S1-E7 | Key Takeaways from the A-Z M&A Series

Transcript

SPEAKER_00 0:02

Hi, everybody. I'm Joshua Johanni. We are in our final episode, episode seven of our Disciplined MA Framework series. We appreciate our audience sticking with us through this curriculum, and we hope that you have found the content useful and something that you can use to improve performance in your own decisions either on the buy side, sell side, or advisor side. Ricardo and I wanted to take a few minutes for this final episode to really reflect on what differentiates successful transactions. We want to summarize what the most common MA failures may be. We want to talk about important alignment across stakeholders. We have another series coming out specifically about stakeholder management, which we're very much looking forward to showcasing to you. And then we'll talk about disciplined execution. Ricardo, when you think about successful transactions and you think about specifically the five phases that we've presented to our technical founder audience thus far, I mean, like what do you think that the takeaway is? So you just listened to this, you spent over an hour of your time going through our podcast and maybe reading books out there. So it's a fairly significant investment. What do they really need to know as they go forward to manage their businesses?

SPEAKER_01 1:18

Joshua, I think it's about what actually determines outcomes. It's about what means actually being results oriented. Because after many transactions across different industries and geographies, certain patterns become very clear. And perhaps the most important one is that outcomes in MA are far more predictable than most people think.

SPEAKER_00 1:45

Do you agree with that? I do agree with that. I'm curious to hear how you define that more precisely.

SPEAKER_01 1:52

Because it may sound counterintuitive because most people see MA as uncertain. But that perception comes from looking at events, not the processes per se. If you focus on headlines, deals look volatile. If you focus on how they are executed, patterns emerge. Successful deals are not lucky, they are structured. And failed deals are rarely surprising hindsight. The warning signs were there, just ignored. And the patterns of successful outcomes, they share a consistent set of behaviors. First, early preparation. They are not reactive, they are not rushed, but deliberate. Second, internal alignment. Founders, boards, and management operating from the same assumptions. Third, discipline process management, each phase respected, not compressed. Fourth, clear your narrative. Buyers understand what they are buying and why it matters. And fifth, composure and the pressure. Because pressure will come inevitably. These are not technical advantages, these are behavioral advantages.

SPEAKER_00 3:08

When I think about the sellers and the buyers and where things may not go according to plan, it is somewhat of an oversimplification, yet still accurate, to talk about how it largely comes down to the inability of one side to make a clear decision. So just decisiveness and making decisions about these transactions is absolutely essential for the buy side and the sell side. And buyers and sellers need to be honest with themselves and then communicate that to the other parties in the transaction about the information they're using to make a green or red light decision on the deal. When buyers or sellers are not decisive and they approach these deals with a bunch of maybes, that's where costs will rise. It will be very difficult to close. The target will be constantly moving, and it can really derail deals and lead to a massive waste of time. It's important for the technical founder listening to this podcast to remember that their customers are not paying them to respond to MA buyer information requests. They're not getting paid to get an LOI. They're not getting paid to do a purchase agreement. They're doing this to transfer ownership of the asset for strategic reasons, but they are simultaneously running a business and serving customers and dealing with employment issues and dealing with vendor issues and all this other kind of stuff. And this is a can be a very distracting process that can have a geometrically negative effect if a buyer or seller is not decisive about why they they would or would not do the deal. And there's nothing wrong with entering into a deal, the parameters of the deal changing, and then walking away. At the same time, you know, this is the goal of everybody to get the deal done. And that's obviously our business model at Jahani and Associates. So we're generally pro-deal. But one of the things that is important to us when we work with buyers and sellers is to tell them why they would not do the deal. Like we want people to do deals at Jahani that we would do ourselves. And if we feel like there's a big issue and the deal's just not going well, well then that's fine, right? This doesn't need to define anybody's life. Let's either see if we can fix it or move on.

SPEAKER_01 5:20

You you raised, I mean, great points there because you're talking about decisiveness and honesty slash trust, which are critical for any deal to progress positively for all parties involved. And also, I mean, the point that you you mentioned that's I mean, the world doesn't stop for the deal. It's absolutely true. The company, the companies, in fact, they need to keep doing what they do for the everyday business. I mean, they have to sell, they have to comply, they have to work with on the motivation of their teams, and so on and so forth. They have to manage the business, and that itself is an internal competitor for the deal making. And the point that's when we talk about failure, which which perhaps is a heavy word for a deal not being materialized, but let's stick to that for simplicity. Failure follows patterns as well, either for misalignments that was never addressed, financials that were never fully understood, overoptimistic positioning, weak solicitation leading to lack of optionality, premature exclusivity, surprises during diligence, fatigue at closing, as we mentioned before. None of these are rare. They are recurring and importantly, they are preventable. Therefore, when you mentioned that associates is very straightforward about the likelihood of a positive outcome of a deal, I think it's it's absolutely a bonus for clients in general.

SPEAKER_00 7:08

People generally reach very similar conclusions on deals. And then as an advisor, economically, we're obviously motivated to get the deal closed. But you know, it's as an advisor, you're really just not doing a good job for your client if you're motivating them to do a transaction that's not good for both sides or one side. If if I'm a technical founder, and which I I am, and if I think about it from our client's perspective, you know, it's impossible for me as the technical founder to become an expert and really be able to lead or control all of the advisors and the buyers and all the third parties in this process. It's impossible for me to do that in almost all cases during the MA deal. So unless I go and I I get a side job as an investment banker, uh as a technical founder, then I'm really not going to be able to be versed enough in this language to be as effective and useful as like a law partner or an investment banking partner. So the purpose of this podcast and the surveying level of terms that Ricardo and I have provided you over these last seven episodes has largely been about trying to give you that information that really matters so that you can then, if you're interested in doing more research, you can do that, but that you can come into these conversations and be like, okay, yes, I care about this. No, I don't care about that. And when I look at the episodes from the past, the big one is that decisiveness, which you've already talked about, and then being able to see these steps that we've outlined as really just one big transaction. Technically, all of the steps and all of the things that Ricardo and I have talked about and all of how all these people make all this money in the MA process is largely optional. At the end of the day, it's about signing a contract and wiring money. And if you keep that simplicity in mind, I think it will give you a lot of clarity that you can use to understand what matters or doesn't matter.

SPEAKER_01 9:04

I think that's clear and that's important for the audience to takeaway. Because if there's one transferable lesson before talking about the takeaways that our listeners should take beyond MA is that complex environments reward a specific type of professional, the one who makes things clear, not louder, not faster, not more complex, but clear. Because clarity enables decisions, decisions enable progress, progress creates value, and that's true in boardrooms, investment decisions, leadership roles, and organizations at scale. MA simply makes this dynamic more visible.

SPEAKER_00 9:57

Thank you everybody for listening to our podcast, the technical founder, advanced topics in MA and Investment Banking. We look forward to seeing you in our next series where we talk about an item that is relevant for you. Thank you very much.