talk about the sort of friction that comes between buy side and sell side.

Yeah, I loved it. That's why I thought this would be a good one for us to do together. It's illuminating for people who typically spend 98% of their work time on one side or the other.

Absolutely. Thank you so much, Andrew, for taking the time to have a conversation and helping me become a better M&A scientist.

My pleasure.

Those of you still listening, stuck through, my fellow M&A scientists, brothers and sisters out there, I love to hear from you. I'm on LinkedIn. Feel free to reach out, connect with me. I welcome feedback, topic ideas I haven't covered. I'll take it all. Mention the podcast because I get so much spam that comes in there. I ignore them unless they mention the podcast. Till next time, here's to the deal.

You didn't just hear it from me. Andrew said it himself near the end. The sell side needs to get on board with buyer-led M&A too. Not just the buyers, the bankers, the advisors, the founders going into a process all need to understand how a disciplined buyer thinks. Because when they don't, you get exactly what Andrew described, a 2-year founder relationship that broke down because a banker hid the real unit economics and a deal that fell apart before it ever had a chance. Andrew spent 20 years learning to recognize that pattern and work around it. You want to understand how a disciplined buyer thinks before you're across the table from one. The Buyer-Led M&A Certification is where to start. Go to mascience.com.

And check it out.

There's a link in the show notes. Thank you for taking the time to explore the world of M&A with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you need help standing up an M&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, kison@mascience.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&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.