CPG Exit Strategy: How to Build a Consumer Brand Strategics Will Acquire | Keith Levy Part 2

19:34Keith Levy:Here's why, because I want to do an acquisition or I want to go do X, Y, Z. It's like, yeah, you've done it well the last two times. There's no reason why I shouldn't believe in you this time. Let's go do it. So there's essentially assessment on how well the entrepreneur is allocating capital. For sure. Unfortunately, we've had some portfolio companies that have wasted a lot of money. They've rolled out products that had no path to profitability or had just all kinds of issues around the belief that this thing would really be meaningful. It's not so much the stage that you waste capital. It is more on the executive management team and how well they execute capital allocation fundamentally.

20:11That is more of the reality.

20:14Keith Levy:100%. We haven't talked a lot about this in this conversation, Kisan, but a lot of these businesses, early stage or late stage, have great ideas, have great people, have resources, may have created a great brand with connection with consumers, or they fail most of the time, execution. They don't execute. You can do everything right, but where the rubber meets the road is just executing, doing what you said you were going to do. Sometimes people overcomplicate business. If I tell you I'm going to do something, I'm going to do it. And if I told you I was going to meet a particular deadline by this date, I'm going to do that come hell or high water.

20:50Keith Levy:Because your word is your bond and your proof points about delivering on your promises are important. And like for me, like a business plan, to me, that's a promise. I said, I'm going to generate 30 % growth this year. I'm going to create X amount of EBITDA or whatever the metrics are going to be. And I don't do that. I've broken my promise to you. I teach my son, man, like above anything else, just honor your promises. Be impeccable with your reward. Does it all show up in the financials? Like when I think about you're measuring me as a capital allocator and how well I am, is it purely you hit your numbers on the quarters and that signals that you're a great capital allocator?

21:24Or is there something underneath the financials?

21:26Keith Levy:No, I mean, I think it's that simple. Like you deliver your numbers. Michael used to tell me, he said, the only thing that matters is your bottom line income at the end of the year. I mean, yeah, if you deliver your numbers, like I'm not going to get in your face. You said you're going to do this. We gave you money to go do it. You did it. Great. Fair enough. I don't need to make it no more complicated than that. We get soft touchy about people stuff. And there is a point when like the numbers do matter. And I'll acknowledge that right here that you're right. The numbers matter. We agree on something.

21:50We don't agree on the frog commercial, but life isn't perfect. So that's all. Okay. So before I switch topics, I want to get to something good here. Let's clear the air on CPG. Define it. How do you define that category? Because we should have probably addressed this earlier.

22:04Keith Levy:Consumer product to me, what you call it consumer product goods, you can call it consumer package goods. Depends on your definition. But for me, it's oftentimes food, a beverage, cosmetic, nutraceutical. It's something that's going to be in a package. you can go in a retail environment or an online environment and buy and consume. It's not a service. I'm not buying consulting service. Deal room is a product. You're buying a physical product that actually does something for you, but it's not a consumer product. I'm not eating it and I'm putting it on my skin. I'm not doing something like that with it.

22:34For me, consumer products have those ingredients, but it's a wide variety, man.

22:38Keith Levy:It's drinks, it's snacks, it's pet food. A lot. Huge market. Nutraceuticals, it's cosmetics, it's clothing to some extent. I want the trillions market cap because it covers everything. Yeah, you want to put the TAM to that. It's pretty big. Okay, now we'll switch gears. Let's talk about exit. How do you position a CPG brand for exit? What makes it acquirable versus just another funding opportunity? For CPG brands that are positioned for exit, they have to meet a couple of important criteria. One is, do they have a brand out there that's unique, that's engaging to consumers, that stands for something?

23:12Keith Levy:They have a product that sits underneath that brand that's delivering something that is important to a consumer or want or need that's maybe unmet by some other companies out there. Thirdly, does it have a level of scale? And that's a very, I guess, arbitrary noun. My idea of scale could be very different than yours. From my experience, like with consumer product goods, a minimum threshold is probably$50 million in top line. And then hopefully you're generating close to double-digit EBITDA around that. If not double-digit, high single-digit with a path to certainly double-digit. The bigger you go from there, 60, 70, 100 million, 200 million, and you get to 20 % EBITDA, you become more attractive and your multiple goes up.

23:57Keith Levy:When we're working with companies, we want to get them to a threshold of top line and a profitability point that we think is both repeatable and expandable to where a strategic will come in or a financial investor like a PE or somebody that say that, yeah, there's blue sky here that's yet to be uncovered. From a strategic mindset, it's putting on my Mars hat. Okay, where can I take this around the world? Where can I put in my procurement leverage to buy better and improve margins? Where can I use my route to market strength to be able to make this more physically available from a marketing perspective?

24:35Keith Levy:How could I create more noise around this, create more awareness or more connection? Those types of things. When I look at a brand that's positioned for exit, it's got to meet a lot of those criteria for a big strategic investor. For the most part, we're looking to sell to strategics. We'd welcome financial sponsor for sure, but most of our companies are going to be smaller, growing fast. profitable meeting or exceeding some need in the marketplace that's either unmet or disruptive. How do you change how you would position a company specifically to exit to a strategic, knowing you've been in that seat before?

25:12I know what big companies do well and what they don't

25:15Keith Levy:do well. What they don't do well is they don't incubate brands well. The best R &D capabilities in the world, but every product that they create looks and smells like came out of a big company's R &D lab, and it's not interesting to consumers. So when I position it to a strategic is, look, guys, let's just agree on something because I spent 30-plus years doing this. You guys don't do this. You don't. Let's just be honest, okay? This founder has done it well. They've engaged with consumers in a way you can't. They've met needs in the marketplace that you've yet to meet. They're profitable, they're growing, and they've got energy around it, and it's exciting.

25:46Keith Levy:You need that in your portfolio. You haven't been able to do it. That's how I would talk in very candid brass tacks. That's what you're buying. as a brand. I've done it. I've sat with my R &D guys and go, look, there's great product out there. I know you can make it. And what would they do? They'd put some glossy package on it. They'd go on air 26 weeks on television and consumers would go, eh, not interested. I like it. So there is a Bring It Direct. Here's a brand that's proven out. It just doesn't happen in large companies. You get an opportunity to take it, scale it. It's like you don't even have to paint that detail of a picture.

26:19You're going to get these kind of synergies from doing this kind of deal. The other thing is It's important to get an audience beyond corporate development. Well, the actual business operators.

26:27Keith Levy:Yeah, because corporate development looks at it. It's an equation. It's IRR and it can both fit in a... Trust me, I've worked with a lot of great, smart corporate development people. And they're really what they do. It's all right if we bash it on behalf of our listeners, but it's all right. No, again, they're not going to have the level of... This is what they need to hear, Keith. Let it out. They're not going to... Sorry, guys. But they're not going to have the level of understanding that a business operator is sitting there going, I got a big problem in my business plan. And the only way to fill that hole is by getting a product or a business that addresses that need over a period of time.

26:59Keith Levy:And again, the corporate development guys are great. They have a discipline that they execute, but somewhat limited in terms of the strategic importance of a particular acquisition. So you got to get to both. You got to get to the operators that have a need. Then you got to get to the corporate development people that are going to actually execute the deal. It's going to make sense financially as strategically for the overall business. But you got to get different audiences. For me, that's critical. Yeah. So it's more than just the corp dev folks. Forget attention. Maybe get the sponsor from the business that understands why the deal would make sense.

27:33Keith Levy:And good corp dev guys know that, man. A good corp dev person listening to this podcast would partner with their business unit leaders and bring them right in and work in partnership with each other. It's like, hey, look, Kisan, I've got an idea. I've seen this business in the marketplace. I know you have an opportunity to want to create X, Y, and Z. This can help. Let's have a chat. At the end of the day, there's a business case that is to be made on doing the deal. And there is a point on your role where you can be proactive or encourage the founder to be proactive to be able to get that business case, get the conversation that leads to exploring building a business case on doing the deal.

28:10And fundamentally, too, like in terms of optimizing for exit, the more options, the better. and I'm curious, what options you curate proprietary as a principal and founder and you as an operating investor versus hiring the banker to go do it in terms of a, hey, we want to compress timeline and get this deal done.

28:28Keith Levy:This isn't exactly related to that topic, but one of the things I was thinking about as we were talking here is deals come both ways. Corporate development guys go, hey, I got a call from a banker that's shopping a brand or a product and this can make sense for your business. Maybe the operator isn't interested, maybe he's not. The other way it goes is like the operator calls up the corporate dev team. I've seen this brand. I was in wherever, Ecuador, and it's pretty cool. And you guys should take a look at it. There's times when both sides are helpful for the other. In other words, sometimes the operator has this idea and he sees this thing and a corporate development professional is going to be more adult supervision in the room going, no, you like this, but here's why it makes absolutely no financial sense.

29:05And that's important. And on the other hand,

29:07Keith Levy:it's like sometimes the corporate dev pipeline of things they're seeing is pretty limited to what's coming through bankers or different systems that are looking for stuff. And sometimes you just discover stuff because you're an operator and you're out in the marketplace, you see something and no one else has seen it. I need you to take a look at this. It's a great relationship. But again, why both audiences are important from when you're trying to position a business for sale. Who do I need to talk to? Yeah. Start building that appeal early and obviously have that business dialed in to be appealing.

29:36Your investments that work out the best. I want to distill what are those key characteristics that worked out well? Is it more in the founder, the category, the timing, the operational readiness?

29:48Keith Levy:Founder still placed a lot of value on that. They set the tone, they create the vision, they create the team, they hire the people they need to get, and they make shit happen. Number one. Secondly, how have they been able to create a story that's somewhat unexpected? Either brand traction or incredible distribution and top line revenue delivery, or maybe just a margin structure that's unique to any other player in the category. We've had some of those in our portfolios, a couple of them have been exited because of those very reasons. Again, you're asking me to draw my experience. So I'm looking at these things and going like, yeah, those are some of the things that were difference makers for those particular companies versus maybe some others that are also ran.

30:32Keith Levy:Is this the pattern? There's like super strong founder and they crack the nut on something. And they have this unique edge that sort of allows them to really win on it. It has a lot to do with that. Look, I'm not going to tell you that we don't have constant arguments with founders about what they think and what we think. That just happens. That's business. And that's part of it. At the end of the day, if a founder is passionate enough and they've just got the brute force strength to just overcome obstacles and push their team and their ideas through insurmountable circumstances, it's pretty cool.

31:06Keith Levy:and you watch that happen, you can see the value in that founder. Conversely, when you see a founder fold under the pressure or focus on all the wrong stuff or completely distracted with the next shiny object versus driving core business, it's important to survival. You also see the differences and really good founders and not so good founders. What was the best investment Sonoma ever made? That's still yet to come. We got a couple of exits. You can pick one you're super proud of. We have a couple of exits that are on the horizon. and could be really big to date as Touchland. Okay, Touchland. Yeah.

31:39We brought that up earlier. Does that hold true? Founder and the key edge. Why? Can you explain why was it the founder that was instrumental in making that deal successful? And what was their key edge?

31:52Keith Levy:First, female founder in a cosmetic category created a just great product with an incredible margin structure and forged a great relationship with Sephora. You got with the biggest player in that particular industry. You made your product physically available at point of purchase. You had a kind of charismatic female founder, which makes sense for that particular industry. And you just created a brand around it that people wanted to lean into. And I'm imagining her being very type A. Yeah. Dialed in margins and boom. I know I need to get this big brand partnership to win. Getting done. Yeah. I mean, it was odd because I wasn't very involved in this business at all because it's not my wheelhouse.

32:39Keith Levy:But the people that I know in the firm that were like blown away with how little they needed to engage with this group because everything they were doing was just right on point. What was their key edge? I don't know how to describe it. It's all those things I just mentioned. It's like a product that was unique. It was packaging. It was brand. It was Sephora. It was massive margin structure. And it was, I mean, we were in it like two years. So, you know, I think there's a good point on, there could be multiple factors that builds that key edge. You got a few things that you really nailed and then boom, that's that, it's a great success.

33:19I want to talk about a little more sensitive. Yeah. The deals that fall apart. Yeah. And we'll be anonymous. And we'll put you on the spot. For sure. It gets you in trouble. People calling bad-mouthing me or you. But I want to understand these deals, why they fall apart. Especially after you did your diligence. You cut them a check. You got a lot of high hope, obviously, that you mentioned on your full confidence. That's why you cut them a check.

33:43Keith Levy:Yeah. I mean, look, founders that haven't actually lived up to what we thought. they were kind of one of the biggest problems. I keep placing a lot of emphasis on the founder, but I'm being consistent in why I believe that. And the ones that have done really well have lived up to or exceeded expectations and the ones that haven't have fallen below. And why have they fallen below? Some were maybe more distracted than when we thought they were and less focused on the things that were important. That's one. Secondly, maybe the level of understanding of the financial structure of what it takes to both develop, launch, and actually make money on things was probably disconnected in what we thought.

34:29Keith Levy:And again, back to the ability we thought with the founder and the leadership team in the business. And thirdly, it's just been something like bad luck situation. Maybe a quality problem or you lost the ability to make product in a particular deal, which may be a compromise, an important relationship with a retailer that was counting on you to deliver a certain level of inventory and you weren't able to do that. And that was a problem you can recover from. We've had those things. We also have had things where we've bet on some celebrity founders. There was a period in the 2000s in particular, whether it was George Clooney's behind the Casamigos or whoever XYZ celebrity behind this particular brand that just made it seem like they were born on third base.

35:13Keith Levy:They had those advantages that other people didn't have because they had notoriety and they could bring attention to the brand. And then what we found was that sometimes those celebrities weren't either as critical to success of the business or they weren't as involved as we thought they were going to be. That was kind of a bad assumption on our part where we felt like we'd seen that formula work. Kobe Bryant with body armor or George Clooney with Casamigos or whoever. We kind of fell into that trap a little bit thinking that's very repeatable. And in some respects, there's a reason to believe that.

35:50Keith Levy:But there's a whole lot of other things that have to go right besides that. We've had some failures with that assumption. We've also had some areas where we stubbed our toe or didn't reserve enough capital to do follow-on rounds, put money into businesses that needed it. That created some straining relationships and maybe some issues around where we wanted to go together. And I think there were some businesses we invested in early that weren't profitable that never became profitable. That informs some of our current philosophy that says we're going to invest in businesses that have strong recurring revenue, strong growth, and profitability are a very short window of path to profitability.

36:27Keith Levy:Quite frankly, I think those are all been good lessons. Life and career, you make mistakes and you should be a curious learner your whole life and allow those mistakes to be things that inform better decisions down the road. They're actually valuable. Yeah, nobody wants to make a big clanger out there or a mistake, but they can actually be very good to your professional development and your personal journey and your firm and your philosophy and investing, how you create success over long-term. That's trite. But most prolific business leaders will tell you most of the stuff that they learn the most valuable lessons from the mistakes and the failures.

37:05I'm getting some good ones here. You listed distracted founder. The cost to execute was underestimated. Bad luck happens at market. The celebrities, but I take that as almost copycatting models. And then you have certainty because the model successful somewhere else. That's a good description. The funding scenario, the shift where you're planning add-ons, things change and that whole funding and just the market. Funding could rise up. It's hard to get subsequent funding rounds. The other was maybe the company's either too early or there was this unclear path to profitability. Yep. I already got some good lessons from your experience here.

37:41What was the most expensive lesson?

37:44Keith Levy:That one's hard to answer without revealing the identity of the particular portco. Not even a broad nature of it. Was it the founder? Was it the... Jeez, it was a whole host of comedy of errors, quite frankly. Bad assumptions going in. Founders, maybe too high of a valuation expectation going through potential processes to exit. It was bad timing of things like COVID. It was too much money spent on a broader executive team than probably was necessary to meet the needs of the business. It was bad execution, which I talked about earlier. and it was bad margin structure. Those are the things that like basically have unraveled certain investments that we had high hopes for.

38:29Okay, so we have a multiple of these, you know, you kind of got in a high valuation. There's a sort of operating cost model, essentially cost to execute. The uneventful COVID happens, that's a bad luck. And then profitability past profitability.

38:43Keith Levy:Yeah, again, it's usually not one thing, man. You want me to call it one thing, but it's usually, like I said, a comedy of errors. We learned some good lessons from that stuff. The thing is that I realized in my 40 years of business is that most mistakes are not fatal. If you had to go back in time and rediligence that deal, would you do it differently? Yeah. Probably wouldn't do the deal. Can you walk me through what that funnel looks like from the different stages when you're starting to look at deals? And then when you start really getting more serious about it until you actually get one that's actionable?

39:15Kind of clarifying the funnel.

39:16Keith Levy:There's a lot of deal flow that comes our way. For example, I've been involved with the funds for what, six years now, seven years almost now. We've looked at hundreds of deals. And as I said, we have 25 active portfolio companies. Think about how small of a percentage that is. So you're going to look at a lot and a lot's going to go right out the bottom of the funnel saying, no, this just doesn't work or out the side of it for a whole host of reasons. Maybe it's not big enough, maybe it's not profitable, maybe we don't believe that the product is that unique, maybe we're not in love with the founder-led story or the founder himself or herself.

39:52Keith Levy:Those types of things will be a bit of a screening process. Let's say something does make it through the funnel, like this is interesting. And all those things that I just mentioned that a rejected opportunity would essentially be rejected because of, those same things would be the ones that you would check the boxes and say, okay, now they're checking these boxes, so let's continue to pursue this. We have a couple of junior folks in the firm that are doing a lot of the deal flow, if you will, and screening a lot of that stuff before they would bring it to the partners. But once they bring it to the partners, we get a little bit more serious about it.

40:26Keith Levy:Then we do a little bit of our own due diligence in terms of looking at their numbers, if they'll share them, sometimes making a visit, certainly having a meeting, whether that's Zoom or in person, and getting a feel for the people. And again, the business you're hoping to do business with. And if you get beyond that stage and you're really serious about it, you want to make an investment, then it goes to the investment committee. We have an investment committee in the firm. It's at that point where we're going to try and poke holes in it. What are the things we're not seeing? What are all the reasons why we shouldn't do this deal versus all the reasons that we should do it?

40:55Keith Levy:If it passes that level of scrutiny and all the partners agree that, yeah, this is something we should go invest in and bring it into the fund, then we do the deal. I'm condensing that a lot. That could be months of looking at something for where it became interesting to where you actually wanted to put some action against it. So you got some stages. You have this essentially like a real quick diligence pass, which you can tell, does this even fundamentally fit our criteria in terms of company size, category, and just is the company going up or down type of thing. Yeah. And then from there, and you've got teams that scout that out, you get a little more serious.

41:32Like this fits initial criteria. Hey, let's sign an NDA. Let's start digging around. This is maybe when it gets brought up to the partners, when there is a stronger fit, if it's sourced by the junior folks, maybe some of the stuff actually comes through your network. How much does it lean on this kind of broad funnel that the junior team brings in versus stuff that actually just comes through the network?

41:52Keith Levy:It's a condemnation of all that. All of us have relationships and people throw stuff our way. And most of us are pretty curious. We want to look at almost everything, right? We've looked at enough things that we can quickly tell whether or not it warrants further discussion or further investigation or exploration. There's certain portfolio companies that have come through the main partners that'll get fast-tracked a little bit, but there are sometimes things that just come out of the blue through relationships and go, oh, this is interesting. Let's dig deeper. Got it. So it can come from multiple sources.

42:24When you get serious about it, sign in DA, start meeting people. The Keith Levy Diligence Framework comes in play at this point. And then this investment committee, What is that comprised of? Is that solid partners there? How big of a committee who's on there?

42:39Keith Levy:It's basically the partners, which in the firm are about six. All those key stakeholders in the GP level. Certain partners have different expertise and different backgrounds in terms of the deals that they bring more credibility to, let's say. So we have guys that have worked more in their career in, let's say, things like light manufacturing. We have some that work more on nutraceutical cosmetic. They have some, like myself, that work more on consumer packaged goods that people would put inside their body. They would eat them. They would drink them. And those voices get louder depending on what we're putting in front of them and how much expertise and experience they can bring to bear on the particular idea.

43:25You're trying to kill the deals as quick as possible, basically. That's like initial, hey, does this fit? Or broad criteria. You go through your framework, essentially look for the red flags. If it's not going to be a doable deal, you want to do it earlier. You get to LOI. I guess the painful is once you sign LOI and you kill a deal post-LOI, that's when it starts hurting. What I'm trying to get at is the reasons you kill a deal through these different stages. Hey, obviously, it's not even a fit. This isn't the type of deal we do. We're looking for whatever it is, 40 % growth rate, something like that, or a certain revenue size.

43:58I understand that in the earlier stages. but then as you progress, and we talked a lot about the founder fit, that's one, but what are the other reasons that would come up as, especially in later where it gets more painful in terms of reasons you would kill the deal?

44:12Keith Levy:Maybe a competitive threat that all of a sudden enters the marketplace that didn't exist when you started doing the due diligence. Ooh, they've got some company here. Maybe this isn't going to be as easy as we thought. There's no real moat here. So that happens. I remember we looked at a couple of deals during COVID that were really good. And today we regret not doing them, but we were just scared. At the time, everything was new and uncertain. And we kept the deadbolt on the checkbook at that point. Whereas today, some of those products that we passed on are like, wow, I wish we would have done that deal.

44:40Keith Levy:But those things happen. There's also some things at times that come out in the diligence process where maybe people haven't been completely transparent with you. And as you get to the end of getting ready to actually write a check and you start looking at the numbers a little bit closer, they didn't tell me this. This is a surprise. And that sometimes is a trust problem. And you can't go into deals with people that you don't trust. So those are just some examples that I've seen over time that could unravel a deal in a late stage. Have you been part of a process where you champion a deal all the way up to the investment committee, the investment committee that killed it?

45:18Like when the investment committee kills it, what do they see that you don't?

45:22Keith Levy:Yeah, I haven't had a lot of that at Sonoma. Typically, when it gets there, we're pretty much going to do the deal. But I've had a bunch at Mars where it went through, we had stage papers. We had to write a stage paper, even have a conversation with somebody. And that had to be approved by basically the board. And then once we got past that, stage two was like, okay, we want to enter into non-binding negotiations. And then stage three paper had to be written to say, oh, we're really serious. We want to bring this to the board. We're really interested in acquiring it or making investment or whatever it was.

45:53Keith Levy:I'd say more often than not, things got shot down, even when we got that far. for whatever reason, IRR isn't high enough. Maybe it was, in my case, I was looking after acquisitions and investments and snacks and treats and things like that. But we're competing with a pet care segment. We're competing with a food segment. And maybe they had a more attractive deal, in which case my particular deal got thrown to the bottom of the list and got rejected. So that happened a lot in Mars. Is it something just their intuition? Because you're dealing with investment community that has so many years in the industry that they're just like, no, this is...

46:28You talking about it, Mars? As an example in general, but it may be in that case, because that is a very well-established sort of family legacy business that may be different versus the P firm is relatively a newer business. Yeah.

46:40Keith Levy:Yeah. And again, like once it gets to the investment committee, we're looking for... It's also like a P versus strategic sort of... Yeah. But again, when it gets to the investment committee, you're pretty much... It's going to take a lot to unravel it once it gets that far, because there's going to be, whether it's John or myself or somebody champing in a particular deal. And the investment committee is going to have difficult questions to answer, but we've thought through a lot of those. And oftentimes, like most things, you don't have all of the information. You got to be somewhat comfortable with 80%.

47:08Keith Levy:In other words, don't let perfect be the enemy of good enough. At some point, you have to move. That's the one thing that is great. A big difference from working with Sonoma Brands versus working inside a large strategic is that they move fast. They're nimble. Big machines like Mars or Mondelez or whoever that you might deal with, they take a long time to do stuff. There's lots of layers of approvals and oftentimes they lose deals because of that. But we don't want to be in a position because we move too slow and we've lost a good deal. Two more questions and we'll wrap it up. Sure. One, like you sat in every chair, from marketing the brand to running the company, investing in them, sitting on the boards, and even stepping in when things are on fire.

47:50Which seed taught you the most about what actually makes a brand last?

47:55Keith Levy:Being a CMO. Okay. Because you're very focused on creating brand health. You know, brand health is a metric of how many people choose you most often when they have lots and lots of choices out there. So I have to do everything in my power to make sure that brand is a trust mark that you trust impeccably and that I engage you. I'm in front of you and I'm delivering against your expectations day in and day out. I used to think about this framework when I was at Mars, which I actually thought was really genius. It was like this flywheel that we called the laws of growth. Actually officially created by a professor down in Australia.

48:36But what it basically

48:38Keith Levy:subscribes to is that you have three components of creating scale in a business. One is you need to create mental availability. I'm aware of who you are, what you represent, and I know your brand. Once I achieve that, that's first check. The second is physical availability. Once I know you, I'm going to be looking for you. And if you're not available and I can't find you, that's a problem. But if I have physical availability and nobody knows you, nobody's looking for you, that's a problem too. So you have to have mental availability, then physical availability. And then when you create scale, people know you, people are looking for you, they're buying you on a regular basis.

49:14Keith Levy:now you're really spinning that flywheel at a rapid rate because you've connected those dots around it. Again, I learned that as a CMO and I learned that as a president of different divisions of Mars about how important that is to deliver upon those expectations you've set for consumers, be in front of them, be available to them, and deliver on those promises of the trust mark that the brand has said, this is who I am. And great brands, they're really clear about who they are. and what they stand for, they're also very clear about what they're passionately opposed to. Interesting. And if you do that really well and really consistently, people will always know who you are.

49:55Keith Levy:And guess what? I'm going to alienate some people because some people aren't going to like what I stand for, or they're not going to like what I'm passionately opposed to. Think about the world we live in today with politics. I'm okay with that because if you try and create a brand for everybody, you'll create a brand for nobody. But you've got to create those boundaries around, this is who I am. This is who I'm not. This is what I stand for. This is what I'm passionately opposed to. And you do that well in every single touch point you show up in front of consumers with, you'll be successful. I'm convinced of that.

50:24Keith Levy:I've done that successfully throughout my career. I managed multi-billion dollar brands, some of the most valuable brands in the world. And I've done it with small businesses and brands that I can learn from some of the things that we've done over time that have built a following that's hard to argue with. That's how I look at it. This might be the best takeaway from the podcast. So for me, I stand for learning from the best in M &A. That's always been the number one thesis of the whole podcast. Learn from the best, period. The counter to that is the bullshit corporate fluff, the conference that is just a bunch of talking head panels where it's super high level topical and there's no depth and a real tactical advice.

51:06I had to push you to the point where you wouldn't answer some of my questions. That's why I feel good. I'm like, I did my job.

51:12Keith Levy:No, amen. I hear all that. And I agree with all of it as well. Comfort zone is one of those things that particularly as an interviewer, as a business owner, you got to push people beyond. You're leading people. They think all I can do is this. You got to push a little harder. I think you can do more. I know you can do more. And same thing when you're trying to get to the root of the real answers. When you get the most out of yourself and get most out of people is when you push yourself, to push others out of their comfort zone and places where they don't think they could go. And then when they get there, it's like, wow, I'm glad you did that.

51:43Keith Levy:Or I'm glad I did that to myself because I don't think I would have gone there. I'm obsessed with Navy SEALs these days. I'm listening to a lot of podcasts on what the body can endure that the mind will often give up on. And the same is true in business. If you can just see something in people or see something in your business that you think is really possible, but far out there, like maybe feel somewhat unattainable. And when people get there, and it's like going, whoa, it's a barrier we didn't think we could actually cross. And when they get there, it's pretty cool. I've had a good fortune of having those experiences in my own professional career, both in the corporate world and even what I'm doing now.

52:18Keith Levy:And it's what gets me out of bed in the morning to think about what's next and why I even spend time doing any of this. It's sort of part of the human quest, the human equation, and what's really possible in life. Push yourself, push others, and learn to suffer. Yeah, man. You won't know joy unless you understand suffering. That is so true. What's the craziest thing you've seen in M &A? This latest Mars deal to me because I was close to it. It was interesting to me, the Calanova deal. Calanova, yeah. Huge deal. What is it, 10 plus billion? Yeah. But I get why they did it because they had a very small subscale food business with essentially Ben's Originals and Tasty Bites and a few not super well-known brands.

53:03Keith Levy:You're lost in food brokers and a subscale business that just doesn't add up to a whole lot. You look at Kelanova and go, wow, it's multi-billion dollars. I can just throw on the top line and now I'm a player in food. And I get that because there's only so many multi-billion dollar acquisitions for a company that's got a$70 billion top line that's actually going to be meaningful. But back to why I joined Mars Wrigley when I did was that I believe that they had brands that weren't on trend anymore. Great brands. There'll always be a consumer for those. But if you want growth, you have to expand beyond those boundaries of the brands that you have.

53:41Keith Levy:Calanova, man, you got Eggos and Cheez-Its and a bunch of stuff that's not really much on trend. I don't know. You have scale. You've bought a big piece of revenue and certainly some household names out there. But are they going to grow? And can really look in the mirror and say, yeah, I'm tapped in the future of what consumers want versus what they wanted 20 years ago. And they're still buying, but maybe they're not buying at the same level that they used to. So, Mar's a phenomenal company. Paul Warrack's an amazing CEO. I mean, they've got really smart people there. And I'm sure they probably know why they did it better than I do.

54:16Keith Levy:But as an outsider looking in, I wonder if that really makes sense or not. I had a lot of bankers call me, which I couldn't really talk to them about my opinions about what it was. I can talk to you, but it's just the deal's done and they're integrating. and then they got to do what they need to do to realize the synergies and the value creation that they promised the board and the Mars family. And they'll do their best to do that. But that one surprised me. It surprised me and it didn't. I knew they wanted to be a player in food and this was out there. They did it. I just, again, take a step back and go, are these brands really better for you?

54:51Keith Levy:Are they ones consumers want? Are they going to grow? Are they going to be the future? And the jury's out on that. at least for me. Big Maca deals that surprise you. Crazy. Keith, I appreciate taking time to have this conversation. Anytime, buddy. It was a lot of fun. I learned a lot through this conversation. You've helped me become a better M &A scientist. If you're still listening to this podcast at this point in time, one, I got to thank you, my fellow M &A scientist. Make sure you're a member of M &A science because that's a seal that you're a true M &A scientist and then we have all these things I'm continuously building on that.

55:26I want to get some feedback on this podcast one high altitude we're 900 feet up so I'm curious I threw my voice off I could tell a little bit two bourbon conversation usually it's a coffee but we've got a little later in the day so we caught us some bourbon I just want to know what you like about the podcast reach out to me connect with me on LinkedIn I dropped my privacy thing so you can just connect with me but put a little comment in there so I know it's not spam you just generally want to connect and I love to get feedback if there's topics I haven't covered bring them to me I'm open to exploring and finding good SMEs, mostly operators, to put on the podcast.

56:01And also, criticism. I'll take it. There's things you think I could do to make this podcast better. Reach out. I'd love to hear the feedback. So next time, here's to the deal.

56:23Thank you for taking the time to explore the world of M &A with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you need help standing up an M &A function or optimizing one that you already have, we're here to help. And if we can't help you, we probably know someone that can. You can reach out to me by email, Kisan, K-I-S-O-N, at mascience.com. Or you can text me directly at 312-857-3711. If you just want to keep learning at your own pace, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter.

57:08Again, that's mascience.com. Here's to the deal.

57:21views and opinions expressed on mna science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual this podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions and giàm Голубкина.