Strategic M&A at Scale: Insight Partners' Buyer-Led Approach with Byron Lichtenstein

23:41We won't, by default, set up an M &A team to go support them. But if a portfolio CEO comes to us or CFO or usually the venture ones don't have a head of corp dev yet, if an exec comes and says, oh, there's this really interesting opportunity or our sourcing team finds something that they think could be interesting, we will spin up the effort and it tends to be on the board member plus somebody from inside-onsite or on our deal team. we'll go have the one-off conversation. What you can do is separate out the portfolio by companies where we set up a more structured approach and repeatable approach to M &A.

24:13And then there are the one-off M &A situations. And that doesn't break down by control versus minority. There are minority companies that will fall into we have a repeatable motion. The goal is figure out what is the appetite for M &A? Do we think M &A can be a growth lever here regardless of our ownership structure? And then we will work to set that up. If you look at the repeatable model, what that typically entails is CEO, CFO, maybe head of corp dev, depending where they are in their journey. We'll meet with our team and essentially say, all right, I'm going to craft strategy. So help them think through where do you want to go?

24:47But oftentimes that's CEO-led. Then we create a sourcing strategy and we have execution. So we can actually help them do the diligence, go through all the pieces of the operations. We'll partner with the management team to get that done all the way through actually funding it. So we have a whole Cap Markets team and a huge shout out to Kevin and Nate who run that team. They would actually think about like, how do I go fund this deal? Is it debt? Is it equity? Should we bring in co-investors? Do LPs want to get in on this? We will go soup to nuts on M &A. That's a lot of support for Portco, especially when you have a minority stake.

25:19Do you charge for that? We don't. Everything's free. The amount of value that we've created is more than pays for itself. Every time we do the ROI analysis, it's bonkers. Take pricing. We got a couple of people who do pricing for us. I'm using that as an example because I think it's the simplest one. There's a company where our team met with them for maybe 25 hours over the span of a month to restructure how this company was looking at pricing. They dropped$2 million down to the EBITDA line using the new strategy. That's$2 million. You put whatever multiple you want to put on it, somewhere between 15 and 20.

25:53You're talking about$30 to$40 million of value. for this person's 25 hours of work. The ROI on that is just a bit bonkers. For us, the reason we don't charge for it and it's like Hilary Gosher, who runs the full team. So I have our Diligent Strategy group. We have Pablo, who runs our advisory teams. That's all the former C-level folks. And then you have Mike Hayes, who runs our access team. And then Brian, who runs our talent team, just like sourcing good talent. But Hilary, she's the OG. She founded Insight Onsite back in 2000. She's been the one that's grown it and seen it. her big push has always been, we could go and charge portfolio companies.

26:30There's a lot of our peers who will charge for consulting fees and management fees and all of that. But ultimately, it creates two issues. One is companies who don't pay are not going to get access to it, even though they actually really may need the help. And then two, if there is a company who has paid, but we don't think that there's actually much value to create, we still have people show up. We'll still have them have to go and justify why they're paying. And so they'll go to the board meetings and it becomes this whole thing of, oh, because you guys are paying me for the service, I have to show up even if there's nothing for them to do.

27:07We think it creates complete alignment between teams to not charge for it because any company who needs the help can ask for the help. And then ultimately though, on our side, we get to go where we think the highest ROI is. Just because a company asks, we always want to be useful and we've created scalable platforms. But there may be something where I have told companies before, hey, that ask is... I know it's useful, but why don't I actually go help you find an external consultant to do that? Or I actually think you need to hire two more people on your team to go do that. That's not something we do.

27:39There's no justification of our existence because we only want to go after the meaningful problems where we think we can actually have ROI in these businesses. Our incentives are 100 % aligned to our portfolio companies. Because you do everything, right? Venture, buyout. How do M &A strategies differ at these different stages? And where do you see the commonalities? Every company at every stage should be thinking about M &A as a potential lever. If you reverse back the clock to 2015, M &A was just this PE thing. All the venture guys, investors, companies that are like, it's a distraction. We have the best products and sliced bread.

28:16We're going to take over the world. There's no need to do M &A, any of that. what we've seen over the years is one that markets come around to even for venture, that they should be open to doing M &A. What ends up happening is we talked a bit about the repeatable versus the one-off model. I would say on the venture side, it tends to be you're leaning more organic growth than inorganic. We want to encourage our companies to be open to the one-off possibility. Is there a company that you could go buy that would be a total game changer for your strategic positioning in the market or expansion into this new vertical?

28:48and we try and identify that with the venture companies early. And then we say, all right, our sourcing engine, and I should probably speak a little bit about our structure at Insight, we have 70 folks who their job is go find software businesses. They are talking to, in the latest stats, something like 40 ,000 software businesses a year. All we're doing is trying to... If it looks like software anywhere in the world, we want to talk to it and we want to know it. And we've built this engine to just understand the software market. What we do is we'll work with a venture business. We'll identify what are the game-changing moves that they could make.

29:24And then the sourcing team will put it on their radar. And if they can crack one of those, great. And we'll send it in. On the buyout side, and for some of our larger minority positions, we will have a more dedicated strategy. If we're going to talk about it day one, what's the strategy you want to go after? How are we thinking about inorganic growth? will set up a regular cadence, whether it's monthly or every two months of checking in with the business. It'll be dedicated to an analyst or an associate on our sourcing team of like, all right, a certain percentage of your time is actually dedicated to this company to help them find deals.

29:55And then we do have dedicated portfolio support that can help them think through actually doing the execution, thinking through the implementation or integration plan and actually getting the deal fully done. How do you look at the deals that just pan out the best? We used the example earlier when we were talking to the side around buying the competitor. There's that. Then there's, what was the term you used earlier? Architecture. You started figuring out all these other products that you can sell to your customers. What works best? What do you see as the best bet? Especially the companies at that earlier stage too.

30:24In terms of what works best, it is just going to depend on what you're going for strategically. We use this phrase, when we first make an investment, I want the CEO and management team to write the S1 on day one. Obviously, not everybody in our portfolio is going to IPO. But the S1 is the marketing document that pre-IPO business puts out into the market right before they go public. And it basically spells out, here's where we are today. And here's the vision. And here's why you should invest in this business. And what my hope is always for all of our businesses is the day we invest, we should be writing what we want that to be.

30:58It's the Amazon, write the press release before you do any initiative. It's the same idea. What's the public story you're going to tell in five, six, seven, eight years? how do we then align everything to that? When we think about actually going and doing M &A, it's going to look slightly different. They're going to be somewhere, it's purely about product. Take M &MI, we feel like we have an amazing customer base, a ton of volume moving through. It's all channel. We have the channel. Now we just got to put product through that channel. Versus take a company like Bullhorn. I know Art Pappas was on the podcast at some point.

31:30And he's an amazing CEO. He's one of the best CEOs I've ever had the pleasure of working with. I say that because if you just look at his journey, you don't get that many CEOs who found a business, go through the whole venture growth stage, sell to PE. He's on his third PE sponsor at this point. He survived throughout and he's grown and he wrote the first version of the product. He knows the product in depth, but he's great on sales. He's great on vision. He's great on execution and hiring and all those things. I won't stroke his ego too much, but I think he's great. Is it? Check out the podcast.

32:01Yeah. Yeah. I don't know. I totally agree. You should definitely. But I think for him, if you look at that business, so we actually... Just to clarify, this is like an actual exercise you do with your portcodes. I think you referred to this in a past conversation as strategic positioning as the North Star. Let's go walk me through it. Yeah. Strategic positioning. So the strategic positioning piece is that S1 statement of like, where are we going to be? Who do we want to be? What are the core tenants of building an amazing business? If you know you have to expand your market, I'll take Bullhorn, just because we were just talking about it, pretty much from day one, the strategic positioning we wanted to achieve was the first core tenant is we need to be the clear market leader within our recruiting CRM business.

32:43All of the actual back office pieces, we want to have 50, 60, 70 % market share. That was one piece. And then the second component was we knew we needed to expand the market. It's a big market, probably$800 to a billion of TAM. And we thought we could really grow into that and make a giant business. But we also knew that wouldn't it be nice to have another billion dollars of TAM? And pretty early in that business, we had those two strategic positioning imperatives. And we said, all right, we're going to use M &A mostly for the first one. So how do we actually build market share? How do we really think about the positioning of adding new features and making sure that the customers are still happy and making sure that they're retained?

33:23And then on the organic side, on the expanding the TAM, we had one or two small product acquisitions, but we also invested meaningfully in the organic product. Like Art came, I think, at our first board meeting and said, I think I can unlock$500 million of TAM with a$3 million product R &D investment. Of course, we greenlit it. And you fast forward to when we actually sold it. So we sold that business three and a half years after we initially invested for a pretty good return. And that was core to the story. Let's have that out. Damn good return. Yeah. It was good. And what was fascinating is we bought that business from another sponsor.

33:58Operationally, that business was humming. There's always this idea of, oh, if you buy it from a sponsor, it's already been optimized and can you actually get a return? I would say that we bought it. It was in great shape. Art and his team were operationally amazing. What our unlock was as Insight is taking a little bit of our venture heritage. We're willing to swing for stuff. We're willing to go after the product expansion, go after some of this M &A in a slightly more aggressive fashion. And we aggressively pursued it and it was a good return. I do think that building where... We could have just done the same thing and it would have been a fine return.

34:30But if you really want to go for the good return, getting the vision of where you need to be and staying focused yet aggressive on those paths is the right call. That's the shape which deals you should be doing. Totally. What does it mean founder-led but not founder-limited? We want to be really good partners. As I said before, we want to be amazing partners to all of our companies. And most of the... I said 85 % of our portfolio is minority. A lot of those are founders. And there is something about founder energy that I think is amazing. And we want to harness that as much as possible. But there's also a lot of founders who, by the time we invest, it's the biggest business they've ever run in their life.

35:07There's something really meaningful to be said for supplementing that founder with other execs and making sure that we're both harnessing the amazing talents of that founder. Getting it to whatever scale that we're investing in is no easy feat. We want to keep that energy, but we also want to make sure that we're supplementing with folks who have seen the story before and can look around the curve. Not to say that they're going to know exactly where the destination is, but at least they know that nine times out of 10, if bookings is off, you should do X. And just seeing some of those processes at scale, it's like, why wouldn't you use that data?

35:46For us, when you think about founder-led but not founder-limited, we want to help our founders grow. And we want to help our founders build the best business. And ultimately, we are aligned about my consulting days versus now on the investing side. We have zero incentive other than make your business bigger and worth more. We only get paid when the business is worth more tomorrow than it was today. A lot of our founders, they are meaningful shareholders. And our goal is make sure that their dollars are multiplied as well. It's really working with them to harness what they're really great at, supplement them on places where they could potentially grow or over those blind spots and just be good partners to them.

36:25What about the founders? Okay. I got some belief in your model here. You've worked with hundreds of founders, CEOs. What are the key qualities that you see are the ones that will scale well through M &A versus the ones that don't? It's a good question. The thing I love most about a lot of our founders is they They love their businesses. They are obsessive. You have to be. You have to get into the details and you have to really be willing to dig deep. But at the same time, you also have to be flexible. Where I've seen founders, maybe I'll take the opposite of your question, where I've seen founders go wrong is a belief that their product is always the best.

37:03A belief that they are 100 % always the right person to solve the issue at hand. The most successful founders in our portfolio are the ones who are willing to ask for help, who are willing to acknowledge their blind spots, but also are super confident in where they are really good. And they are willing to dig in. And the partnership really works with us. Our biggest value add for a lot of our founders is bringing data and expertise and saying, ultimately, your business is going to be like, it's your baby, you know it well, but maybe I can bring a couple other data points of 10 other businesses that have gone through the same problem with you.

37:37And those who are willing to listen tend to, or at least be open to the idea, tend to do quite well. So just don't have a big ego. Yeah. I'd say this. The investing community, there is ego inherent in the job. You have to be willing to inherently pay more than other people or take a bet on something and believe that you are right over others. If you are purely doing what everybody else says, you're never going to make any money. And the job's inherently like you have to have some ego as an investor. But ultimately, the thing that I love most about Insight, I don't know if I do this exact job anywhere else.

38:10I do think this place is special. And the reason for that is, I talked about our core values earlier around command and reinvention, but our number one core value is hunger to win. We want to be in the best deals. We want to be with the best founders. We want those businesses to be super successful. But our number two value is heart. How many investment firms have heart as their number two value? And the reason I bring that up is we always want to do things in the right way. Even though there is ego and you have to have an opinion, it doesn't mean you got to beat people over the head with it. And you want to be fair about it.

38:41We ask our founders to be similar. And we ask our execs to be similar of, we hired you or we invested in you because we think you're the best. We think you are the person to run this business. You're the person to get it there. We'd also ask that if something comes up, that you're willing to take direction. It's potentially trite, but it's like, my wife always jokes. She's like, we'll be in a foreign country. She's like, why don't we just ask for directions? I've learned over the years. I was like, I just need to ask for directions. Every now and then, we use the ways analogy. We say, our CEOs are in the driver's seat.

39:09Ultimately, they have their hands on the steering wheel. But if we can be ways and we can say, hey, actually, there's a crash up ahead and maybe you should turn right, that's all we want to be. We want to help them get there. But ultimately, they got their hands on the wheel. They're the ones driving. But we have to take direction and not just driving the traffic. I like that. FireLed, we talked about just your rigor around having this strategy, strategic positioning, supporting a lot of these portcows with finding opportunities and just being proactive and not just waiting for stuff to show up on a deal book.

39:39Yeah. M &A, I know most P firms usually have a 90, 100-day plan, model. Yeah. How do you work with portfolio companies? We're going through the deal, got something, we're going to close. Hopefully you're planning integration before you close. Yeah. Can you walk me through what that support looks like? Yeah, totally. We 100 % think you should have an integration plan before you close. I hope that every company has an integration plan before they close. How about an integration thesis at LOI? I mean, you should. And it goes back to those categories of types of M &A you're doing. There are times where 100-day plans go wrong.

40:10They feel like they are boil the ocean, very static documents. They're like, I have to have this 100-day plan. And we're going to tick through all the boxes. Yes, there is a certain level of like, you got to get people new badges. You got to get laptops. You got to move the systems. There are really minutiae things that do have to get done so that everybody feels, especially on the acquired business, you want employees to feel like they're being welcomed into this new environment. You want them to feel like, okay, there's a path forward. And if somebody's badge doesn't work on the first day, everybody spirals.

40:44You do have to have the checklist. But ultimately, the best 100-day plans are one, flexible and regularly updated. And then two, depending on the category, they are tailored to what the situation is. If you have a 100-day plan for a five-person acquihire, that looks very different than, oh, I'm doing a merger of equals of two direct competitors in the same geo. Those are fundamentally different 100-day plans. And so you have to create those different plans, and then you have to be willing to adapt. One of my favorite, I got a lot of favorite CEOs, and one of the ones I've learned the most from is our CEO's Lisa Stinnett over at InhabitIQ.

41:26She is like a machine on M &A. And ultimately, if you look at her 100-day plans, every deal that she's done has a 100-day plan, and it gets updated every 30 days. The team is just methodical around understanding where it is, updating, moving, and then reassessing where it is. They just have this cadence. And it's the right balance of focusing on what matters while still being flexible to keep it ongoing. And then you talked about support. We will be heavy on the strategy creation. We'll be heavy on the sourcing and the execution where we're needed. Sometimes our companies say, I got it. This is the 10th deal they've done.

42:01They have a full corp dev team and we're not dogmatic about being in their shorts about it. We're just here to be helpful. Again, it goes back to the alignment piece. We only care about the outcome. We don't care about we have to do something X way or Y way. But we are always willing to be helpful on the execution and getting the funding and the transaction done. We do want to be helpful on getting the 100-day plan set up. What I learned relatively early in my career though is if we own the 100-day plan, it doesn't get done as well as if the company owns a 100-day plan. Meaning that somebody in the company has to be accountable to it.

42:33Whether it's the CFO or the head of FP &A, it should be 70 % to 100 % of one person's job for the foreseeable future to get it done. Adam Berger, one of our operating partners who has just been an amazing mentor to me over the years, He always says, if this M &A is not the most important thing on the strategic roadmap, you probably shouldn't be doing it. And he said, a lot of people cheap out and they say, oh, it'll be like 10 % of the CFO's time, 20 % of the head of FP &A's time, maybe like 5 % of all these other people's time. And he's like, no, no, no. You need one person who is going to update that plan, make sure all the functional leads are actually coordinating and updating their plan, running the weekly standup.

43:16Somebody has to own it. And if it's not important enough for you to make it 100 % of somebody's job, you should probably not be doing the deal. It's a big bet. Yeah. It's interesting talking to different sizes of firms. And I'm almost seeing a correlation between how much AUM a firm has and how much portfolio support they can provide. Is that a real thing? And it's a different topic. We can debate this with me directly or not here, but the bigger funds will pay more. You don't have to answer that. Hopefully not. Yeah. I think it goes back to what we talked about earlier. How much you believe you have in your strategy and what you're going to execute should determine what you're paying for it.

43:50But on the portfolio support, that's what I've noticed. If you're a small fund, definitely sub-billion, sub-500 million. I think it's tough. For us, we've leaned into scale as a differentiator. And ultimately, we believe there are two components that really matter at scale. Access and expertise. Everything's about access. How do we use our scale to get you better access? That's more access to other portfolio companies. We don't have all the answers internally, but I'm pretty sure that one of our 500 other companies has solved the problem you're trying to solve. And we want access to other portfolio companies.

44:24I want access to buyers. Our Insight Ignite team or enterprise team, they spend their lives looking for relationships in the Fortune 1000. They want to know the buyers of software in C-level buyers within all of the Fortune 1000 companies. We want to provide access to that and use our scale and our portfolio scale to actually provide that access. And then on the expertise side, we want to use all of our data. There's AUM scale, but there's also like we've invested in probably 800 companies over our lifespan, exited hundreds of companies. We've seen companies go through every, you know, within a vertical, like we probably have 12 data points of other companies that have gone through your journey.

45:06and we want to use the data as well as the expertise from people who have actually sat in your seat to give advice. You can't do all that in a billion dollar fund. You just literally can't pay for the... You use this phrase cost center. For us, it's an investment and we think it has a super high ROI as we already talked about. But ultimately, that's a lot of cost that we're bearing and that benefits our portfolio, that benefits our LPs. We fundamentally put our money where our mouth is of believing that we can change the math. Fundamentally, why can strategics pay more than PE firms? It's because they can change the math.

45:42They just have a different math. They can plug in whatever acquisition into their existing behemoth of a business. The sales channel is already set up. They already have a good R &D or they're able to pay more and still have good deals because they have different math. Our goal is to do the same thing. How do we We have different math using our scale. As we talked about over lunch, there's really only two ways to make money. I would say there used to be three ways in that you can always get, you can just find things before other people. It's becoming harder to harder. We still do it. I would say half our deals are still proprietary or not going through a bank process or we've had a relationship.

46:15The average time between first meeting a company and actually getting a deal done is three years. That's the medium. We're really getting to know people over a long time. But I think that is going away. Even earlier stage companies are getting bankers involved and all of that to go through fundraising. So really, the only two advantages you have to make money in this industry is either taking more risk or changing the math, having better operational support. And we've said, ideally, you wouldn't take more risk. You should take educated risk. We're obviously in the business of taking risks. Ultimately, if we can also lean on better operational support, there's good ways of driving return simply using our expertise and our access at scale within this portfolio.

46:54Yeah, that's a big part of it is one of the pillars when looking at what private equity firm to work with. It's the price they'll pay, the terms, and then operational support that comes working together. You also got to like them too. I hope. That's it there too. Raising capital, as somebody once said, raising capital is like getting married. You're stuck with us. We're stuck with you. And we both have to make it work. And ultimately, again, it goes back to why I think heart is a meaningful value is we always want to do the right thing. We want to be fair. It doesn't mean we're going to be soft, but it does mean that we're always going to be fair, be good partners to our portfolio companies.

47:28And ultimately, you want people around the table who are going to be both your biggest cheerleader, but also your biggest coach on pushing you a bit. Make sure you have a good prenup. Those don't fully exist, right? That goes back to the terms. The terms. You mentioned too at lunch, buyers are getting more sophisticated. Tell me more about that. Buyers are definitely getting more sophisticated. Part of it is just the market that we're in. When I first started here in 2015, we're still a small team and there's this amazing rite of passage that our team would usually help our investor relations team put together all the materials for our annual meeting.

48:02My first year here, I was a lucky one who drew the straw of putting together all the materials for this thing. But it got me more involved in our IR process. Ultimately, what it allowed me to do was go to LP meetings and hear questions from LPs. What was fascinating is in 2015, you talked to LPs and they were like, why are you guys doing software? Why are you all focused on software? Why should I as an LP invest in software? I got real estate, I got industrials, I got pharma, I got healthcare, software only. Why does that need to be part of my portfolio? Then you fast forwarded to five years, 2019, 2020.

48:37And then the question was, oh, I totally get why I need software. what makes you guys different. That level of competition has just the realization of everybody wants to be in high tech. You look at the Magnificent Seven, all of that. Everybody knows that a lot of the returns are going towards software and tech. It's not even a question anymore that people should be in it. And what that's created is a market where you get more entrance. Like I would say 2019 through 2021, you've got a lot of people who started to do their first software deals. And then they realized after that, they're like, oh, maybe I should do more software.

49:09You've got a lot of entrance into the market. And what's created is people are now used to looking at software assets. And then they've also looked at more of them over time. So they've learned what to look for. Software buyers are just becoming more and more sophisticated as in the market. And for us, what that means is you've got to have really good product. And you've got to think about where your mode is. What we've seen through cycles is like the A plus businesses will always get A plus pricing. But I think in the heat of 2020 and 2021, you got a lot of B businesses getting A pricing still, where the market has corrected to, and I actually think we're in a good part of the market, is A-plus businesses should get A-plus prices, B-businesses should get B prices, and C-businesses should get C prices.

49:50People are becoming more and more discerning as software as a market has grown and the entrance into investing in software has also grown. It is. It's getting a lot more competitive. I'd love to just touch on just the themes, whether it is trends you're seeing around value-add models that go beyond capital. We got AI everywhere. Everybody's slapping AI. AI. Everything. Sometimes using that as a reason to go increase valuation and stuff. And then you've just got all these startups popping over where they are raising on crazy valuations. What's your view? Teach me something there that I need to be thinking about as a founder of a business that's trying to keep up with some new AI features.

50:26Yeah. No, we can definitely talk about AI trends. We're making a big push internally. We have this initiative called Five and Five. We have this fundamental belief that all of our businesses should be able to get five points of growth and five points of margin out using AI. We fundamentally believe that we should be able to accelerate the growth and that if you look at G &A, S &M, R &D, especially, there's a lot more places for efficiency using AI. I think R &D has been one of the biggest unlocks if you look at where the most use cases are using AI. Today, it is within engineering. What's amazing there is if you reverse the clock back five, six years, most investors could tell you pretty well what to do and how to optimize S &M.

51:06They could probably tell you how to optimize finance and legal and HR and all that in G &A. R &D was this black box. They were like, oh, don't break the product. And so they wouldn't touch it. And now you're just seeing more efficiency come out of those orgs, better deployment in DevOps. There's a lot of tools using AI. And so I think that you'll see a bigger push there. Product, as I think about advice, when we talk to our companies about this, you should get out ahead of your product and think about where the product mode is versus an AI future. We really push on like, how do I actually incorporate it?

51:37It doesn't mean you got to fully rewrite it. Historically, one of the most interesting things, hopefully for your listeners on this, with this business, Optimizely, where we've been in the business for a few years now. Originally, we invested in a business called EpiServer. We ended up merging with a business called Optimizely. And they do think of it as like web A-B testing. I was an early customer. Yeah. So they're an awesome business. Marketers are famous for having too many tools. We fundamentally believe it's like, you have your website, you need to figure out how to test it. They're using AI to figure out like, what test do I run?

52:06How do I analyze it? But what was fascinating, they actually used, it's a good M &A story. They acquired this business called Welcome, kind of a digital asset business. As all this AI stuff happened, the CEO was actually super out in front. He's like, we have to be AI first, but how are we going to do it? And they actually used the founder of that business. They acquired Welcome. He became like the AI guru across the business. And what they ended up doing, which was really cool, was they had really strong software. across multiple parts of the marketing stack, instead of taking the conventional wisdom of, I got to go rewrite all of these pieces of software and be AI first, they actually said those software components actually work super well.

52:46And we're just going to create an orchestration layer over the top. And so that founder and Alex's CEO were amazing. And that basically developed a co-pilot on top of their existing software. So they didn't need to rewrite, but fundamentally the user experience changed. And now you as a user, you did all the orchestration. using your AI co-pilot. And you didn't actually have to touch the underlying pieces of software at all, really. They went against this conventional wisdom of if you're old and legacy or if your software is written more than five years ago, you're going to be dead. And they're like, no, no way.

53:17Our software is good. It actually creates a lot of value. We're just going to give you the right user interface to it. And we're going to allow you to orchestrate our software even better. Disrupt those users. Totally. And then they used all the data coming. They have so much data underneath. So they give us an example of an incumbent utilizing it versus being afraid of it. And I think that's ultimately where you got to be. And hats off to Alex and that team for being ahead of the trend, being super thoughtful. And my sense is, it's not one of mine, but my sense is from the team, it's growing well and the growth is accelerating quite well off of the back of a lot of this AI orchestration and utilizing the new tools at your disposal.

53:55That's a great example. You got to be taking bets on AI if you're a company in the field today. Totally. You know, budgets are also fairly unlimited with AI. We'll see when the music stops. But what's interesting is, this is maybe my hot take that people won't want to agree with, but you get a lot of articles talking about AI as fundamentally different business model. You can't underwrite it the same as software, all of that stuff. I do think some of that's true. I do think the pace is moving quicker. I do think the adoption has been amazing. You maybe don't need the same amount of tooling or people that you need.

54:27But fundamentally, a business is a business. It's I create product. I have to have a channel to sell that product. Somebody has to buy that product and use it. Then they have to renew their contract. The fundamentals of business and what you're looking for, am I bringing in more customers? Are they staying with me? Am I keeping them happy? Are they paying me more over time? Those haven't fundamentally changed. The reason that the metrics look so funky is I haven't been through as many cycles as some of our most senior partners. But it's the first time, at least in my career, where you've seen just supply and demand completely meet.

54:59Before you look at the SaaS conversion, I spent the first five years looking at companies and really thinking about, oh, enterprises are slowly moving from on-prem to SaaS. They should have all moved, but they're just moving. Versus the first time where every single company across the world was like, oh, shoot, I need to go invest in AI. And so they released budget at the same time where the capabilities were there. That's why these growth curves look like vertical because you just had this really good supply demand meeting moment. In reality, I think over time, people will think about where the budgets are.

55:31And I do think it'll look more fundamental. We're at a super interesting time right now where the supply of technology and the demand dollars are fundamentally overlapped. I think you'll see that for a few years. Fundamentally, at the end of the day, I think the fundamentals will still be okay. It will still be similar long-term. We'll see if valuations come down. I would say it's unprecedented. and you're seeing some of these rounds happening. The growth is there. The growth is there. What's the craziest thing you've seen in M &A? M &A ultimately comes down to the people. I've seen founder to founder shouting matches.

56:03I've seen deals blow up three or four times before actually getting done. Fundamentally, like everything in life, spreadsheets, yes, they work well together, but fundamentally, you got to get people working with other people to drive the business forward. Ultimately, emotions always play a factor and logic always has to somewhat overcome it. Even software business, yes, there's a lot of work for it, but most of the costs are in. We are in a people business. People are both predictable and unpredictable. 100%. Oftentimes, M &A can feel very existential, both for founders, shareholders, and also employees.

56:37There's a lot of emotion in selling your baby or there's a lot of emotion in getting acquired. As somebody who's worked with businesses to acquire a lot of companies, we always lead with this idea of you got to be open and transparent and thoughtful. And the goal is be good humans. Make sure that people feel stable. Give them the right vision. Don't hide the hard decisions. I listened to one of your podcasts that you just did. I think it was with the Alpine Invest folks. And one of the best pieces of advice was like, have the hard conversations early. Get it all out there and get aligned early.

57:10That's totally right. It's been an awesome conversation. Thank you for taking the time, helping me become a better company scientist here. It's amazing. Thank you so much, Kisan. Really appreciate it. And those of you listening all the way to the end, fellow M &A scientists, I appreciate you tuning in, listening through. I love hearing from you. I'm most reachable on LinkedIn. Connect with me. Give me some feedback, the good and the bad. I like the criticism. That's how I learned to get better at this. We got some interesting topic ideas I haven't picked on. Until next time, here's to the deal.

57:51Thank 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.

58:36Again, that's mascience.com. Here's to the deal. Thank you.