Transforming a Company Through Strategic Acquisitions

26:10So made the process more enjoyable, yes, but I think it also in some cases helped to get deals done. and maybe it saved us some money. I don't know. So there's that part of the job, which was very intrinsically satisfying to have those relationships. Certainly, especially the firms that were smaller, you get under 10 million in revenue. You probably have kind of an owner, operator, founder involved, and it's a nice experience and a chance to use your personality. The other part of it, though, that I think is just as enjoyable for me is the interaction with our whole internal team. And I don't mean just the M &A team, the virtual team that is a part of an acquisition.

26:49At Nuance, we did enough acquisitions that people knew that this was what they were supposed to do. And how did they help? And this was the strategy. Some people, even they were in the finance department or in HR, they had M &A on their business card. They were part of the team fully. That was their full-time job. So working with them, working with the technology people, Yes, sometimes you had to kind of tug and pull to get them to commit to meetings and to give you notes after meetings and slides and edits and review things. But being that person who was coordinating all of that, being the one throat to choke and understanding it.

27:25And what I've actually said to some folks I've mentored, a key role in M &A and the kind of a deal lead position like mine is triage. You have to be able to listen to everything that's being said by the counterparty. And I like to be on every meeting. I did not like to just have the specialists that we had just run the meetings and then look at the reports. I like to be in every meeting. And you just, you listen with a different ear to the standard triage stuff, sort of a little interesting, a little bit concerning on the one hand, and then the middle things that are potentially troublesome. Maybe we need to flag it in some way in what we're doing.

28:03Maybe it leads to some change in the model. Maybe it gets a reference as a yellow flag in something. And those things that are truly concerning, possible showstoppers at the extreme, the things that are fundamental that you need to escalate almost immediately. So it's a key part of our job to be the voice of nuance, to be the person who is most embedded in that acquisition, to think about things in those three buckets every time you're in a meeting. And that also goes for the meetings that you have with your own team, your diligence partners, because they can get quickly alarmed at things. And so you have to like, okay, yes, we heard about that, but that's actually not a showstopper.

28:43That's just something that we have to make sure that we cover in a rep and warranty. That's something that we may need escrow for. That's very good for us to know, but it's not a disaster. And some things that they may hear and may be something in one kind of a specialist diligence meeting that is actually important for another stovepiped diligence group to know. Not everyone can be in every meeting. If HR says something about some of the people that are actually contractors instead of full-time people, that actually may be very important to our R &D people in terms of longevity and IP. And so you have to be the integrating mind that is hearing everything and understanding how to interpret it, how to prioritize it, triage it, and make sure that it's properly spread across all the specialties.

29:30And, of course, very importantly, reflected in reps and warranties, in disclosure schedules, and in, of course, the model. How much of that is from knowing your business, all the nuts and bolts and how the business actually works? And then how much of it is from intuition you developed from the years of experience of doing this? I think back on that first year or two, I was not someone who came from M &A. I was involved in one acquisition at Xerox, but as the strategy guy, not as the M &A guy. And the leaders at Nuance had faith in me based on my background that I would learn the new skills required to succeed at M &A.

30:06Of course, as they later said, or they would have gotten rid of me. But certainly those first couple of years, I was learning on the job. Certainly, then you're leaning more on your diligence partners internal to help you detect things that are troubling and not. And then, of course, over the years, you get better and better at hearing what they hear and figuring out how to prioritize. But like my first deal, literally my first acquisition was an Indian-based transcription company. Their corporate structure was, you know, Bahamas and this and that. It was like definitely trial by fire of all of these issues, international issues, corporate governance issues.

30:46It was a mess. So that's how you learn. It's like a combination of all these different things that really come together to make you good at it. And I like that point around that prioritization is essentially what you get better at. Going back to the last area we were talking about, a lot of it was relationships at the end of the day. And you had this relationship with the company CEO and then also your internal deal team, especially that part where you mentioned save money. Because I'm Indian. As soon as I hear save money, like perk up. I'm curious about it because you mentioned a relationship with the CEO and how important that relationship is to get the deal done.

31:20I'm trying to fish here a little bit of does that relationship and how good a relationship you have allow you to save money? I think so. every deal has its own personality. Some sellers, especially if you've got a financial sponsor involved, they're going out after every penny. As one PE guy said to me once when we're arguing over something in the final days of the definitive agreement, and he says to me, Fred, I know we're arguing about pennies here, but it's my penny. That's like the mindset though. You're a big corporation, you're a machine, and this is me. Exactly. And then you have other people who are much more, we want to get this done.

31:59There's plenty of money here for me, the founder, and my people. We're getting fabulously rich. They may bring it to a different mindset of where they're willing to compromise and all of that. And certainly many, many books have been written about negotiation and every situation is different. All the personalities are different in terms of the getting to yes and how you sharing risk, the dollars versus some of the other terms and conditions around it, the retention packages and the terms and conditions around retention packages. So a deal that may have a headline number of 20 million, we were not in the billion range.

32:33We were 20, 30, 40, 50 million, sometimes 400 million, sometimes bigger, sometimes smaller, but we were in that sub-billion range in almost all of our deals. The headline number, which a lot of people focus on, is not the only place where important value is being defined and apportioned. It is in a lot of those T's and C's. And again, that's why as an M &A person, you have to be fully involved in every comma and every line of the definitive agreement and the disclosure schedules. You are the fiduciary with respect to looking out for the interests of the company and the board and everyone involved and making sure that everything gets properly reflected and that you understand it.

33:14And so the price is just really a piece of it in terms of important value. Let's say we're negotiating a deal and I'm fixated on more money. I want to get the most out of this exit. You want to save money. What would be the other dials that you'd start looking at to maybe justify either paying more or paying less? There's a thousand of them because it does get reflected in so many of the definitive agreement terms and conditions. So whether it's how much escrow for how long, tax protections, how long do they last? We had firms that had things in their subchapter S compliance that we may not have fully agreed with their lawyers on whether or not it was in compliance.

33:53So are you protecting the nuance on what happens if those compliance factors are later challenged? So are you getting protection for all of those other factors? And obviously a huge one, earnouts, the terms of the earnout, the flexibility in the earnout, terms and conditions. So all these elements are huge elements in the factor of dividing risk and dividing value. Every deal, every new dials. Yes. It doesn't make this easier. Teach me how to save money on a deal. To a certain point, you look at every decision as a source of value creation and risk division. And obviously, if you take it to the illogical conclusion, then you never get a deal done because you're keeping everything to your chest.

34:37You want to win every battle. The fact is what most people do, and again, I don't think this is unique to the nuanced style of doing deals, is that you get further and further along in a deal. LOI, wine and roses, yes, that's an important negotiating point. But again, a lot of the value then is still further on in these terms and conditions. And as you get closer and closer to where you want to sign a definitive agreement, the list of things that are outstanding gets smaller. And obviously the things that end up being still open are things that people care about a lot. You just know that you're not going to win every one of those.

35:11You start putting together little buckets, little packages. So, okay, we're willing to give on this and this. You give on this and this. Now, is there a risk then that the counterparty says they then cherry pick? And they said, okay, we'll take the things that you're willing to give on here, but we're not going to give you the things in return because they now know we are willing to do that. You have to just play those situations by ear and figure out how you can actually get some balance in those negotiations. And that is, again, where a huge part of value gets divided in those final important negotiations.

35:44So if you had something like here's, I see maybe you're trying to adjust price, but you have these five other dials that you identified as leverage. Would you just present those all at once and then you get in that situation where they start cherry picking? Or is there a way to intuition, right? Can I sense or do I scout it out in a conversation before I do that? I mean, the tools of acquisition tend to make this pretty visible. You're trading red lines. And so then you move from trading red lines where you're just like, you know, you keep changing everything back to the way you want it. They keep changing it back to the way they want it.

36:18So you end up creating a tracking list of the key issues. So it ends up being a sort of a separate document, kind of a term sheet, if you will, of the things that are open and not open. And this is usually the time when you have to get ready for in-person discussions as opposed to doing everything remote and having those discussions, going to the whiteboard, writing things up, circling things with the counterparty. This is the scary and gut-wrenching part of getting a deal done. Your CEO and everyone's either saying, just get it done, or they're saying, don't give up on this. you and your other members of your tight deal team are up to your eyeballs then in trying to placate both your internal and external participants in getting something done without giving away the farm.

37:07That is the most tense part of any deal. What's the hardest thing you had to negotiate? There's a lot. No names. Just I'm curious, like scenario-wise, what was the hardest thing you had to negotiate? Oh, scenario-wise. Yeah, we'll protect the innocent. Certainly some of these tax-related reps and warranties and terms around earnouts get very emotional. Those protections, retention things, elements of those retention agreements in terms of what constitutes constructive dismissal, where they would still get their payout for the retention if we do this. So that gets very difficult. Again, in the deal that I was saying before my first deal, we had a situation where in buying the company with their several multinational Bermuda-Bahama entities, it was a situation where they needed to unwrap that ownership structure but they didn't have the money before close.

37:58So to us on paper, it looked fine. We were paying them all this money. The loans that they had done to each of these corporate entities for the various reasons they had set it up from a tax standpoint, they couldn't unwrap that pre-close. So we had to come up with a way for us to provide a little bit of money for them, which again, we're not a bank, but a little bit of money for them to literally run money around their corporate circuit three or four times paying off loans in a triangle so they could actually clear the ownership structure as we required to actually do the deal closed. It's things like that where you have to get creative.

38:33In this case, you're coordinating your international tax experts, your legal people, your treasury people, everyone who's trying to do their job in protecting their turf. And you've got to get everyone to communicate and to agree on an approach. And again, in this case, as you recall, this is my first deal. So I was trying to navigate all this with lots of help from Rich Palmer, who was my boss then and my real mentor on all of this. I have to find a way in the situation. We did one public deal that has its own incredibly complicated, nerve-wracking things around getting things done. It's also, of course, one of my favorite stories.

39:11As many deals as I have, I have at least that many stories because each deal has these crazy stories. In this case, public deal. We've cleared HSR. We're about to close the deal. We're literally within 48 hours. And I hear from the operations head of the counterparty that there's something that they're not sure if it's a problem or not. But one of their Indian facilities, the employees have taken over the facilities and locked the managers out. In some cases, the managers are still in there, but they're keeping them there. Okay. And is that a problem for closing? This is the phone call you get.

39:44So what do you do with that? What do you do with that? So that's the challenge. And the fun of M &A is being the person that gets that phone call. You should ask for the crazy story at the end of the podcast. This is good. I like this. You're now the person who has to decide which alarm bells do you ring? Who do you bring into this? How do you keep people looking for solutions as opposed to panicking? So we found our way through it. We said, certainly we're not going to close until the situation is resolved. We're not going to step into your shoes on that situation. They understood that. So over the next couple of days, they were like, okay, the employees have left.

40:18So just cutting to the chase. The employees have left and we have control again of it. I'm like, okay, we're going to need proof. And so we talked about this. And what they literally did is took today's copy of an Indian newspaper. And they went around the office taking pictures of the office being cleared of people with today's newspaper in every shop. And so we got this 50, 60 photographs showing each of the floors of this multi-floor facility with the proof of life. What about the employees? It was one of those points in time where the company had started reducing its footprint. And so they were encouraging employees to work from home more.

40:57Some employees didn't want to work from home. And again, this is not COVID related. This is just, you can imagine the logistics of getting employees to facilities in Mumbai. Very difficult. The commute time, the cost, all that stuff was much better. That's just the cost of real estate. Again, this company had been reducing its footprint and encouraging people who were from. Some people were, again, protesting to that degree that they did not want to end up working from home. So they were actually locking themselves in the office. I forget what the resolution was in terms of how to deal with all of that.

41:27But we did deal with all that post, but we didn't take on a building that was occupied. The deals you run into a brick wall, they just came over. Tell me about those. Yeah, there's been a number of those. In general, we were pretty aggressive under Paul Ritchie. We were pretty aggressive in getting deals done. We found a way. And does that mean that we caved on very difficult terms in some cases? Probably yes. But in all cases, we still felt that we were operating certainly within our guidelines and within full board approval. There was one situation. I was in New York City on another matter, but we were trying to negotiate an LOI on another matter.

42:04And they were choosing between several parties. I was literally jumping out of meetings on the phone, supposed to catch a flight. from LaGuardia back to Boston, on the phone the whole time, cab out to the airport. They just are going with somebody else. And we're just, and I'm like, our people, I'm talking to their people. And then they said, no. He said, we're going with this other way. And that's not what our boss wanted to hear. The reason the story remains memorable is when I got to LaGuardia, there was horrible weather. So they said, no flights to Boston. They ended up, a few of us that were just standing around a service car.

42:43He said, all right, who's going to Boston? And so three or four of us that didn't know each other filed into a car together to drive to Boston. I'm in the front seat. I'm on my laptop, headphone on, dealing with my CEO, dealing with everyone, trying to figure out what we're going to do. And then, you know, the call ends and we're just flying along the Merritt Parkway and I'm just silent. And these people who I did not know sitting in the back seat. They were kind to give me the front seat because they knew I was doing it. They saw that I was involved in something. And they were like, is everything okay, Fred?

43:15Are you going to be okay? Because they heard how I had to try to manage this situation. And it was very heated with me being on the, clearly the receiving end of this heat. That was again, one of those moments of high pressure. How do you do this? And then we did get authorization to increase our bid and we got the deal. You ended up getting the deal. Ended up getting the deal. That's the thing. Sometimes you have to snatch victory from the jaws of defeat. Sometimes you just lose. Turn this into a happy ending. I was looking for the story that ended up the bad ending. That's what I was trying to...

43:47No, no. Give me a bad ending story. So it was a bad ending story. I have to be more circumspect. Certainly. Part of me is just I want to get a sense of what are the circumstances that you really hit these brick walls that you can't get around. And I want to get a sense of that so I know what to look for ahead of that. Yeah, I mean, we had a deal that was our acquisition of Philips Speech Recognition Systems in Vienna was being HSR reviewed. And so that has a second request. Can you explain HSR real quick? Par Scott Rodino is a part of our commercial code in terms of anti-competition. So that's the standard thing that we all have to deal with.

44:22If an acquisition is of a certain size, you have to, there's certain carve-outs. But basically, if an acquisition for a certain size, then it has to be filed. Then the DOJ has 30 days to tell you whether or not you can actually go ahead and close this deal, or they have to make a second request. The first request is the information you have to file with the deal and any ancillary initial response questions they give you back. Second request says, we're really doing an investigation here. You can't close. and this is why so many deals, you'll hear this on CNBC and otherwise, oh, like the Microsoft Nuance deal was reviewed by HSR and was reviewed by European anti-competition and because of Brexit, also British.

45:09Deals get stretched out for a year as these competition folks do all of this work. So in the US, HSR is the shorthand for this. So this deal was being reviewed by our DOJ, even though only a portion of the revenue was US, blah, blah, blah. in the process of all the document discovery. This is every email on the deal, PowerPoint. Just imagine the volume. And the stories I could tell you about kind of going through the DOJ process and some of these deals, it's just long and laborious. The pipeline thing I'm still stuck on, to get your pipeline in review, and then all of a sudden they use that as part of the decision thing.

45:47That's bogus. I feel like that's not cool at all. Right. Because that's part of it. Like you got to have a vision of acquiring the whole world. That's what you're supposed to do. That's like doing your job. I don't, anyways, I digress on that. Yes, and we had those conversations because they would say, so it is your plan to do all of these acquisitions. No, this is a plan to do some of them. This is sort of our wish list. Anyway. My big takeaway from keeping my ass out of trouble with the feds is like really having phone calls and making sure they're not being recorded is like probably the safest bet in terms of exchanging information because it seems like all this stuff coming back to you is anything a written document.

46:24Written texts, chats. So as the technology is involved, they've gotten more inclusive of all of that. Any texts on computer. Yeah. And now every time I have a Zoom call, it's all recorded and transcribed. Exactly. Do we got to go back to like payphones or remote meeting and remote locations? So it seems, especially my favorite was when I would get, and of course, because we were so involved in speech recognition, we had products, our enterprise group did, that were involved in the transcription of your voicemails. We were one of the first companies to offer that. And as the supplier, we were one of the first ones to be using it.

46:59I would get an email that would be a transcription of the voicemail of someone saying, hey, Fred, I wanted to bring this to your attention. I think it's one of those things that I'm not supposed to send you an email on. That's what you got to do. This is a great practice. So that's great. So they left it as a voicemail, got transcribed, and then came to me as an email. That's a good lesson for everybody. I think you got to brief your team on what information you pick up the phone and cell phone and call. That's right. And just. Unless you're thinking that, unless you have some. Most important thing is just to behave.

47:29Just everyone just behave. Behave. But there's a, I've had it. Just something comes on your way and it's, yeah. So there's like a bucket of, it's going to happen. You're going to have information that you probably don't want documented in maybe early season. But yeah, general business usual is just behave. Yeah. And also, of course, just steer clear of situations that may be controversial. Sometimes that means that you don't do deals. Now I got good story mode. I'm just curious about the Microsoft exit. How was your exposure to that? Because that was like a huge deal. Huge deal. As pre-signing discussions were going on, basically my job was to get our transcription business divested.

48:07So here's Microsoft's reaching out. Their executives are probably involved. This is a big deal. And then they're probably working through your executives on it. and they're coming up with this thing. Yeah, it's going to make sense. And boards are approving this stuff because basically it's a board-level decision. It's, hey, by the way, we need to divest this chunk of business. We had already started that. You already started it. So, hey, we're planning to divest this. We're going to keep divesting it. Fred, you got to stay focused on that. In fact, it had already been signed because they knew that - So it was just signed and closed.

48:37But getting it closed was a big deal because it was a spin-out. They had to set up new systems. They had to really be ready to accept the business. So getting that all done was nail-biter for everyone because we knew that it wouldn't be until that was done that everyone felt comfortable actually moving forward. But that deal had been signed, not closed, during the discussions. As far as at the point that I was brought in, when I was brought in under the tent, it was probably six months before signing. But my involvement was like the last month of pre-signing diligence. All of Nuance Corp Dev was involved.

49:09We became the key people to respond to those last key requests from the Microsoft executives and diligence team. And what I now know as an insider, the Mavs team and corporate development, the Microsoft acquisition and venture success team, asking a bunch of questions, getting ready for the deal to be finalized and the final negotiations. So I was not at all involved in any of those negotiations. I was a diligence facilitator. facilitator. And then after the sign, pivoted to being a point person for Nuance for the integration effort. We've talked about the front end part. I like to talk about doing the deals.

49:43Integration has been a big part of your role. Certainly when Nuance was doing a lot of acquisitions, Nuance, we were doing six a year with a small team for a few years there in 2007 to 2012, probably our most intense years. And so we had a very separate integration team. And the idea was that we take care of getting the deal done, and then we hand off as quickly as possible to the integration team to do the integration so then we can return to being deal guys. Over time, as Nuance was doing fewer deals a year, less of an integration team, let it trip down, and then we were leading our own integrations as well as the deal activity was lower.

50:23So there were several deals before the acquisition where I was the integration lead as well. Over time, it shifted as we did fewer deals. It makes sense to have you involved with the integration. It was a huge deal. Yeah. How's it been? Is there like there's a playbook? Like a company like Microsoft's like, all right, we've done similar type of big deals. I guess the other piece is like you look at LinkedIn, so big that you can't just fully integrate this thing just like that. Microsoft has a very formal practice around this and a team, the Mavs team that does this and they do a great job. Obviously, this deal was larger than most.

50:58And there was the enterprise division that had one set of commercial characteristics. Again, this is the business, the B2B business, financial institutions, airlines, insurance companies. So that had fewer large customers with almost like a consulting paradigm involved. And then the healthcare business that was larger, but still very different. So you really had almost two separate integrations to attack. And I think to Microsoft's great credit, they came into it saying, we need to figure this out together. It is not, here's the script of how the next six months are going to go and blah, blah, blah.

51:36And we're going to onboard everyone by this date. It was really, let's figure out really what we're going to be able to do without breaking the business. The priority is on not breaking the business, growth, enabling our AI businesses to flourish, and getting essentially top-line synergies, not just revenue, but top-line R &D. How do we collaborate most intensely, most quickly? Those were the priorities. And so in some respects, like explicitly, we slowed down certain things on integration to make sure that we did not, in fact, break or distract from some of the high growth areas that we were all very excited in.

52:14And then drop into the middle of that, ChatGPT. Yes, Microsoft was involved beforehand. And we actually had a relationship with NVIDIA before the acquisition on a lot of the radiology imaging technology. But obviously when ChatGPT broke, that went into a whole new effort then of how do we jointly retool, rejigger, reprioritize to make the most impact in healthcare with these new tools. The acquisitions with AI, the recent acquisitions, Dakara and IceCribs. Yeah. Post or before Microsoft? Before. Before, okay. Before. We haven't done any post. IceCribs was a few years earlier. and on your theme of transformation.

52:54I mean, I think that's really one of the very interesting stories because iScribes was a services company. They had very little technology. They were one of these firms that used remote workers to take recordings from doctors. You know how medical students will be hired to be a scribe. We've all been in the room with a doctor like, who's this? Who's this person here? Like, I'm just a scribe. And sometimes they say things to the doctor mumbling under their breaths and sometimes not when they're physically in the room. iScribes is among a set of companies that had taken this to being a remote capability, but it's a services business.

53:31Very light technology, kind of a recording device and then some workflow to get it to the right person, some tools to assist with the translation into a doctor's note, but still it was being done by a person and then the workflow to get it back into the right place in the EHR, Epic, CERN, or whatever. Small company, we'll say sub 10 million. So Pete Durlock, our head strategy guy in healthcare, says, you know, we want to go in this direction because we're going to want to be in this area of intelligent understanding of what doctors are saying with patients. And we're like, this is a little services company.

54:06So P &L looks lousy. It's a labor business. We were already talking about getting out of the transcription business. This looks like a dog. How else can we get at this? We need the data. The guy who was heading CorpDev at that time and I, and we don't generally play a very strong role in screening deals. We try to make sure that it passes a sniff test. And this didn't seem to pass the sniff test. This is a subpar is not going to move the needle, does not have some great technology, little services business. Pete walks into the CEO's office and says, we got to do this deal. This deal is going to give us the data to train the models to do what we now know is tax, but will change our ability to understand how doctors actually talk to patients, how patients respond, to use that data, train models, to do that on an automated basis.

54:59And so Paul said, do it. And so we did it. This little service business, small, hiring people, remote, working out of their rooms, technology to make sure that HIPAA was all very light. It was technology to make sure they were HIPAA compliant and that the workflow worked, but really just a services business. But the data was key. With that data, Nuance Technology Group trained up all these models and were able to launch this incredible product, DAX, that listens in on a doctor talking to a patient, sorts out what they mean, who's saying what, and the generative AI, because again, this was new to us.

55:39We would use recognition for understanding what was being said. we rarely were having to then turn around and generate text. That's where then SayCara came in. They had done some of the generative AI side. With these relatively small acquisitions, we got the data and the technology and the know-how for being essentially the industry leader in this breakthrough capability for doctors and patients to just be able to talk, not have your doctor looking at a screen, distracted. doctor can just look at you, ask you questions, you answer, doesn't have to do anything at the HR. And then he gets a note that captured all that information properly.

56:19So it's just been a game changing thing. And it came from small acquisitions with key technologies that were spotted by a very smart guy as being the linchpin in the future. That's transformation. I like that. That's such a great example. It's almost like the question, like that visionary mindset to be able to identify that, I think is the key. So A, Pete to have the vision, to see it, and to know what he wanted to do. Paul, to recognize the brilliance in what Pete was saying and the passion that Pete brought to it and to trust. That's a rare thing and it can create huge value. Yeah. Great example.

57:01Fred, what else is the best thing I could learn from you before we sign off? Right now, there's a guy that I'm mentoring that's outside of any area of expertise involved with Microsoft. So it's just a friend that I've been introduced to who's asked me to, somewhat new to his position at M &A, he has some M &A experience. When we have these coaching, mentoring discussions, and my wife overhears some of this, the thing that sort of she has said to me and the takeaway is the benefit of experience is just being able to catch your breath. At M &A, you deal with some very high stress situations. You have a lot of stakeholders that all expect miracles.

57:39You have counterparties that expect that you're a big company, you can do anything. You have to find a way to simplify all these competing demands and find peace in taking a position and performing your fiduciary duty and being the voice of reason through these storms. So that's what's fun about the job, challenging about the job. There are those moments that it just seems, ah, how am I going to do this? But that's a great part of the job is that you have those experiences. You come through the other side. That's what makes it fun. Yeah. What's the craziest thing you've seen in M &A? I mean, certainly we had a lot of situations where just getting to the LOI.

58:21Yes, it's a little bit wine and roses, but it's competitive. And somebody put it in somebody's head that they're going to be worth$100 million. and any rational thing might be a fraction of that. And how do you deal with the advisors and deal with the founders? So we had one situation where we had a mismatch of value expectations with a willing seller and a willing buyer. And we just had this completely different view of the appropriate value for a company this size. And we would try to compromise a little bit, but they just weren't compromising. And we just didn't understand how they were sticking to their guns, kind of a ridiculous situation.

58:54We weren't going to get a deal done that way. through this kind of relationship building, I finally learned from the CEO that they essentially backed into the number by looking at what it was going to take for them, the three founders, to not have to work for the rest of their lives. It had nothing to do with the company. You just sort of hear this and you say, did I really just hear what I thought I heard? And so, because they want us, if we're going to sell it, then we want to be set. And I'm like, okay, so how did you come up with what it would take for you to be set for the rest of your lives.

59:27And he's like, well, we thought about how much we spend a year. We thought about kind of retirement planning stuff and inflation. And that's how we came into this number. I said, you what? And he goes, yeah. And he actually shared the spreadsheet where they had calculated out, not using any formulas, essentially, you know, each year, how much money they thought. And then they had a little bit of inflation thing and they had a little bit of a return on their money thing. And then they added it up and that was the number for each of them multiplied by three. And so you just say, okay, that's not how it works.

1:00:01I get it. So we bridged it essentially with an earn out. So let's share the risk. And we'd be willing to pay that if this result. So we found a way for them to save face. They knew that the goal was stretched. They knew. So we were able to, everyone's got to save face, as you know. We found a way for there to be a headline number that met that thing, but they didn't quite get it because the numbers weren't quite achievable. Everyone went in with their eyes open and got the deal done. Awesome. I love that story. If anybody's listening to this and is curious of M &A Science and Deal Room, yes, it's for sale.

1:00:39I'm just looking for a private jet. Give me a nice Goldstream 650. Hit me up if you're interested. I like it. Thank you, Fred. This has been a fun conversation. I loved all the stories. I learned a lot. You helped me become a better M &A scientist. Glad to help. It's fun to share my experiences with people because it's been quite a ride. Those of you listening, thank you. You are a true M &A scientist. Love to get feedback, even recommendations. If you got some big name speakers that would have a really interesting conversation, send me a note on LinkedIn. We'll look forward to hearing from you.

1:01:14Till next time, here's to the deal.

1:01:28Thank 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.

1:02:13Again, that's mascience.com. Here's to the deal. Thank you.