Best of LinkedIn: M&A Insights CW 25/ 26

00:00:00: Provided by Thomas Allgaier and Frennus, based on the most relevant posts on LinkedIn about M&A insights from CW-Twenty Five and Twenty Six.

00:00:08: Frenness is a B to B market research company supporting M& A consultancies with the Market & Competition perspective for example in commercial due diligence's CDD.

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00:00:33: So for today's deep dive we are jumping into what is essentially high signal zero slough breakdown of top M&A trends across LinkedIn over calendar weeks, twenty-five and twenty six.

00:00:43: Yeah exactly the mission here is well we want to give you the M&A PE VC or consulting professional an actual operational edge.

00:00:52: We're extracting real mechanics of how deals are getting done right now from people in trenches.

00:00:56: Right.

00:00:56: because I mean if you wanna understand the mechanics You first have look at macro environment your operating And defining characteristic just this brutal two speed market.

00:01:05: Totally, it's so bifurcated.

00:01:07: It is.

00:01:08: Karsten Kuhnley and Aiman Ismail Abuhan both had some incredibly sharp analysis on this dynamic recently.

00:01:15: Karstens pointing out that while these AI fuel transactions in global mega deals are just accelerating the mid-market.

00:01:25: It's extremely haves and have-nots.

00:01:27: Yeah, and Amon actually broke this down with the underlying multiples which was fascinating.

00:01:31: Oh right!

00:01:31: The SAWS numbers?

00:01:32: Exactly he noted that private SAWS in the lower middle market is.

00:01:35: you know it's clearing maybe three X to seven X annual recurring revenue right now.

00:01:40: but then you look at AI infrastructure or cybersecurity And they're commanding double or triple those multiples.

00:01:46: The gravitational pull of capital is just entirely lock-sided.

00:01:51: I mean, the mechanism driving that gap is basically fear of obsolescence.

00:01:54: Yeah

00:01:55: a hundred percent legacy software sort of in a free fall with no clear floor because AI is threatening to replicate its core functionalities for a fraction of the cost.

00:02:05: so buyers look at traditional sauce platform and they wonder you know will an AI tool just make this completely redundant in eighteen months?

00:02:12: And that uncertainty destroys valuation.

00:02:14: Completely!

00:02:15: Obviously it creates massive friction because sellers are still mentally anchoring to their twenty-twenty one peak

00:02:23: comps.

00:02:23: Oh man, yeah they're gripping those historical numbers so tight

00:02:27: right like They remember a time just a few years ago when any decent sauce company was getting thirty x two fifty X revenue and Holding on to those expectations When the market has fundamentally repriced risk.

00:02:39: That's what kills mid-market deals today.

00:02:42: The gap between seller expectation and buyer reality is basically the graveyard of modern M&A right now.

00:02:48: Yeah, but if we flip the script And look at high quality future proof assets the demand Is ferocious

00:02:56: it?

00:02:56: It's like okay think of the current market Like a VIP velvet rope at an exclusive club.

00:03:01: Okay I liked that

00:03:02: If you have an AI native product or super clean diligence ready asset the bouncer just unhooks the rope and waves You write through.

00:03:09: i mean Chris Oren shared this wild story about running a cell side process where they got five legitimate bids in single day.

00:03:15: A single-day?

00:03:16: Yeah,

00:03:16: for highly prepared asset!

00:03:18: That's a frenzy.

00:03:20: But if you're holding legacy tech You are out on the sidewalk and the rain Clexing your VIP pass from twenty twenty one.

00:03:26: Just wondering why noone is letting into

00:03:28: that.

00:03:29: visual Is perfect And buyers standing inside club.

00:03:33: Their motivations have shifted too.

00:03:35: Oh, so well Mitch Berlin highlighted that corporate buyers are moving purely for speed right now.

00:03:41: They need to stay ahead of tech driven disruption because if they try to build an AI capability in house it might take what three years?

00:03:50: Yeah easily but buying a capability gets done in three months.

00:03:54: For a lot of CEOs Speed is the ultimate strategic imperative So they don't get disrupted Meanwhile private equity buyers or operating under a totally different constraint which has higher capital costs.

00:04:05: Right, because interest rates aren't just sitting at zero anymore.

00:04:07: Debt is expensive

00:04:08: Precisely.

00:04:09: Expensive debt means PE firms have longer hold periods.

00:04:12: They can't buy and trim some fat and flick the asset two years later.

00:04:16: they are hyper focused on durable value.

00:04:18: They need businesses with fundamentals strong enough to survive a five-to seven year old

00:04:22: While supporting heavy debt load

00:04:24: Exactly.

00:04:24: But tech disruption in capital costs isn't only drivers.

00:04:28: Tullahant Erdemi and Ronan O'Kelly pointed out something really fascinating about geographical expansion.

00:04:34: Oh,

00:04:35: the survey data!

00:04:36: Yeah...

00:04:37: Ronin highlighted that fifty-four percent of European CEOs are pursuing M&A specifically to expand geographically because they're hitting structural constraints in Europe like market fragmentation across languages, regulatory zones.

00:04:51: slower organic growth.

00:04:52: buying their way into new markets especially the US is sort of the most viable lever.

00:04:57: They have left to show growth to their boards

00:04:59: which naturally brings us back to the ultimate VIP pass.

00:05:01: we mentioned earlier artificial intelligence.

00:05:04: Because we need to look at AI not just as an asset class, but it's operational force.

00:05:08: Yeah?

00:05:08: AI is fundamentally changing the execution of M&A itself.

00:05:12: It really is.

00:05:13: Adam Parks and Keith Sanfatell were discussing how AI has transitioned from this like operational novelty into a hard valuation metric.

00:05:20: Karen's bluntly pointed out that AI wrapper products you know companies that built thin user interface over chat GTT

00:05:27: This already dead on arrival for buyers

00:05:29: Exactly.

00:05:30: The barrier to entry is basically zero, so there's no enterprise value.

00:05:33: but at the same time because of demand for genuine foundational AI talent is so fierce Aquahire prices have jumped like fifty-to one hundred and forty percent per head.

00:05:43: Wow and buyers are implementing a completely new diligence test because of it.

00:05:48: According to Kirsten, the primary question isn't just about financial health anymore—it's literally can this company survive the next model release?

00:05:56: Right!

00:05:56: If OpenAI or Anthropic updates their model tomorrow does your target's entire business evaporate

00:06:02: overnight?!

00:06:02: And if the answer is yes, the valuation is zero.

00:06:05: Which is terrifying for a founder.

00:06:07: but AI's also changing the actual mechanics of how we diligence these deals.

00:06:12: Daniel Wortman he's a deal lawyer shared this incredible anecdote.

00:06:15: Oh I saw that it was the co-counsel thing.

00:06:16: Yes

00:06:17: He fed the Berkshire and Taylor Morrison merger agreement into an A.I tool called Co-Council.

00:06:22: The A.i analyzed document instantly flagged that contract missing a go shop provision.

00:06:28: And for context, a ghost shop provision is critical clause in public M&A.

00:06:34: It allows the board of acquired company to actively solicit better offers after signing an agreement.

00:06:42: It's basically fiduciary safety net.

00:06:44: Proving shareholders got the highest price!

00:06:48: And what's wild is that the AI didn't just spot The missing clause.

00:06:53: It explained why it mattered, it applied senior attorney level reasoning pulling from practical law guidance to argue That because this was a fast moving all cash deal locking in shareholders without an independent market check Was a massive liability risk?

00:07:14: Okay, but I have to pause and push back on this a little bit.

00:07:16: Sure!

00:07:16: If the machine can review complex merger agreement in seconds flag a missing fiduciary provision.

00:07:22: apply senior-level legal judgment.

00:07:25: Are human M&A advisors about be outsourced?

00:07:27: Like if AI does heavy lifting of modeling and diligence what is it actually getting paid for?

00:07:32: It's The Logical Quotient.

00:07:34: But Stefan Freudl provided a really crucial counter perspective here.

00:07:38: He drew a hard line between analysis and execution,

00:07:41: okay?

00:07:42: An AI can write a beautiful target profile it can parse a thousand diligence documents in the data room And it can draft an investment memo.

00:07:51: what he cannot do is realize that a critical financing work stream hasn't moved forward In two weeks because of mid-level banker Is actively avoiding at difficult conversation.

00:08:00: Ah, so it's the cat herding aspect of getting a deal over the finish line.

00:08:05: Cat herding?

00:08:06: Timeline management?

00:08:07: Navigating human friction?

00:08:08: Yeah.

00:08:08: Steven noted that a buy-side process involves roughly two hundred interconnected tasks.

00:08:13: deals almost never die because financial analysis took too long.

00:08:17: they died.

00:08:17: in execution They

00:08:18: stall out on soft blockers

00:08:20: Exactly!

00:08:21: Execution requires human oversight holding people accountable and managing delicate psychology.

00:08:26: with complex transaction AI has zero emotional intelligence.

00:08:30: That makes total sense, and I mean if AI can't replace the human element of execution it definitely cannot replace the Human Element of sourcing.

00:08:37: No

00:08:37: way!

00:08:38: Which leads us to the front end of The Deal where psychology is quite literally everything.

00:08:43: Patrick Bauer shared this statistic.

00:08:45: out of a hundred business owners they spoke to ninety-eight actively did not want a competitive bidding process

00:08:51: which completely rewrites the traditional investment banking playbook.

00:08:54: It really does

00:09:00: Right?

00:09:01: You mandate an advisor, run a broad auction pit buyers against each other and the highest price wins.

00:09:08: But Patrick points out that for a founder selling their life's work valuation is often secondary to emotional weight of decision.

00:09:15: Yeah they're agonizing over things like who takes over my legacy?

00:09:18: what happens with employees?

00:09:21: Christian Deer-West are built on this beautifully.

00:09:24: He pointed out that proprietary deal flow is entirely about owner psychology, most owners aren't just sitting around waiting to sell.

00:09:31: they're busy operating right?

00:09:32: They might just need to hear from the right buyer at the exact right moment and they need to implicitly trust that buyer.

00:09:38: And Jan Steinbesser made a brilliant connection here.

00:09:41: regarding the limits of AI in sourcing.

00:09:44: Sure AI can scrape the web and build you along list of a thousand targets in five minutes But when you dialed the phone The AI can't speak for you.

00:09:52: No, when an owner picks up they know within thirty seconds if You genuinely understand the nuance of their industry or If your just reading off a generic CRM script.

00:10:02: trust cannot be automated.

00:10:04: Yeah,

00:10:04: we often hear people compare deal sourcing to farming versus hunting but I actually think a better way to look at it is tuning a radio to the right frequency.

00:10:14: oh

00:10:14: i like

00:10:14: that.

00:10:15: you can't just shout louder.

00:10:16: to make a seller here.

00:10:17: you have to be broadcasting exactly what they care about at the exact moment they decide to turn the dial.

00:10:22: Brandon

00:10:23: Hall shared a story that perfectly illustrates that radio metaphor.

00:10:26: he reached out to a twenty million dollar business owner in april.

00:10:32: absolute silence.

00:10:34: Right, and in most CRMs that lead gets marked as cold and abandoned.

00:10:38: but late June so two-and a half months later the owner suddenly emailed back saying they were ready to move forward

00:10:44: because during those two-a-half months they were dealing with the emotional reality of succession planning.

00:10:52: They were talking to their spouse, looking at their retirement horizon maybe quietly testing their management team...they are operating on a human timeline not a buyer's quarterly KPI schedule.

00:11:05: Patience and consistent low-pressure follow up is what actually separate successful proprietary outreach from failure.

00:11:13: you have to be there when they're finally ready

00:11:17: The seller is ready and you sit down at the table.

00:11:20: That deep human psychology now has to translate into cold financial reality,

00:11:25: right?

00:11:25: The math has to work!

00:11:28: And Victor Lubov pointed out a massive pervasive misconception in how our industry talks about valuation structuring.

00:11:36: people constantly throw around EBITDA multiples as if they're the starting point of a negotiation.

00:11:41: like we pay five bytes EBITTA for this type of business

00:11:45: which is backwards

00:11:46: exactly.

00:11:47: Victor reminds us that an EBITDA multiple is actually output, not a starting point.

00:11:51: This such of vital distinction for anyone structuring the deal.

00:11:55: Sophisticated buyers don't just pull a multiple out thin air.

00:11:59: they build complex financial model from ground up.

00:12:02: They analyze projected free cash flow calculate target's dead capacity based on current interest rates

00:12:07: Factor in their required internal rate return.

00:12:09: They figure out the absolute maximum enterprise value they can pay to hit their hurdle rate.

00:12:14: And only after all that heavy mechanical math is done, do they divide that final number by the EBITDA to get a multiple?

00:12:20: The multiple's just a shorthand summary of massive underlying equation

00:12:24: Which means two businesses with exact same EBITTA can trade at wildly different multiples based on their underlying capital structure and cash conversion cycles.

00:12:31: Precisely.

00:12:32: And speaking of the mechanics evaluation, Don Gray highlighted the often overlooked bridge between enterprise value and equity value.

00:12:40: I mean enterprise value is the sexy headline number for the press release but equity value Is the actual cash a seller takes home?

00:12:48: Those two can be vastly different.

00:12:50: The transition from enterprise to equity value is where a lot of founders get really nasty surprise at the closing table because the buyer will adjust the purchase price based on working capital targets and debt-like items.

00:13:04: Let's explain how that work in capital peg actually functions, because it is crucial.

00:13:08: Imagine a founder thinks they sold their business for fifty million?

00:13:12: But the buyer looks at working capital.

00:13:14: The cash tied up in inventory and accounts receivable needed just to keep the lights on, it says wait your inventory is depleted?

00:13:20: And you have a mountain of unpaid vendor invoices.

00:13:23: You're three million dollars short of your historical working capital average.

00:13:26: Yeah That three-million dollar deficit doesn't just disappear...the buyer deducts it dollar for dollar from the founder's final check.

00:13:34: So suddenly the fifty million headline becomes a forty seven million reality and the structure of the target's cap table can make that reality even harsher.

00:13:45: Anders Forfang issued a stark warning to founders about stacked liquidation preferences.

00:13:50: Oh, this is a trap!

00:13:52: A huge trap... He pointed out that raising venture capital at a thirty X-to fifty X revenue multiple only to sell later at five x-to eightx multiple could completely destroy the founder's economics.

00:14:03: Yeah, I want to break down the mechanics of a stacked liquidation preference just to be clear on how bad this gets.

00:14:08: When you raise capital at a sky high valuation investors usually secure a preference meaning if the company is sold they get one X or sometimes two X their money back before anyone else sees a dime right.

00:14:19: so If market cools and exit valuation drops significantly The entire proceeds might go towards satisfying those investor preferences which is what the founder holds gets wiped out entirely.

00:14:32: The Founder works for ten years, sells a company and walks away with zero.

00:14:35: Exactly!

00:14:36: The math is unforgiving...the time to run your downside exit modeling before you sign your next term sheet not when looking for buyers.

00:14:43: Seriously?

00:14:44: But even when structural math does work negotiations often stall over tiny irrational gaps.

00:14:51: Justin Pine shared an amazing story about bridging a valuation gap when emotions run hot.

00:14:56: Oh, the ten dollar store?

00:14:58: Yes

00:14:59: He was in a negotiation that was completely deadlocked over a trivial amount literally ten dollars Mm-hmm.

00:15:05: he leaned into this tough guy persona and made an aggressive zero sum demand for The money and his counterpart paused.

00:15:12: And instead of fighting back or defending his position you reframe the entire problem.

00:15:16: You said how about we each take four dollars and we give two dollars to charity.

00:15:20: That is a brilliant psychological pivot.

00:15:22: It immediately dismantles the binary win-lose dynamic.

00:15:25: Completely The trap.

00:15:26: Justin Fellon too was thinking, there's no even way to split ten dollars.

00:15:30: so I have to win and he has to lose!

00:15:32: His counterpart zoomed out and changed rules of game.

00:15:35: In M&A.

00:15:36: it is easy for sellers to dig in Buyers to Dig In Attorneys To Dig In.

00:15:40: Everyone

00:15:40: builds a fortress

00:15:41: Exactly, but deals actually close when someone possesses the emotional intelligence to ask what if we look at this differently?

00:15:49: Reframing The Problem is a far more powerful deal-making skill than brute forcing up position.

00:15:55: Which brings us to A Reality Check.

00:15:58: You've built the trust.

00:15:59: you bridge the valuation gap that contract has signed But value Is never created At the signing table.

00:16:05: no it's Created or destroyed during due diligence and post merger integration Or PMI.

00:16:12: And right now, the structural fragility we discussed earlier means The Diligence Bar is higher than ever.

00:16:17: Yeah Anthony Caparino noted that showing strong historical performance alone just isn't enough anymore.

00:16:22: Buyers are demanding concrete proof of revenue durability and margin sustainability.

00:16:26: They need to see a value creation plan That can actually withstand a recession

00:16:30: In cross-border deals... ...the operational execution risk amplifies that need for rigorous diligence.

00:16:36: Elizabeth Andrews uses the phrase, measure twice cut once.

00:16:39: A classic!

00:16:40: Right.

00:16:40: but she warn's that most expensive mistakes happen when buyers rush to execute a complex multi-country step plan without checking fundamental entity health first.

00:16:49: Oh for sure imagine you're executing global roll up.

00:16:53: You push forward aggressively, only to realize halfway through that an entity in Italy isn't in good standing with local tax authorities or a planned merger sequence in Germany legally conflicts within asset transfer in France.

00:17:06: Ouch!

00:17:06: Right?

00:17:07: You aren't just delayed—you are unraveling weeks of expensive legal work and risking compliance breaches.

00:17:13: Upfront diligence saves you from the fire drill later...

00:17:17: But diligence can't be strictly limited to legal and financial checklists….

00:17:21: Professor Vlatka Ariyana Flupik argues that cultural diligence must happen early in the process.

00:17:27: Yeah,

00:17:27: culture isn't a late-stage HR consideration.

00:17:30: Exactly or convenient excuse to explain why an integration failed two years down the line.

00:17:35: You need cultural insight early enough to shape actual deal terms and integration planning

00:17:40: Because when integration falls apart it's almost always failure of leadership.

00:17:45: Thomas H. Kessler made a really profound point about leadership during PMI, he said the most dangerous leader in an integration isn't the loud aggressive one.

00:17:53: it's The One who stops listening.

00:17:55: that's powerful.

00:17:56: right when incumbent leaders treat their own perspective as the full story Blind spots grow exponentially and trust across the newly merged teams just declines.

00:18:07: any shared A brilliant rule for integration staffing first-rate people select First-rate People.

00:18:12: Second-rate people protect legacy titles and their own comfort.

00:18:16: They surround themselves with mediocrity so they aren't threatened.

00:18:20: Choosing the right leaders immediately after a transaction isn't just an administrative exercise.

00:18:26: It is these single most important C level decision you will make because it dictates The entire trajectory of the merged company.

00:18:33: And once you have those first rate people in place, You have to protect them from burnout Soil.

00:18:37: Jimma shared an incredibly practical rule for integration capacity.

00:18:41: He was discussing a carve-out where the acquirer tried to roll out two hundred and sixty five value creation projects across a bench of just eighty middle managers,

00:18:50: which is operational suicide.

00:18:52: totally human brain has hard cognitive limits.

00:18:55: so Hale points out that managers can only realistically absorb point five extra initiatives on top of an existing workload.

00:19:01: That makes a lot of sense.

00:19:02: Think about the mechanics of what an integration demands.

00:19:05: A manager has to run their core function, hit their daily KPIs and manage their team.

00:19:11: Now you're asking them learn a new software system Align with corporate reporting structure and harmonize product line.

00:19:19: Every context switch drains cognitive battery.

00:19:22: If you assign full one point extra project Balls start dropping and their core functions collapses

00:19:28: Exactly.

00:19:29: Point five means they can only handle partial, tightly scoped integration tasks.

00:19:33: If you treat human capacity as a stretch goal your grand integration plan will fail upon contact with reality.

00:19:40: Math and relentless focus are what actually save integrations.

00:19:44: Speaking of unglamorous details that can wreck an integration Koshmeti highlighted something hyper specific but critical for banking M&A the customer master file.

00:19:52: Oh yeah Regional banks have been highly acquisitive lately, inheriting multiple core systems and massive amounts of overlapping customer data.

00:20:01: Cosh points out that mapping a well-governed customer master file is the single most critical tool for bank integration.

00:20:06: Why's

00:20:06: it senatoriously difficult though?

00:20:08: Because different banks categorize data differently.

00:20:11: Bank A might list a client as John Doe LLC And Bank B lists them as Doe Enterprises.

00:20:19: If your data architecture can't cleanly match incoming customer data with your existing population, you end up with duplicate records.

00:20:27: Which creates massive compliance and anti-money laundering risks.

00:20:30: Exactly!

00:20:31: It's not just annoying for the customer.

00:20:33: Data teams need to be in a room before the deal closes architecting that map Not treated as cleanup crew afterward.

00:20:39: That makes total sense.

00:20:41: So we've navigated the bifurcated macro market, the AI revolution in diligence.

00:20:45: The delicate psychology of proprietary sourcing... ...the rigorous math of structuring and hard realities of cultural and operational integration Which

00:20:53: leaves us with a pretty fascinating paradox to consider.

00:20:56: Let's

00:20:56: hear it!

00:20:57: If AI is rapidly commoditizing the technical side our industry Instantly reviewing contracts, flagging missing provisions and generating complex financial models.

00:21:06: And if proprietary sourcing in successful integration rely almost entirely on empathy patients an understanding human psychology will the M&A advisor of the future look less like a spreadsheet wizard?

00:21:18: An more likely specialized executive therapist?

00:21:21: If you enjoy this episode new episodes drop every two weeks.

00:21:24: also check out our other additions on private equity venture capital and strategy and consulting.