Best of LinkedIn: M&A Insights CW 33/ 34

00:00:00: provided by Thomas Allgaier and Frenus, based on the most relevant LinkedIn posts about M&A insights in calendar weeks thirty-three and thirty four.

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00:00:32: so imagine running a seven hundred forty-seven million dollar transaction and deciding you just don't need Wow, right.

00:00:41: I mean that's exactly what CVC capital just did and it is absolutely sending shockwaves through you know traditional advisory firms.

00:00:47: Yeah We are definitely diving into the raw reality of M&A today setting the expectations here.

00:00:51: we're unpacking The top trends dominating professional networks Right now so from the actual mechanics of AI driven deal making to Macro capital flows in even deep niche roll-ups.

00:01:02: yeah.

00:01:02: And that cvc deal.

00:01:03: i mean It's the perfect place to start.

00:01:05: We're seeing this intense collision right at the beginning of the deal lifecycle, it's pure speed and new tech just crashing into traditional relationship-heavy advisory model.

00:01:16: Absolutely There was a fantastic point raised recently by Keegan Caldwell about exactly this Compressed deal.

00:01:23: timelines are fundamentally redefining how buyers have to evaluate risk.

00:01:28: Right due diligence is accelerating breakneck pace.

00:01:31: Exactly, and to put the mechanics of that speed into perspective let's look at that massive example you just mentioned which was broken down by Jeremy B Hill.

00:01:39: so CVC Capital.

00:01:40: they've got a hundred eighty billion under management and they sold a Greek e-commerce company to Blackstone for seven hundred forty seven million.

00:01:48: And

00:01:48: no sell side bankers?

00:01:49: None

00:01:50: no coverage teams at all.

00:01:51: They completely bypassed the traditional playbook, I mean instead of standard information memorandums or you know heavily managed management presentations buyers were just given access to a data portal and it was equipped with a real-time AI chatbot trained on the company's financial diligence.

00:02:06: that's wild yeah.

00:02:08: so any complex issues we're just routed into the management team directly

00:02:11: to management.

00:02:11: yet CBC kept roughly nine million in advisory fees they would have normally paid out.

00:02:17: Nine

00:02:18: million, wow!

00:02:19: I mean i look at that and think of the AI as this infinitely fast data room clerk like a clerk can organize ten thousand PDFs.

00:02:28: five seconds you know.

00:02:29: index every lease agreement flag missing signatures sure but a clerk cannot tell you if the target company c-suite secretly hates each other or if the culture is toxic enough to trigger a mass exit as post-close.

00:02:41: Right

00:02:42: So, If a chatbot's doing financial Q&A The liability and narrative control shift entirely into management team?

00:02:48: I guess this question does make traditional advisors obsolete?

00:02:53: Or just force them upmarket?

00:02:56: Well it overblown.

00:02:58: AI is undoubtedly automating the data structuring, sure.

00:03:02: But if we look at the insights from her Expringer... ...the underlying fundamentals of what makes an asset attractive haven't changed a bit.

00:03:08: Acquirers are still deploying capital to capture hard-to-rebuild customer relationships.

00:03:13: you know deeply embedded operational workflows and proprietary datasets

00:03:17: Right!

00:03:18: And AI might accelerate Reading a data room, but it doesn't generate the enterprise value inside.

00:03:23: Exactly and Mary Joyce brought up a crucial layer to this.

00:03:26: She pointed out that possessing data is not a moat.

00:03:29: The true structural mode comes from owning the actual process through which that data Is transformed into strategic decisions?

00:03:36: That

00:03:36: makes a lot of sense

00:03:37: And we see that reality reflected in the market data too.

00:03:40: Brian Pinto shared a recent Deloitte survey of five hundred deal makers and it found ninety percent Jenny I adoption across M&A activities.

00:03:47: Wow, ninety percent.

00:03:48: Yeah But the overwhelming consensus from that same group is that human judgment remains irreplaceable You know for the actual nuances of negotiations structural risk assessment things like that

00:03:59: Which means navigating this accelerated environment requires just an absurd amount of human preparation.

00:04:06: You can't just unleash a Gen AI tool onto a sloppy unstructured data room and expect to clean diligence report.

00:04:11: Oh, absolutely

00:04:12: not!

00:04:12: Take a look at the strategy Kiesan Patel highlighted from Jeremy Segal.

00:04:16: He regularly executes a thirty-day close.

00:04:20: Thirty days is incredibly fast Right

00:04:22: And closing in thirty days only works through aggressive pre-LOI front loading.

00:04:27: He demands one page question set An anonymized employee census a full financial pack, an evaluation model before exclusivity is even granted.

00:04:37: So the speed is entirely earned before the clock ever starts?

00:04:40: Exactly!

00:04:41: But that preparation gap is incredibly dangerous particularly for cell-side founders.

00:04:46: Yeah, Tula Khan or Demi made a brilliant observation about this.

00:04:48: information asymmetry heavily punishes first time.

00:04:51: sellers think about it.

00:04:53: A private equity fund has executed dozens of transactions This year alone.

00:04:57: they know exactly which EBITDA add backs will hold up under quality of earning scrutiny and how to legally structure earnouts to protect their downside.

00:05:06: The seller, on the other hand is usually doing this for the very first

00:05:09: time.".

00:05:09: That structural disadvantage is huge!

00:05:12: It's why Anna Rusathia argues that closing a PE deal effectively now requires ten or more specialist advisors—you've got tax environmental risk legal operational diligence.

00:05:23: you just can't afford to get blindsided on a nine-figure exit because

00:05:28: Founders are definitely waking up to this, but you know their criteria for hiring those advisors is shifting.

00:05:34: Brian Dukes points out that founders no longer just want bankers trained on generic financial frameworks.

00:05:39: What're

00:05:39: they looking for now?

00:05:40: They demand advisors with actual sector operating experience people who have built scaled and exited businesses in the highly specific industry.

00:05:48: The days of winning a mandate through warm text intro are largely over

00:05:52: Especially high stakes arenas Like the creator economy, where valuations routinely cross the one hundred million threshold.

00:06:00: Chris Rumin notes that formal bake-offs are completely replacing old network driven handshakes.

00:06:06: Boards and banks are literally flying in for intense live presentations.

00:06:11: It all circles back to exit readiness.

00:06:13: Carrie Rabishah Yassir Gadid out in Dubai And Jake Tobin down in Florida have all been hammering this identical warning.

00:06:22: Readiness gaps destroy enterprise value long before a teaser is ever drafted.

00:06:26: Right, weak documentation unresolved tax exposures or business that relies entirely on the owner's personal relationships.

00:06:34: That's going to cost you dearly at the negotiation table

00:06:36: And profitability does not equal readiness.

00:06:39: Joshua Novick shared perfect example of this.

00:06:41: He pointed out that a sellable business doesn't just mean good business.

00:06:44: It means there an active pool buyers right now willing pay your clearing price.

00:06:49: Didn't he mention specific restaurant chain?

00:06:51: Yeah, he actually had to turn down a mandate for a highly profitable restaurant chain generating one point five million euros in EBITDA.

00:06:59: Just because the buyer universe of that specific asset class was dormant!

00:07:02: That is a bitter pill for a founder to swallow.

00:07:06: but Kai Hesselman warns that letting ego drive the process and refusing to accept realistic valuation early on often leads to catastrophic alternative which is liquidation.

00:07:17: Yeah, when you factor in paying out severance unwinding commercial leases and auctioning off machinery for a fraction of book value liquidation almost always costs far more than simply taking that initially done.

00:07:29: appointing M&A offer.

00:07:30: So the tactical question becomes how do you maximize leverage to avoid that scenario?

00:07:35: Michael J Blankenship advocates for the engineered exit.

00:07:38: so preparing a dual track IPO in parallel with the m&a process interesting it physically creates The competitive tension required to force financial sponsors to pay a premium.

00:07:47: But see, if speed and preparation dictate the process.

00:07:51: What happens when buyers get blinded by the momentum of winning that deal?

00:07:55: Because all this hyper prep in competitive tension from dual track IPOs creates a massive trap on the buy side.

00:08:02: That brings us to valuation traps And diligence blind spots.

00:08:06: It's huge issue.

00:08:07: I mean there is a staggering statistic floating around right now From Addisela Ajibola.

00:08:11: losing bidders often outperform the winners in the long run.

00:08:14: Wait, really?

00:08:16: Yeah and furthermore only thirty percent of strategic acquisitions actually hit their internal performance targets.

00:08:22: wait so The secret to M&A is just losing the auction.

00:08:25: like how do we avoid the winner's curse?

00:08:26: well Michael Rosenberg hits this perfectly.

00:08:29: post-close decisions protecting culture retaining talent they matter far more than whether you paid seven X or eight X EBITDA Right.

00:08:38: You can negotiate a flawless entry price and completely destroy the value within six months of integration.

00:08:44: Furthermore, focusing purely on EBITDA during diligence could be a dangerous illusion anyway.

00:08:48: Oh absolutely

00:08:49: Armando Zucali highlighted a fascinating breakdown of the luxury group OTB's financials

00:08:54: The fashion group right?

00:08:55: Exactly So.

00:08:56: they reported a two hundred thirty seven point three million euro EBITTA Which sounds incredibly healthy But their actual EBIT earnings before interest in taxes was just ten point one million.

00:09:09: Wow,

00:09:10: Just ten million?

00:09:11: Yeah

00:09:11: that is a massive gap!

00:09:13: You can't pay your senior debt service with theoretical EBITDA you pay it with actual cash flow.

00:09:17: if That Gap Is Driven by Depreciation or Massive Exceptional Items It Fundamentally Questions How Much Real Operating Leverage You Actually Acquire.

00:09:25: and it is those hidden operational realities that ruin closings Cabot Earl flags for specific reasons.

00:09:32: Working capital becomes a massive dispute right before the wire hits, it's usually undefined targets in the LOI.

00:09:38: If you don't nail down exact calculation mechanics early You're guaranteed to six-figure argument that can derail entire timeline.

00:09:45: And finance is just one minefield.

00:09:46: Technical and legal blind spots are equally fatal.

00:09:49: Richard G emphasizes that deep technical due diligence is what actually determines project bankability for lenders.

00:09:54: And Robert Plotkin warns that ignoring a patent portfolio until the LOI stage guarantees risk discounts and warranty exposure, plus Joris Kirsten notes that it targets CAPEX.

00:10:06: policy nuances drastically impact long-term value creation.

00:10:11: But if we're talking about pure deal breakers, nothing blows up in integration quite like IT.

00:10:16: Martina Trojakova breaks IT carveouts into three very distinct species.

00:10:21: Let

00:10:22: me guess none of them are fun?

00:10:23: Well there's the nice carve out where systems are already independent.

00:10:26: Okay that's not bad.

00:10:27: Then there's the spaghetti carve out where the target is deeply technologically entangled with its parent company and The build it carve-out, Where the buyer literally lacks the infrastructure to house.

00:10:38: Oh man

00:10:39: She warns that signing a TSA A transitional services agreement without mapping That underlying IT architecture Is operational suicide Right

00:10:48: before we look at how To actually integrate these companies Without breaking them.

00:10:51: Just a quick reminder to subscribe to the feed So you don't miss our upcoming deep dives Into PE value creation exit strategies.

00:10:58: Because once the ink is dry and you've somehow survived that IT carve out, or you execute a hybrid rebrand.

00:11:29: And whatever path you choose, Steven Patscott adds that HR leaders must follow five golden rules for navigating cultural

00:11:35: tension."

00:11:35: But when get the alignment right it is incredibly powerful.

00:11:39: Genelabber pointed out that ASMPT's NenexX divestment to applied materials succeeded entirely because of deep mutual trust and cultural alignment.

00:11:47: Yeah...that was textbook win!

00:11:49: but let me ask here this is seamless integration?

00:11:50: just myth?

00:11:51: yeah Is ever that peaceful?

00:11:53: Honestly It's often brutal.

00:11:55: We have to acknowledge the human cost here.

00:11:58: Jack Schwunghau reports that Sanofi is cutting two hundred and twenty-nine blueprint medicines jobs post their nine point one billion dollar acquisition just To reprioritize pipeline assets,

00:12:10: that's rough.

00:12:10: And it's not just headcount.

00:12:12: Archie Samson notes That The Big Four Consulting Arms which rebuilt aggressively via M&A are now facing intense regulatory pressure to divest again.

00:12:21: Wow which is why Frank Aquila reminds us to be aware of survivorship bias.

00:12:25: We constantly study the unicorn's finish line rather than the initial market conditions that made them successful in first

00:12:31: place.".

00:12:31: Exactly,

00:12:32: so we've looked at micro level.

00:12:33: integrating single companies now let zoom out into macro data where strategic capital actually flowing globally?

00:12:40: The volume trends are fascinating.

00:12:42: Despite high funding costs, Mitch Berlin, Tim Creasy and Josh Putnam showed that acquisition premiums are incredibly stable across decades.

00:12:49: Buyers haven't reset their willingness to pay for premium assets?

00:12:52: Not at all!

00:12:53: Cape Haldesey reports UK in-gon public M&A has doubled to seventy seven billion dollars And Tarun Agarwal notes India's deal value rose eighteen percent to a hundred twenty three point eight billion even as deal volume fell.

00:13:07: Bigger Beals

00:13:07: Exactly Plus, Brad Watson highlights strong momentum in the Mene region.

00:13:12: When we spotlight sector-specific multiples The picture gets really sharp.

00:13:16: Dirk Solmer notes, saw steals are clearing at a four point zero x median multiple with vertical saws taking market share.

00:13:22: And outside of software

00:13:24: Natalie Ohana points out that industrials are quietly holding twenty percent of global M&A deal volume.

00:13:29: and in life sciences Kyla Huchik reveals biotechs are increasingly using reverse mergers.

00:13:34: we've seen seventeen this year nearly rivaling the nineteen traditional IPOs.

00:13:38: but there is no sector running hotter right now than cybersecurity.

00:13:41: Cole Grolmes' flag sire has unprecedented one billion dollar acquisition of Oasis security.

00:13:46: That's an estimated fifty x to a hundred X AR multiple for five-year old buyer.

00:13:50: A hundred times ARR, that is just wild!

00:13:53: Dominic Perry tracked a hundred July cyberdeals worth roughly four billion dollars and Eric McAlpine notes strategic now drive eighty six percent of Cyber M&A.

00:14:04: But Pramod Gosavi highlights Fortinet's unique strategy here.

00:14:08: Oh, what are they doing?

00:14:09: Instead of paying massive venture premiums They buy distressed low revenue assets with strong tech and integrate them into their own distribution engine.

00:14:17: It's a totally different playbook.

00:14:19: I love that.

00:14:20: And you see this massive consolidation across the board.

00:14:23: We've seen a wave of landmark mega deals just to show market breadth.

00:14:27: Julie Stanley highlighted Grant Thornton buying CBIZ for five billion.

00:14:32: Natasha Mescurran has covered Stripe acquiring Open Router for over seven billion, and Phillips Matthew noted the twenty-one billion euro merger between Saipim and Subsea Seven is facing EU pushback.

00:14:43: Plus Alistair Matchett covered Goldman Sachs buying LCN Capital for four hundred ten million.

00:14:48: And The regional movements are just as fast.

00:14:50: Antoine Dabini, Alan Sheehan & Richard Denney discussed Deloitte advising on a nine hundred million Euro BMC Kings Band deal along with the Vittag transaction.

00:14:59: Wait, what about Brentag?

00:15:00: Weren't they doing something in South Korea?

00:15:02: Yeah.

00:15:02: Gus Desmond noted Brentag acquiring Woojin and Doug Woodburn covered Red Squids B Corp MSP acquisitions.

00:15:10: Martin Gallus shared Maguire Capital taking a stake In Schlafener Heis.

00:15:15: And if you want context for all this Reza Zahiri looked at Medtronic's targeted M&A history to show how these cycles play out.

00:15:22: You know, it's easy to get lost in billions and tech multiples but massive wealth and scale are being generated quietly in the lower middle market.

00:15:30: Right?

00:15:30: The main street roll-ups.

00:15:31: Ben Kelly broke down acquiring a one point two million dollar car wash with an SBA seven A loan.

00:15:37: he used ninety percent debt and investor for that ten percent down allowing him operated.

00:15:42: generate cash flow was zero personal capital

00:15:44: incredible leverage.

00:15:46: yeah It sounds like no money down commercial real estate flipping.

00:15:48: but is the risk profile wildly different?

00:15:50: It requires relentless operational execution for sure.

00:15:53: But Adam Coffey shared a similar leverage story, one million in equity to buy four million insurance agency that eventually sold for twelve million.

00:16:00: and Greg Headnotes operators are buying industrial businesses at eight X-to-twelve X EBITDA heavily utilizing twenty to thirty percent earnouts.

00:16:08: Private Equity recognizes the arbitrage here.

00:16:11: Joe Lewin notes that fifteen platforms backed by firms like Blackstone and Carlisle have quietly bought over four hundred eighty fire safety businesses.

00:16:19: Yet no platform has crossed the Atlantic yet!

00:16:22: Right,

00:16:22: furthermore Robert Johnson highlights that M&A isn't just an exit minority.

00:16:26: business enterprises are using it as a disciplined path to scale...and a brief nod to community making all this happen.

00:16:33: Josh Calderon's Bicide mandates, Ryan Berning's Southside closes.

00:16:37: David Bishop's Gray does deal and Jean-Christophe Urgoyen.

00:16:41: new bicide M&A practice

00:16:42: Plus all the events driving this

00:16:44: Exactly!

00:16:45: The Becker Bicides Summit with Jeff Aplan Martin Boroscoe & Michael Bartels.

00:16:49: Crossborder ACC Events hosted by David Edgar And Ermer F. Gevins Nurbergring.

00:16:54: M&a Networking so much momentum.

00:16:56: You know, we started by talking about AI running a seven hundred and forty-seven million dollar transaction without a banker but ended up with the unautomated reality of fire safety inspections in specialized car washes.

00:17:06: as AI commoditizes the process of deal making The true premium in M&A will shift entirely to niche gritty operational expertise.

00:17:14: If you enjoyed this deep dive new deep dives drop every two weeks.

00:17:18: Also check out our other editions on PE Value creation PE exit strategies, venture capital private equity fundraising and strategy in consulting.

00:17:27: Thanks for listening.

00:17:28: don't forget to subscribe!