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Best of LinkedIn: M&A Insights CW 45/ 46 · Best of LinkedIn: Strategy, M&A & Investments

• 0:00
  Speaker 0: Provided by Thomas Allgaier and Frennus, based on the most relevant posts on LinkedIn about M&A Insights and CW-FourFiveFourSix, Frennus is a B-to-B market research company supporting M&A consultancies with the market and competition perspective, for example, in commercial due diligence.
• 0:15
  Speaker 0: This edition is brought to you by our partner Dealeroom.
• 0:18
  Speaker 0: Help shape their state of M&A's twenty-twenty-six report by taking their survey.
• 0:22
  Speaker 0: This is your chance to share how you approach sourcing, diligence, and integration, and see how your experience compares to peers.
• 0:28
  Speaker 0: Find the link to the survey in the description.
• 0:32
  Speaker 1: Welcome to the deep dive.
• 0:34
  Speaker 1: Our mission today is pretty laser focused.
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  Speaker 1: We're diving into all the intelligence shared across LinkedIn over the last two weeks or so.
• 0:40
  Speaker 1: The M&A insights that, you know, corporate development, private equity, VC, and consulting professionals really need to be acting on now.
• 0:47
  Speaker 1: We're just going to cut straight through the noise.
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  Speaker 0: And it's necessary because the volume of material is just, it's dense.
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  Speaker 0: We're seeing this, this critical blend of high level macro perdition.
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  Speaker 1: Like is the market actually back?
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  Speaker 1: Exactly.
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  Speaker 1: That, right alongside these really tactical in-the-weeds execution details that, you know, determine whether a deal even survives the first eighteen months, we're here to connect those dots for you.
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  Speaker 1: Okay,
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  Speaker 0: let's start there.
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  Speaker 0: Let's unpack that macro pulse first.
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  Speaker 0: Is the deal environment actually shifting from, you know, that defensive crouch back to forward momentum?
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  Speaker 1: The consensus is a pretty definitive yes.
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  Speaker 1: I mean, top deal makers like Michael Simons and Mitch Berlin are signaling a clear positive outlook.
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  Speaker 0: So it's not just
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  Speaker 1: talk?
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  Speaker 1: No, we're seeing actual expectations for a twenty twenty five M&A value rising and then projections for twenty twenty six volumes, especially mega deals to climb even further.
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  Speaker 1: And
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  Speaker 0: what's driving that?
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  Speaker 0: Is it just pent up demand or are the underlying financial mechanics getting better?
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  Speaker 1: It seems to be the latter.
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  Speaker 1: Lower funding costs are starting to make the models work again.
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  Speaker 1: which explains why cross-border M&A, and this was noted by Mikal Kants and Gabriel Huaz, actually hit a five-year high.
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  Speaker 0: Five-year high, even with all the geopolitical stuff?
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  Speaker 1: Yeah, despite all of that, it seems the pressure to deploy capital globally is just overcoming that perceived risk.
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  Speaker 0: And that pressure, it isn't just generic, right?
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  Speaker 0: It's being deployed with extreme precision into certain sectors.
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  Speaker 0: We saw some pretty big surges recently.
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  Speaker 0: Absolutely.
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  Speaker 1: Take health care services.
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  Speaker 1: Nathan Hempleman highlighted a massive five hundred and fifty percent surge in M&A deal value in just the first half of twenty
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  Speaker 0: twenty
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  Speaker 1: five.
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  Speaker 1: Wow.
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  Speaker 1: But the key strategic takeaway here is the shift in investor priority.
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  Speaker 1: It's not just about chasing pure growth at any cost anymore.
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  Speaker 0: It's about efficiency.
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  Speaker 1: It's all about efficiency, passive productivity, and clear cash conversion.
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  Speaker 1: That's where capital is going.
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  Speaker 0: That focus on efficiency.
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  Speaker 0: You can see it even in mature European markets.
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  Speaker 0: Jackie Enneke pointed out that European banking M&A is being driven by the sector's, well, it's overcapitalization.
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  Speaker 0: Right.
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  Speaker 0: And specifically, the simplification of Basel III, that key regulatory framework, is unlocking a lot of capacity for these banks to consolidate.
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  Speaker 1: So they're basically being forced to get leaner to target better return on equity.
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  Speaker 1: Exactly.
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  Speaker 1: And we're seeing similar platform plays in European telcos.
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  Speaker 1: Dr.
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  Speaker 1: Stephanie Wiegener detailed this.
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  Speaker 1: M&A there is not just about domestic consolidation for scale.
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  Speaker 1: It's more
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  Speaker 0: strategic.
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  Speaker 1: Much more.
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  Speaker 1: It's about infrastructure-centric deals, like fiber carveouts or JVs.
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  Speaker 1: And these adjacency moves into high-growth areas like cybersecurity.
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  Speaker 1: They have to diversify.
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  Speaker 0: And even in a booming sector like renewables, the risk profile is being tweaked.
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  Speaker 0: Liam H noted a really crucial shift toward asset-level acquisitions.
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  Speaker 1: OK, so why is that?
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  Speaker 0: Well, institutional capital, it prefers buying ready-to-build or already operational.
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  Speaker 0: assets, it just mitigates so much of that development and permitting risk.
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  Speaker 0: So you
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  Speaker 1: get a much clearer return profile from day one.
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  Speaker 0: A much clearer profile, it's a safer bet.
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  Speaker 1: It's also worth highlighting the dynamic in tech and AI.
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  Speaker 1: Laurent Houserman reported a massive eighty three percent drop in U.S.
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  Speaker 1: cybersecurity M&A deal value in Q to twenty twenty five.
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  Speaker 1: Eighty
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  Speaker 0: three percent, that suggests extreme caution.
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  Speaker 1: It does.
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  Speaker 1: And yet the financing deal count actually went up, which suggests that early stage investment is still really strong.
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  Speaker 0: That feels like a contradiction, huge caution on the big deals, but still funding innovation.
• 4:19
  Speaker 0: How do we square that?
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  Speaker 1: It could signal a kind of polarization.
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  Speaker 1: The market is super cautious about overpaying for mid-market scale, but still highly interested in pre-integration innovation.
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  Speaker 1: But then, Mike Previtt shared that the Google Wiz deal was approved by the DOJ, and that's being seen as a potential green light.
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  Speaker 0: the floodgates opening for twenty twenty six
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  Speaker 1: potentially.
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  Speaker 1: yeah.
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  Speaker 1: the market is waiting for these regulatory signals before it unleashes that next wave of mega deals.
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  Speaker 0: that's a fascinating snapshot but you know speed and high valuations they don't matter if you drop the ball on execution
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  Speaker 1: right
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  Speaker 0: which brings us to integration.
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  Speaker 0: Lars Ikenroth and Estela Jantokanova reminded us that what, seventy percent of M&A deals famously fail to deliver their expected value.
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  Speaker 1: And if that value thesis collapses, it's almost always because of what was missed in cultural due diligence.
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  Speaker 1: Hany Bader and Brian Ralph really stress that people in culture quality are decisive.
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  Speaker 0: The numbers here are just, they're astounding.
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  Speaker 0: They highlight a huge liability.
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  Speaker 0: Ebony, Simone, Morton X shared that ninety-five percent of executives agree culture fit is critical.
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  Speaker 1: Ninety-five percent.
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  Speaker 1: But only
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  Speaker 0: twenty-two point six percent actually perform cultural due diligence.
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  Speaker 1: That gap, that ninety-five to twenty-two percent gap, it's basically M&A malpractice.
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  Speaker 1: We spend months on balance sheets and legal clauses.
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  Speaker 0: But we skip the one thing that causes seventy-five percent of key personnel to leave within three years.
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  Speaker 1: Exactly.
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  Speaker 1: It's catastrophic value destruction just walking out the door.
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  Speaker 0: So if you do manage to on to your people, Steve Nunn offered three pretty straightforward approaches for boosting integration success.
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  Speaker 0: Okay.
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  Speaker 0: First, be prepared to over communicate.
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  Speaker 0: You have to address those cultural misalignments.
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  Speaker 0: Second, you have to balance priorities, deliver synergies, and keep the lights on.
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  Speaker 1: Maintain business as usual.
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  Speaker 0: And third, pace yourself.
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  Speaker 0: He says speed without adequate resources just leads to chaos.
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  Speaker 1: And we also need to recognize those external factors during integration.
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  Speaker 1: Alexis Chevalier flagged inflation and macro volatility as huge distorting factors.
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  Speaker 0: Right.
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  Speaker 0: So your assumptions are out of date almost immediately.
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  Speaker 1: They're obsolete.
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  Speaker 1: Synergy assumptions, he argues, need to be recalibrated pretty much every ninety days to maintain any kind of deal resilience.
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  Speaker 0: And you can't overlook that granular operational detail.
• 6:33
  Speaker 0: Paul Kohn gave a fantastic example of this.
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  Speaker 0: Mapping the engineering change process during diligence led to finding a thirty-two million dollar penalty clause risk.
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  Speaker 1: Wow.
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  Speaker 1: A risk that was just completely missed by the financial and legal teams.
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  Speaker 0: Completely.
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  Speaker 0: Because they lacked that ground level operational perspective.
• 6:52
  Speaker 1: In that example, it just reinforces what Dwayne Weaking was saying.
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  Speaker 1: Every single acquisition now is fundamentally a technology acquisition.
• 6:59
  Speaker 0: A tech acquisition, right?
• 7:00
  Speaker 1: Boards have to apply a digital transformation lens early.
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  Speaker 1: Indiligence.
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  Speaker 1: If the systems and data can't scale together, the value thesis just collapses no matter what price you paid.
• 7:10
  Speaker 0: Okay, let's shift gears completely.
• 7:12
  Speaker 0: Let's talk about the sell side.
• 7:14
  Speaker 0: For founders looking for an exit, there's a real dose of reality here, moving from the exit fantasy to exit engineering.
• 7:21
  Speaker 0: Mohana
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  Speaker 1: Balani's data is the cold shower on that fantasy.
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  Speaker 1: The reality is, ninety-six percent of M&A deals are valued below five hundred million.
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  Speaker 1: And
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  Speaker 0: most founders don't get a clean break.
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  Speaker 1: Not at all.
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  Speaker 1: The kicker is that seventy-three percent now include earn-out provisions.
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  Speaker 1: That often locks founders in for over three years.
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  Speaker 1: Signing isn't the end, it's just the beginning of the lockup.
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  Speaker 0: Which means deal.
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  Speaker 0: readiness is everything.
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  Speaker 0: Luke Patzold and Brian Duke stressed this.
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  Speaker 0: Buyers are just so wary of red flags.
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  Speaker 1: Like what?
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  Speaker 0: Fragmented data, shifting KPIs, operations that just feel like a black box.
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  Speaker 0: Trust is built when the business makes its operations obvious.
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  Speaker 1: I thought Allison Dent and Greg Head summarized the founder trap just perfectly.
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  Speaker 1: So many profitable businesses failed to sell for one reason.
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  Speaker 0: The founder is the business.
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  Speaker 1: The founder is the rainmaker or the operational core.
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  Speaker 1: Buyers are not paying for a job to inherit.
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  Speaker 1: They want a replicable system that works without the founder's heroics.
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  Speaker 0: So if your business depends only on your individual genius, you're the liability, not the asset.
• 8:25
  Speaker 0: Ouch.
• 8:26
  Speaker 0: But true.
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  Speaker 0: And when you do find a buyer, that first negotiation is critical.
• 8:30
  Speaker 0: The letter of intent.
• 8:32
  Speaker 0: Cat lends in cautions against treating the LOI like a formality.
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  Speaker 1: Right, because that's when the leverage quietly flips to the buyer.
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  Speaker 0: Exactly.
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  Speaker 0: Amad Al Khalil underscored the non-binding myth here.
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  Speaker 1: I mean, the purchase price might be non-binding, but so many other key clauses are.
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  Speaker 1: They
• 8:48
  Speaker 0: are legally binding.
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  Speaker 0: Exclusivity, confidentiality, expense provisions, they all have to be scrutinized just as much as the final contract.
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  Speaker 0: Mismanage the LOI and you could sink the deal.
• 8:59
  Speaker 1: And the risk assessment has to be quantitative.
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  Speaker 1: Edward Lind provided a metric that is... Pretty sobering.
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  Speaker 1: It does.
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  Speaker 1: Losing just twenty percent of your revenue because of high customer concentration can drop your EBITDA by almost forty percent.
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  Speaker 1: Forty
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  Speaker 0: percent because of operating leverage and fixed costs.
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  Speaker 1: Yep.
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  Speaker 1: And buyers price that vulnerability in heavily.
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  Speaker 1: And Scott Weevill and Mary Joyce remind us that even seemingly small things, weak churn metrics, poorly managed working capital, can stall or reprice a deal late in the game.
• 9:28
  Speaker 0: Okay, finally, let's talk about how deals are being engineered creatively when the traditional methods just fail.
• 9:40
  Speaker 1: over the headline price.
• 9:42
  Speaker 1: They'll pay a premium for an asset that closes a specific strategic gap for them.
• 9:46
  Speaker 0: Whether that's proprietary automation or regulatory moat.
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  Speaker 1: Or even just embedded specialist talent.
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  Speaker 1: And achieving that fit, it often requires some structural creativity.
• 9:56
  Speaker 1: Tom Dylan shared a great example of a deal that stalled because bank financing fell through.
• 10:00
  Speaker 0: And they saved it.
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  Speaker 0: how?
• 10:01
  Speaker 1: They restructured the whole thing.
• 10:02
  Speaker 1: They used seller financing.
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  Speaker 1: combined with performance-tied equity, it aligned everyone's incentives and just got the deal done.
• 10:09
  Speaker 0: And valuation itself, it's still a blend of science and, well, psychology.
• 10:15
  Speaker 0: Tullohaner Demi and Andre Wassmann emphasize that while models like DCF, they define a price range.
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  Speaker 1: The final sticker price is often determined by market dynamics and pure necessity, like a PE fund that just has to deploy capital.
• 10:28
  Speaker 0: Or strategic buyer who absolutely needs the asset to keep their market share.
• 10:31
  Speaker 1: And we're also seeing innovative tools manage transaction risk now.
• 10:35
  Speaker 1: Bradley Glatt noted that reps and warranties insurance, RWI, it's no longer a luxury.
• 10:42
  Speaker 1: It's a crucial tool for shifting risk away from the negotiating table.
• 10:45
  Speaker 1: And
• 10:46
  Speaker 0: Prince Santani highlighted how IP-backed financing is starting to revolutionize capital access by leveraging intangible assets.
• 10:54
  Speaker 1: Which is where so much of the hidden deal value is today.
• 10:57
  Speaker 1: Right.
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  Speaker 1: One last point on how acquirers are structuring themselves internally.
• 11:01
  Speaker 1: Umar F. Govind noted that corporate M&A teams are actually shrinking.
• 11:05
  Speaker 0: Cost pressures.
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  Speaker 1: Exactly.
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  Speaker 1: It's forcing leaner core teams.
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  Speaker 1: And Peter Zinkseacher recommends that the best acquirers operate with an octopus-like deal committee distributing intelligence across the business units.
• 11:16
  Speaker 0: So, decentralized knowledge, but centralized authority.
• 11:19
  Speaker 0: Faster, more accurate decisions.
• 11:21
  Speaker 0: Yes,
• 11:21
  Speaker 1: the idea.
• 11:22
  Speaker 0: That need for speed and accuracy, it brings us to our final thought for you to carry forward.
• 11:26
  Speaker 0: This comes from Dirk Salmer's insight for founders.
• 11:29
  Speaker 0: If a potential buyer says, come back when X is done, that is almost always just a polite no.
• 11:34
  Speaker 0: Buyers with genuine strategic interest, they act with urgency.
• 11:39
  Speaker 0: So don't restructure your entire roadmap waiting for one lukewarm suitor to
• 11:44
  Speaker 1: maybe,
• 11:44
  Speaker 0: possibly, shift their strategy.
• 11:47
  Speaker 1: The principle there is really clear.
• 11:49
  Speaker 1: Focus on building a sustainable, ready to sell system that you can actually control, rather than tailoring your business for a single, uncertain exit.
• 11:57
  Speaker 1: That's a great principle to carry forward.
• 11:59
  Speaker 0: If you enjoyed this episode, new episodes drop every two weeks.
• 12:02
  Speaker 0: Also, check out our other editions on private equity, venture capital, and strategy and consulting.
• 12:06
  Speaker 1: Thanks for joining us on this deep dive into the M&A source material from CW-forty-five and forty-six.
• 12:12
  Speaker 1: Those insights on cultural diligence and founder readiness were particularly telling.
• 12:17
  Speaker 0: Subscribe and keep learning.
• 12:18
  Speaker 0: We'll see you next time.