In-House vs. External Legal Insights in M&A

25:36In which case, you may decide not to terminate a piddling target side contract because you realize that it would upset that same customer because they have a buyer side contract. And once you close that deal and then you let the entire world know that you've done this fantastic acquisition, that customer doesn't care which side of the target or buyer line they sat on pre-close. They're just going to view themselves as I'm your customer, period. I want to learn more about negotiating these deals, especially now I'm getting a better understanding of the power dynamic between external counsel and internal.

26:09Teach me how to negotiate deals. How do I leverage this? Are you getting a sense of a good cop, bad cop relationship here? I would say if anyone's going to be a bad cop, it should definitely be outside counsel, right? I think outside counsel also knows a little bit better how to read who they're negotiating against. because the world is small. And like I'd say, M &A circles are even smaller. And then oftentimes, if you're outside counsel, you don't only do buy-side deals. You'll do buy-side and sell-side. So you understand what are the kind of arguments that the other side will make. And at the same time, you will also understand which ones fly with which buyers, but then which ones you'll just be forced to make for the principle of making them.

26:48For in-house counsel, you also kind of learn to understand how to negotiate and what stands to take against which group of outside counsels representing the targets. Because oftentimes what will happen is the same law firms that you will end up sitting across from and buying companies from, you will think twice before hiring them to represent you and buying companies because as much as they may say there's a Chinese wall within them and that they promise not to allow associates to hear and access all of the kind of arguments that you're giving, that's very hard to actually implement. They all hang out the same bar, so word's going to get out.

27:29Exactly. What ends up happening is the law firms that are really good at representing companies that sell to big serial acquires oftentimes don't end up being able to represent those same serial acquires when they're trying to buy their customers, even though they clearly are just as technically capable of doing so. Which then means that the companies that or the law firms that you end up using as a serial required to help represent you in buying companies are going to be a different breed of law firm. I want to get a better gauge of this. When you work on a deal and you look at the target and then you identify the external counsel they're working with, are there like cultural associations just knowing the name of the firm that you right away already get a sense like, oh, this firm's going to be easy to work with.

28:13This is going to be harder. Does that come off right off the bat? I would say even more specifically, Silicon Valley is such a small world. You know the groups and you know the players and you know how certain groups operate. Within that law firm. So I can even say, hey, there's not like I can stereotype to one big culture of the law firm just by pure logo. It's more specific to that group. And then I would get a sense of like, all right, this is... Because I also think in Silicon Valley, what ends up happening is people jump from law firm to law firm. Like partners will just jump law firms. So then for an associate, for example, when I was interviewing for law firms, firm culture was very important because I think as an associate, since you're not really working for any one group, the default culture is critical.

28:57And then making sure it's critical in shaping your experience. But then when it comes to when you've practiced longer, you're probably more wedded to working for a certain partner or a certain group of partners or senior associates than you are working for that law firm instead. if like those partners or some of those partners leave, they may choose to bring you along. In which case then you're really more attached to that person. And like you two or whatever group of people will end up forming a certain dynamic and a certain culture. You understand how to negotiate a certain way. What's like best case, worst case reputation I would conceive when I get a sense of this group I'm working with?

29:34I want to say that there's any sort of like best case, worst case reputation. You know what I wonder where it just like makes you cringe right away? This is going to be a slog. working with this group? This is the way that I kind of view deals is if as a serial acquirer, I'm going up against a small VC backed firm. My job is actually to get very clever, constantly arguing back to my paper because I'm setting a precedent and I'm communicating to the market that this is the price of my money. And I just want my paper and I'm only going to give you a handful of changes. And that's just the way the world is.

30:07I can say that with a straight face because having worked in the past and having represented other serial choirs, I know that's what they do as well. And it gets so extreme that there are examples of you as the serial choirs council, just calling up the other side and saying, I've looked at your markup. I'm going to tell you XYZ are going to get rejected. So let me tell you now what I'm going to be able to get across the finish line because this is what I've seen happen so many times before. And then after they're like, okay with that. And they tell their client, you don't even take their version and version up and reject all their changes.

30:41You take your prior version, save it on top of theirs, and only make the handful of changes that you told them you would accept. And that's just what happens when the power dynamics are so large, it doesn't make sense for the serial acquirer to bend and break in order to move away from their paper. Because if they are a serial acquirer, they're also looking to do a repeatable, scalable process. And the more you just hand something on your paper, and then you're able to just use your playbook in order to integrate this target and then deal with the risks and what have you, the better. Now, you can't do that with every single target because there are other targets, for example, that have a real book of business.

31:21Maybe they're not owned by a venture capital firm. They are owned by a private equity firm that took a previously public company private. In which case, if you can still argue that, more power to you. but I highly doubt that's going to happen. That's when it's your job as an house counsel to not just be clever about arguing back to your paper and then raising all these red flags because you can't get back to your paper because you should understand at that point that your paper is probably pretty ridiculous and you have all these belts and suspenders. That's when you're like, I can give on this because that is market.

31:51I'm not going to give on every single one, but I must give on it. And then that's where you have to exercise your muscle in understanding, how do I get my organization and all these groups of people that I don't have formal authority to change the way that they do stuff so that we can get this deal across and mitigate these risks appropriately. Power dynamics behind this. I like that because you're so right. Like, do you have the power? Do they? You know, are you sort of the serial acquirer that's got all the reps in and this sort of fits in your template? And then you kind of can have that conversation of this is what we're going to bend on.

32:25There's not going to be a lot of room versus maybe that power dynamics flipped around and you're either doing the bigger deal or they've come from that background where it's a carve out of a public company or something like that, then it may be worked around in a totally different direction. I like how you were pretty straightforward, how you cut through, you get the conversation of, hey, let's just be upfront, let's get this. Because I feel like that's, for me, the biggest concern in any deal is that all of a sudden, it's like this ongoing back and forth on some deal point when I look at it and just like, guys, the odds of this actually happening is like one in zilch.

32:56Well, that's also your job as the in-house counsel. So obviously you need to allow the other side to say stuff and then bring their hands and you guys go back and forth. And there's like this theater of going back and forth. But at the end of the day, as an in-house counsel, you get paid to get deals done. And your job is not to like constantly raise a red flag and say, oh, we can't sign this because we haven't gotten back to our paper. So then you also have your own come to Jesus moment where you're like, no, we can't keep on arguing back and forth. This is where I'm like, I'm going to take on these risks.

33:25And like, this is fine. and we're just going to get to the finish line and sign. I'm thinking like efficiency. At the end of the day, you get the deal done and there's my legal bill. Is that sort of part of your goal is to be efficient with the resources externally? Oh, yeah, of course. And how do you think through that to be like, all right, this is what I'm trying to do. Do I budget it and I'm trying to stay within certain parameters or is it more of just trying to be efficient through the deal process incrementally to ultimately have that result? Before we hop on that, actually, a lot of the ways that you can get yourself to the finish line for deals is don't underestimate the power of money.

33:57If you can just shift some costs around and say, I normally would have you pay for that, but I'll pay for that. And giving those amounts, those will probably get you farther in tying out loose ends than permitting you to win on these theoretical high magnitude risks than actually just trying to keep on arguing those points. Because it's really just a question of, hey, how about I just give you more money now at close And then you take the risk that this will either arise during the general survival period if this is covered under the general escrow or if for some reason this is a fundamental rep under whatever extended survival period we've agreed to.

34:34Now, going back to your other question about outside counsel, I'm very cognizant of the fact I try to tell other people that I work with in case they get overly conservative. I'm like, do not underestimate yourself. You've been hired to be in-house counsel. And the reason why this company has in-house counsel is because they don't want to otherwise hire someone who has no idea how to advise on this to ask a lawyer to then run up the bill and go crazy. Yes, I do think as in-house counsel, you realize your value add is in lowering the legal bill. Yes. In-house counsel uses outside counsel to CYA to a certain extent.

35:09You can't do that every single time. Otherwise, my thought process would be, I could hire anybody to hire a law firm to CYA on their behalf. So it's the right balance. It's like you got a partnership there, but you want to have it as more of an extension of your effort and be efficient about it, so it's not like a fully outdoors effort. Oh, yeah, for sure. Outside counsel, because they do so many deals and because they're like always sitting on both sides of the table. I think at some point they're going to get very agnostic about how you decide to call the risk. I think a lot of them would be more than happy to just have in-house counsel say, don't worry about that.

35:44I'll handle it later. Just drop it. Really fair point. What's your advice to really make sure you're working with the right external counsel? Like you've gone through this and you've built it and there's like cultures of the groups, but how do you approach it? Do you build a go-to relationship through time and then you're just always defaulting to that? Or is it more of, I got a bit of a matrix of these relationships, knowing it's a really tiny deal. I'm going to work with this law firm. This is more of a bigger high profile deal. I'm going to work with this law firm. How do you think through that?

36:12taking that apart in different layers. One, obviously cost is a consideration. So if I'm, for example, just hiring a law firm where I know I have all the leverage, where basically I'm just negotiating back to my paper, I don't need to hire the most sophisticated law firm out there. I just need to hire a law firm that's familiar with my paper and knows how to argue back to that. And then also relatively familiar with how I would mitigate risks. Although I as in-house counsel can probably just as easily layer that on top. And I think there's a broader swath of law firms that you could teach that to.

36:42If I'm talking about a very prickly deal, then I'm not going to give it to the folks who are just really good at arguing back to my paper because I need folks who understand my paper, the folks who can help me think through really prickly issues. And then help me devise more sophisticated risk mitigation plans because those prickly targets are probably also the ones that offer the biggest books of business or the biggest opportunities for me to grow into. So I shouldn't just try to hold up the deal simply because there are risks out there or more risks that I normally would encounter. And then just thinking of when an M &A in-house counsel is hiring an outside law firm, something that I learned that wouldn't have been obvious to me before is you can actually find a lot of really top tier corporate M &A lawyers out there.

37:33You can find a lot of really top tier employment attorneys and employee benefit attorneys. But what is going to be harder and what is going to drive probably more of your decision is, can you find a great IP team or a privacy team because of how much more antitrust and federal scrutiny of deals are now? those like antitrust or, you know, specialist teams that will help me deal with the risks that will arise in these deals. So that at the end of the day, it's not really how great an M &A team is, even though it probably is the M &A lawyers coming in to pitch you as a law firm on why you hire them.

38:11You have to hire a law firm that has a solid M &A team, but it's going to be another specialist group within that law firm that is going to have to really win over your specialist counterparts in deciding your decision whether to hire. That's a lot of different directions and considerations and the ultimate working relationship and what your goals are going to be or working towards. Yeah, because the eminent lawyers don't matter at the end of the day. We're just like monkey scribes. We're just project managing and ensuring that all the T's are crossed and the I's are dotted. Sometimes you do feel like that.

38:46That is very true. Do you remember like the whole monkey scribe thing that went viral? Wasn't that at Wilson where some... Winston Straw? Oh, okay. Yeah, exactly. Like a partner at Winston Straw called like some associate a monkey scribe. Okay, yeah. I kind of remember that. That's a good friend of mine. Oh, wow. So I got to ask you, thinking of myself as an operator and when I get this deal, especially when you're early, we haven't done an M &A deal, but at some point, whether it's a year, two years, whatever out, we will likely acquire a business. is I'm going to want to spend the time and make sure I'm really working.

39:22I think that's the moral of doing all these podcast interviews is make sure you have great legal counsel you're working with. What's my best approach to network to really build those relationships and identify who's going to be a good fit outside of interviewing them in this podcast? So like you're saying, you don't even work in Silicon Valley and like you just come here and then you're like, I'm going to buy some tech company and I want to make sure I hire the best tech company law firm. Okay. If I were you, I'd probably go bring up the sales forces, the Facebooks, the Googles, all the big serial buyers that have done really sexy deals that you're interested in.

39:56And then be like, hey, do you mind if I can talk to your M &A folks and then ask them which law firms do you like using and why? And then separate it based off of the way that I've sliced and diced the way that I think about law firms. But maybe people slice and dice it a different way. Okay. So who would you use if you're buying a, if you're just doing an acquihire deal, in which case you just have all the leverage and then you also want to limit the cost as opposed to who would you use if you were doing a big boy M &A and buying a company with a real book of business and then has like a real history that may have been formerly private and is owned by a private equity firm.

40:31Ask for referrals from in-house M &A councils. Yeah. Otherwise, if you go purely off of word of math or I guess reputation or God help you, if you're just reading everyone's bios on a website, which I feel like everyone purposely just copies each other so that it's very hard to tell on its face who really does what. Maybe it works, maybe it doesn't. I love this approach. I'm going to take that to heart. I might even test it by just asking for referrals to interview people for the podcast. That actually makes a lot of sense. And you're right, because I've caught myself doing that, where you look up best of many law firms and you'll get this fabled list.

41:08And then you start looking at their directories. And then that's what you end up doing is you're flipping through bios, which doesn't tell you about their working style. Even for me, like M &A is so broad. A company that does really great M &A out in, I guess, maybe East Coast style M &A, where it's like they do hyper complex deals and then they're buying like manufacturing plants and really complex conglomerates or blah, blah, blah, blah. Those people may not be great at doing like a textile deal, even though obviously they could learn to do it, but it may not be the most efficient to go in and find those folks.

41:41Or you may end up finding before antitrust became a big issue, antitrust was something, for example, that I used to handle with the people within my team and primarily drive with the assistance of outside counsel. But now that antitrust is a real issue, like I see deals or like I hear of deals where you'll hire one law firm to handle every aspect of the deal minus antitrust. And then you will go to the law firm that has a really fantastic antitrust practice and then hire them to just handle the antitrust aspect of your deal. Having that network and then being bespoke about who you pull in at what time.

42:19Yeah. Let's talk about managing diligence, specifically preterm sheet versus post. Obviously, preterm sheet, we're looking at deals, we're negotiating. and we really want to find out if there's any big red flags or things that are going to block the deal. At the time, we're getting data room set up. And then from there, we get an LOI sign and we really get into the thick of this stuff. Talk me through that approach to really identify some of these big showstoppers early. How do you work with the CorpDev team? What does that look like? I think it's helping CorpDev understand first that no target is going to completely open their treasure trove of information to a corp dev team, simply because you've signed an NDA, however robust.

43:07Because at the end of the day, if that corp dev team decides to walk away from that deal, any solid buy-side NDA, is going to make very clear that the buyer is a multi-headed hydra. The buyer regularly goes around and looks at many different targets and that the buyer may very well end up having a different department within them develop a competing product. because M &A, the question that I think for a buyer is always, is it easier for me just to grow organically and build this in-house or is it easier for me to just go out and buy a team or buy a business and then grow inorganically? It's a very fine line that your corp dev team has to tread with each target in order to gain their trust.

43:47But then it's very important for your corp dev team to establish a track record and have one of integrity and trust so that targets do feel safe, that if they share this stuff with you, it's not going to come back to bite them later on. Now, post-term sheet, and then when the target sets up the entire data room and lets you rifle through any and every document that they have and then ask all these follow-up questions, what you need to understand as the buyer is because you still theoretically have the right to never sign an agreement or you still have theoretically the right if you sign the agreement to not close if certain things aren't done, is if you want to meaningfully exercise that right and then eventually flip to just building the product yourself, you can't, for example, disclose every single technical person on your side who would be capable of building that product to go and diligence this target.

44:36Because if you do decide to walk away from the deal before signing an agreement, or if you decide to walk away from the deal between sign and close, you're not only going to be able to rely on some residuals clause in your NDA to say, Oh, I told you that I may retain something in my unaided memory. to like potentially go and build something else. Or I already told you in my NDA that like I'm a multi-headed hydra beast and that I may eventually develop a competing product because if that target does see you create a competing product and then they realize that they'll be completely destroyed, they may very well just take you to court and fight tooth and nail in order to survive.

45:13And for you to be able to still continue developing that product or that competing product, you may need to just hire an entire team off the street in order to do that, which if you haven't planned for that Or if you aren't willing to do that, then you need to think beforehand carefully about who you disclose on your technical side to go diligence as target. That will still leave you optionality to walk away if you decide that there's other stuff on the table that you weren't ready to take on. Good point. What are like the big red flag items that you would push to look for pre-signing the LOI?

45:45The big issues that I think are pretty low-hanging fruit that people probably forget about. One, reputational issues, which you could probably suss out pretty quickly. If this company has a reputation via Glassdoor of having a toxic work environment or, God forbid, an environment where there's a lot of sexual harassment or potential sexual harassment going around, it doesn't matter how valuable this target is. The reputational hit to you as the buyer for knowingly buying them may outweigh any sort of value that this target is able to add to you post-close. Another one would be regulatory. I'm thinking back to the days where people wanted to play more fast and loose with regulators, where it was like, it's easier to ask for forgiveness than for permission.

46:23It's all about disruption. It's all about being done rather than perfect. In which case, then you also have to outweigh, you have to really consider, hey, there is value in buying this company, but then is the hit that you're going to take with the regulators, especially if there's potential criminal liability, far outweighed by that. And then third, it's also just understanding, for example, if you think that there is some sort of regulatory risk there, regulatory approval, for example, antitrust, it is possible to go out and get antitrust approval from the authorities on a term sheet alone. But what's going to end up happening is if you really want to keep this deal in the wraps, there's nothing stopping the authorities from doing what they would do if you had already signed a deal and applied for antitrust approval, which is to go out to your competitors and ask them, hey, do you think that there's any anti-competitive effects on this deal?

47:12In which case then it's like you've basically let out the bag to everybody that you wouldn't want to know that, hey, you think that this is a really juicy target or a really juicy place for us to move into. So you wouldn't want to be the one to do that, where you bring that up to the competitor. Exactly. If you're willing to do that, understand that there are risks that as much as it is supposed to be confidential, word gets out. Does that still come in play with a smaller private to private deal? So I haven't done as many of these super sensitive deals as of late. I wouldn't know, but I'd say it could theoretically still be an issue because there are certain private companies out there that may not have a great book of business, but have a really valuable team.

47:55In which case then to know that they're in play, because they're obviously not going to run around and tell everybody that they're in play, or you wouldn't allow them to run around and tell everyone that they're in play. Could, once that cat's out of the bag, really take whatever deal timeline or schedule that you had or track and really push it off the rails. What's the approach when it comes to collaborating with internal stakeholders, corp dev team, maybe other functions? and I'm trying to get that specific sense of what that relationship looks like pre-LOI versus post. CorpDev and M &A, I think, work hand in hand all the time.

48:30The best deal teams probably have the closest relationship between CorpDev and their M &A in-house lawyers because those two are probably going to be the leaders in the deal process. They're going to be the ones who really rely on each other to hopefully divide and conquer and get alignment cross-functional within the deal team and then across the organization. The second most important would be that people who you come in contact with on a repeat basis on your deals, being able to build a track record with them, whereby you can prove to them, for example, that I will argue on your behalf to get us back to our paper or to our playbook, because at the end of the day, I know that you have a day job and that there's value in our creating a repeatable, scalable process.

49:08So that one day when I come knocking on your door and that day will come, you know that I've earned the right to disrupt your day and really have you focus on this way generous and truly unique issue. Sounds like the right approach is really having that relationship so that it is very collaborative. Then I take it that expands once you do sign LOI and now you're getting into big functional considerations with those leads. What's your expectation that people actually read the PA and know what the hell it means? I don't expect anybody to read it. I expect myself to know it back and forth. I expect my outside counsel to know it really well.

49:41But for example, when I kick off a deal, I will have already summarized what the turn says. And then if I know that there's a certain specialist group that always like hones in on some fun fact that I otherwise want to think is important, I will call it out for them. I will also try to provide as much background information in a short, digestible manner to folks so that they know that when I kick off a deal, they can just either attend a meeting where I'm kicking off the deal and pay attention to the slides or just pull that deck if they couldn't get on the meeting and then just refer to it later on.

50:09So you kind of have your own summary and then it may be something like HR specific. Hey, here's some nuanced things because this company has employees in Eastern Europe. And we want to make sure this is how we got it worded. And then let them know everything. And then you get that feedback. For everybody else, they don't need to know anything other than a term sheet and then a target and details. For the PA, I would say they also don't really need to understand a PA other than in general terms. And then I would rely on outside counsel. they're like outside council counterparts to really get into nitty gritty and then tell them what the big issues are.

50:44But I would still be fluent enough in their specialty area and then in their sections of the BA whereby I could say, hey, if you're not comfortable signing off on this, this is why I'm comfortable signing off on it because of XYZ and this deal. And then also, hopefully I can say, and because we've already signed off on this in prior deals, in which case then it's, I don't expect that person to remember what they signed off in the pass, but I should be able to pull that up myself to say you have signed off on this. What would impress you? Like if a corp dev person does have a good interpretation of the purchase agreement?

51:15Some corp dev people do like that and they do get into the weeds. Those are few and far between. Quite frankly, I don't need corp dev to know that stuff, right? But what I do need corp dev to understand is that at the end of the day, it isn't really just their job to source the deal and then be a human alarm clock, right? I need them to understand that there is some wood to be chopped and that to have patience and that to understand that I may need to selectively pull them in to argue certain commercial points. And if I guess CorpDev feels like I'm over abusing the fact that I'm like, that's a commercial issue that's for you to take, I'm more than happy to take that feedback.

51:51But I think similarly, what I'd also say is it isn't just once a deal's sourced, all what I have is, and nobody really does this on a CorpDev team, but I think maybe sometimes I get this for salespeople who just source a commercial deal is they suddenly just become human in lockbox and tell me like, oh, I want to sign by X date without ever looking at the agreement, without ever understanding when it needs to be done to button it up. So not enough to know what's going on. Yeah. But I also really rely on Corp Dev on is understanding to deal in mathematical terms so that I know I reflected in the agreement.

52:19But then also, as I told you before, whenever you're trying to button up these really tricky issues, if you can just say, hey, I'll pay for this, even though I normally wouldn't pay for it. And then you think of it in the higher level of just I'm paying you more at close so that you will assume some theoretical risk that may or may not arise post-close, then you guys have alignment on that. Because at the end of the day, all of that is just math too. And whatever you agree to in the M &A agreement for the payout and the risk shifting has to be somehow reflected in a spreadsheet somewhere. AI is changing things quickly.

52:50I took a Waymo to get down here. Oh, wow. I still haven't taken that yet. Although there's a bunch of them. Self-driving, we took it three times with the kids yesterday, and it's trippy. The fact that we took one ride, and my kids refused to take Uber after that. They were like, no, dad, this is way better. We don't want to deal with no... And if you think about it, it's one bad experience with a driver. All of a sudden, it's, oh, wow, I can eliminate that. Versus like, hey, sometimes I have good experience. I have fun conversations with my Uber driver. But nope, they just like instantly converted.

53:23We'd rather take the self-driving. It's probably the novelty though, because afterwards people are going to start wanting to be like, it's lonely sitting in a car alone. I think I was like reading somewhere. Now there's this growing movement, although it isn't completely taking over of teenagers or like college students wanting flip phones because they feel like smartphones are just too distracting and like completely like, I mean, there's just too much static and like it completely cuts you off from the rest of the world. which I would also agree because I grew up at a time where I remember, I think it was like in college when the Moto Razor came out.

53:54And the fact that it would flip was just like so cool. I remember watching the news and it'd be like, oh, Paris Hilton has one. Not that I cared about her, but it was like an emblem of cool. But then back then it was like, because you couldn't just look up on your phone stuff or you couldn't just, you could text, but then you were like, each number is three different letters. So your text messages were much shorter. You were forced to have much more human interaction. with people around you, which now we don't really have as much. It is. It's a big difference. It's really flipping things upside down.

54:23But I like that. I hope I can see that. Acknowledge it. Like, hey, this is way too much of a distraction. I want to dial things back. With AI making a lot of impacts, when it comes to the legal world, how do you see the impact, even taking it back to that dynamic of working with external versus internal counsel, how do you see it making an impact in those different perspective roles? I'm definitely very fascinated by it. I definitely try to read as much as I can about it. And I would have to agree with what I've read so far in these general points, which is one, AI is going to make the greatest probably changes within our lives.

55:00Not like from OpenAI and ChatGBT or Google's part, but in some boring organization or industry that somehow manages to realize great efficiencies through harnessing the power of AI. One of them I just read about was data centers that have managed to use AI in order to predict out their energy usage with AC due to weather patterns. Another one I think is financial institutions using AI in order to detect fraud, fraudulent transactions. These are like all low-hanging fruit, nothing fancy, but AI, once you implement it, could have very great efficiency bounce. putting that aside, which I think is something that is already happening and then will continue to happen.

55:44The other thing that I've read is that artificial intelligence is more artificial than it is intelligent. It could very well hallucinate and then produce something for you that even the people who wrote the code or like trained models have no idea why they did it that way. I think the example that I read recently was someone asked how to make a pizza, but like they told them to put glue on the pizza. Or like I think Google was trying to make some socially liberal image generator. And then people were asking it to generate images of our founding fathers. And instead they were generating images of people of color as George Washington.

56:21Clearly, there was something happening there and it was hallucinating that was not anywhere in line with reality. In the law, I've had people tell me before, they're like, oh yeah, I've been told to write this memo before and I've debated, is it easier for me just to have chat GBT write it and then I just fact check it? Or is it easier for me just to write it and then ensure that all the facts that I have in there are correct? And nine out of 10 times, people are like, I'll just do the latter. Because the problem is with ChatGBT, they'll conglomerate so many different facts and make a statement.

56:51You don't understand how to disentangle it and determine what's been hallucinated and what's real. Which I guess is my segue into, I think AI will be able to, I think, once it's been trained to a certain level. And you can check manually as a human when it has hallucinated. be very useful in diligence. Being able to pull out, if you're like, give me all the change of control provisions or give me all these termination for conveniences. But it's going to need to get there. It's going to need, one, a lot of different examples of how all of those are put together. And then two, you're still going to need a human being or somebody who knows what they're doing to be able to know what was put in and know what exactly should have been spit out.

57:33And not only check to see that what has been spit out should be narrowed because it's probably going to be over-inclusive, but also know that it should have spit out other stuff that no one ever saw it spit out. So know where all the absences are, which I think is hard. Until you get there, you're still going to need some sort of human being in the background, double-checking all that work. It's going to be in the foreseeable future. The most realistic thing is, hopefully you get to a point where you have lawyers who are trained well enough in AI that they can work well with a machine. to get the job done.

58:08That's probably the most realistic thing right now, as opposed to thinking, oh, eventually we're just going to be able to just automate everything. We're going to pick up the sequel to this interview a year later, and it's just going to be all about the AI use cases you're currently using. Oh, exactly. We'll be all like deep fakes. We'll just use some deep fake voices. Then afterwards, you'll be like, which segments of the podcast are real? Which ones were fake? That'll be the test. What's the craziest thing you've seen in M &A? This is probably really basic. Maybe it just goes to show you the importance of lawyering, but also the limits of lawyering is that you as a lawyer may be able to go out and negotiate the most sophisticated or like acceptable or comprehensive solution to an issue, which at the time took into consideration all of these different voices.

58:51But when it comes time to actually implementing it, if those people that you got the input from don't get the cross-functional alignment across the organization later on, you may very well just end up realizing that whatever you negotiated for people to actually go out and plan, nobody will actually honor. I'm not saying that that necessarily immediately exposes you to great liability because you can view contracts as just more of the threat of litigation motivates people to work together. But it does go to show that as a lawyer, you have to one, be really good at being a lawyer, but two, it's even more important or just as important to be really good at communicating and recognizing who you need to communicate to to make sure that the paper is actually respected.

59:36Yeah, give me an example. Give me some little context to it. I'm thinking back to when I did asset purchase deals or joint ventures where conceptually speaking, it's very simple or it's more straightforward to put these deals together. But practically speaking or logistically speaking, I think those are the most difficult to actually implement because the people that you're getting input from to say, for example, say, this is the list of assets that we're going to bring over. and then we agreed that if anything's forgotten, we're going to work together to come up to somehow untangle it. Those people may not actually, at the end of the day, help be there in the post-codes to help disentangle anything.

1:00:11That's true. I get it. You can legal things up to the end of times, but then at the end of the day, it's really about people working together. And so this has been an awesome conversation. You've helped me learn a lot, become a better M &A scientist. Thanks for taking the time with me. Yeah, no, thank you for having me. And this has been great. Those of you still tuned in, thank you, my fellow M &A scientists. Always welcome feedback, criticism, how I can get better at doing these interviews. Reach out to me, LinkedIn. Always open to topics, speaker suggestions as well. Until next time, here's to the deal.

1:00:59Thank 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.

1:01:44Again, that's mascience.com. Here's to the deal.

1:02:08Thank you.