Best of LinkedIn: M&A Insights CW 09/ 10

00:00:00: Provided by Thomas Allgeier and Frenes, based on the most relevant posts on LinkedIn about M&A insights from CW.

00:00:06: nine-and-ten.

00:00:07: Frennes is a B to B market research company supporting M& A consultancies with the Market & Competition perspective for example in commercial due diligence's.

00:00:17: Welcome to a tailored deep dive designed specifically for you.

00:00:20: Yeah,

00:00:20: You the professional who is Navigating The really fast-paced world of strategy private equity venture capital and consulting exactly

00:00:29: We are cutting through all the noise out there To bring you the top M&A trends

00:00:33: And we extracted these directly from the most relevant LinkedIn insights From calendar weeks.

00:00:39: nine in ten

00:00:39: right so you can expect us smart Really no fluff conversation today.

00:00:44: We're covering deal execution the impact of AI which is huge right now shifting capital flows and The critical human side of transactions because

00:00:52: the overarching theme across all our sources this week Is that the market?

00:00:55: It's recovering,

00:00:56: but it has become ruthlessly selective completely.

00:00:59: I mean the days of growth at all costs driving these really quick sales.

00:01:03: those are over

00:01:04: yeah firmly behind us Which actually brings us to our first team Beale execution and this massive shift in market selectivity.

00:01:12: Right, and Khaled Azar shared some really critical observations on this recently.

00:01:16: Oh yeah his post was fascinating.

00:01:18: It

00:01:18: was he was looking at the data And noted a hard shift that started back In The Q for twenty-twenty five.

00:01:25: Market

00:01:26: right multiples compressing across the board

00:01:28: Yeah.

00:01:29: But even more importantly exit timelines have stretched by

00:01:31: like fifteen to twenty percent rate

00:01:33: exactly fifteen To twenty percent longer than historical averages.

00:01:37: Buyers are just exhaustively stress testing everything.

00:01:40: I mean, they're looking at financial models customer contracts team depth even code quality

00:01:45: Yeah with a level of scrutiny that simply wasn't there a few years ago

00:01:49: because buyers Are basically asking you know what's in it for me?

00:01:53: and They are demanding proof

00:01:55: right.

00:01:55: the key takeaway from azar is that EBITDA margins an operational profitability Now definitively beat pure revenue growth.

00:02:03: It's what buyers prioritize now.

00:02:05: Clean financials are no longer optional.

00:02:07: They're

00:02:07: absolute table stakes,

00:02:09: which honestly reminds me of Paul if Croman's post he gave this really blunt reality check for sellers.

00:02:14: Oh the price or terms thing?

00:02:15: Yeah

00:02:16: He said price or Terms.

00:02:18: No one gets both.

00:02:20: That is such a stark way to put

00:02:21: it.

00:02:21: But, its true right.

00:02:22: if the seller comes to table still expecting those massive valuations from previous cycles and they insist on that high price... They

00:02:29: have to be flexible in terms?

00:02:30: Exactly!

00:02:31: They have accept things like sellers notes or complex earn-outs Or

00:02:35: rollover stock in buyers vehicle.

00:02:37: Right you don't get clean all cash exit at premium prices anymore.

00:02:42: The risk profile for exiting founder has fundamentally changed.

00:02:46: It

00:02:46: really does.

00:02:47: And this intense selectivity is also impacting specific deal structures.

00:02:52: Like carve-outs?

00:02:53: Yes!

00:02:53: Dylan Roberts had a great point about the massive underestimation of carve outs right now.

00:02:58: Buyers love to look at a carve out as just, you know...a discounted asset.

00:03:02: Right but Roberts points that a carveout isn't only small acquisition It's building from scratch.

00:03:07: Yeah

00:03:08: it's an entirely different operational beast.

00:03:10: Exactly There are no existing HR No localized payroll No defined culture.

00:03:17: So the people risk is exponentially higher.

00:03:19: You have to stand up a new employer completely from zero

00:03:24: and Standard integration playbooks just collapse under that weight.

00:03:27: We're actually

00:03:28: seeing this exact same rigorous risk up Underwriting show-up in specific sectors, too like

00:03:33: and life sciences.

00:03:34: Yes

00:03:35: Sebastian likes Gaff day Anderson posted some data on this.

00:03:38: That perfectly illustrates the new reality.

00:03:40: late stage assets are dominating right completely

00:03:42: dominating while early-stage companies Especially those in phase I clinical trials They are Just facing a brutal exit environment.

00:03:50: And it's not because Early Stage science is suddenly less innovative.

00:03:53: No, it's all about how buyers are pricing risk.

00:03:56: Right?

00:03:56: Faizeye generates a lot of excitement but doesn't generate conviction.

00:04:00: Exactly!

00:04:01: The risk-of clinical failure is simply too hard for buyers to accurately model and price right now.

00:04:06: So they just pay premiums on the certainty of late stage commercialization

00:04:10: Which transitions us nicely into our next major cluster.

00:04:14: Because across the finish line today you need clean financials And a risk profile that buyer can confidently map in a spreadsheet

00:04:22: And AI is fundamentally rewiring how those spreadsheets are built.

00:04:26: Right,

00:04:27: AI in M&A from sourcing to software valuations.

00:04:30: This isn't just about acquiring AI companies.

00:04:33: It's about AI changing the deal-making process itself.

00:04:36: Kai Hesselman had a really interesting take on this.

00:04:39: A very counter-intuitive angle.

00:04:40: Yeah, because everyone is so anxious about AI taking M&A jobs Exactly.

00:04:45: But Hesselmen argues that AI isn't taking M & A jobs.

00:04:47: It's actually giving professionals their profession back.

00:04:50: That's great way to phrase it Right!

00:04:52: Because by automating all of the brutal bureaucracy The data rooms...the buyer matching AI Freeze up time

00:04:58: Time for most critical element of deal

00:05:01: Building human trust.

00:05:02: Exactly Getting the buyer and seller aligned requires intense, face-to-face relationship building.

00:05:09: AI handles the heavy lifting so you can actually do

00:05:11: that.".

00:05:11: And efficiency gains are just wild!

00:05:14: Nikolay Lazarov shared some hard metrics on this... Oh

00:05:17: from Ila AI his AI native advisory.

00:05:20: Yes

00:05:20: The numbers were striking.

00:05:22: They used automated buyer identification to overhaul their outreach

00:05:26: Surfacing hundreds of buyers based on synergies and deal history Right

00:05:29: And doing it in a fraction of usual time.

00:05:32: Lazerov reported their fee pipeline surged to fourteen million euros.

00:05:38: That is incredible, right?

00:05:40: It proves that embedding AI into advisory work isn't just a gimmick it's a massive competitive advantage.

00:05:46: but then we have to flip the perspective from AI as tool to AI as target

00:05:51: because thats an entirely different conversation.

00:05:53: Moritz Otakurkin noted that software M&A is highly selective.

00:05:56: now

00:05:57: People assume if you have an AI feature get premium multiple

00:06:00: But buyers are smarter than them.

00:06:02: Otakurken points out that AI actually lowers the barrier to entry for software development.

00:06:06: Because anyone can use large language models quickly replicate your core features

00:06:10: Exactly, so you're code is no longer a defensible mode

00:06:13: Which means proprietary datasets are THE REAL MOTE If your software sits on unique embedded data.

00:06:19: that feeds the AI.

00:06:20: That's what acquirers want

00:06:22: And this technological shift is forcing a massive change in how software's priced too.

00:06:27: Eckhart Issel talked about it at the M&A Excellence days?

00:06:30: Right,

00:06:30: he observed that we are moving away from traditional seat based pricing

00:06:35: Where you just pay fixed license fee per user

00:06:37: Exactly.

00:06:39: Now were moving toward outcome-based pricing charging for actual value generated, like leads in a CRM or compute power consumed.

00:06:48: And that radically changes how private equity firms have to underwrite software valuations?

00:06:53: Completely!

00:06:54: Building a discounted cash flow model is an entirely different exercise.

00:06:58: when revenue is tied to variable usage instead of fixed-sauce licenses

00:07:02: You have to underestimate the actually utility of tool.

00:07:04: Exactly So with all these complexities and software valuation it makes you wonder where money's going Right.

00:07:10: Theme three, capital flows and sector spotlights.

00:07:13: Where is the money actually flowing right now?

00:07:15: Well Joey Hagner highlighted that RIA Space Registered Investment Advisors.

00:07:19: it's booming!

00:07:27: But the interesting part is where that capital specifically went.

00:07:30: It heavily favored pure independent RIAs over hybrid advisors.

00:07:35: Right,

00:07:36: institutional capital kind of left the hybrid models behind

00:07:39: and it ties back to what we said earlier about risk in modeling

00:07:41: because Pure RIA's are simply easier for PE firms to model on a spreadsheet.

00:07:46: The regulatory complexities of hybrid models introduce variables That are just too hard to forecast

00:07:51: And in this elective market investors pay a premium.

00:07:55: Scalable business models.

00:07:56: We're seeing huge numbers in other specific sectors too, like sports tech.

00:08:00: Malcolm Lemons reported on that didn't he?

00:08:02: Yes

00:08:02: staggering number is one hundred fifty six billion dollars and M&A transactions across over four hundred and fifty deals In twenty-twenty

00:08:10: five.

00:08:11: Wow Yeah major acquirers like Huddle & Teamworks are just leading this massive consolidation charge

00:08:17: Which shows how fast a niche can mature when the tech becomes indispensable

00:08:21: totally.

00:08:21: And then you have cybersecurity.

00:08:23: Dino B had a quick rapid fire stat on this.

00:08:26: Oh right, just in the month of February twenty-twenty six alone

00:08:29: The sector saw hundred and eight transactions totaling one point seven billion dollars.

00:08:34: That is just wild for a single month across financing an M&A.

00:08:40: It just proves that mission critical niches assets essential For security are completely defying any broader market sluggishness.

00:08:47: Buyers will always find capital for things they deem existentially necessary Always.

00:08:52: But behind all these billions of dollars and the automated pipelines... The reality

00:08:56: remains, that transactions are executed by people.

00:08:59: Which brings us to our final —and maybe most— discussed theme.

00:09:03: across all the sources….

00:09:04: …the human side of deals – leadership culture and succession.

00:09:08: Right.

00:09:09: Thomas H. Kessler presented a really powerful thesis on this.

00:09:12: He said numbers may close the deal but people determine whether value is realized.

00:09:17: That perfectly captures it, he emphasizes that human-centric leadership Is a tangible value driver not just as soft factor.

00:09:24: specifically He highlighted the strengths women bring to stabilizing organizations under pressure clear judgment transparent communication

00:09:31: The exact traits you need during a post merger integration

00:09:34: and his advice To CEOs is that People readiness needs to be treated with the exact same rigor As financial readiness During due diligence.

00:09:42: Eva Davis expanded on this, too.

00:09:44: She advocates for a systemic shift in how female talent is supported and M&A

00:09:48: Moving from passive mentorship to active sponsorship

00:09:52: Exactly pulling women into the most meaningful conversations And deal negotiations.

00:09:57: Sponsorship changes the structural dynamic because The most consequential decisions happen behind closed doors.

00:10:04: In that level of inclusion directly impacts a firm's ability to navigate complex cultural integrations later on.

00:10:11: Speaking of complex integrations, Christina Horry brought up fascinating organizational perspective to this.

00:10:17: She noted that in these transactions attention is the scarcest resource.

00:10:22: I love that phrasing.

00:10:23: deals don't fail because The Integration Office lacked playbook.

00:10:26: They fail because executive attention is directed at the wrong things.

00:10:30: Right,

00:10:30: successful integration means understanding the HR engine behind performance

00:10:35: Finding where value actually originates in the target company's culture

00:10:38: And proactively identifying where it might leak during transition.

00:10:42: That focus on where value originates is driving another huge trend.

00:10:46: we saw The

00:10:47: massive wave of SME successions

00:10:51: and the rise of ETA entrepreneurship through acquisition.

00:10:54: Search funds are getting a lot.

00:11:01: He noted that ETA is about taking real entrepreneurial responsibility.

00:11:07: It's individuals putting their own risk on the line to preserve the culture of these mid-sized companies

00:11:12: And there is a very specific structural market inefficiency driving this right now.

00:11:17: Severnay Borch identified it perfectly

00:11:19: The financial sweet spot.

00:11:20: Right, the three hundred thousand to nine hundred thousand euro EBITDA range

00:11:24: Its massive highly lucrative gap.

00:11:27: Institutional PE usually looks for targets with at least two million in EBITDA.

00:11:31: And traditional backsearch funds need around one point five million to justify the overhead,

00:11:36: leaving this incredible hunting ground for dedicated self-funded searchers.

00:11:40: these businesses are fundamentally sound often run by retiring founders but they're just too small for institutional PE.

00:11:47: so these ETA buyers face less competition get more realistic multiples and can scale a great business.

00:11:53: it's a fascinating dynamic Synthesizing all of this from Coladesar's deal timelines to the ETA sweet spot, what is mandate for listener right now?

00:12:05: To thrive in environment you have operate at intersection of ruthless financial selectivity and deep human empathy.

00:12:12: You really do!

00:12:13: You need leverage AI handle heavy lifting due diligence but must rely on your judgment navigate complex cultural integration carve outs successions

00:12:25: Because that human judgment is what actually dictates whether a deal succeeds or fails.

00:12:29: Exactly!

00:12:30: So we want to leave you with the final, slightly provocative thought-to ponder as you look at your own Deal Pipeline this week.

00:12:36: Let's

00:12:36: hear it...

00:12:37: If AI completely commoditizes financial modeling and target screening processes and ETA models democratize the ability to buy company?

00:12:45: will the most successful M&A professional of twenty thirty looks less like traditional investment banker than more like behavioral psychologist?

00:12:52: That is a very interesting way to look at the future of advisory

00:13:06: work.