How Business Cycles Affect M&A Valuation

22:47And maybe you'll consider onshoring some of that if you can, but that might increase your costs. If you're depending on imports, not just from China, but from elsewhere, what's happening in the Red Sea, the Suez Canal, may constrain or change some of your manufacturing timelines. One of the things we see in construction quite a bit, but also in other areas, anybody providing a service or agreeing to build something or supply something in the future will insist on having longer schedules. and those longer schedules are meant to smooth over or allow cushion for potential supply chain disruptions or labor shortages, whatever they may be facing.

23:21The cost to that, things take longer, they tend to cost more. If any of that's fueled by borrowed money, that means interest is also increasing, interest expenses increasing over that time period, as well as exposure to volatility. And that pushes out when you'll have a steady state that you might be predicting or valuing. That means you have more uncertainty, so asset values come back down. I think sectors that depend on anything that's crossing a border, whether that's capital or goods or technology, they have that issue. By the same token, the response to that, for example, the United States, we have the CHIPS Act, a bipartisan law that stimulates investment in domestic manufacturing of semiconductors.

23:55We're seeing massive investment, billions going into chip fab plants here to reduce our dependence on Taiwan in particular. That's because of the geopolitics of China, by and large. And that will ultimately lead to a better domestic supply chain of those technologies, closer onshore test beds and production beds for the technology as it innovates. And with the expansion of data and data centers, the expansion of AI, of quantum computing, eventually, these things that are just massive magnets attracting not just capital, but attracting real equipment and real investment. The fact that it's onshore, it'll increase costs, but I think that's offset, more than offset, by the security of supply.

24:35Especially if you get that level of confidence too, then things continue to be chaotic on the other end. And there's a difference between being exposed to risk and perceiving risks. And that ties back to those business cycles. One is, what is the inherent risk in your business? And some of that's internal and some of it's external. How exposed are you to things you can control or can't control? But the other one is how worried you are about that or how aware you are of that or what blind spots you might have it. I see quite a bit often people are either overconfident or they have missed some of the correlations that are inherent in risk profiles for their business.

25:08You used this line with me before. Lack of experience can lead to overconfidence when it comes to valuation. Yeah, and some of that too, I think, as I said before, if you've never been through something bad, you either don't fear it or you don't understand it or you overreact when it happens. I think that's part of it. I think the other is we've had such a prolonged period of growth and expansion, not just in the economy, but especially in the financial sector. And a shift in sources of capital from intermediated bank-dominated economies into private hands. Private equity now is probably valued more than public equity.

25:42Private capital is also being directed on the debt side. So private credit is now over a trillion dollars available to be deployed in that. But it's outside the fully regulated banking sector. When that's happening and everybody's winning and everybody looks good, we all look smart. The real challenge is, and the weather sorting begins, is if we do end up with an economic contraction, and the laws of business cycles have not been repealed, eventually we will have one for whatever reasons. When the tide comes back down, you'll see which boats remain above it. Good stuff to think about here. Any other notes around cycles and how it impacts valuations?

26:14Because we've got a lot of dynamics. It's not like a clear cookie-cutter thing. I like the perspective on just the certainty and the perception around uncertainty. The reference around just experience and not being as familiar with those blind spots. Is that just a natural tendency? You think about at some point, I'm going to do the first deal for our company here, or just somebody getting into a new industry for the first time. Do they tend to overvalue assets? And that's just the cost to play in the field? Let me say one thing first. A lot of this is basic human psychology. And I have blind spots too.

26:47We all do. That's just normal. What do you do about that? One of them is get other people or other experts or other partners, business partners, whatever it might be, and battle ideas around and allow yourself to be challenged, either institutionally or personally. That's, I think, really important. Second, we ask the question of whether people are overpaying. In a M &A context or any kind of an acquisition context, by definition, the buyer overpaid because they are valuing what they're buying at more than competing bidders and more than the seller. The seller say, hey, I'd rather have your cash or whatever it is we're trading.

27:19And they're the ones who, by the way, know their asset best. So the person with the best knowledge is happy to part with it to somebody who has less knowledge despite diligence, despite doing the best work they can with their advisors. But that combination of asymmetric information and the fact that you definitely overpaid It doesn't mean you shouldn't have done it. It doesn't mean you can't make money while doing transactions. But at the end of the day, it means that you've got a little bit of extra you have to compensate for first before you get into the things that really create value. And then you have to look at why are you doing the deal.

27:48I think a lot of companies also are shedding non-strategic assets. We're going to see a lot more of that probably in the coming year because they're focusing on their core competencies. Not necessarily because they're better at it, although they should be, but also they're more confident about it. And when they actually look at the uncertainties, the unknowns, the risks, risk you can model, uncertainty you can't, but they look at what's coming and their ability to either withstand or control it, focusing on what you know best is probably a pretty good idea. Yes. There's that domain expertise. Even if you do have domain expertise and you're doing acquisition, you're right.

28:19There's essentially, I don't know if the lens is you're assuming you're overpaying, but there is a view of the synergies that we're not buying this as an asset that's going to print out money for us. We're going to have to be proactive to extract value from this business. I think that's that clarifying point. It is. Stay on that because I think for a corporate buyer, strategic buyer, synergies are very important. And then the question becomes, can we use economies of scale to cut costs? Can we grow our market share perhaps? Not in a way which violates antitrust laws, but in a way that does create an appropriate level of defensible level of market power, builds a bit of moat, maybe allows us to extract higher margins.

29:00I think integration and cultural integration, not just financial or production integration, becomes very important in that case. And most of those buyers plan on holding those assets that they're buying or the companies they're buying for a very long time. But there is time to integrate them and grow them in a kind of an organic way. And if the cultures fit, those synergies can be real. For other types of buyers, some private equity buyers, not all, but some, there may be the idea that you buy the asset or the company and you find ways either to bolt it onto other things in your platform that achieve those same synergies.

29:30great. You may find ways to improve the business and then sell it. The question really then becomes what's your exit? And if you're just assuming that you're going to buy it today and sell it for more tomorrow because markets are going up and you don't have to be smart about what you're doing, you're not adding value otherwise. That I think is an overly optimistic bet. I would agree. There was a point in time when you could do that. We may still be in one, but eventually when the music stops, the musical chairs, it's just like you run out of the chairs. I feel like I sound like my parents, But like the good old days are over with.

29:58You could always find these kind of assets that were highly undervalued. I think everything's so competitive right now. Well, part of that is because we actually do have better access information than we've ever had. There's greater transparency. And it's not just because of disclosures and securities laws. A lot of it is, look how diligence is done. The ability to turn over vast amounts of information quickly and analyze it and assimilate it is higher. And AI is going to make that even easier. Because you'll be able to take big data sets of information about companies with very complex variables and processes.

30:25And if you use the right algorithms and you're intelligent about it, it's not that you make better decisions necessarily. You might, but you'll be able to make more decisions more quickly that are at least as good. You're right. I mean, between like LinkedIn and Glassdoor, I can figure out everything about your people and culture over there. Yeah. And you start synthesizing some AI. Which, by the way, also helps in the downside. Sometimes when people buy a company or make an investment, they're blind to things that they would have liked to have known. Certain types of liabilities, litigation risks, maybe environmental risks that may come with a site or with a company, IP gaps and patent portfolios, whatever that might be.

31:00If you're not as blind to the downsides, that also, I think, helps quite a bit. Not just having confidence in what you're buying, but having appropriate confidence in what you're buying so that your valuation has a greater chance of being right. That's true. Things we're listing around the blind spot, then there's overconfidence as well. In terms of blind spot, we talked about expanding the perspective that attorneys with industry experience get the folks in there and that may be operators and so forth and really look at that opportunity to help identify those blind spots. We also talked about just having almost mindset you are overpaying that you can really dig down through what does that synergy plan look like for you to create value in the opportunity.

31:41Are there other views in terms of identifying blind spots? I mentioned culture a minute ago. I think cultural blind spots, especially for companies that are trying to merge, that could be a real challenge. And we see it in other spaces. Private equity funds are merging. Law firms are merging. We had a lot of consolidation among accounting firms a few years ago. And now we're still seeing some of those are having a hard time with succession at the very top. Hard time simulating different ownership or partnership structures. I think that's something that people often underestimate. Some of that is because we focus a lot on finance.

32:13People talk about ESG. We do ESG diligence and people focus a lot on the E in that. What are the environmental impacts? And they may focus on governance, ideally. And governance is one that should get a lot more attention too. There's a lot of blind spots around governance and how to make it more effective and fair and less likely to not work or to get stuck. All of those things, not to defend or criticize ESG either way, it doesn't matter. The point is there are non-financial risks that companies should be attuned to and that investors should be attuned to, however you label it. And culture is one of those things.

32:43Big one. It comes up a lot. Being really mindful of that and putting that right amount of emphasis on it. That's a tricky one. It is tricky. That's why diligence should take some time. By the time you're really digging a culture, you're signing an LOI. And you sign an LOI, it's hard to walk away at that point. Yeah, well, and remember too, culture is not just do the CEOs get along. You've got to look under the hood. I agree. Do you believe in that? That there just should be a way deeper view before signing an LOI on culture? Or is it more of being comfortable walking away for cultural reasons after signing an LOI?

33:13Look, whether people walk away or not, there could be a lot of reasons for that. It could be culture. More likely, it's when they do their diligence, they find out it's not quite what they expected. The numbers don't add up. One cultural, by the way, red flag is if you're doing diligence and you're the buyer, you're not getting responsive answers. Or it looks like what's being given to you is being cleaned or being delayed or being filtered somehow. Or it's just non-responsive. Or they just seem incoherent and they're not organized. Whatever it might be, those are all red flags to maybe walk away, maybe just dig deeper.

33:41These blind spots, being blind to your blind spots is basically what leads to overconfidence. Sure. That's a tautology, but yes. That's where you can get in trouble is if you're doing a deal or maybe you're taking too much risk. Yeah. I want to be careful. When I use overconfidence, that sounds critical and it really isn't meant to be. We're all confident or we wouldn't do any deals. Deals depend on confidence and you don't know whether you're overconfident until later. Exactly. So you really don't know. It's a very biased thing. Was the person overconfident or not? And you should have a level of confidence to pull the trigger on a deal.

34:16Definition of itself, very subjective. How do we define it in a perspective of the deals that you really shouldn't be doing? Risk aversion or taking on too much risk too happily. What determines that? One might be your psychology, your personality, your makeup. And that can be true of institutions, funds, not just of CEOs and fund managers. It could be true of anybody. And they tend to reinforce if you're in certain institutions where everybody's the same. I remember doing a lot of work years ago for Enron, and you walked into their office, and guess what? There was a lot of groupthink. Everybody approached risk the same way.

34:48Another contributor to that is if you're spending somebody else's money, you should be aware that you have a fiduciary duty to that person. You should be aware that you should be more careful with somebody else's money, or at least as careful with somebody else's money as you are with your own. There's in many corners of the economy, especially in the financial sector, many people lose side of that. And they may be more prone to take risk with somebody else's money than they might be with their own. Part of that is the incentive structure. You're getting a share of the money that you're holding, but you do need to deploy it.

35:17You have pressure to deploy it. Eventually, if you haven't deployed it, you better go because if you don't, you can't raise your next fund. Okay, fine. So you'll be prudent about that. You do that responsibly. And you have incentive to make good investments because you're sharing in the upside. Not necessarily sharing the downside as immediately, except to the extent that it constrains your ability to raise further capital in the future. And you also then, of course, are not sharing in the upside that you would have hoped to achieve. You have some correlated interest, but not entirely. The combination of asymmetric information in the transactions and a lack of alignment of interests, I think, is one of the things that contributes for any human to some of the overconfidence in that context.

35:52I like that. That's a good way to look at it. It's funny. I tell you, I teach at Berkeley and have for over 15 years just as an adjunct. And sometimes I have courses in the law school, some in the business school. And when the courses have the MBA students and the law students together, you can do fascinating experiments while teaching them principles of finance or energy project finance or M &A or investments, whatever it might be. When you put them on teams, the law students tend to be risk averse. And they also as a group, not to generalize, but I will, they tend also to have a hard time making a decision because they can see all sides of things and they're used to arguing all sides of things.

36:26So they're indecisive and risk averse. And you put them on the same team as an MBA student, Most MBA students are highly confident. They make decisions quickly. They may have a good quantitative basis for those decisions or not. They like risk. It's fun to put the two together and really see what happens. And then add in a graduate engineering student or a graduate public policy student on the team and watch that completely different way of approaching problems and of managing them. What results from that is a discovery, I think, eventually among all of those students, that the multidisciplinary team where they each listened to each other makes much better decisions than any one of them could have themselves.

37:01This is a great way to look at it. You've got to have the diversity. The diversity of views, that's diversity of risk spotting, diversity of risk management, diversity of risk appetite, and a sensitivity to the fact that most complex transactions require multiple points of view. Some are technical, some are economics, some are commercial, some are regulatory, legal, whatever it might be. That's like the golden theme of this podcast right here. Is it? I think so. I want to talk about the bad deals. I want to talk about deals that go sideways without putting any specific company in the spot. I want to extract some lessons learned maybe where they didn't have these diverse perspectives.

37:36Do you have any examples like that? One that comes to mind is a toll road company that was very over levered. They had exposure, great exposure to risks that were correlated without realizing it initially in their financial plan. We had a big recession in 2008, 2009. And what happened? Toll revenues went down. Traffic went down. The expected escalation of future toll revenues either didn't materialize or the curve that slopes up to the right with inflation or escalation shifted over to the right by four or five years. So the liquidity was not there to take care of debt service. And interest rates were very low, so that also exposed them on some swaps and hedge exposure that they had, which was meant to manage interest rates in a rising rate environment.

38:16But it ended up creating a significant additional liability alongside their senior secured debt or being upside down on the swaps. So what did they miss? You could run downside sensitivities on your original financial model on every single one of those things. What was missed, obviously, because it became distressed, was that those things were correlated. The rates would go down and stay down for a long time if you had a significant contraction in the economy. So this gets back to these business cycles and credit cycles. And you would not be able to refinance at that point because your future cash flows were projected now to be significantly lower than they would have been before.

38:49and because people being afraid in 2009 and 10 after a big financial crisis were likely to discount things further because there's a risk premium. Those things coming together tend to be a disaster. Went through bankruptcy and now that asset's doing wonderfully and it's got a great capital stacks and aligned and you can be certain that they won't have a capital structure that exposes them to those kinds of correlated risks again. And it has new owners. So many of these deals tough. You have so many things that could change full economic cycle on you and you're screwed. Okay, but you look at what you can control and what you can't.

39:22You can predict there will be changes in economic cycles or demand for your product or your costs, whatever that might be. It doesn't matter the industry. You can look at that. But there will also be things you cannot control that are outside of that. So how do you plan for those? How do you build in resilience? How do you build in downside protections? If you've got a capital structure which is dominated by short-term debt, you're going to be more exposed to things. And if you have long-term debt, if you have preferred equity, that doesn't have any kind of debt service requirement, maybe be smart in this kind of period of the business cycle, for example, to swap out high-yield debt and instead have PREF.

39:56That PREF equity sit there and be patient. The economics may not be that different, but the resilience to the downside could be significant. Nice fence. Do you have more bad deal examples? Oh, endless ones. Let's do a couple more, and then we'll do some good deals. Here's an example of a company that actually is highly regulated, highly prudent in its finances, but nonetheless has been in bankruptcy twice. I worked on the bankruptcy originally for Pacific Gas and Electric, a regulated utility, largest investor-owned utility in California. And along comes with climate change, a much larger exposure to wildfire risks than we've historically had in California for a variety of reasons related to extreme heat and to lack of rain and therefore dry vegetation.

40:35One can discuss to them whether the utility needed to spend more money to try to fireproof its system. That's hard to do. to trim trees more, you have to underground lines. And for high voltage, long distance transmission lines, putting things underground is very expensive. Will the regulators let you do that when that has to be passed through to rate payers? And remember, we said power should be affordable. What happened is they had liabilities under California state law for billions of dollars of losses attributable to wildfires that were ignited by their equipment. Now, they don't have liquidity to pay for that.

41:06So then the question is, who should? Is it their shareholders? Is it current rate payers? Is it future rate payers? Is it the state government? Is it the federal government? Is it insurance? And they're able to couple together with a real alignment between creditors in the bankruptcy, the different agencies of the executive in the California state government, legislature in California, and also the federal government, ways to align that to solve the problem and not just kick it down the road, but create a pool of money that could pay future liabilities so you don't bankrupt the company again and that can be available to make investments that are needed to make the system more resilient.

41:42That's an example of something coming in from the outside that the system wasn't set up to handle. So now we have to find ways to do that. Good lessons learned. That sounds like they had another chance to fix it and go at it. Yeah. How about the flip side? How about something that companies really played smart, avoided some of these blind spots? Sure. So there were investors coming into JFK Airport, Neutron 1. I mentioned to you earlier, That's an almost$10 billion new international terminal here at JFK. The initial financing for that was happening right before COVID. So when COVID hits, and I saw something similar representing investors in an airport in Latin America in Chile right before 9-11, similar pattern in a way, because after 9-11, international air traffic fell to the floor.

42:25In the Chilean airport case, the other thing that happened is we had a contraction in the world's GDP, so that's the business cycle, which meant that the demand for copper went down. Copper is a big chunk of the Chilean economy. So air traffic through Santiago, Chile, is tied very much to copper prices in some macro longer-term way. Not day-to-day, of course. So you look at COVID, again, an exogenous shock. Now, here we are much more recently hitting expansion plans for New York's major international airport. So what was necessary was to have smart people and investors were pretty smart, figure out a way working collaboratively with the Port Authority of New York, with state officials, with city officials, with the airlines that were involved, with other stakeholders, with contractors and the unions that were supporting construction projects and really find ways to reshape it.

43:11So now the terminal is being rebuilt in a phased way while the deck came in for the first phase. And future, as air traffic recovers, and it is now recovering, and as there's future growth in air traffic, they'll do separate phases of the terminal expansion instead of doing it all at once. And they're doing it all within the scope of the original federal permits. So you don't have to go through a new permit review cycle. The lesson from that is bringing in all those different stakeholders and finding a way to align their interests to resurrect the deal and get it done in a way that was creative and it was different than how it was originally structured.

43:43Did they restructure it after setting on some initial terms? Yeah, I don't mean they restructured it in the bankruptcy distressed sense because the loans had not yet closed, had not yet started the actual construction. So it was before they signed. So what it is, they changed the structure of the deal. So contractually, the structures were different. Before it was signed. Before it was signed. That's pretty good. For me and my clients, the difference between those two airport transactions, one of them, the big bad thing, COVID came before we closed financing. The original Santiago Chile deal at 9-11 and the drop in air traffic happened right after we had closed financing.

44:16Yeah, then you got to take yourself out. Any other good smart play examples of deals? I guess in the M &A context, I can give you an example of a client of mine. They were initially family owned and then they were backed by some infrastructure funds. And by doing that, those investors were able to provide more liquidity. So you had a structure where you've got this original business that has some assets that it can seed, operating assets it could seed. And the fund is investing, but the fund is also providing liquidity for the future pipeline of expansion. And there the expansion was mainly acquisitions.

44:48And it's a very fragmented part of the North American rail market. So they found a way to make strategic acquisitions of companies that on their own just didn't really have the wherewithal to grow significantly. But as an integrated platform with strong management and economies of scale and the ability to train up employees and move them from one place to another, to have bulk purchasing of all the equipment or things you might need, potentially proprietary technology, they were able to build a platform at scale that justified the acquisitions. And that's what created decretive value. That's where the premium was.

45:22So those were real synergies. Now, I don't want to underestimate how hard that kind of integration is. It is very difficult. Not every management team can do it, but a good one can. As a result, the investments paid off for everybody. That's pretty cool. You kind of got to go to strategy to keep expanding and paying out everybody. In M &A, what are the most common mistakes made in valuation, and how can they be avoided? One would be using only one valuation methodology. Another would be diligence, particularly insufficient diligence. A third, I think, which gets back to that overconfidence we were talking about, is when things come up in diligence, missing them somehow.

45:56Either overemphasizing the wrong ones that look interesting, sometimes potential litigation may be one that comes up, but it may not actually be core to the business. It may not be that big a problem. I think people sometimes focus on high magnitude things, even if they're low probability, but miss things that are higher probability, probably because they're lower magnitude, but those are ones maybe you should have focused on more. and also failing to do diligence on things that might matter. Do you have examples of that? I can think of a company that had a big cyber attack after a deal was done and no one really diligence cyber.

46:26Like they should have. It was a few years ago. I think today that mistake would not be made. Yeah, that's a good point. It has a lot of things. It's important to have experienced folks you're working with. You have to. I think that's what gets tricky. I'm always curious about just the whole maturity of a company building their M &A muscle. It's like you have to go through some pains to get there. And it is a muscle. I think if I had to think of anything else, it would be just the way deal teams work. Some are very hierarchical. So then you hope the person at the top is listening to others and making smart decisions.

46:55Some are more flat, consensus driven. Some don't make decisions much at all. They're paralyzed. It's not really a cultural issue so much as it's a management governance issue, not in a formal legalistic way. This is a practical way. Who's making decisions? Who's calling the shots? Who are they including in that process? And not just on their internal management team, but also their outside advisors. What's impressed you the most in terms of seeing that right structure? It's ones where there's a high degree of internal argument and debate because different points of view are heard. But at the end, there tends to be a lot of consensus kind of getting around eye on the ball.

47:27What is our goal here? What are our limits? What is our exit strategy? How does this investment further that? And what do we know are the next steps we're going to do right after? You're not going into something thinking it's going to be easy without a plan of how to integrate or how to execute. this idea of being good at executing, not just good at doing the deal. I think if people can do both, that's a much stronger combination. So it's debate, getting to consensus, and then the ability to really execute post-close. Which I wouldn't underestimate. Not all companies or investors have that ability.

47:56It's very true. Aside from valuation, what are other early stage M &A considerations practitioners should focus on? The team, the relationships. You do a joint venture agreement or a partnership agreement or a merger agreement, and you can't miss the fact that if there's frictions or a lack of compatibility, you can't paper over that. The documents, the legal documents, we work very hard on that. And remember, deals are collaborative. It's not like litigation where one side is suing the other and their adversaries. People around a deal table are all fundamentally working in the same way to make a deal happen, if it should, because it's good for everybody in a way that's ideally trading off those interests.

48:31So it's fair and everyone's glad. So when you have a closing, no one thought that they lost. They all thought that this is good for everybody. So finding a way to collaborate on all of that is pretty important. But at the same time, not just saying, well, the deal has to get done at all costs. If things come up where it shouldn't, the parties can't agree or they have different views of things or diligence reviews problems or the seller discovers that lo and behold, the buyer is proposing one thing and then proposing something different or the ethical issue that comes up for sure. Those are all things where maybe you want to stop and pause.

49:00So it's not just a deal that matters, but the collaboration around it, I think it's critical. You're going to have to deal with a lot of broad, unpredictable macro elements of climate you operate on, but there are some pretty tangible things that you should really concentrate on. For sure. Alan, what's the craziest thing you've seen in M &A? I think it's some crazy things in project development in advance. Sure. Having worked in Southeast Asia during the Asian financial crisis and being physically on the ground in Jakarta for a deal when that all unfolded and there was a bombing in the hotel where we were staying at the shopping mall underneath it.

49:32As Indonesia, we had the Suwarta government fail. We spent time moving expats in to run the company. And six months later, everybody was evacuated. We were making forest majeure claims and the currency, you know, 10X. Those were challenges. I think in the M &A... Sounds like a whole podcast right there. That was a good one. But I think in the M &A space, so there's a deal I was doing in Mexico. I represented the sellers, but not all of them, but some of the sellers of the equity in a telecom company, the cell phone company. one of the selling shareholders was Wealthy Family, and her signature was needed on the documents.

50:05We'd been flying around the world for a year negotiating the deal. We had parties involved from California. We had meetings in Miami. We had people in Madrid. The buyer was from Europe. Lots of meetings in Mexico City. And most of the time we spent, we're looking at very complicated, sophisticated issues. This is, of course, a regulated business, but cell phone technology was relatively new at the time compared to today. So the business model was evolving, and they needed more capital to build because you're never done building out your network. You're always investing and expanding it and upgrading it and modernizing it.

50:34So they needed that liquidity and they needed government support. But after all of these negotiations and all of this work, we needed to get a signature on a piece of paper from one of the minority selling shareholders in the family that was associated with the business. But people were saying, where is Carmela Burrio-Ascaraga? The answer was she was on her yacht, one of them, in the Mediterranean. And we wanted to close, wanted to close that day. We couldn't get her signature. We weren't really sure exactly where the boat was. And people are running around doing like crazy, trying to solve the problem.

51:04And if you have to have the signature authenticated, it does really matter where you are. Here in New York, if I need a notary, you go down to the corner, you get a notary, you're done. In the law firm, they come to the conference room and 10 minutes later, it's been notarized. If I'm in Mexico, I've got arranged a notary. It's going to take a couple of days and it's got to be stamped the right way and so forth. That's a bigger process. And if I'm overseas, I may have to go to a consulate or an embassy and have a apostille. There's other things going on. But where was the boat? What jurisdiction was it in?

51:29A lot of us assumed that this was a fascinating question of international law. It wasn't. We were wrong. We were trying to figure that out. The boats in the waters of France versus Italy, the rules might be different and so forth. It's like a, do you like fish? Sort of, yeah. Okay, so if you go into a New York restaurant, you get Bronsino. Not even an Italian restaurant, like any restaurant. Bronsino's everywhere on the menu. Bronsino fish, when it's sailing around the Mediterranean, changes names. If it swims from Italy to France, it's not Bronsino, it's Lou de Mer. It goes to Greece, it's Livraki.

51:56If it's Roblato in Portugal, it's the same fish. So her yacht sailing around was the same thing. Which kind of notary thing do we need? The problem is we were all being too sophisticated and smart and smug. This was just a simple practical problem. And one of the legal assistants at the Mexican law firm picked up a phone, called somebody, they called somebody else. They got a hold of a port agent in Monaco, found the boat, had her sign it, all done. It was a logistical problem. Everybody was making, the bankers and lawyers were making this far too complicated. And they put on a fax and got it over there and it worked out just fine.

52:25Some things are just practical and logistical and not all sophisticated and complicated. It's easy to overcomplicate things. That's probably one of the craziest things, but it's one that comes to mind. This has been great, Alan. Likewise. I really appreciate your questions. I appreciate you taking the time and helping me become a better M &A scientist today. Thanks very much. Those of you that want to hear more from Alan, check out his podcast, Law, Policy, and Markets, on Spotify, Apple Podcasts, wherever you listen to, I'm sure you'll find it. I hope you enjoyed today's conversation. Until next time, here's to the deal.

53:23We'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. Again, that's mascience.com. Here's to the deal.

54:06Views and opinions expressed on M &A 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...