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Best of LinkedIn: M&A Insights CW 03/ 04 · 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 from CW-O-three and O-four, 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.
• 0:18
  Speaker 1: Welcome back to the deep dive.
• 0:19
  Speaker 1: We've spent the last few days combing through all the noise on LinkedIn to really pull out the signal for M&A trends.
• 0:26
  Speaker 1: This is for weeks three and four of twenty twenty six.
• 0:29
  Speaker 0: And the signal is surprisingly loud this time around.
• 0:32
  Speaker 0: I mean, if you just looked at the headlines, you'd think we were in another boom.
• 0:35
  Speaker 0: Alistair Machette pointed out that Goldman Sachs alone advised on thirty-eight mega-deals.
• 0:40
  Speaker 1: Yeah, I saw that.
• 0:41
  Speaker 1: Thirty-eight.
• 0:41
  Speaker 1: That's a massive volume of activity.
• 0:43
  Speaker 0: It is.
• 0:44
  Speaker 0: But the texture feels different.
• 0:46
  Speaker 1: It is different.
• 0:47
  Speaker 1: It's not that... You know, wild speculative frenzy we saw a few years back.
• 0:50
  Speaker 1: The real theme emerging isn't growth at all costs.
• 0:53
  Speaker 1: No.
• 0:53
  Speaker 1: It's discipline.
• 0:54
  Speaker 0: Exactly.
• 0:55
  Speaker 0: It feels like the market has sobered up a bit.
• 0:57
  Speaker 0: We're seeing all this rigorous discussion around deal mechanics, preparation, and, interestingly, a real human focus on what happens after the ink is dry.
• 1:06
  Speaker 1: Right.
• 1:06
  Speaker 1: So we basically clustered this into three themes for today.
• 1:09
  Speaker 1: First, deal discipline itself.
• 1:11
  Speaker 0: Then, preparation and strategy, how you source deals.
• 1:14
  Speaker 1: And finally, the one that always gets overlooked.
• 1:17
  Speaker 1: people and culture.
• 1:19
  Speaker 0: Plus, we have to touch on some huge sector shifts.
• 1:22
  Speaker 0: I mean, what's happening in fintech and biotech?
• 1:25
  Speaker 0: It paints a very clear picture of where the money is actually moving.
• 1:28
  Speaker 1: It does.
• 1:29
  Speaker 1: And that really explains why all this discipline is so necessary.
• 1:33
  Speaker 1: But let's start where the rubber meets the road.
• 1:37
  Speaker 1: Deal discipline.
• 1:38
  Speaker 0: Right.
• 1:38
  Speaker 0: And you can't get more fundamental than this quote from Bill Monroe.
• 1:42
  Speaker 0: I feel like every dealmaker knows it, but they forget it.
• 1:44
  Speaker 0: He just said, Time kills all deals.
• 1:47
  Speaker 1: It's the oldest rule in the book, isn't it?
• 1:49
  Speaker 1: The fact he felt the need to post it again tells you people are still getting it wrong.
• 1:53
  Speaker 0: So his point is that motivation, it's a perishable resource.
• 1:56
  Speaker 1: It is.
• 1:56
  Speaker 1: You have this peak momentum right when the commercial terms are agreed.
• 1:59
  Speaker 1: If you let that bleed away while lawyers fight over syntax, you're just inviting disaster.
• 2:06
  Speaker 0: It's that classic fight, isn't it?
• 2:07
  Speaker 0: Commercial intent versus legal protection.
• 2:11
  Speaker 0: Monroe's advice seems so obvious.
• 2:14
  Speaker 0: Agree on the commercials upfront, lock them down, then let the lawyers in.
• 2:18
  Speaker 1: Obvious.
• 2:19
  Speaker 1: But it rarely happens.
• 2:21
  Speaker 1: And the legal review just reopens the commercial points.
• 2:24
  Speaker 1: And that's where the deal dies.
• 2:26
  Speaker 0: It's not just speed, it's about signaling.
• 2:28
  Speaker 1: Yes.
• 2:28
  Speaker 1: Which brings us to one of the best tactical anecdotes I've seen in a while.
• 2:33
  Speaker 1: From David Edgar.
• 2:35
  Speaker 1: The luggage tactic.
• 2:36
  Speaker 0: I loved this.
• 2:37
  Speaker 0: It's such a simple... psychological power move.
• 2:41
  Speaker 1: It really is.
• 2:41
  Speaker 1: So for anyone who missed it, he basically says, you should never bring your bags to the negotiation room.
• 2:46
  Speaker 0: Because luggage is a clock.
• 2:48
  Speaker 1: Exactly.
• 2:49
  Speaker 1: If I see your suitcase, I know you have a flight to catch at six p.m.
• 2:52
  Speaker 1: I know your deadline.
• 2:53
  Speaker 0: So I'm just gonna stall.
• 2:54
  Speaker 0: I'll wait until five fifteen to bring up the really tough points knowing you'll probably just cave to make your flight.
• 2:59
  Speaker 1: It hands all the leverage to the other side.
• 3:01
  Speaker 1: Edgar told the story where he did this.
• 3:04
  Speaker 1: He deliberately left his bags at the hotel.
• 3:06
  Speaker 0: So he looked like he had nowhere to be.
• 3:08
  Speaker 1: Right.
• 3:08
  Speaker 1: And he forced a late night session.
• 3:11
  Speaker 1: The punchline was that the lawyers were furious because they missed dinner, but their CEO just wanted it done.
• 3:17
  Speaker 1: He forced the close by removing that signal of time pressure.
• 3:21
  Speaker 0: A great reminder that negotiation is as much theater as it is finance.
• 3:25
  Speaker 1: Speaking of finance, we should talk about earnouts.
• 3:28
  Speaker 1: Because, you know, if you're a seller right now, the data suggests you should probably run the other way.
• 3:33
  Speaker 0: Yeah, Adam Johannen had a pretty grim take on this, especially in the lower middle market.
• 3:37
  Speaker 1: It stood out to me because earnouts are always pitched as the solution, right?
• 3:42
  Speaker 1: The bridge between what a buyer and seller think a company is worth.
• 3:46
  Speaker 0: But Johannen is saying that bridge is collapsing.
• 3:48
  Speaker 1: It's collapsing because of control.
• 3:50
  Speaker 1: His whole argument is that sellers are realizing they just rarely get paid.
• 3:56
  Speaker 1: Once you sell, the buyer has the keys.
• 3:58
  Speaker 0: They control the accounting, the strategy, the costs.
• 4:01
  Speaker 1: And It is incredibly easy for them to legally massage the P&L to make sure those earn-out targets get missed.
• 4:08
  Speaker 0: A bit of strategic cost reallocation.
• 4:10
  Speaker 1: You could call it that.
• 4:12
  Speaker 1: But the real insight here is that sellers are getting wise to it.
• 4:16
  Speaker 1: They're trading a higher valuation for certainty.
• 4:19
  Speaker 1: They'd rather take a lower guaranteed cash payment at close.
• 4:22
  Speaker 1: Then
• 4:22
  Speaker 0: a lottery ticket three years from now.
• 4:24
  Speaker 1: Exactly.
• 4:25
  Speaker 1: And that desire for real, tangible cash brings us straight to EBITDA.
• 4:31
  Speaker 1: Professor Joe Omahoney raised a really important point about the quality of EBITDA.
• 4:34
  Speaker 1: Right.
• 4:35
  Speaker 0: Not all EBITDA is created equal.
• 4:37
  Speaker 1: It's a critical distinction.
• 4:39
  Speaker 1: You can have great EBITDA on paper, but if that profit isn't accessible, if it's not converting to cash,
• 4:44
  Speaker 0: it's not that valuable.
• 4:46
  Speaker 0: Oh, Mahoney says, the key metric now is cash conversion.
• 4:49
  Speaker 0: What actually lands in the bank after tax, VAT, everything else?
• 4:53
  Speaker 1: And he gave a specific number.
• 4:54
  Speaker 1: He said, greater than ninety percent cash conversion is the new gold standard.
• 4:58
  Speaker 0: Which is a high bar.
• 4:59
  Speaker 1: It is.
• 5:00
  Speaker 1: But it reflects the cost of capital.
• 5:01
  Speaker 1: Buyers need cash flow to service the debt they just used to buy you.
• 5:05
  Speaker 0: And on top of that, Alistair Robertson added another layer about adjusted EBITDA.
• 5:09
  Speaker 1: Oh, the adjusted game.
• 5:10
  Speaker 1: If we ignore all the bad stuff, we made a fortune.
• 5:13
  Speaker 0: Robertson's warning is that it's getting out of hand.
• 5:16
  Speaker 0: You can't adjust for everything.
• 5:17
  Speaker 0: You lose credibility.
• 5:18
  Speaker 1: Adjustments are for exceptional items.
• 5:20
  Speaker 1: A lawsuit.
• 5:21
  Speaker 1: A one-off restructuring.
• 5:23
  Speaker 1: Not normal trading costs.
• 5:25
  Speaker 0: If a buyer sees adjusted EBITDA is double the actual profit, they don't see potential.
• 5:31
  Speaker 0: They see fake numbers.
• 5:32
  Speaker 1: It's just a road's trust.
• 5:34
  Speaker 1: But there is one area where you can find real hidden value.
• 5:38
  Speaker 1: Mert Erkin pointed out that supply chain synergies are often completely overlooked.
• 5:42
  Speaker 0: And he said they can drive up to thirty five percent EBITDA growth.
• 5:46
  Speaker 1: Which is huge.
• 5:47
  Speaker 1: Deal teams always focus on sales synergies, you know, cross-selling, but procurement and supply chain efficiencies.
• 5:54
  Speaker 1: Those are tangible.
• 5:55
  Speaker 1: That drops straight to the bottom line.
• 5:56
  Speaker 0: Much safer bet.
• 5:57
  Speaker 0: Okay, so let's shift gears.
• 5:58
  Speaker 0: Preparation and strategy.
• 6:00
  Speaker 0: If you're a buyer, how are you finding targets in this disciplined market?
• 6:03
  Speaker 1: Well, Patrick Bauer compares to defining a needle in a haystack.
• 6:06
  Speaker 1: He makes a key distinction.
• 6:09
  Speaker 1: The bottleneck isn't money.
• 6:10
  Speaker 0: There's plenty in dry powder out there.
• 6:12
  Speaker 1: The bottleneck is visibility.
• 6:14
  Speaker 1: It's finding that target before everyone else does.
• 6:17
  Speaker 1: So Bauer argues for structure and signals.
• 6:20
  Speaker 1: You have to monitor for triggers, hiring waves, new products.
• 6:24
  Speaker 0: So it's about proactive sourcing, not just reactive bidding when a company hits the market.
• 6:29
  Speaker 1: Exactly.
• 6:30
  Speaker 1: Which is a point Kisan Patel also made.
• 6:32
  Speaker 1: He says M&A shouldn't be a break glass in case of emergency move.
• 6:36
  Speaker 1: The
• 6:36
  Speaker 0: growth panic trap.
• 6:38
  Speaker 0: Right.
• 6:38
  Speaker 1: Your organic growth stalls, the board panics and says, go buy something.
• 6:43
  Speaker 1: Patel warns that's the worst time to buy.
• 6:45
  Speaker 1: You're just patching a hole, not executing a strategy.
• 6:48
  Speaker 0: And from the seller side, if you do decide to sell, indecision is just lethal.
• 6:51
  Speaker 0: Alice in Dent had a strong warning about on-again, off-again deals.
• 6:55
  Speaker 1: Well, we see this all the time.
• 6:57
  Speaker 1: A founder tests the market, gets cold feet, pauses.
• 6:59
  Speaker 0: And she says value doesn't pause.
• 7:01
  Speaker 0: It rots.
• 7:02
  Speaker 0: Buyers lose conviction.
• 7:03
  Speaker 0: They assume something's wrong.
• 7:04
  Speaker 1: Right.
• 7:04
  Speaker 1: And sticking with the process, George S. Markakis had a very tactical piece of advice for the data room.
• 7:10
  Speaker 1: He calls it this staged approach.
• 7:12
  Speaker 0: This seems like basic risk management, but so many sellers ignore it.
• 7:16
  Speaker 1: They do.
• 7:16
  Speaker 1: In their eagerness, they go open Kimono on day one.
• 7:20
  Speaker 1: They put their entire customer list, contact snull, in the data room before an LOI is even signed.
• 7:26
  Speaker 0: So if the deal falls through, you've just handed your competitor your client list.
• 7:30
  Speaker 1: Exactly.
• 7:31
  Speaker 1: And it gives them leverage to retrade you later to drop the price.
• 7:35
  Speaker 1: His advice is simple.
• 7:36
  Speaker 1: Hold back the crown jewels until the very last stage.
• 7:40
  Speaker 0: Speaking of secrets, Alfred D. Nader's post on the signs your company is being sold was
• 7:44
  Speaker 1: hilarious.
• 7:45
  Speaker 1: Painfully accurate.
• 7:46
  Speaker 0: The one that got me was nonsensical hires.
• 7:50
  Speaker 0: Suddenly you're filling empty boxes on the org chart just to look complete for a buyer.
• 7:54
  Speaker 1: Or the sudden... Urgent request from finance for five years of historical data that no one has ever cared about before.
• 8:01
  Speaker 0: And the calendar invites all those private meetings.
• 8:04
  Speaker 1: Strategic review, yeah.
• 8:05
  Speaker 1: If you see those, you're being sold, which actually segues perfectly into our third theme, people and culture.
• 8:13
  Speaker 0: Because while the execs are in their strategic review, the staff is going through what David Lansfield calls organizational grief.
• 8:19
  Speaker 1: Grief is a strong word, but when you read his analysis, it's the right one.
• 8:23
  Speaker 0: It makes sense.
• 8:24
  Speaker 0: Employees are mourning the loss of the future they had imagined for themselves at that company.
• 8:29
  Speaker 1: And it's not just an emotional issue.
• 8:31
  Speaker 1: It's a productivity one.
• 8:33
  Speaker 1: He says productivity can drop by twenty-five to thirty percent during that grieving period.
• 8:38
  Speaker 0: That's value being destroyed in real time.
• 8:42
  Speaker 0: And it's not just the junior staff.
• 8:44
  Speaker 0: Anirvan Sen pointed out that leadership exits often happen for the wrong reasons.
• 8:48
  Speaker 1: The misinterpreted signal problem.
• 8:51
  Speaker 1: Senior leaders hear rumors, or they just get silence from the acquirer, and they assume the worst.
• 8:56
  Speaker 0: So they resign.
• 8:57
  Speaker 1: They resigned before the deal even closes.
• 8:59
  Speaker 1: But the tragedy is, the buyer often wanted them.
• 9:02
  Speaker 1: They were part of the investment thesis.
• 9:04
  Speaker 1: The communication just failed.
• 9:05
  Speaker 0: So how do you
• 9:06
  Speaker 1: fix that?
• 9:07
  Speaker 0: Thomas H. Kessler suggests looking beyond the C-suite.
• 9:10
  Speaker 0: He says the key is the extended leadership team.
• 9:13
  Speaker 1: The ELT, yes.
• 9:14
  Speaker 1: VPs, directors, country heads.
• 9:17
  Speaker 1: the people who actually run the company.
• 9:18
  Speaker 0: And his point is that most integrations fail because the ELT is just briefed on a plan.
• 9:23
  Speaker 0: They aren't part of creating it.
• 9:25
  Speaker 0: Right.
• 9:25
  Speaker 1: Briefings create compliance, co-creation creates ownership.
• 9:29
  Speaker 1: If they feel like it's their integration, it works.
• 9:32
  Speaker 0: And before we move on, Frank Akila had a great piece of advice for everyone listening.
• 9:37
  Speaker 0: Treat your career like a deal.
• 9:39
  Speaker 1: I really like this framing.
• 9:41
  Speaker 1: We do so much due diligence on companies, but when we change jobs, we often just look at the salary bump.
• 9:46
  Speaker 0: The premium.
• 9:47
  Speaker 1: Akila's advice is to do full DD on your own career moves.
• 9:51
  Speaker 1: Check the culture fit, the integration risk.
• 9:54
  Speaker 0: Sage advice.
• 9:56
  Speaker 0: Okay, let's hit these sector shifts because some of these are massive signals.
• 10:00
  Speaker 1: Let's start with FinTech.
• 10:02
  Speaker 1: The headline here is Capital One acquiring Brex for five point one five billion dollars.
• 10:08
  Speaker 1: Sam Bowie have flagged this.
• 10:10
  Speaker 0: It feels like a watershed moment, doesn't it?
• 10:12
  Speaker 0: The whole narrative was that FinTechs were going to kill the big banks.
• 10:14
  Speaker 1: And now a big bank is buying one of the biggest disruptors.
• 10:17
  Speaker 1: It's the maturation of the cycle.
• 10:19
  Speaker 0: The banks realize they can't innovate that fast internally.
• 10:23
  Speaker 0: So
• 10:23
  Speaker 1: they're using their balance sheet to buy modernization.
• 10:26
  Speaker 1: The disruptors are becoming the R&D departments for the incumbents.
• 10:28
  Speaker 1: We're
• 10:29
  Speaker 0: seeing a similar buying the future trend in tech more broadly.
• 10:32
  Speaker 0: Nicholas Babin talked about a shift from buying structures to buying intelligence.
• 10:37
  Speaker 1: It's the evolution.
• 10:38
  Speaker 1: they acquire higher.
• 10:39
  Speaker 1: Companies aren't buying revenue.
• 10:41
  Speaker 1: They're buying algorithms, data sets, machine learning teams.
• 10:44
  Speaker 0: The value is in the IP.
• 10:45
  Speaker 0: And Hurwigsbringer backs this up for software saying buyers pay for roadmap
• 10:50
  Speaker 1: fit.
• 10:50
  Speaker 1: It's the build versus buy calculation.
• 10:53
  Speaker 1: If a startup plugs a hole in your product roadmap, they're worth a premium because they save you eighteen months of development time.
• 11:01
  Speaker 1: You're buying speed.
• 11:02
  Speaker 0: And finally, in biotech, Dr.
• 11:05
  Speaker 0: Yenpo Chin had a fascinating take on deal timelines.
• 11:09
  Speaker 0: He says it's all about conviction.
• 11:11
  Speaker 1: This was a really nuanced point.
• 11:13
  Speaker 1: In pharma, you can't rush a deal.
• 11:15
  Speaker 1: The buyer needs months to build scientific conviction that a drug actually works.
• 11:20
  Speaker 0: But the paradox is, once they have that conviction, the deal closes in days.
• 11:24
  Speaker 1: Right.
• 11:25
  Speaker 1: So as a seller, you can't run a normal auction.
• 11:27
  Speaker 1: You have to nurture that conviction over time.
• 11:30
  Speaker 1: The winner isn't the highest bidder.
• 11:32
  Speaker 1: It's the one who achieved conviction first.
• 11:34
  Speaker 1: It
• 11:34
  Speaker 0: all comes back to that central theme, doesn't it?
• 11:36
  Speaker 0: Discipline.
• 11:36
  Speaker 0: That's
• 11:37
  Speaker 1: the verdict from the market for early twenty-twenty-six.
• 11:39
  Speaker 1: The discipline to wait, to verify, to integrate properly.
• 11:43
  Speaker 0: So looking ahead... What's the sentiment?
• 11:45
  Speaker 0: We heard from Daniel Friedman, Venus Kennedy, Chris Irwin.
• 11:50
  Speaker 0: Are we bullish?
• 11:51
  Speaker 1: I'd say the consensus is cautious optimism.
• 11:55
  Speaker 1: The capital is there.
• 11:56
  Speaker 1: Rates have stabilized.
• 11:58
  Speaker 1: But the party days are over.
• 11:59
  Speaker 0: Chris Irwin put it best.
• 12:00
  Speaker 0: The growth at all costs era is dead.
• 12:03
  Speaker 1: It's dead.
• 12:04
  Speaker 1: Now it's about disciplined KPIs.
• 12:06
  Speaker 1: Buyers are selective.
• 12:07
  Speaker 1: They want profitability.
• 12:08
  Speaker 1: They want logic.
• 12:09
  Speaker 1: They want real integration plans.
• 12:11
  Speaker 0: Less gambling, more chess.
• 12:13
  Speaker 0: That's
• 12:13
  Speaker 1: the mood.
• 12:14
  Speaker 0: If you enjoyed this episode, new episodes drop every two weeks.
• 12:17
  Speaker 0: Also, check out our other editions on private equity, venture capital, and strategy and consulting.
• 12:21
  Speaker 1: Thanks for listening.
• 12:22
  Speaker 1: Go subscribe so you don't miss the next deep dive into the sack.
• 12:25
  Speaker 1: See
• 12:25
  Speaker 0: you next time.