Latest / Best of LinkedIn: Strategy, M&A & Investments / Best of LinkedIn: M&A Insights CW 09/ 10

Transcript

Best of LinkedIn: M&A Insights CW 09/ 10 · Best of LinkedIn: Strategy, M&A & Investments

• 0:00
  Speaker 0: Provided by Thomas Allgeier and Frenes, based on the most relevant posts on LinkedIn about M&A insights from CW.
• 0:06
  Speaker 0: nine-and-ten.
• 0:07
  Speaker 0: 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.
• 0:17
  Speaker 1: Welcome to a tailored deep dive designed specifically for you.
• 0:20
  Speaker 1: Yeah,
• 0:20
  Speaker 0: You the professional who is Navigating The really fast-paced world of strategy private equity venture capital and consulting exactly
• 0:29
  Speaker 1: We are cutting through all the noise out there To bring you the top M&A trends
• 0:33
  Speaker 0: And we extracted these directly from the most relevant LinkedIn insights From calendar weeks.
• 0:39
  Speaker 0: nine in ten
• 0:39
  Speaker 1: right so you can expect us smart Really no fluff conversation today.
• 0:44
  Speaker 0: 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
• 0:52
  Speaker 1: the overarching theme across all our sources this week Is that the market?
• 0:55
  Speaker 1: It's recovering,
• 0:56
  Speaker 0: but it has become ruthlessly selective completely.
• 0:59
  Speaker 1: I mean the days of growth at all costs driving these really quick sales.
• 1:03
  Speaker 1: those are over
• 1:04
  Speaker 0: yeah firmly behind us Which actually brings us to our first team Beale execution and this massive shift in market selectivity.
• 1:12
  Speaker 1: Right, and Khaled Azar shared some really critical observations on this recently.
• 1:16
  Speaker 0: Oh yeah his post was fascinating.
• 1:18
  Speaker 0: It
• 1:18
  Speaker 1: was he was looking at the data And noted a hard shift that started back In The Q for twenty-twenty five.
• 1:25
  Speaker 1: Market
• 1:26
  Speaker 0: right multiples compressing across the board
• 1:28
  Speaker 1: Yeah.
• 1:29
  Speaker 1: But even more importantly exit timelines have stretched by
• 1:31
  Speaker 0: like fifteen to twenty percent rate
• 1:33
  Speaker 1: exactly fifteen To twenty percent longer than historical averages.
• 1:37
  Speaker 1: Buyers are just exhaustively stress testing everything.
• 1:40
  Speaker 0: I mean, they're looking at financial models customer contracts team depth even code quality
• 1:45
  Speaker 1: Yeah with a level of scrutiny that simply wasn't there a few years ago
• 1:49
  Speaker 0: because buyers Are basically asking you know what's in it for me?
• 1:53
  Speaker 0: and They are demanding proof
• 1:55
  Speaker 1: right.
• 1:55
  Speaker 1: the key takeaway from azar is that EBITDA margins an operational profitability Now definitively beat pure revenue growth.
• 2:03
  Speaker 0: It's what buyers prioritize now.
• 2:05
  Speaker 0: Clean financials are no longer optional.
• 2:07
  Speaker 0: They're
• 2:07
  Speaker 1: absolute table stakes,
• 2:09
  Speaker 0: which honestly reminds me of Paul if Croman's post he gave this really blunt reality check for sellers.
• 2:14
  Speaker 1: Oh the price or terms thing?
• 2:15
  Speaker 1: Yeah
• 2:16
  Speaker 0: He said price or Terms.
• 2:18
  Speaker 0: No one gets both.
• 2:20
  Speaker 1: That is such a stark way to put
• 2:21
  Speaker 0: it.
• 2:21
  Speaker 0: But, its true right.
• 2:22
  Speaker 0: if the seller comes to table still expecting those massive valuations from previous cycles and they insist on that high price... They
• 2:29
  Speaker 1: have to be flexible in terms?
• 2:30
  Speaker 0: Exactly!
• 2:31
  Speaker 0: They have accept things like sellers notes or complex earn-outs Or
• 2:35
  Speaker 1: rollover stock in buyers vehicle.
• 2:37
  Speaker 0: Right you don't get clean all cash exit at premium prices anymore.
• 2:42
  Speaker 0: The risk profile for exiting founder has fundamentally changed.
• 2:46
  Speaker 0: It
• 2:46
  Speaker 1: really does.
• 2:47
  Speaker 1: And this intense selectivity is also impacting specific deal structures.
• 2:52
  Speaker 0: Like carve-outs?
• 2:53
  Speaker 1: Yes!
• 2:53
  Speaker 1: Dylan Roberts had a great point about the massive underestimation of carve outs right now.
• 2:58
  Speaker 0: Buyers love to look at a carve out as just, you know...a discounted asset.
• 3:02
  Speaker 1: Right but Roberts points that a carveout isn't only small acquisition It's building from scratch.
• 3:07
  Speaker 1: Yeah
• 3:08
  Speaker 0: it's an entirely different operational beast.
• 3:10
  Speaker 1: Exactly There are no existing HR No localized payroll No defined culture.
• 3:17
  Speaker 0: So the people risk is exponentially higher.
• 3:19
  Speaker 0: You have to stand up a new employer completely from zero
• 3:24
  Speaker 1: and Standard integration playbooks just collapse under that weight.
• 3:27
  Speaker 1: We're actually
• 3:28
  Speaker 0: seeing this exact same rigorous risk up Underwriting show-up in specific sectors, too like
• 3:33
  Speaker 1: and life sciences.
• 3:34
  Speaker 1: Yes
• 3:35
  Speaker 0: Sebastian likes Gaff day Anderson posted some data on this.
• 3:38
  Speaker 0: That perfectly illustrates the new reality.
• 3:40
  Speaker 1: late stage assets are dominating right completely
• 3:42
  Speaker 0: dominating while early-stage companies Especially those in phase I clinical trials They are Just facing a brutal exit environment.
• 3:50
  Speaker 1: And it's not because Early Stage science is suddenly less innovative.
• 3:53
  Speaker 0: No, it's all about how buyers are pricing risk.
• 3:56
  Speaker 0: Right?
• 3:56
  Speaker 1: Faizeye generates a lot of excitement but doesn't generate conviction.
• 4:00
  Speaker 1: Exactly!
• 4:01
  Speaker 0: The risk-of clinical failure is simply too hard for buyers to accurately model and price right now.
• 4:06
  Speaker 1: So they just pay premiums on the certainty of late stage commercialization
• 4:10
  Speaker 0: Which transitions us nicely into our next major cluster.
• 4:14
  Speaker 0: Because across the finish line today you need clean financials And a risk profile that buyer can confidently map in a spreadsheet
• 4:22
  Speaker 1: And AI is fundamentally rewiring how those spreadsheets are built.
• 4:26
  Speaker 1: Right,
• 4:27
  Speaker 0: AI in M&A from sourcing to software valuations.
• 4:30
  Speaker 1: This isn't just about acquiring AI companies.
• 4:33
  Speaker 1: It's about AI changing the deal-making process itself.
• 4:36
  Speaker 0: Kai Hesselman had a really interesting take on this.
• 4:39
  Speaker 0: A very counter-intuitive angle.
• 4:40
  Speaker 1: Yeah, because everyone is so anxious about AI taking M&A jobs Exactly.
• 4:45
  Speaker 0: But Hesselmen argues that AI isn't taking M & A jobs.
• 4:47
  Speaker 0: It's actually giving professionals their profession back.
• 4:50
  Speaker 1: That's great way to phrase it Right!
• 4:52
  Speaker 0: Because by automating all of the brutal bureaucracy The data rooms...the buyer matching AI Freeze up time
• 4:58
  Speaker 1: Time for most critical element of deal
• 5:01
  Speaker 0: Building human trust.
• 5:02
  Speaker 1: Exactly Getting the buyer and seller aligned requires intense, face-to-face relationship building.
• 5:09
  Speaker 1: AI handles the heavy lifting so you can actually do
• 5:11
  Speaker 1: that.".
• 5:11
  Speaker 0: And efficiency gains are just wild!
• 5:14
  Speaker 0: Nikolay Lazarov shared some hard metrics on this... Oh
• 5:17
  Speaker 1: from Ila AI his AI native advisory.
• 5:20
  Speaker 1: Yes
• 5:20
  Speaker 0: The numbers were striking.
• 5:22
  Speaker 0: They used automated buyer identification to overhaul their outreach
• 5:26
  Speaker 1: Surfacing hundreds of buyers based on synergies and deal history Right
• 5:29
  Speaker 0: And doing it in a fraction of usual time.
• 5:32
  Speaker 0: Lazerov reported their fee pipeline surged to fourteen million euros.
• 5:38
  Speaker 1: That is incredible, right?
• 5:40
  Speaker 1: It proves that embedding AI into advisory work isn't just a gimmick it's a massive competitive advantage.
• 5:46
  Speaker 0: but then we have to flip the perspective from AI as tool to AI as target
• 5:51
  Speaker 1: because thats an entirely different conversation.
• 5:53
  Speaker 1: Moritz Otakurkin noted that software M&A is highly selective.
• 5:56
  Speaker 1: now
• 5:57
  Speaker 0: People assume if you have an AI feature get premium multiple
• 6:00
  Speaker 1: But buyers are smarter than them.
• 6:02
  Speaker 1: Otakurken points out that AI actually lowers the barrier to entry for software development.
• 6:06
  Speaker 0: Because anyone can use large language models quickly replicate your core features
• 6:10
  Speaker 1: Exactly, so you're code is no longer a defensible mode
• 6:13
  Speaker 0: Which means proprietary datasets are THE REAL MOTE If your software sits on unique embedded data.
• 6:19
  Speaker 0: that feeds the AI.
• 6:20
  Speaker 0: That's what acquirers want
• 6:22
  Speaker 1: And this technological shift is forcing a massive change in how software's priced too.
• 6:27
  Speaker 0: Eckhart Issel talked about it at the M&A Excellence days?
• 6:30
  Speaker 0: Right,
• 6:30
  Speaker 1: he observed that we are moving away from traditional seat based pricing
• 6:35
  Speaker 0: Where you just pay fixed license fee per user
• 6:37
  Speaker 1: Exactly.
• 6:39
  Speaker 1: Now were moving toward outcome-based pricing charging for actual value generated, like leads in a CRM or compute power consumed.
• 6:48
  Speaker 0: And that radically changes how private equity firms have to underwrite software valuations?
• 6:53
  Speaker 1: Completely!
• 6:54
  Speaker 1: Building a discounted cash flow model is an entirely different exercise.
• 6:58
  Speaker 1: when revenue is tied to variable usage instead of fixed-sauce licenses
• 7:02
  Speaker 0: You have to underestimate the actually utility of tool.
• 7:04
  Speaker 1: Exactly So with all these complexities and software valuation it makes you wonder where money's going Right.
• 7:10
  Speaker 0: Theme three, capital flows and sector spotlights.
• 7:13
  Speaker 0: Where is the money actually flowing right now?
• 7:15
  Speaker 1: Well Joey Hagner highlighted that RIA Space Registered Investment Advisors.
• 7:19
  Speaker 1: it's booming!
• 7:27
  Speaker 0: But the interesting part is where that capital specifically went.
• 7:30
  Speaker 0: It heavily favored pure independent RIAs over hybrid advisors.
• 7:35
  Speaker 0: Right,
• 7:36
  Speaker 1: institutional capital kind of left the hybrid models behind
• 7:39
  Speaker 0: and it ties back to what we said earlier about risk in modeling
• 7:41
  Speaker 1: because Pure RIA's are simply easier for PE firms to model on a spreadsheet.
• 7:46
  Speaker 0: The regulatory complexities of hybrid models introduce variables That are just too hard to forecast
• 7:51
  Speaker 1: And in this elective market investors pay a premium.
• 7:55
  Speaker 1: Scalable business models.
• 7:56
  Speaker 0: We're seeing huge numbers in other specific sectors too, like sports tech.
• 8:00
  Speaker 1: Malcolm Lemons reported on that didn't he?
• 8:02
  Speaker 1: Yes
• 8:02
  Speaker 0: staggering number is one hundred fifty six billion dollars and M&A transactions across over four hundred and fifty deals In twenty-twenty
• 8:10
  Speaker 1: five.
• 8:11
  Speaker 0: Wow Yeah major acquirers like Huddle & Teamworks are just leading this massive consolidation charge
• 8:17
  Speaker 1: Which shows how fast a niche can mature when the tech becomes indispensable
• 8:21
  Speaker 0: totally.
• 8:21
  Speaker 0: And then you have cybersecurity.
• 8:23
  Speaker 0: Dino B had a quick rapid fire stat on this.
• 8:26
  Speaker 1: Oh right, just in the month of February twenty-twenty six alone
• 8:29
  Speaker 0: The sector saw hundred and eight transactions totaling one point seven billion dollars.
• 8:34
  Speaker 1: That is just wild for a single month across financing an M&A.
• 8:40
  Speaker 0: It just proves that mission critical niches assets essential For security are completely defying any broader market sluggishness.
• 8:47
  Speaker 1: Buyers will always find capital for things they deem existentially necessary Always.
• 8:52
  Speaker 0: But behind all these billions of dollars and the automated pipelines... The reality
• 8:56
  Speaker 1: remains, that transactions are executed by people.
• 8:59
  Speaker 0: Which brings us to our final —and maybe most— discussed theme.
• 9:03
  Speaker 0: across all the sources….
• 9:04
  Speaker 0: …the human side of deals – leadership culture and succession.
• 9:08
  Speaker 0: Right.
• 9:09
  Speaker 1: Thomas H. Kessler presented a really powerful thesis on this.
• 9:12
  Speaker 0: He said numbers may close the deal but people determine whether value is realized.
• 9:17
  Speaker 1: That perfectly captures it, he emphasizes that human-centric leadership Is a tangible value driver not just as soft factor.
• 9:24
  Speaker 0: specifically He highlighted the strengths women bring to stabilizing organizations under pressure clear judgment transparent communication
• 9:31
  Speaker 1: The exact traits you need during a post merger integration
• 9:34
  Speaker 0: and his advice To CEOs is that People readiness needs to be treated with the exact same rigor As financial readiness During due diligence.
• 9:42
  Speaker 1: Eva Davis expanded on this, too.
• 9:44
  Speaker 1: She advocates for a systemic shift in how female talent is supported and M&A
• 9:48
  Speaker 0: Moving from passive mentorship to active sponsorship
• 9:52
  Speaker 1: Exactly pulling women into the most meaningful conversations And deal negotiations.
• 9:57
  Speaker 0: Sponsorship changes the structural dynamic because The most consequential decisions happen behind closed doors.
• 10:04
  Speaker 1: In that level of inclusion directly impacts a firm's ability to navigate complex cultural integrations later on.
• 10:11
  Speaker 0: Speaking of complex integrations, Christina Horry brought up fascinating organizational perspective to this.
• 10:17
  Speaker 1: She noted that in these transactions attention is the scarcest resource.
• 10:22
  Speaker 0: I love that phrasing.
• 10:23
  Speaker 0: deals don't fail because The Integration Office lacked playbook.
• 10:26
  Speaker 0: They fail because executive attention is directed at the wrong things.
• 10:30
  Speaker 0: Right,
• 10:30
  Speaker 1: successful integration means understanding the HR engine behind performance
• 10:35
  Speaker 0: Finding where value actually originates in the target company's culture
• 10:38
  Speaker 1: And proactively identifying where it might leak during transition.
• 10:42
  Speaker 0: That focus on where value originates is driving another huge trend.
• 10:46
  Speaker 0: we saw The
• 10:47
  Speaker 1: massive wave of SME successions
• 10:51
  Speaker 0: and the rise of ETA entrepreneurship through acquisition.
• 10:54
  Speaker 1: Search funds are getting a lot.
• 11:01
  Speaker 0: He noted that ETA is about taking real entrepreneurial responsibility.
• 11:07
  Speaker 1: It's individuals putting their own risk on the line to preserve the culture of these mid-sized companies
• 11:12
  Speaker 0: And there is a very specific structural market inefficiency driving this right now.
• 11:17
  Speaker 0: Severnay Borch identified it perfectly
• 11:19
  Speaker 1: The financial sweet spot.
• 11:20
  Speaker 0: Right, the three hundred thousand to nine hundred thousand euro EBITDA range
• 11:24
  Speaker 1: Its massive highly lucrative gap.
• 11:27
  Speaker 0: Institutional PE usually looks for targets with at least two million in EBITDA.
• 11:31
  Speaker 1: And traditional backsearch funds need around one point five million to justify the overhead,
• 11:36
  Speaker 0: leaving this incredible hunting ground for dedicated self-funded searchers.
• 11:40
  Speaker 0: these businesses are fundamentally sound often run by retiring founders but they're just too small for institutional PE.
• 11:47
  Speaker 1: so these ETA buyers face less competition get more realistic multiples and can scale a great business.
• 11:53
  Speaker 0: 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?
• 12:05
  Speaker 1: To thrive in environment you have operate at intersection of ruthless financial selectivity and deep human empathy.
• 12:12
  Speaker 0: You really do!
• 12:13
  Speaker 1: You need leverage AI handle heavy lifting due diligence but must rely on your judgment navigate complex cultural integration carve outs successions
• 12:25
  Speaker 0: Because that human judgment is what actually dictates whether a deal succeeds or fails.
• 12:29
  Speaker 1: Exactly!
• 12:30
  Speaker 0: So we want to leave you with the final, slightly provocative thought-to ponder as you look at your own Deal Pipeline this week.
• 12:36
  Speaker 0: Let's
• 12:36
  Speaker 1: hear it...
• 12:37
  Speaker 0: If AI completely commoditizes financial modeling and target screening processes and ETA models democratize the ability to buy company?
• 12:45
  Speaker 0: will the most successful M&A professional of twenty thirty looks less like traditional investment banker than more like behavioral psychologist?
• 12:52
  Speaker 1: That is a very interesting way to look at the future of advisory
• 13:06
  Speaker 0: work.