How to Scale Global M&A with Culture, Strategy, and AI with Rob Brown, CEO of Lincoln International

22:07That's a good point. And it's just looking at those capital sources and how they align with the growth that you're in and how you can allocate that capital. You asked me what's it like being a CEO. I think one of the things you have to do as CEO is constantly think about the future. What got you to where you're at today, it's going to be different going forward. You constantly have to be evaluating not only your strategy, but you have to be evaluating your capital structure and your governance. If this is your strategy and this is your goal, you have the right capital base to get there. The deal you did in the US?

22:36Spurrier Capital Partners. Although we had done a small acquisition in Germany years and years ago, we basically merged our German partner into us with AllEquity. I really view Spurrier as the first real acquisition we did. They had hired an advisor. It was within a process. I think Spurrier was commercially, it doubled the number of software bankers that we had in the US. The one thing that was really interesting about Spurrier, even as a small firm, they were doing work mostly with private equity. And that was rare. It's rare to see small firms doing a lot of work with private equity because private equity values the deal flow.

23:10They value broader institutional relationships. Spur was really interesting from the standpoint of it was all software, which was really added to what we were doing. It was mostly private equity. It was in New York where we already had an office. So the commercial case pretty quickly was attractive to us. And then the question was, what about the cultural case? And again, that was another situation where the more people we met there, the more we understood how they looked at the future. It was a great cultural case. And that's how it's played out. Our timing on that wasn't great because we did that deal in May of 2022, just before the bottom fell out of the M &A market.

23:44But in terms of what that's done for our tech practice, it's become a material part of our U.S. tech practice. Identifying commercial fit seems pretty straightforward. It's just aligning with your goals. Are we confident we're going to get these outcomes? Cultural fit's like a tricky thing. I'll use another deal as an example where I felt management team, I had like great cultural fit, this and that. And then it's a tech deal. So my VPM engineering, this isn't going to work. They're a completely different way of working. This is not going to work. I still want to do the deal because obviously I've got my agenda.

24:15But just curious about that. Like, hey, if culture fit is that big of a factor, should I say, since we're riding on tech integration, then we probably shouldn't do this deal if our VP of engineering doesn't want to do it. I'm just curious how you look at it with the firms. Is it just a feel-good thing? We go have a beer and this seems like a good fit. Or is there something more? You bring up a great point. Cultural fit has to be more than just the two leaders feeling like they see the world the same way. But you have to have that. You have to start with that. So if I think about our process to assess cultural fit, it's multifold.

24:47But it starts with the leadership seeing eye to eye that, hey, you seem to have the same values that we do. You're looking at growth the same way we are. Just in conversations, how do they think about management? How do they think about aligning incentives? How do they think about values? You can start sensing that. leader to leader. That's a good place to start because a lot of organizations, the culture is a direct reflection of leadership. But you bring up a great point. It can't just be that. You have to start with that. Then you have to then say, all right, does this culture permeate their organization?

25:15How does our overall leadership feel about their leadership? So you have to expand the amount of people interacting. You also then have to try to find, are there third-party ways to validate a culture? One of the things we look at is Wall Street Oasis and Glassdoor. Those are unvarnished views of what do current and former employees think of the culture of that firm. So we tend to look at those. If you go to those and you say, wow, the way people, current and former employees talk about this firm is really different than the way their CEO talks about the firm. That's a red flag. And you've got to drill down on that.

25:51You do tend to look for third-party validation. The other thing we'll do is sometimes if we get further down the line in a confidential way, bring up a firm's name in front of some of your clients and see what they say. Clients think about... Their reputation factor. Their reputation. So I think it's multifaceted. Got to be leader to leader. And then it's got to be kind of team to team. You point out something that's interesting is that if there's words that say this is our culture, but then you see actions or the way they manage, that's very different than that. That's a red flag. And by the way, I don't think you're really ever done assessing culture till the day you close because you keep learning more about them.

26:26they keep learning more about you. So it's not a, gee, we've checked the box on this. One of the things we do for senior hires, and we do it as part of our acquisitions as well, is we have personality profile assessment that we give to senior people, which it's not perfect, but it's one input in saying, hey, will they fit into our culture? Will they fit into the things we value? Some of those third-party tools can be effective as well. You do that post-LOI before we close? Yes. Okay. So my playbook here around the culture is this conversation really digs into leadership styles, values, really understanding what that actually means in practice and seeing how wide that is across our organization.

27:04And then having a broader spectrum where it's not just the two leaders at the top, but the overall management team's perspective on the management team. And then you also mentioned, look for ways around using third parties, whether those sources, Glassdoor, Wall Street Oasis. If you don't know, it's a form from investment banking community, really funny memes on there. And then also personality test you mentioned as another tool they could use. We like to say assessment as opposed to test. Okay. Assessment. Reputation. Just ask around. What's reputation of the firm? But again, it's not something that you're, oh, we've confirmed the culture.

27:36You're going to be taking risks, but you can try to mitigate as much of that risk. Interestingly, we had another deal that we were in the tech space in Europe and we were close to having probably a deal on the table. That was a situation where the more time we spent together, the more the cultural case deteriorated. In the professional services world and investment banking, one of the things you want to ensure is that there's a real institution there, that a bunch of the revenues aren't tied up in one person, one key dominant figure. So that is one. It was also observe how they treat each other when you're around them.

28:09A key element of assessing culture is how do their people treat each other when they're together, having a dinner with them, being in meetings with them. And you start picking up clues that say, hey, this is in line with our culture or it's not. And that was a deal we just walked away from saying commercially would have been a good fit. It was culturally never going to work. And for us also, part of our strategy is this concept of one firm. We don't want to do acquisitions and leave them alone and have them be like, hey, this is a Lincoln business. Typically, it would have to be something that's a totally separate business.

28:36We want to be really one firm. We want everybody to feel as one firm. And if you start realizing in the course of doing diligence that they really don't want to integrate. And the beauty of an acquisition, I think, is you always learn something. Every deal you do, they do something better than you do. And you're like, oh my gosh, that's great. We should do that for the whole firm. And then there's things you're doing that'd be more effective than them. And they want to be part of that. If you start getting down the line where someone's like, no, no, no, what we're doing is working great. Why don't you kind of leave us alone?

29:03That's not going to work for us generally. Others that have an acquisition strategy that says, hey, listen, we want to be a collection of businesses that can work for them. That's antithetical to how we look at the world. How do you ultimately integrate these companies to make them work post-close. You have to have a plan. You got to start working on a plan the minute you start talking to them. And we've become really sophisticated in how we integrate lateral managing directors. And we hear it when we onboard a lateral managing director. And even if someone's worked at a couple of other firms, they've never seen anything as detailed, as organized.

29:34We have check-ins every six months. You have to find a way to say, how do we get them integrated into our processes and systems? How do we get them integrated into our culture? So when we've done acquisitions, we've taken that playbook from our lateral MDs to make sure you get them integrated. I also think, particularly for tuck-ins like TCG and Spurrier, kind of day one, integrate them. Get them on your CRM system, get them under your brand. And there's some pain to that, but really saying, hey, get integrated into our systems, get integrated into our CRM system, our performance review management system.

30:04The revenue in these businesses are driven by managing directors. So if you can get them very integrated, get their people on your systems and processes sooner rather than later. And again, there's some disruption to that, but I actually think it's better than saying, well, over time, we'll move you on to what we're doing. You do the acquisition, you get them onto your systems and you move forward. Pretty aggressive on the tech integration part. Yeah, we have been. We've been very aggressive on that. This has been helpful. Like I like the examples too, walking away from a deal. I feel like that's the hardest thing to do.

30:32It is hard to do because you spend a lot of time. My own view on that is trust your gut. Like when my gut starts telling me, hey, this isn't going to work out Because you can become enamored with the commercial case, but in any acquisition, you can't discount the cultural case. In professional services where your people are your product, it's the most important thing. That's so important. That's like the hardest thing to do sometimes. Yep, it is. Especially if you sign an LOI, then you're really invested in. The commercial and cultural assessment, it keeps going on. You got to respond to what you're hearing back.

31:01Let's talk about the dynamics buyer-seller. I put a whole framework called buyer-led M &A, Rob. And this was my observation of doing hundreds of these interviews and working with a bunch of corporate buyers. And I've noticed the evolution. First deal, they don't really know what they're doing. It's a lot of times very seller-driven. But then you do 10 deals and the process becomes more and more buyer-driven, whether it's starting from how you source deals and just having that clear North Star and being proactive. Even if that deal goes in a bank process, you at least have a relationship already there to leverage.

31:31To the integration, just putting that front and center. and just having a process where you can iteratively update your integration plan as you do the deal. The question always comes up too is like, what do you do in a bank process? Because the bankers control the whole process. I'm just curious of like, how do you look at it? Because now you've been on the buy side. You've been through it on a proprietary deal and a bank deal. Yeah, we did one of each. We had a proprietary deal and a bank deal. They weren't that different. Even on the bank deal, you know, what Spurrier told us, Clark Spurrier, who was the founder, said, you guys weren't the highest value.

32:01I just felt you were going to be the best home for our business. You have to be at an acceptable value. My sense is the other acquirers of those businesses were commercial banks and maybe even foreign commercial banks. And that's a whole other ball of wax. And I think he was worried about his people staying through that. I laugh when you say buyer-driven M &A because coming out of the global financial crisis, really through kind of mid-2022, it was a seller-driven market. Sellers could dictate we had zero cost of capital, tons of money to put to work. Every process had multiple parties. You had these highly competitive processes so the sellers can dictate the process.

32:35I mean, it was insane. There was like non-exclusive processes where you essentially had to show up with a purchase agreement. And there's still some of those going on. But now when inflation spiked and the rapid increase in cost of capital and then the fear of the recession in 2023 and really from mid-2022 to mid-2024, I think the M &A market was going through a recalibration. You had to recalibrate cost of capital is higher and economic uncertainty. And it really wasn't until probably mid 2024, you started seeing us start to get back to a little bit more normalized M &A market. You saw that through January and February.

33:09And then given what's happened with the tariffs, that's put a little bit of a wrench. I think there was, and we saw it too, we had a lot more confidence that this M &A market was going to continue to improve in 2025 as it did in 2024, a little more unclear now. My point is the market started recalibrating for the last couple of years. It's been more of a buyer-driven market. The buyers could dictate the process more and they could dictate what they wanted more because you didn't have as deep of a hand. Now for the really high-performing businesses, the A-quality businesses, you still had really seller-driven processes because there were so few deals in the market and people wanted to put money to work that the really high-quality deals, the processes looked a lot like 21 kind of deals, just the values were slightly lower.

33:50Even right now, there's still more leverage that buyers have in this market than they did at the peak of the market. I was curious, it comes up because we sell a really badass tool to manage M &A on the buy side. And the thing you got to do is take control of the process when LOI signed. You can do all your integration planning and diligence work stream and tie them together. That's the magic of it. It works really well in proprietary deal. It's not hard to get that arrangement. But it's a bank process. Competitive, sure. You just got to replicate it and build your own environment. But once you sign LOI, is there leverage to say, hey, we're going to get through diligence faster and better plan post-close.

34:28It's funny because most of our deals, we're not signing an LOI, we're going right to a purchase agreement. And there's generally not exclusivity given. Sometimes there is. A lot of times it's kind of a handshake saying, hey, we're not going to give you written exclusivity. This deal's yours if you sign the purchase agreement by this date, as opposed to signing an LOI. Sometimes we are signing an LOI and it's a little different geography to geography. The best seller leverage is a competitive process. That's the best seller leverage. What sellers are always worried about is that the buyer is going to change the price and terms if we give them too much time to sign this.

35:00And what the buyer is always worried about is, am I going to have time to complete all my diligence and really think through integration before I have to sign this? And that's the tension that you have to manage. And one of the things you brought up that I think is really important is spending time with companies, even if they end up hiring an advisor, like spending time with companies in advance of that's going to put you at an advantage. The more they know you, the more they feel like you could be the right partner. And the private ed groups that invest in that and get on the road and meet management teams well in advance of a sale process, they tend to do better in those sale process.

35:34And it could also be because they're willing to pay more because they've gotten to know the team over a longer period of time. But it also could be that the team says, hey, I'm willing to take some discount to the highest price to do a deal with this acquirer because I think they're the best home for me and my people. Investment in that relationship ahead of time is right. What the buyer thinks is a good home. Is there anything else that separates an average buyer from an elite buyer in a competitive process? There's several things. And we see all flavors of it because we're one of the most active sell-side advisors on the planet.

36:04One is really trying to find a way to authentically connect with management. That starts at the dinner. It's little things. You're in a management presentation. And if you've got a buyer that's checking their phones, you're not going to win. Put your phones away. Put your computers away. come into that room to beat management 100 % focused on them. The other thing that we'll get buyers that will ask, they'll say, hey, we love meeting management, the managed presentation. We'd love to fly out and spend a little more time with them. And the worst that's going to happen is the seller is going to say, I don't want to do that.

36:34No. But a lot of times it's like, actually, yeah, management would like, you don't get if you don't ask. If I think about things that have really distinguished buyers in a process, one is investing in meeting management before process happens. If it's a private equity-owned business, you know at some point it's going to be sold. And if you think that's a business you want to own or a sector you want to be in, find a way to get in front of that management team. And then even when the process comes, push to spend more time with them. You want to authentically develop relationships. I also think that doing what you say you're going to do as well.

37:08We've seen some buyers that everything's great. And then as they get in the process, they're like, we need this and this. And you're like, you didn't bring that up a while ago. And a lot of those things may not even be unreasonable things that they want, but they've upset the management team by the management team feeling like, well, wait a minute, why didn't we talk about this stuff earlier? So get out upfront the things that are going to be important to you to get to the finish line so there's no surprises at the end or no surprises during the process because deals are built on trust. And the more you can continue to build trust with the seller and the management team, the more successful you're going to be at the end of that process.

37:38If you're flipping it around, what are the things that the sellers do to run the table? What do the best sellers do in terms of the operators to manage the sale process? You got to be ready before you go to the market. And there's plenty of companies that we've advised where we've said, hey, listen, we're not ready. You're not ready from a data standpoint. You're not ready. You got too many holes in your management team. You do need to spend time thinking about, am I ready? Do I have confidence in the visibility of my business? Do I have my data lined up to withstand a diligence process? Do I have the right people on my team?

38:09I think it's never going to be perfect, but I think you need to spend time up front. What's interesting, we've run a few processes recently, and in certain groups, they're doing this more and more, where we have meetings with buyers in person before we even get indications of interest from them. So now it's a little incumbent upon us knowing the market to say, who are the right people to get in front of you? But we have management teams that have said, listen, I want to meet everybody and be able to tell my story. Then we can find out where they're at on value. Sometimes management teams feel it's almost too transactional.

38:40Like they really haven't met anybody. These bids have come in and they're like, okay, well. So I think that's better for the sellers. I also think it's better for the buyers too. But we are seeing more and more and more of that. And then you give them access to information. Then you say, hey, come to us with a value. Well, at this point, it's more than an indication of interest. You know what I mean? They've met management. They've gotten some information. They're now giving you their initial value. That's one, it should be a value that's more substantiated. But two, they've been able to hear the story in management's words and get comfortable.

39:10This is a team I want to back. And management's gotten more comfort with them. And so sellers that are able to approach it that way end up with better outcomes. What you may miss is we didn't scour the market. We didn't go to the market and get indications of interest from 100 different parties. You may have to get over the, well, gee, did we miss somebody? If you have the right advisor that really knows that sector and knows who the right strategic acquirers are going to be and the right financial sponsors and curates a process around those, What we've seen, particularly in this market, is those have been pretty effective.

39:38So from the time we first met, like a decade ago, have you changed the way you would take a company to market working with your customers? Yeah, I think so. The process is today, one, we've become much more organized along sectors and subsectors of expertise. So if you go back 20 years ago, it was a little bit more of a generalist market. Maybe you'd have a consumer banker, an industrial banker. Well, now you've got a food banker, you've got a consumer services banker. The deep and relevant knowledge in each sector allows sellers to curate a process more around the right buyers as opposed to going as broad and trying to narrow it down.

40:11That has been a major, major change. Two other major changes in the industry over the last 20 years that I think have accrued to both the benefit of the buyer and the seller. One is the electronic data room, the ability to share information, to customize information, to track. That's accelerated. The other thing I think that's changed the M &A market in a really material way is the advent of rep and warranty insurance. Because when you're negotiating a purchase agreement, the buyer and the seller who are going to be married at some point, they go through this contentious process to negotiate this agreement.

40:44Rep and warranty insurance has taken out a lot of that because if you can get an agreement that the underwriter's view is market, it's the underwriter's. It's the insurance company's problem. And even if there's claims afterwards, you don't have a private equity group filing a claim against its management team. The insurance company stands behind it. Those two things, they've added a lot of efficiency into the M &A process over the last couple of decades. How do you see killing deals? More bad diligence, bad timing, bad chemistry? It's a really poignant question right now because we have all these deals in the market.

41:15And then the global trade paradigm gets turned on its head. And now there's much more concern of a recession than there was a month ago. So the deals we have in the market are largely moving towards completion, but everyone's waiting to launch things till there's a little more clarity. And to me, the thing that kills deals the most is uncertainty about the future. If you have certainty about the future, even if there's certainty that it's going to get bad or there's certainty that it's going to improve, that sort of certainty gives buyers and sellers more conviction to get a deal done, particularly buyers.

41:49When you have uncertainty, that's when CEOs and investors start saying, I'm just uncertain about the future. And that uncertainty needs to be priced into my deal. That's the thing that kills deals. That's what makes us tough in this market. It's rare. I think in today's day and age that a diligence item kills a deal. Normally, if it does, there's some off balance sheet risk that didn't get disclosed. There's an environmental liability, but it is rare that that kills a deal. The two things that kill a deal are uncertainty about the future and the company missing its forecast during the sale process.

42:20Making your forecast during the sale process is incredibly important. It's not just a math issue. It's not just, well, you missed your forecast by 10%, so our bid's going to come down 10%. It gets to a management credibility issue saying, well, wait a minute. You gave us this forecast two, three months ago, and now you're missing it. You really have a handle on your business. I would say those two things, just general uncertainty and then missing the forecast during the process, those kill deals. You got to be on point in both those areas. And then uncertainty, that's a whole other. That's hard to control.

42:47And again, we're in a period of uncertainty right now. Is that period of uncertainty going to last weeks or months? And it's hard to answer that. Going back to the process side, you kind of gave the overview about how the sell sides changed. How about the buy side? Do you see buyers taking different approaches when it comes to diligence? Integration is a big one. That's the one that you sort of see that push, which is tough to get all the information you want to do that, especially before you sign. I would say in the last couple of years, since the market slowed down in mid-2022, it's a lot harder to push buyers on diligence.

43:16They're going to do their diligence at the timeframe they need to do it. We're at a hotter market. They may be willing to accelerate it or even maybe forego some of it in order to win the deal. We're still in a market where it's harder and harder to push buyers on timing until they feel like, okay, I've got everything done. That makes sense. If this market dictates a lot of this, if you've got leverage, more competitive, less leverage you have. 100%. One of the things that's interesting in kind of the peak of the market, not even in the peak, really, if you go back to kind of 15, 16, 17, 18, 19, 19, maybe the last normal year we've had if whatever normal is, right?

43:51Because 20 was COVID. 2021 was this crazy kind of catch-up year. 2022, the bottom fell out of the market and we've been in this recalibration. But for a long period of time, maybe too long a period of time, sellers would go to market. They'd see if they could get that strategic outlier that would value a bunch of synergies. And if they couldn't, they could get a really good price from a private equity group because debt was nearly free and there was all this capital floating around and business performance was up into the right for eight or nine years. We're in a market now where you get that strategic outlier, you get that strategic that can value synergies.

44:24But then if you don't, there can be a big fall off from that. And maybe there's one private equity group there that's at an acceptable value, maybe two, whereas in the the heyday of this market, if you couldn't get that great price, it was really easy to get a really good price or really good value. And that's, I think, been harder to do. And particularly for businesses that maybe have been a little more performance challenged. Going back to good old days. Not quite. I don't think we'll go back to like 20 years ago. You know, it's interesting. If you look at 2024, and I'll just look at the US for right now, a bellwether for is the M &A market improving or not is private equity because they buy and sell companies for a living.

44:58They monitor the markets really well. They stay on top of their companies really well. And in 2022 and 2023, you saw big fall-offs in private equity sell sides. I mean, you could argue there's some studies that say that market was down like 50%. It was down more than the overall M &A market. You saw that improve in 2024. That was the first kind of up year. And in the US, private equity sell sides were up 11 % or 12%. We came into the year feeling like, okay, okay, that should improve this year. Maybe it'll be 15%, maybe as high as 20. It's estimated roughly 60 % of companies sitting in private equity today in the US were acquired in 21 or 2022.

45:33That's a massive number. Those are the deals done at the peak of the market that are taking a little bit longer to create equity value or maybe aren't creating equity value. That's the wall of deals that will need to come to the market at some point. Our expectation was that was not going to happen in 2025. That probably happens in 26 or beyond, but that we were going to see an improving M &A market. And we saw that in Q1. Like Q1, our performance was up materially, but now you're seeing a bit of an air pocket and taking new deals to market. So just this uncertainty around the trade and will that force us into a recession, it's causing a bit of a slowdown.

46:07And the question is, is this just a speed bump or does this cause some prolonging of getting to a return to a normal M &A market? We keep creating more and more private capital products. Yep. I don't know how big we made private credit. Now we got these perpetual funds that are pulling more private capital in? The institutional investors haven't had the returns of capital that they needed. So now private equity is saying, the institutional guys are tapped out. Where else can I go? I'm going to go to retail. So you're seeing these retail funds and these interval funds. There is a lot of money. There's an incredible amount of credit funds.

46:36There's an incredible amount of dry private equity powder. There's an incredible amount of companies sitting in private equities. And those are getting more age. So all the ingredients are there to have a real rebound in M &A activity, particularly in the private capital markets. And it's going to come at some point. It has to. It looked like we were going to be on that trajectory to continue that this year. And maybe we still will. But right now, when you just think about the uncertainty economically that's been caused by the announcement of these tariffs, people are in a bit of wait and see attitude.

47:06Put yourself in a CEO's position. All right, should I reshore something? Is this all just negotiating tactics? They're trying to figure out where do I invest. And if they don't have certainty about that, M &A is something that suffers. Wait, explain that last part again. Part of a CEO's job is to invest for the future and to allocate capital. And again, it gets to my point. When you have confidence about the future, you're willing to do that. If you put yourself right now in a CEO's shoes, where we're going to have these incredible tariffs and they're here to stay, and then it's, well, no, they're not.

47:37We're just using these to negotiate better trade deals. And we haven't announced any better trade deals yet. There's just a, well, what should I do? I'm not going to reshore a factory if this is negotiating, but maybe I will, maybe I won't. But I just think that as you think about one of the ingredients you have to have for a really healthy M &A market is optimism about the future. That's cloudier today than it was 30 days ago. Yes. I was curious about just the firm and how you organically grew up, but then the partnerships and the partnerships could evolve into acquisitions. That's just something I was just generally curious about.

48:07And then the AI stuff, which I know you've been big on that. And I want to talk about that. I don't know in 10 minutes if we have time to cover both, but it's up to you. Why don't we cover AI? Because I think that's been... Let's do that. The other one I can always come back to. That's been an important part of our strategy. We formed an AI committee probably two years ago now, and we formed about 30 people across the firm, all levels, various geographies, various product groups, various industry groups. And we wanted younger people. We wanted some older people on that. And we tasked that committee to come up with, what do you think the most impactful use cases for AI in our business might be?

48:40And we said, think big, think broadly, think kind of white space. That committee came up with nine use cases to use AI in our business. We then plotted these use cases on two axes, the ones that would be level of impact and ease of implementation. Some of these really would be fantastic. They'd be really hard to implement. We decided, let's do one or two of these really well. Let's roll these out. Let's use AI. And the two that kind of fell out of the analysis was what we call the Lincoln Library and the Lincoln Deal Sheets. The Lincoln Library was, gee, if we could aggregate all of our data, all of our pitches, all of our information memorandums, all of the industry studies that get done on our deals, all of the notes we have in Salesforce, if we could organize that data in a way where you could search that data and analyze that data with generative AI, we would be able to share insights with our clients so much more effectively.

49:33That's called the Lincoln Library. And then we did the Lincoln Deal Sheet, where basically every deal has an AI page where all the data we get from the client, we can then analyze with our AI tool. So those were the two we decided to do. And our AI platform is called Blink, L-A-N-C. We then determined, all right, where are we going to get this technology from? Is there off-the-shelf technology? Is it something we're going to build on our own? Is there something in between? We ended up working with McKinsey. We developed a proprietary tool, as I said, called Blink. So today, we've got five years of all of our data that every banker has the Link platform on their computer.

50:07And you can now go in and say, what are the latest trends in animal health M &A? It'll have paragraphs on it. We'll drill down on this paragraph. You could go in and say, hey, I'm looking for the last five pitches on enterprise software globally. Drill down front. I'm looking for a specific slide on customer concentration. Or I've got this company in this sector. Give me a list of the private equity firms that have expressed interest in this sector. It'll scrape all of our CRM notes. So the quality of information and knowledge sharing that we have now is fantastic. We really did this from an effectiveness standpoint, but what it's also resulted in was a lot of efficiencies.

50:44So things that might have taken an analyst or an associate, they were tasked to do it hours or even days, they're getting in minutes. This is a tool that just keeps building on itself. We keep training people how to prompt. We've also loaded SafeGPT so we can upload data into GPT that won't go outside of our firewalls, but still analyze it against it. So we're a knowledge-based business. AI is going to affect almost every business. It's clearly going to affect knowledge-based businesses. And we have a roadmap for not only more enhancements of the two we have, but ultimately rolling out some of these other use cases over time.

51:14We think we're a little bit ahead. To our knowledge, none of our competitors have a functioning AI product. I like that a lot because you focused on the intelligence piece. It wasn't just some tactical automation of little things to click. Pretty cool. Took a lot of work. We had to get our data organized in the right way to create like this data lake. And we're learning every day, like teaching people how to prompt better. You can have the tool, but if you're not really teaching people how to use it, we're hitting our adoption goals on it. Everything we do is through the lens of what's best for our clients.

51:41And if we can knowledge share and be able to share, if something's going on in a Milan office and they've got some information that's really relevant to a deal we're doing in the US, we can get it. we're going to be less likely to miss that. The old days of sending out an email saying, hey, does anybody have anything on this? Yeah, that's very impressive. That's incredibly inefficient. That's pretty impressive. What's next? Do you look forward in the next three, five years? I'll tell you one of the things that's interesting. I think AI is going to help us really analyze buyer behavior. If you have a deal, if you really think about having all the data saying, who are the five private groups that are most likely to stretch for this deal?

52:15And we have this data, we analyze it on our own, but having an AI tool that can look at what they've invested in the past and where they've had returns and what have they paid for things. Getting to kind of AI predictive behavior of investors, it's going to go there. I don't think it's going there tomorrow, but it's going to go there. You think you'd like almost advise them to strengthen their business case on just some of that data? I'll tell you what's interesting is, I won't say the private equity group, but they now have an AI bot on their investment committee. So when they are voting, should we do this deal or not?

52:42The AI bot votes as well. And they're going to track how did the AI bot vote versus others. And over time, was it more or less correct as they see how some of these investments play out. I've been doing that with some of my calls. I have like a prompt to extract the takeaways I want, very specific, but then I'll have it score the productivity of the call. Yeah, I hope this interview gets a high productivity score. And we'll find out. Yeah, we'll find out when you're running through AI. You know, I did this similar exercise how you had all these different use cases on the buy side and I went through it to validate what's the number one use case.

53:12You know what that was? What? Reducing legal fees. So we ended up building contract analysis just to like, you know, you got the 100 customer contracts, which we're not changing control provisions. So one of the nine use cases that our committee came up with revolved around legal efficiency. Yeah, that's interesting. So the buy side, that's what I ended up with. And I would say probably there's a bias there because we work with quite a few roll-ups. That was like the top thing that came up was that they wanted to reduce the legal expense. Hey, so the biggest thing I had to ask, I was so excited about, was what's the craziest thing you've seen in M &A?

53:41Being that you operate this global firm that does like hundreds, thousands of deals a year. So the craziest story that I've seen in M &A is, and this goes back a few years, but we were selling a business that was an aerospace and defense components business. And this is going back a ways because it goes back to 9-11. And we got bids on the business, really strong bids. We were having management presentations. 9-11 hit. If you were an aerospace and defense company, and this was a lot of commercial aerospace, everything got put on hold. It's put on hold. Business actually performed well. The dust settles eight, nine months, a year after 9-11 that, okay, there'll be some changes to the airports and commercial aerospace, but we're going to move forward.

54:23We go to move forward, and the owner of this business passed away in the interim. He had cancer, and one of the reasons he was selling is he wanted to have his estate in order. And he had passed away, and he had been married earlier in his life. He never had children, but he had cancer early in his life, and he was going to go through treatment. He ended up actually freezing some of his sperm. He ends up divorcing that woman. He has a living girlfriend after that. When he passed, she got all of his possessions, including the sperm he had saved from an earlier marriage. She impregnated herself with that and then claimed that her unborn son was going to be the heir to the sale proceeds of this business, which you can't make this up.

55:05And so we go back, we say, let's get going again. And the estate attorney says, we got to work through a little bit of an issue here. We don't think she has a legal claim because he wanted a lot of the money to go to charity and some foundations. And that ended up delaying the process eight or nine months. And then their biggest customer came in, recut their contract, and that business ended up trading for half of what it would have from the bids originally. But it was probably the craziest thing we've seen. I don't know if we can air that story or not, but in my professional life, that's probably one of the craziest things I've seen in the deal world.

55:37Well, if you're listening to it, that might be a hall of fame. You know, I'm in the craziest story. And I think she ended up losing. So she had the child, but did not get all the proceeds from the... Oh boy. Wow. That's a crazy story. That was crazy. The lengths we go to get a piece of the pie, I guess. Yeah. That was a high-risk strategy for her. Wow. This has been a great conversation. I appreciate taking the time, teaching me a lot of things, negotiating, and helping me become a better enemy scientist. It is always great to catch up with you. And we've known each other a long time, and it's been great to see the success you've had.

56:06I'm more impressed. I still think I should have got that job. But then you'd have to work for me. Maybe. You probably would have fired me. Fellow of Emory Sciences, you tuned in this far. I appreciate you. Love to hear your feedback, what you thought of this interview, ideas for other folks I should be talking to or topics to cover. Reach out to me on LinkedIn. Until next time, here's to the deal.

56:39Thank 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.

57:23Again, that's mascience.com. Here's to the deal.

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