Best of LinkedIn: M&A Insights CW 37/ 38

00:00:00: Provided by Thomas Allgaier and Frenes, based on the most relevant LinkedIn posts about M&A insights in calendar weeks thirty-seven and thirty eight.

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

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00:00:32: So imagine spending a hundred thirty years just, you know meticulously building this massive global industrial empire right requiring countless companies dominating multiple sectors and then one morning because that is exactly what's happening in the market right now.

00:00:51: And, uh... In this deep dive our mission is to basically dispel this massive wave of recent M&A insights down to what strategy and investments professionals actually need to know.

00:01:00: like right now We aren't just looking at the raw numbers we're you-know-we are looking at underlying pressure points on global markets.

00:01:07: Exactly!

00:01:09: To really understand those pressure point we will track entire life cycle how capital moving.

00:01:16: So we'll start by looking at how corporations are fundamentally rethinking their core identity, then track exactly where they're deploying their capital.

00:01:24: Dig into the hidden friction of actually getting deals closed and finally look what happens on day one of integration?

00:01:30: Oh for sure!

00:01:31: Especially with AI.

00:01:32: Exactly

00:01:32: especially now that AIs completely rewiring how deal makers operate.

00:01:37: but before we get to where money is going We have to look at companies structurally thinking about growth because the era of the bloated conglomerate is just, it's ending.

00:01:48: Agility and niche dominance are actually beating pure

00:01:50: scale.".

00:01:51: Which brings us to this really fascinating breakdown by Murt Dem Lapinar.

00:01:55: he highlighted how big food is bifurcating in real time.

00:01:58: like look at Unilever right?

00:01:59: They're combining their foods division with McCormick in this massive uh forty four point eight billion dollar deal.

00:02:07: yeah but why?

00:02:08: It's not to get bigger in food... Exit the category entirely so they can become a pure play home and personal care business.

00:02:15: Oh, wow!

00:02:16: Right?

00:02:16: Meanwhile you have Denone buying Hewell for one point two billion And Ferrero is acquiring purely Elizabeth.

00:02:24: wait Ferrero like The chocolate company They're buying a healthy granola brand.

00:02:29: Yeah

00:02:29: exactly because they are aggressively trying to dominate.

00:02:33: the better for you Hellfile.

00:02:35: And, The core driver behind that shift is GLP-One Demand?

00:02:39: You know like Osempic?

00:02:41: Oh of course!

00:02:41: Yeah it's completely altering long term cash flow projections For traditional snacks.

00:02:46: He just...you can't be a general food company anymore.

00:02:48: Right..You cant hedge your bets.

00:02:49: You really have to pick a lane.

00:02:51: and speaking of picking a lane That brings us back To the ultimate unbundling example from Reza Zahiri.

00:02:56: I mentioned tearing down an empire earlier.

00:02:58: he was talking about GE.

00:03:00: Alright!

00:03:01: GE

00:03:02: Yeah, they just ended.

00:03:03: their hundred and thirty year acquisition led conglomerate history with this incredibly disciplined three-way breakup.

00:03:10: Aerospace, Vernova & Healthcare.

00:03:13: And the lesson there is that courage to buy Just has to be matched by the courage to sell.

00:03:19: But that raises a really tough question though I mean if these massive companies are breaking apart Is organic growth dead?

00:03:26: Or scale still somehow necessary for survival?

00:03:29: Well, it's a great question.

00:03:30: And Jan Portman actually provided a perfect counter example to explain this.

00:03:34: he looked at a robotics startup that used M&A simply by purchasing scale and supplier relationships overnight

00:03:41: was smart.

00:03:42: right because of the small robotics company tries to build manufacturing volume organically.

00:03:47: they're stuck.

00:03:47: They can't get cheap parts without volume, and they cant' get volume without cheap parts.

00:03:51: Yeah it's a chicken & egg thing.

00:03:52: Exactly So.

00:03:53: by acquiring another firm that just bypassed years of grinding It proves M&A's core advantage is pure speed over organic growth

00:04:01: Which totally explains why deal activity remains so robust despite all the geopolitical unrest.

00:04:06: I mean Chase Bice broke down The latest PWC deals update and Jorge Peres Havia talked about the CMS European M&A outlook for twenty-twenty seven.

00:04:15: Both of them confirmed that optimism is high especially in regions like Spain and Portugal.

00:04:20: So if companies are hyper focused on speed, you know very specific niches.

00:04:26: Where exactly is a capital flowing?

00:04:28: Well, the defense sector is a huge one.

00:04:30: Kevin Kochi points out that capital is rushing towards scale specifically in shipbuilding and autonomy startups.

00:04:35: you have Hanwa buying Ostall and Lockheed buying Ultra because single product autonomy start-ups are super vulnerable right?

00:04:42: They don't have the cash runway to wait for government procurement cycles.

00:04:45: so M&A is literally their only credible path

00:04:48: to scale.

00:04:48: And Josh Donnelly noted a similar thing with the Stratedge sale to ARXIS.

00:04:53: Yeah!

00:04:53: While Defense has consolidated You also have this massive tech and digital wave.

00:04:57: like Marcel Van Oost broke down Stripes' twenty-thousand largest deal, seven billion dollars for the AI model Gateway Open Router.

00:05:04: Seven

00:05:04: billion?

00:05:05: Wow!

00:05:05: Yeah.

00:05:06: and then Blake Madden flagged some really intense behavioral health consolidation.

00:05:11: Sword Health just made a three hundred million dollar cash acquisition of Headspace.

00:05:16: It's wild.

00:05:17: And by the way if you want to keep tracking where this capital flows next quarter make sure your subscribed future deep dives.

00:05:24: Definitely hit subscribe, but I want to trade off some really quick examples here because it's not just the mega caps.

00:05:30: The breadth of cross-border deals is huge like Frank Salosi advising PPC Group on Hungarian solar Oh

00:05:37: yeah.

00:05:38: and Custis Nicolopoulos On Macquarie's Sero generation sale right?

00:05:42: And Daniel Farmash on Strabag buying Bernica

00:05:45: Marcus Rosen on ex partners entering Germany

00:05:48: Aiden Walsh on Alpha core adding streamlined family office

00:05:51: Ryan burning on sensor selling to CSI

00:05:53: And Jeff Zendani on the law firm, William Heath joining Judge and Priestly.

00:05:57: I mean...the market breath is just everywhere!

00:06:00: It really is.

00:06:01: but you know it's interesting.

00:06:02: because of actual structure these deals are changing.

00:06:05: Taberbee Benedict explains that reverse mergers no longer just IPO alternatives.

00:06:10: Wait, really?

00:06:10: What are they using them for then.

00:06:12: They're using them as tools to get public stocks specifically as acquisition currency.

00:06:16: it's a strategic move and Ross McNaughton noted that biotech boards are currently weighing whether to reopen IPO windows or just go for strategic sales.

00:06:25: but

00:06:25: I mean all of this carries massive risk And Audrecy highlighted a jaw-dropping scenario This week.

00:06:32: Novartis spent twelve billion dollars buying avidity But they just lost nearly thirty billion in market value after one failed drug trial.

00:06:43: It's insane, and it raises huge board level questions about how capital allocation is measured.

00:06:48: Patrick Dunn even added that boards are heavily testing M&A capacity competence in control right now because of stuff like this.

00:06:54: I mean they have to.

00:06:55: And just around out the market view we saw some really quick insights globally Panagiotis-Criorus ranking top nine European merchant acquirers.

00:07:03: James Creech highlighting creator economy capitol flowing into Paris.

00:07:07: Oh he says Yeah!

00:07:08: And New York F Gosney winning deal for prospect medical and astrona.

00:07:12: Julian Riedelbauer advising RYSM founders on a management buyout.

00:07:17: Right, and John Matthews presenting at the Jersey City Tech Walk Alexandra Krakowsky A. Simone's launching new valuation playbook And Eli Gross discussing Brad Jacobs lessons from over five hundred deals.

00:07:31: Five Hundred Deals is just.

00:07:32: I can't even fathom that!

00:07:35: But okay, knowing where the capital is flowing as one thing actually getting a deal structured Negotiated and closed.

00:07:41: Is where most of the friction lies?

00:07:42: Oh absolutely James Gosling introduced this concept of The Silver Tsunami.

00:07:47: Millions are retiring UK baby boomers or flooding the SME market

00:07:51: but Clinton Lee bluntly warns that Most of these are just their unsellable jobs not businesses.

00:07:57: right

00:07:57: exactly?

00:07:58: But why is that?

00:07:59: well

00:08:00: Hurwitz-Bringer explains that founder dependence across critical functions, like revenue and decisions is the biggest exit risk.

00:08:06: If the founder does everything you aren't buying a business You're just buying their daily to do list right?

00:08:11: And Professor Joe Mahoney adds that in consulting boutiques over reliance on star employees actually Depresses valuation multiples

00:08:18: really because you'd think Star talent would increase the value.

00:08:21: you it thinks so but they need codified operational IT instead.

00:08:26: if The star walks out the door the value goes with them.

00:08:30: John Seuss emphasizes that valuations, like his four-step Toronto framework rely on highly defensible data.

00:08:37: Yeah and it makes sense.

00:08:38: And Brian Dukes notes that stepping a sell side quality of earnings review is really costly mistake.

00:08:44: So with all the friction what actually gets a stubborn seller to sign the LOI?

00:08:49: Well Eli Albrecht shared this golden rule A direct reference from prior sellers as single most powerful tool.

00:08:55: you have period

00:08:57: Just talking to someone who already sold them.

00:08:59: Exactly, human trust.

00:09:01: But then even after the LOI there are all these execution traps.

00:09:05: William Harrell uses a brilliant hiking analogy for this.

00:09:08: Unstated assumptions about pace and priority create massive avoidable missteps.

00:09:13: in deals You know like running down a hill because you think the other person wants to go fast And you end up twisting your ankle.

00:09:19: Oh

00:09:19: that's such good way of putting

00:09:21: it.

00:09:21: And Frank Aquila demands an end to vague meetings for this exact reason.

00:09:26: Momentum requires a named owner and hard deadline.

00:09:29: Agri Wasman also insists that M&A negotiations have to advance on clarity in facts, not just pressure or threats.

00:09:36: But then you have distressed scenarios right?

00:09:38: Paula Strickland highlights that in an accelerated sale, the CFO's duty shifts instantly to creditors.

00:09:44: The short-term cash forecast becomes the actual deal deadline.

00:09:48: Wow so the calendar just goes out of window?

00:09:50: Completely.

00:09:51: and Arter's Everts adds quietly change.

00:09:59: Yeah, that's terrifying.

00:10:01: and just a quick roundup of some other deal mechanics.

00:10:04: Kai Hesselman notes that classic auctions often fail with US software buyers.

00:10:08: Lindsay M. Wendler points out that earnouts in working capital really dictate the economics.

00:10:12: yeah

00:10:12: an Aaron Pinagore reminds us that earn outs trigger fixed installment sale tax consequences.

00:10:17: right.

00:10:18: Bethany Winsby highlights tax due diligence risks.

00:10:22: Pat Linden expands on the strategic role in MMA disputes post-closing.

00:10:26: Rhys Hennigson notes the extreme need for buy-side sourcing speed right now.

00:10:31: And Juliet Oskowski points out, The rising NDA works low burdens.

00:10:35: and of course Mike Funk reminds us that simply showing up at dealership still really matters.

00:10:40: It always does.

00:10:41: but let's say the LOI assigned the deal closes.

00:10:44: as we know That is literally just a starting line.

00:10:46: who actually captures value?

00:10:48: Yeah.

00:10:48: Francine D warns of this frontline disconnect, deals fail at the front desk when associates lack system access and clear workflows.

00:10:56: Jeffrey Tan echoes that cost synergies only happen through ground level execution right?

00:11:01: And Maryam Huss points out that integration fatigue peaks around month six which is right when advisors leave in data ownership dispute surface.

00:11:08: So who was actually supposed to manage all these?

00:11:11: isn't the CFO?

00:11:12: Well, Tobias Herrmann gives a reality check there.

00:11:14: The CFO has to own the financial outcome – cash and synergies.

00:11:18: but you need dedicated integration.

00:11:20: lead Andreller and Hessel Castro note that integration must be an institutionalized capability.

00:11:29: Like Avons, they migrated twenty-one countries by remaining flexible on committed dates... ...and just renegotiating conditions when they had

00:11:36: to.".

00:11:36: Yeah

00:11:37: you have to be adaptable!

00:11:38: On the human capital side Denise Libertro talks about building career level crosswalks so merging structures actually align.

00:11:45: Andy LaRae says You create buy in through transparency of non negotiables but you grant local implementation ownership.

00:11:52: Oh, like that.

00:11:52: Yeah

00:11:53: Christian Stapleton stresses involving brokers at the LOI to prevent employee benefits disruption and carveouts.

00:12:00: Michael Bartels focuses on retaining producers in staffing acquisitions.

00:12:04: Paul McCann says you have to invest early in change management.

00:12:07: Absolutely Amanda Cooper Bembo is building a middle-market human capital ecosystem.

00:12:11: Paul F Crone notes business owners face The seven stages of M&A grief And Carl Friedrich Heinz reminds us that IT acts as either a pure cost line or massive value driver in carveouts.

00:12:22: It's

00:12:22: so much to manage!

00:12:24: But the way we execute these integrations and deals themselves is changing fundamentally because of AI.

00:12:29: Oh completely, Hans Steinweiler points out first passes through our data room.

00:12:33: now take days instead weeks.

00:12:35: Jen's Hanwald notes AI is just an everyday reality now.

00:12:39: I mean, when Pope even hosted a Microsoft deal hackathon mixing AI tools with human judgment...

00:12:45: And the origination shift is huge too!

00:12:47: Alexandra Van Lair uses this moneyball analogy.

00:12:50: M&A needs continuous AI-driven data infrastructure to scout targets.

00:12:55: Ryan Vice already using AI driven buyer identification for his new advisory firm.

00:12:59: Wow Yeah.

00:13:01: and Rob Cantt notes that interest in m&a tech adoption has exploded which all these next-gen M&A events globally.

00:13:07: But, okay if AI does the research and modeling sweeping data rooms what happens to the junior?

00:13:12: Well Lenny Foe & Albert Kahl say Junior hiring now prioritizes reliability composure and trust over raw modeling skills.

00:13:19: Interesting Judgment is irreplaceable.

00:13:21: you have know how.

00:13:21: deploy the AI manage the Dunning Kruger trap where think machine perfect but it's not in spot when the AI just flat out wrong.

00:13:29: We spend so much time worrying about whether AI will replace the dealmaker, but the real takeaway from this massive stack of insights is that technology's just stripping away the busy work.

00:13:39: Yeah exactly

00:13:40: Whether it's managing a frontline integration or communicating unstated assumptions Or just knowing when to walk away from a deal The future of M&A relies entirely on human judgment and trust.

00:13:52: AI can build the model But It Can't Earn the Clients Trust for You.

00:13:56: If you enjoyed this episode, new episodes drop every two weeks.

00:13:59: Also check out our other editions on PE value creation pe exit strategies venture capital private equity fundraising and strategy in consulting.

00:14:08: Thank you so much for joining us on the steep dive And don't forget to hit subscribe.

00:14:12: So never miss an update.

00:14:13: see next time.