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Best of LinkedIn: M&A Insights CW 37/ 38 · Best of LinkedIn: Strategy, M&A & Investments

• 0:00
  Speaker 0: provided by Thomas Allgaier and Frennis, based on the most relevant posts on LinkedIn about M&A Insights in CW-Thirty-Seven and Thirty-Eight.
• 0:08
  Speaker 0: Frennis is a BDB market research company supporting M&A Consultancies with the market and competition perspective, for example, in commercial due diligence.
• 0:16
  Speaker 0: Welcome back to the deep dive.
• 0:19
  Speaker 0: This week we're diving straight into what's been really moving the needle in the M&A world.
• 0:24
  Speaker 0: We've sifted through LinkedIn insights from the last couple of weeks.
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  Speaker 0: Our goal here is to translate that feed directly into, well, actionable intelligence for you, whether you're in strategy, PE, VC, or consulting.
• 0:34
  Speaker 1: Exactly.
• 0:35
  Speaker 1: And this isn't just a rundown of headlines.
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  Speaker 1: What we're seeing and what the source has really highlighted is a market that demands real precision.
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  Speaker 1: There's a definite pivot toward strategic scale plays, a real need for discipline in diligence and integration, and then, of course, heavy action in sectors like cybersecurity and healthcare.
• 0:51
  Speaker 1: We really need to unpack the so what behind these shifts.
• 0:54
  Speaker 1: That's where the value creation or destruction happens.
• 0:57
  Speaker 0: Okay, let's kick off with a macro picture.
• 0:59
  Speaker 0: Deal flow and market tone.
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  Speaker 0: The big takeaway seems to be strategic scale plays are front and center.
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  Speaker 0: Boards seem to be prioritizing fewer, more meaningful deals over, you know, just lots of small add-ons.
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  Speaker 1: Yeah, it suggests capital is getting more selective.
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  Speaker 1: And the bar for, let's say, synergy potential, it's definitely higher.
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  Speaker 0: Which seems to be having an effect on deal speed.
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  Speaker 0: Yeah.
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  Speaker 0: A bit faster execution.
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  Speaker 0: It
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  Speaker 1: does seem that way, which is, well, a promising sign.
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  Speaker 1: Francisco T. pointed out average close times actually dropped about four percent in And in North America.
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  Speaker 1: specifically, timelines went from, what, two hundred seventy-one days down to two hundred and fifty-two.
• 1:37
  Speaker 1: Wow.
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  Speaker 0: Okay.
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  Speaker 1: Yeah.
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  Speaker 1: And it's not just admin efficiency.
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  Speaker 1: It probably signals more front-loaded diligence, more aggressive maybe, stronger buyer leverage earlier on.
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  Speaker 0: Right.
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  Speaker 0: But that North American speed, it... contrasts a bit with Europe, doesn't it?
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  Speaker 1: It does.
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  Speaker 1: Europe held steady around two hundred and fifty-five days.
• 1:53
  Speaker 1: They're often dealing with, you know, complex cross-border disclosure rules.
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  Speaker 0: And then you have emerging markets like India, C.A.
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  Speaker 0: Akash Khanduja mentioned something interesting there.
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  Speaker 1: Yeah, the deal count in India is down, like double digits down.
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  Speaker 1: How about the values?
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  Speaker 1: The transaction values are huge.
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  Speaker 1: We're talking, what, fifty billion dollars in the first half of twenty twenty-five alone?
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  Speaker 0: So fewer deals, but massive ones.
• 2:13
  Speaker 0: Exactly.
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  Speaker 1: That's India Inc.
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  Speaker 1: Moving away from that scattergun approach towards what you might call conviction investing.
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  Speaker 1: Big bets on strategic sectors, especially tech or renewables.
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  Speaker 0: Which brings us back to valuation.
• 2:27
  Speaker 0: discipline, I suppose.
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  Speaker 0: High risk needs high conviction.
• 2:30
  Speaker 0: Absolutely.
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  Speaker 1: And the conversation around valuation isn't just about EBITDA multiples anymore.
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  Speaker 1: It's drilling down into earnings, quality, concentration risk, and, crucially, cash conversion.
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  Speaker 1: You know, trying to avoid those nasty, post-close surprises.
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  Speaker 0: We also need to remember the M&A landscape isn't uniform.
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  Speaker 0: Edward Lent made a really good point comparing the huge deals we often talk about with Main Street transactions.
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  Speaker 1: That's key.
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  Speaker 1: Those Main Street deals make up, what, ninety-eight percent of U.S.
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  Speaker 1: businesses?
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  Speaker 0: Huge number.
• 2:59
  Speaker 1: Yeah, and it's a totally different world for lower middle market funds.
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  Speaker 1: You're typically dealing with business brokers, asset purchases, single-bitter negotiations, not auctions.
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  Speaker 0: And the fees are different, too.
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  Speaker 0: Dramatically
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  Speaker 1: different.
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  Speaker 1: Success fees average eight percent to fifteen percent on Main Street versus maybe two percent to six percent for the larger deals.
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  Speaker 0: So deploying capital there means a totally different playbook.
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  Speaker 0: relationship-based sourcing, different cost structure.
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  Speaker 1: Right.
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  Speaker 1: That initial handshake, that trust is vital, which kind of leaves us nicely into risk mitigation and diligence.
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  Speaker 0: Jim Friesen emphasized the letter of intent, the LOI, saying a strong one can basically make or break a deal early on.
• 3:37
  Speaker 1: It really can.
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  Speaker 1: It's that first test of good faith, sets expectations, builds trust.
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  Speaker 1: A weak LOI might signal the seller is already hedging.
• 3:45
  Speaker 1: OK,
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  Speaker 0: so trust is established, then comes the firewall.
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  Speaker 0: Financial due diligence, FDD.
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  Speaker 1: Yep.
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  Speaker 1: And Dhruv Malhotra from Alvarez and Marcell broke it down into three critical pillars, going way beyond just headline profit.
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  Speaker 0: Pillar one, quality of earnings, QoE, making sure profits are real and sustainable.
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  Speaker 1: Exactly, not inflated by one-offs or pulling revenue forward.
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  Speaker 0: Pillar two.
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  Speaker 1: Net debt.
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  Speaker 1: This is where buyers can really get burned.
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  Speaker 1: Hidden liabilities, litigation costs, undisclosed debt, it all hits the equity value directly.
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  Speaker 0: And the third one.
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  Speaker 0: often missed.
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  Speaker 1: Networking capital, NWC.
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  Speaker 1: You have to ensure that short-term liquidity number is accurate.
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  Speaker 1: If it's overstated, bang, you've got a cash crunch right after closing.
• 4:27
  Speaker 0: So the financials have to be rock solid.
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  Speaker 0: But David Hauser brought up culture.
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  Speaker 1: Right.
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  Speaker 1: He argued culture is ultimately what decides if a merger sticks long term.
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  Speaker 1: And that culture, it sits with the middle managers.
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  Speaker 0: The ones translating strategy into action.
• 4:40
  Speaker 1: Precisely.
• 4:41
  Speaker 1: If you sideline them during diligence and planning, you're basically planting cultural landmines.
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  Speaker 0: Okay, and beyond culture, there are these specialized diligence areas, particularly for tech or... Brand heavy deals.
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  Speaker 0: IP, for instance.
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  Speaker 1: Absolutely critical.
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  Speaker 1: Mark Campania stressed this.
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  Speaker 1: You need to verify the chain of title.
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  Speaker 1: do they really own it.
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  Speaker 1: Check freedom to operate.
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  Speaker 1: FTO, can you actually use the tech without infringing?
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  Speaker 0: And license transferability.
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  Speaker 1: Non-negotiable.
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  Speaker 1: Owning IP isn't enough.
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  Speaker 1: You need to know you can legally deploy it day one.
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  Speaker 0: That diligence mindset applies even to purely digital assets, right?
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  Speaker 0: Like, to me names.
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  Speaker 1: Definitely.
• 5:17
  Speaker 1: Akos Bajorfi shared a great cautionary tale, the VigParkalo.hu parking
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  Speaker 0: garage case.
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  Speaker 0: What happened there?
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  Speaker 1: Buyers thought they bought the whole business.
• 5:28
  Speaker 1: Seller intentionally left the domain name out of the asset purchase agreement.
• 5:32
  Speaker 0: Ouch.
• 5:33
  Speaker 0: So they owned the garage but lost the website.
• 5:35
  Speaker 0: Essentially
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  Speaker 1: lost their digital front door.
• 5:38
  Speaker 1: It shows domains are standalone assets.
• 5:40
  Speaker 1: Asset deals must explicitly list digital keys for transfer.
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  Speaker 0: The common thread here seems to be, integrity or lack thereof.
• 5:49
  Speaker 0: Absolutely.
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  Speaker 1: Brian Dukes mentioned deals falling apart post-LOI because of founder mistakes, missed forecasts, hidden issues.
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  Speaker 0: Like undisclosed criminal charges even.
• 5:58
  Speaker 1: Right.
• 5:59
  Speaker 1: And Alice in Dent's story really hits home on trust.
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  Speaker 1: A seller running a parallel process after signing exclusivity.
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  Speaker 0: That kills the deal.
• 6:06
  Speaker 1: Instantly.
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  Speaker 1: Doesn't matter how good the financials look.
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  Speaker 1: Broken trust is, well, impossible to fix.
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  Speaker 0: And that failure, whether it's diligence or trust, leads straight into why integration is so notoriously difficult.
• 6:17
  Speaker 1: Yeah.
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  Speaker 1: Oliver Knapp and Sviatislav Birulin cited that famous stat, fifty to seventy percent failure rate in delivering expected value.
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  Speaker 0: Thomas H. Kessler put it bluntly, deals fail on integration, not strategy.
• 6:30
  Speaker 0: It's where the rubber meets the road, or doesn't.
• 6:33
  Speaker 1: So if integration is the make or break phase, you need quick wins.
• 6:37
  Speaker 1: Tactical stuff.
• 6:37
  Speaker 1: Like
• 6:38
  Speaker 0: procurement.
• 6:38
  Speaker 1: Procurement comes up again and again.
• 6:40
  Speaker 1: Michael Jonas, Oliver Knapp, they highlight it as an immediate lever.
• 6:44
  Speaker 1: Potentially, ten, fifteen percent cost savings.
• 6:46
  Speaker 0: But where do those savings come from?
• 6:48
  Speaker 1: The key is overlap in non-core, non-strategic spend.
• 6:53
  Speaker 1: Things like IT services, maybe real estate.
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  Speaker 1: You need structured category strategies to unlock it.
• 6:59
  Speaker 1: But that's immediate cash to fund the harder parts.
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  Speaker 0: Okay, so quick wins help, but you need structure for the whole process.
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  Speaker 1: Thomas H. Kessler talked about three decisive leadership events.
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  Speaker 1: Executive alignment, week one engagement, and synergy prioritization.
• 7:13
  Speaker 1: Clarity on org design, decision rights.
• 7:15
  Speaker 1: that needs to happen before day one, week zero thinking.
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  Speaker 0: And that week one engagement piece ties back to the middle managers again, right?
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  Speaker 1: Exactly, David Hauser's point.
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  Speaker 1: You need them involved early.
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  Speaker 1: They're the trusted voice during uncertainty.
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  Speaker 1: Their buy-in prevents the whole thing grinding to a halt.
• 7:29
  Speaker 1: What about
• 7:29
  Speaker 0: practical techniques, especially if things are moving fast?
• 7:33
  Speaker 1: Anastasia B advocated for a light integration in the first hundred days.
• 7:37
  Speaker 1: Keep core systems running side by side.
• 7:39
  Speaker 0: Parallel systems.
• 7:40
  Speaker 1: Yeah, with simple data bridges for just the key numbers.
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  Speaker 1: Focus early standardization only on critical things like reporting metrics, supply chain visibility, minimize that massive disruption full murderers often cause.
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  Speaker 0: Sounds pragmatic, but integration also needs governance.
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  Speaker 0: Someone has to own it.
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  Speaker 1: Absolutely.
• 7:59
  Speaker 1: Danny Davis asked the right questions.
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  Speaker 1: Who's accountable for synergy delivery?
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  Speaker 1: Who owns the new budget?
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  Speaker 1: Where are decisions really made?
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  Speaker 1: And
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  Speaker 0: Nicholas Yamaguchi offered that DOC model, deal intent, operating model, structure, external pressures.
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  Speaker 1: Right.
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  Speaker 1: The point being, move beyond generic checklists.
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  Speaker 1: Tailor the integration strategy to the specific deal intent and its unique
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  Speaker 0: pressures.
• 8:22
  Speaker 0: Okay, let's switch gears to specific sectors getting a lot of attention.
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  Speaker 0: Cyber security is huge.
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  Speaker 1: Massive day one priority.
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  Speaker 1: Buyers are really stressing cyber due diligence, data leak risks, integration dependencies, it's top of mind.
• 8:34
  Speaker 0: And the stats back it up.
• 8:36
  Speaker 0: Shavor MJ noted something pretty stark.
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  Speaker 1: Yeah, sixty seven percent of M&A failures apparently stem from inadequate cyber due diligence.
• 8:43
  Speaker 1: That's huge.
• 8:45
  Speaker 0: So where's the consolidation happening within cyber?
• 8:47
  Speaker 1: Focus seems to be on identity management, application security, and tools close to developers, things that help reduce complexity and that constant alert fatigue.
• 8:56
  Speaker 0: And AI M&A.
• 8:58
  Speaker 0: That's a different beast.
• 8:59
  Speaker 1: Totally.
• 9:00
  Speaker 1: Katya Pimenova explained that when you acquire an AI-first company, diligence shifts hard towards the tech itself.
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  Speaker 1: Source code, yes, but also lawful data ownership.
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  Speaker 1: Model governance.
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  Speaker 0: Model governance.
• 9:12
  Speaker 0: Like bias and explainability.
• 9:14
  Speaker 1: Exactly.
• 9:14
  Speaker 1: Plus the usual talent retention, which is maybe even more critical with AI experts.
• 9:19
  Speaker 0: And we're seeing deals happen.
• 9:20
  Speaker 1: Oh yeah.
• 9:21
  Speaker 1: Money's flowing.
• 9:21
  Speaker 1: Nick Leongas, Daniel Kennedy mentions Sentinelone buying promised security, F-Five buying Calypso AI, and Mike Privet highlighted a really interesting one, Mitsubishi electric buying nozomi networks for a billion dollars.
• 9:33
  Speaker 0: A traditional industrial buying into OT security.
• 9:36
  Speaker 0: Exactly.
• 9:37
  Speaker 1: Shows that convergence
• 9:38
  Speaker 0: trend.
• 9:38
  Speaker 0: Industrial giants strategically moving into digital security at scale.
• 9:42
  Speaker 0: Okay, let's pivot one last time.
• 9:44
  Speaker 0: Healthcare and biotech.
• 9:45
  Speaker 0: Also seeing strong activity.
• 9:47
  Speaker 1: Definitely.
• 9:48
  Speaker 1: Despite the economic climate, there seems to be a renewed, almost aggressive appetite for late-stage assets.
• 9:53
  Speaker 0: What's driving it?
• 9:54
  Speaker 1: Big deals, often with creative structures.
• 9:57
  Speaker 1: Alistair Matchett detailed Pfizer's plan's seven point three billion dollar.
• 10:00
  Speaker 1: acquisition of Metzra.
• 10:02
  Speaker 0: The weight loss drug space.
• 10:04
  Speaker 1: Right.
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  Speaker 1: Largest deal there to date.
• 10:05
  Speaker 1: But interestingly, it includes two point four billion dollars in milestone based contingent value rights or CVRs.
• 10:12
  Speaker 0: So sharing the risk.
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  Speaker 1: Textbook example.
• 10:15
  Speaker 1: adapting deal terms because the asset valuation is inherently uncertain.
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  Speaker 1: Any
• 10:19
  Speaker 0: other big ones?
• 10:20
  Speaker 1: Anisfan DeSadi noted Roche buying eighty-nine bio for over two billion dollars.
• 10:25
  Speaker 1: Again, big pharma showing sustained interest, especially at that interception of tech and biotech.
• 10:30
  Speaker 0: So looking back over these last two weeks, the big picture seems to be interconnectedness.
• 10:36
  Speaker 1: I think that's exactly it.
• 10:37
  Speaker 1: M&A isn't just a series of steps.
• 10:39
  Speaker 1: Success demands focusing on the whole system, how the pieces interact.
• 10:43
  Speaker 0: Which brings us to that final thought.
• 10:45
  Speaker 0: Referencing Kiesin Patel, M&A is definitely not a straight line LOI to close.
• 10:50
  Speaker 1: Not at all.
• 10:50
  Speaker 1: He frames it as managing three interconnected levers, constantly feeding back into each other.
• 10:55
  Speaker 1: Deal structure, due diligence, and integration strategy.
• 10:59
  Speaker 1: Like
• 10:59
  Speaker 0: a closed system.
• 11:00
  Speaker 1: Exactly.
• 11:01
  Speaker 1: Change one.
• 11:02
  Speaker 1: You have to adjust the others.
• 11:03
  Speaker 1: Add CVRs to the deal structure like Pfizer did.
• 11:06
  Speaker 1: That immediately impacts your integration timeline and maybe the depth of diligence needed on certain milestones.
• 11:13
  Speaker 1: You can't manage it like a checklist.
• 11:14
  Speaker 1: You have to manage it dynamically, always balancing those three things.
• 11:18
  Speaker 1: It's a system.
• 11:19
  Speaker 0: If you enjoyed this episode, new episodes drop every two weeks.
• 11:22
  Speaker 0: Also, check out our other editions on private equity, venture capital, and strategy and consulting.
• 11:27
  Speaker 0: Thank you for joining us for this deep dive.
• 11:29
  Speaker 0: Be sure to subscribe so you don't miss our next analysis.