Opto Sessions – Invest in the Next Big Idea

Sell-side M&A: What Makes a Company Valuable?

• Haydn Brain & Ed Gotham

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Victor Basta, Managing Partner and Co-founder of Artis Partners, joins OPTO Sessions to share his two-stage exit preparation process - designed to ensure companies are bought, not sold. He delves into why success often comes to those who exit uncomfortably early, the critical roles of boards and CEOs, and what it truly means to be prepared for an exit. 

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Hello and welcome to another episode of Opto Sessions. Today, I'm thrilled to be joined by Victor Basta managing partner and co-founder of Artist Partners, a boutique investment bank launched in December 2024. Artist helps high growth tech firms scale at speed and maximize evaluations through strategic, sell-side M&A and growth financing. They focus on companies across Europe and the US, especially in AI, FinTech, B2B SaaS and healthcare. As an M&A expert, Victor is advised on over 130 transactions, which is incredible, across a 30 year career pioneering a sophisticated two stage exit preparation process. First comes strategic positioning, then execution, designed so that companies are bought, not sold. This approach enables artists to orchestrate intensely competitive processes that maximize strategic value. How are you doing, Victor? Great, that was a great lead in. I couldn't have done it any better. if you need a part-time job promoting advisory firms, let me know. Anyway, good to it. So thank you for the opportunity. Where are you calling from today? Is that where you're based normally? More so New York than London at the moment, but that's 60-40. are they primarily in the US or in Europe for deals? Well, the work we're doing is about 50-50, US and Europe. really, you know, we think of the markets we serve in terms of sectors and, you know, areas like fintech really cut across both. mean, there's some for sure at some scale Europe-only businesses and US-only businesses, of course. But, you know, these are pretty global sectors. So it's natural for us to be able to work across both. And there's a cross-pollination, know, learnings you have from working on something in Europe very often can translate in some way, shape, or form to the US and also vice versa. And traditionally, mean, a lot of the deals used to be in the US, but do you see Europe is becoming more of a contender in that space? Yeah, deal intensity, meaning the proportion of the time that a grown up growth company ends up doing M&A, right? So M&A deal intensity is greater in Europe than in the US. And there's a couple of reasons for that. So the large tools of financing are just not as available in Europe as in the US. And so, you know, it's harder for European company to do a very large financing and also, you know, effectively recapitalize the business, which is sometimes an alternative. And then, of course, the IPO markets, which people talk about endlessly, don't function in Europe. They do function for companies of a certain size in the US, but they just don't function in Europe with one or two notable exceptions. therefore, you know, company that is built to, you know, 100, 300, 500 million of value in whatever currency you choose, even more likely that they'll be involved in an M M&A transaction in Europe than in the US. Proportionally, there's fewer of them in Europe because it's smaller, right? But but the probability that they'll be involved in M&A is even higher. and In the US, see that generally the companies have higher valuations because in Europe there's more capital available in the US and therefore more money going for less deal. well, that used to be palpably clear. Like, used to be every single time you'd say, well, you know, there's a premium for being in the US, or conversely, people would explain it as a discount for being based in Europe. That is almost zeroed out. Maybe in certain spaces, there's maybe a little bit, or if there's a range of values, let's say, you know, that European companies, if we spread on that range, maybe you'd see their US counterparts slightly bunched in the upper half, not the lower half, but it's gradations. It's nowhere near as pronounced as it used to be. The geographic discount largely is a myth today. Why is that normalized now? What's the cause of that coming together? That's a very, very good question. So without giving you a, you know, a PhD level answer, to some number one is that, you know, the basically friction has gone down in many markets in Europe as businesses have become digital first delivery models anyway. So friction has gone down. That used to be one of the reasons why you'd have a geographic discount. was harder to go from one market to another. It still is non-trivial. I mean, you can go from California to Nebraska more easily, more quickly than you can go from London to Vienna. I don't mean travel, I mean, in terms of developing business, But it's, again, become much, much easier than before. And also, there are a number of inherent benefits that companies can take advantage of in Europe that they can't in the US. So at an early stage, government-sourced funding is actually available in Europe. As we have seen spectacularly, government funding is zeroing out in the US to the extent that it existed before. It really didn't. That's number one. Also, the amount of latent talent across Europe has always been incredibly high. If you want to hire a 50-person development team for relatively low cost, You know, you can really do that in Europe still. Whereas, I mean, trying to buy, trying to hire AI engineers. I don't know you saw Sam Altman was on a podcast a week or two ago saying that Meadow was trying to poach his individual engineers, offering him a hundred billion dollars in one case as a sign-on bonus, right? It is insane, but you know, in the Bay Area, earning half a million dollars a year, you know, you can end up not saving anything. Yeah. it becomes table stakes, whereas, you know, pay somebody in central or Eastern Europe, 100, 200 grand and you know, they are doing incredibly well. So you can get incredibly good world-class talent for a fraction of the price in some areas in the US and build a team that could compete anywhere. And you've seen with companies, Klarna, UiPath, Revolut. I mean, let's go Spotify. The whole range of companies, numbers smaller, but these are world-class competitive companies coming out of Europe. They're not hamstrung in the way that they were before. There's many other reasons, but those for certain are some of the key ones. and So I thought We could start just the the amount of deals you've done is obviously really impressive. So 130 plus deals that you've advised on and what That's why I don't have any hair left, but yeah, it's true. What consistent patterns have you seen in companies that achieve successful exits? well, the... They don't wait to sell at the optimal time. That's number one. I've been involved, I mean, I actually have been involved in a business myself, a corporate finance advisory business that turned down multiple billion dollar offers and then ended up selling for a fraction of that. um And the mistake in hindsight we did was we said, well, know, it's a billion dollars. Well, we can get two. and we didn't. And, there's an analogy, one of my partners uses, which I think is very apt, which is apologies to any vegans listening to this, this podcast, but, you know, we're, if, if, know, you've got a group of people around the steak is sizzling and everybody can smell it. Everybody wants it. The moment the steak is done, left on the grill for a while starts turning slightly cold. may be perfectly well done, but it doesn't have sizzle anymore. And it really is nowhere near as appetizing. so companies and CEOs that sell successfully don't wait too long until the steak is perfectly cooked, but it's starting to get cold. So in fact, the one common denominator is typically companies will sell slightly uncomfortably early. That's usually about the right time to the extent that one can time them. If you don't feel uncomfortable that it's a little early, probably you've waited longer than you should have. um That's one. The second, yeah, it's so true and it's very, very common. um mean, this is obviously part of your experience. Like, how do you know when you're close to the top? You don't want to start too early, Obviously. Yeah, we're veering into kind of what I tell CEOs, which is it is the height of arrogance to start off by choosing your own timing or believing you can choose your own timing. You don't, right? I mean, buyers will largely choose that for you. So you have to rethink entirely the way that quite a lot of CEOs and boards think about exits, which is, you know, let's build it to a certain point and then we make a decision and then we're ready to sell, right? We're veering into that territory. It's pretty fundamental to what we're talking about here. Number one, there's an arrogance built into it that is, you know, really extreme, like, you know, I'm ready now. Yes, the world's waiting for me. Okay. The what you can do is become exit ready. And then the exit window naturally opens within that exit window, which might be 12 months, 24 months even for some companies within that window. If you're being, if I use that word intentional about it, and courting potential buyers, developing interest, all of that, then buyers will respond or not respond. And very often they're responding because something else happens. A competitor gets bought, the landscape changes, whatever. And all of a sudden there's a move in the market and then, you know, your natural ideal, if I put it that way, opportunity opens for exit. So the short answer is back to what you're talking about. You don't do what you're talking about, right? You don't pick your timing. You get to a certain stage, still feels early. All right, let's get exit ready. So the exit window opens for us for a period of time. see where buyers are at, and then we can work out from both sides of the table when a natural exit happens. anything other than that, and you really are, you might as well be going to the casino and betting it all on 32 red, right? Because you have no idea, markets change too quickly, particularly in growth companies, six months is a lifetime. So you have no way of forecasting all market conditions six months from now. No way. So, you know, the fact that you kind of arrive at a destination point is if you're on a train journey. is actually when you break it all down, it is kind of insane. And yet that is what 80 to 90 % of growth companies, CEOs and boards do. And I didn't mention before, you said what were the two or three things I mentioned about this, but the other is board alignment, right? that you've got a board that also is aligned on thinking this way. That you don't have a board which is very brittle, like, well, my view is X and this is what we need to do. Or worse, that you have a board where maybe the biggest shareholder has their own entirely individual reasons for waiting or wanting to move quickly. Maybe they need to get some liquidity. Well, that's really a bad idea to go sell a business based only on that. And yet that's what happens quite a lot of time. A third thing I'd call out is an experienced chairperson. I can't emphasize how much an experienced chairperson really, really can make a difference in an exit process. Another way, consultative point for a CEO. So you got to remember, the CEOs are either the strongest link or the weakest link in doing exits. I mean, you know, it's going to benefit the CEO oftentimes more than anybody else. And yet they are the least prepared. Imagine you've been running a business. Let's say this is your second business. You might've done a small exit for the first one, right? You built this one. You've been doing this for what? Eight, 10 years. You've been out of the exit game for eight to 10 years minimum. And maybe this is your first gig, particularly in Europe, right? You've never done this before. Ward turns around and says, well, all right, now we're about ready to exit. So you go do it. You go like. Ha I do? Right? It is, and yet generational money, generational wealth is on the table for me as a CEO. This is the one opportunity perhaps in my life when I will be able to provide for the next two, three, four, five generations for God's sake. And I have no idea what to do. And the board all looks at me and says, well, what's your plan? And you, you know, so, and there are a lot of CEOs that, cause you know, part of my job honestly is an unpaid psychiatrist. I tell people that it really is true. Like part of it is like, look, you know, you're not going to die. Yes. There's a plan. is what we can do. The things we can do here. Let's go through this step by step. Of course, I've been doing this for 30 years. So this is something I know how to do, but, like there's, there's a, you can get your arms around this. Don't worry. Right. and you start from there and then you build it up. But you have to understand just how acutely unfair the CEO or founder's situation is here. How unbelievably disadvantaged they are all of a sudden when people say, well, okay, switch on the lights for an exit here. And so the chairman's role here is to help them process. as a guy, yeah. Yeah, what I'm talking about is a chairperson that is exit aware, right? Has done one or two, understands what is involved. You could fairly get a chairman who has done 50, but anyway, someone who's got at least the one-eyed person. That's very helpful. Okay, so we've got a chairman who understands exits, a board who's aligned on the strategy. And the initial one was, remind me of the initial one. that the, well, the initial one is selling uncomfortably early. You'll notice that none of these have anything to do with the segment in which a company operates. And they actually don't have anything to do with the size of the business. And they actually don't have anything to do with revenue, profitability, any of that. Like none of that, right? Of course, those are what determine the price, but they don't determine exit, relative exit success. What we're talking about is, Can you get a successful exit away given your profile and dimensions? And that might be a billion. That might be 20 million. I mean, who knows what a successful exit looks like. These cut across all of those. But of course, when people talk about a successful exit, it's how many euros did you get? And did you not get enough euros or pounds or whatever? mentioned you've turned down a couple of billion dollar deals twice. These three things we just talked about, those are the learnings that you've sort of taken away from those scenarios. Yeah, well, I mean, I should probably say in my defense, it was a group of us, not me by any means. So, but let's put it this way. I certainly didn't argue against that. yeah, I'm culpable. Yes. So that was a very hard learning, but mainly the learning for this actually comes seeing C as an action and seeing the kind of decisions. And you got to understand, I mean, this is almost genetic. If you or I have been doing something with intensity for five, 10, 15 years, I mean, how can you shift a gear? How can you become dispassionate? You know, how can you look at it as an asset? You can't. And yet part of you has to. And how do the CEOs know they need to find someone like you to help them? Is that because they're just stuck with what to do? Well, they don't. No, the reality is 90 % of the CEOs I certainly am in contact with, so I think I'm a pretty good proxy for the market, you know, but I mean, never perfect. 90 % of CEOs woefully underprepare as a result. If I'm being conservative, I'd say 80, but it will never be less than 80%. Absolutely not. Woeful. I don't mean like slightly underprepared. I mean woefully underprepared, which is ignore it completely. What it is, tell CEOs, we don't want you spending 90 % of your time on cultivating by or doing exit preparation. That would be insane, right? You'd be spending 10 or 15 % of your time. 80 % spend zero to 1%. Avoid it like the play. Don't know what to do and therefore prioritize something else. Feel like they're doing it and doing nothing really because they're thrashing around. Or do one thing and then stop because the board says, no, let's, know, we think the buyer is going to be from here. okay, we go here. And then no, no, no, no, no, actually we think we should wait three years. okay, we'll wait three years. God, why did we wait three years? We really should have, you know, and then by that time you get the idea. the horror stories, unfortunately. could only tell you anonymized the horror stories of doing this for 30 years. That's why we developed this whole framework for exit prep is because it was just so much was being left on the table. And you got to remember that if you're doing a deal for 200 million, I'm just picking a number, right? The last 50 million normally disproportionately goes to the CEO or founders. Mm-hmm. right? Because, you know, the investors get their preferentials decked back, right? Et cetera, all of that. And then usually there's a disproportionate, let's put it this way. The first 50 normally is going big chunk of it to investors, right? The last 50 is really going maximum full cream to founders, CEOs. So getting this right really, really matters to them. So leaving some money on the table is a disproportionate hit. to their grandkids, if not. yeah, yeah. I can imagine. Well, the horror stories you're talking about is when you get these huge, huge valuations and then a year, two years later, they've disappeared. They've disappeared or yeah, you get an offer, you turn down, or worse, which I've seen this many times, you play cute with potential buyers. They buy two of your competitors. All of a sudden, your value is about a quarter of what it was six months before, and you've done nothing wrong. Right? You you're just like, we've grown. I've had a situation, CEO turned around second half of the year and said, two of my direct competitors have just been acquired by people who are interested in me. um I've grown 20 % this year. I said, but you're probably worth a 10th of what you were before. And he was like, but I've grown 20%. You know, it's like, I know. So let's talk about this two-step stage exit preparation process that we've coined. And it's about companies preparing to be bought, not sold. Yeah. So the dirty little secret of this two stage process is that being bought, not sold requires a fair amount of selling beforehand. You just don't call it selling. You're not writing an information memorandum, mailing it out like postcards, asking for proposals and you know, like actually doing running a deal process, but you need to do a fair amount of selling to buyers. You just don't call it selling. One CEO characterized it as Once I explained it to him, said, it's like the marketing phase before the selling phase. I said, yeah, that's about right. You're marketing yourself. You're marketing your story, you're broadcasting your story. You're doing it with real intention towards potential buyers, but you're not for sale. That's really at its heart, what we're talking about. There is no magic to it. A five-year-old could do this at home. I wouldn't recommend it, but they can. Like it's not, there's no rocket science, there's no, but I tell CEOs the reason why it works is it's just a business process. You you've got a business process for doing your HR, right? And business process for doing logistics. This is just another business process. If you set it up, we know how to do it because we've done so many of these, but. You set it up, you run it every couple of weeks, you plan to spend maybe 10, 12 % of your time on it. You figure out with somebody like us supporting so you can really get the biggest bang for the buck from the 10 or 15 % of time you spend. And you just run it month in, month out, build momentum. And the objective of what we call the stage one, which lasts a year, sometimes even two years before any formal sale process. So it's the marketing before the selling phase. The objective at the end of that phase is that you have one or two or three buyers seriously at the table who have therefore approached you, although they've been cultivated, right? It's their idea. Timing works for them. They're interested to buy you. They know enough that they understand the company, understand the opportunity. have an idea what they would do with it. They're all teed up, really teed up, right? And they understand the synergies. And so that's the way to anchor a process where you're bought rather than being sold. It's the opposite of what a lot of people in my industry do, right? Which is sign up a company, write an information memorandum. It's dozens and dozens of pages, mail it out to 50 buyers. And then it's, you know, there's no way to be bought, not sold. It's like, at that point, please, will you buy me? Yeah, OK. It's just the conditioning of it. Yeah. And the traditional argument is that that works because you create maximum competition by creating maximum exposure. That doesn't work. It just doesn't work. Right? Because everybody's evaluating the business as an asset. Everybody is usually coming up the curve to learn about the company. They need to make an offer with partial information. And sure, you can create competition and we've done in doing these processes, but You also are leaving the whole opportunity for them to really grasp what the full value is for them. So getting an outstanding price is usually harder in those processes. It's just harder because there's always an element of risk that a buyer has to take on because of the speed that a process runs through. So the traditional exit process is just sign a bank or sell the company. Yeah, but you can't get bought, not sold. That's at its heart. mean, now there's, would say 20 years of machinery behind this. used to teach this for six years at the business school. Like we're doing this for dozens of growth companies at the moment. There's a lot under the hood. It's isn't like, it's sort of like, oh, well, you um, you can just like read it on postcard and then go do it at home, but you could. Yeah. I mean, I like to think in fact, I'm pretty sure that you probably wouldn't do it quite as well. But again, the dimensions, the contours, the elements of it, there is no rocket science. It's a five-year-old couldn't understand. Yep. And I saw online an interesting, I think it's Tedx Talk, the 10 Commandments of Selling Your Startup. Are there a few that we haven't discussed yet that you can? We're gonna Commandments, yeah, well you'd have to walk me through the Ten Commandments. There were probably 20 commandments. I mean, it's, well, I mean, that talk is now a few years old. So maybe one way of thinking about it is what might have changed between now and then? That applied then that applies even more acutely today is maybe a good point of departure. I'm answering your question a little bleakly, but bear with me. One is clock speeds. Well, there's two or three things. Clock speeds are just much faster now. If you plan to do exit prep for two years, you probably end up doing it for a year. Yeah. If you thought you would exit in three years, you probably exit in a year and a half. It's just clock speeds are faster. Right. The other thing that definitely has changed is that access is so much easier. mean, it used to be... that if I had lunch with the president of Oracle last week, that mattered, right? Because I did and you didn't. It just doesn't matter anymore. I really, I mean, I would love to say that our network is differentiated and ultra kind of exceptional and it's pretty good, I have to say. like that it has so much more value can a lot, that's just not the case. Think of it this way. The exit business used to be a distribution business. And when I did the Ted talk, it was still partly a distribution business. Who you could get to matter. It's become a product business. How good is the product, meaning the company and the packaging of the story and the packaging of what the opportunity is, not just the current shape of the business. Looking at the company as a product. and how well articulated is that product. Distribution, so many companies are scouring the earth literally for acquisitions at any one time. Like distribution is not that hard. you can get in front of right people if you have something they're interested in. Yeah, mean, occasionally we will really have an insight that like nobody else will have, but honestly, that's much less than it used to be. So, but, and I would say that some boards understand that difference. Frankly, other boards don't, you know, they still are kind of like, well, who do you have access to? And the answer is, I wish I could tell you a matter. I mean, we'll tell you who we have access to and, you know, it'll be impressive. But honestly, I mean, well, if we're trying to win a deal, we probably wouldn't say this, but we would think you asked the wrong question. Yeah. Okay. And so during these negotiations, what are the key drivers of the biopsychology side? What you can do to it's a very good question. It is the opposite of what sellers think. Okay. So conceptually, the price for business is going to be what's the value, future, cashflow, whatever, of it, just money up top and risk divided by risk. It's kind of like risk adjusted money I can make out of this. really oversimplify it, right? And it's really that simple. It's just, it's, doing exits is great because it's very simple. It's hard to do, but it's very simple to explain. So it's money and risk. Almost every growth board and CEO looks at it as money. Right? Why? Well, because I kept raising rounds in the past by having a hockey stick. You know, and if I didn't say 50 or 100 % growth each year and revenue was going to explode and, you know, et cetera, like, what was I doing this for? Okay. They never think about risk really. Why? Because they're doing this job. I mean, they've already decided that they have no problem with risk. Large buyers, it's the exact opposite. So risk first. Is this going to fall apart after we buy it? Yes, no. Are these people we can work with? Will they fit in an organization? If I try and sell this product through my sales channel, will it really work or will I have a problem? market changes might happen as a result of this deal that might not be good for me. Will I lose my job if this deal doesn't work or look like a hero? The bigger the company, the more risk inclined they are. The bigger the company, the more typically they can pay for it in acquisition, get more money. So the greater the amount of money, more often than not, the more important risk is. So companies doing the exit process, they spend less time on all the risk stuff. Okay. know, right? I'll give you an example. Charismatic CEO has to front an exit. The first thing that a buyer thinks once they meet him is, well, he's going to last two minutes. CEO does not promote the second line team in front of a buyer in the way perhaps he or she should. Buyers' view of risk is distortedly negative. Part of the, like we might choreograph it so that the second line people actually have more of a prominent voice early on. Which if you were fundraising, you would never do that. Like who on earth wants to meet all these people? It's like, that's my responsibility. It's my job to hire, you know, like you're betting on me. Of course I'm betting on you. This is the opposite of that. And that's, if you have to encapsulate the fundamental get wrong. I would say that's a very big one that unpacks to a dozen things. And if you could highlight a few of the risks that they're most concerned about most often, what would they be? Oh, well, in any growth company, mean, even if it's a thousand employees, there's 20 that matter. Okay, because they're the glue. think of it this way, I know AI business, know, oftentimes there's two or three phenomenal individuals around whom everybody else gravitates. Just as an example. Are those people going to be motivated? Like what happens if they leave, right? It's that kind of thing. It's not attrition, it's the domino effect of the wrong people leaving. And what can I do to safeguard that? Because if I don't have that, I've lost a big chunk of them out. is a, the related to that is, can I just integrate these people into my business? But the two are very closely related. So when we're about OpenAI, you talked about earlier getting these incredible sign-up bonuses from Meta. The risk there is obviously that some of the team leave. How much value is in the... So we're saying that there is a lot of value in those core team members who open up. Yeah, I mean, each one of them is a decent size exit in and of themselves. I mean, you who needs an exit if you, by the way, I mean, no one would would actually offer $100 million day one to anybody for anything, right? But still, yeah. But it certainly got everybody's attention. So yeah, yeah. So but I mean, OpenAI, you know, they've got They've got enough redundancy, but sure, if they lose 20 of those people, well... Guts the company. And if you're a buyer, you're kind of thinking, well, if I pay, you know, let's just pick a realistic number of $30 million for 20 of those people, I paid $600 million. Open AI's value is in the hundred billion plus category, right? So, you know, can I get the, the milk without the cow? Right. It's the typical, no, it's not that easy, but still, yeah. And just going on to sort of the types of companies we're looking at, obviously AI is pretty big at the moment. So think 36 % I've got here of VC funding in 2024 went to AI-focused companies. What makes a true AI company attractive versus just another startup? It's a bit of a buzzword at the moment. Yeah, so everybody raising money is AI. That's number one. Sorry. Table stakes. It's become table stakes, I suppose, because you have to be in call point. mean, it's stable stakes. I mean, when you're talking about true agentic developers, right, we're talking about companies that are building real enterprise connectivity, not just being linked to your OneDrive and searching for documents, like, know, they're... relatively few of those. think so native AI businesses, we're seeing probably half of all the money going there. A big chunk of that is going in infrastructure. This is the wholesale wealth transfer from the VC industry to Nvidia. mean, you know, take $10 billion of VC money, give it to startups who give it to Nvidia. Right? For infrastructure. Seriously, that is a big chunk of what it used to be that way with meta. If you remember a few years ago, people would raise funding rounds in order to spend money on Facebook. Right? In fact, to the point where one VC told me, this goes back years, he said, I had 20 pitches in the last week from people wanting to raise money for me to go spend on Facebook. So he said, I didn't invest in any of those. I just took some money and invested it in Facebook. So I bought Facebook stock and I seem to be pretty happy. I mean, that's another way of looking at this. So there's a giant sucking sound out of the funding market going to AI. What makes an attractive AI company? don't think, let me be devil's advocate. It almost doesn't matter anymore because you literally cannot be acquired in most sectors without embedding enough AI. Literally cannot. I mean, Ravelin was a deal that we were involved in earlier this year, fraud detection business that was bought by Worldpay. And one of the main reasons was that Ravelin had embedded machine learning into its business to do fraud detection in a way that very early generation fraud software businesses had not. And their platform really embedded it. Was it an AI company? No. But would it have been acquired otherwise? Absolutely not. even if it had higher revenue and greater profitability, would have been less valuable had it not embedded that. So to me, the biggest value of AI is actually the revenue increase and the valuation increase that more traditional businesses will be getting. If you look at like the top 1000 growth stage or top 10,000 growth stage companies in the world, them embedding AI and being able to show faster growth, and being able to get higher valuations will dwarf a lot of the native AI funding in due course. That's really, frankly, where if you look at legal tech companies that are becoming legal AI tech companies, but have the domain knowledge, understand, or companies in the medical space, for example, because we do a fair amount there, who have basically proprietary data they can't give to anybody or offer to anybody, but They can do an entirely private large language model on very sensitive data as long as they keep it in house. It doesn't go anywhere, doesn't violate any privacy, but they're able to extract insights that they otherwise would never be able to, and nobody else can. That's a perfect example of how you can turn a traditional medical technology business into an AI-enabled business that could potentially be worth an enormous amount more. That's just one example, but we can do this forever. And what sort of sectors or industries do you think are going to benefit the most from this AI empowerment phase? So yeah, business is already benefiting. um over the next five years or so, do you see these trends playing out? They may not be benefiting now, but these are key things. I mean, for sure. Well, today you're seeing it for sure in legal and HR and areas like that. I think if your question is five years, it's the enterprise deployment piece, right? It's AI agents that I am able to really let loose on my enterprise data and not worry. It is AI software that connects into all of my existing business processes and my silos of data in my huge company and extracts value for decision-making. Add this line in the factory tomorrow. I know you don't need it, but add it tomorrow. And I can generate more as a result. or reconfigure your business in this way. Trust me, you really should do that. Here's why, right? Change this business process. So enterprise embedment of AI is a huge future value. And we are literally, I haven't even scratched the surface yet. I mean, literally haven't touched. And do you think there will be sort of singular companies that touch on, they touch all the data in the company, you know, then advise across different verticals marketing like HR or the individual companies that are... very tough. Boy, that is a tough question. Actually a few tough questions, but that is a tough question. I don't think a company will be willing to trust single vendor. just don't. It's too... Having said that, the problems are intractable enough. Accenture, for example, may kind of be the all single dancing, you don't worry about it. We can take care of everything. I don't think so. think also development technology is moving so quickly. I think it will be very hard for any single vendor to really own what I would say the full stack of functionality. It's very, very hard, but people will try, of course. And my other question is related to AI empowerment of developers and teams. Do you foresee, I mean, the extreme is like single person startups, you I think there's one just the other week that was bought. Well, he started as a single person, but I think it was 10 people in the end for it was a coding tool was bought by Wix for 84 million. That's insane. Right. Do you see to do Do you see this happening a lot more? Very, very small teams. Are they going to have an advantage over the bigger companies now or? No question. If you remember Instagram was what 10 people or seven people when it was bought for billion dollars. This is not new. WhatsApp was Was a 30 people or so I can't remember but and they were bought for 20 billion dollars, right? It was like a couple of dozen people or maybe 40 people but it was insignificant the number of people they had Yeah, but Instagram was the one at the time was so astonishing people couldn't believe it. My point is that you've had these kind of extreme network effects already. This is not new. It's just the number of companies that get that value will be new. By the way, I mean, I think it was Kylie Jenner's business. It could be a different domain, right? She built a cosmetics business, of course, based on her brand. Like it had only five or 10 people. was valued at between 500 million and a billion, I think it was. You know, so like it's again, the power of network effects, the power of mass distribution when everything's automated and you you can with one post sell $30 million worth of product, but you don't need people. Yeah. So it is that that kind of extreme leverage. It's just, the answer is yes. I would be surprised if you really never saw. a growth company get to a thousand people going forward. Yeah, it used to be that the best quality ones would scale up towards a thousand people. I'm surprised. I'd be surprised. And, Just moving on to sort what investors should be looking at when they're looking to exit, what three metrics or, you know, if you could pick out three, should they be tracking pre-exit? Is there their sort of North Star plus another few, you know, secondary metrics? yeah. The three things I think that, company and a board should do. and I'm going to focus on the ones that they don't do, is really focus on market signals, like read markets, who's doing what, what are people doing, what are larger players and competitors doing, the external inputs for a potential exit. Too many boards are too focused on operational execution, how a company is developing, et cetera. That's number one. Number two is, companies get to a certain size, and then when they grow, say 30 or 40, 50%, sometimes they cross into a different size. So you get step functions in value. It's not just linear. So one of the things for boards to really look at is, OK, if the business was doing 30 million of revenue, If we got to 40 or 50, is there some sort of like, we step up? do we get a higher multiple on that revenue either because we're meaningfully bigger than the other competitors or we just, you know, big enough to qualify to be bought by larger, whatever it might be, but looking for the step functions and value value very rarely goes like this. It always goes in step functions. So. thinking about those step functions, being alive to them, at least being able to map to them. The third, I think, goes back to what I said earlier about CEO preparation. the CEO is a human being. Is he or she ready? And what can we do to get them ready, rather than there somehow going to be a instrument that can be turned on with a switch? Now, those would be the three things. Well, there's 30 things, so you forced me to come up with theories. But yeah, I mean, it's been great to talk to you about this and, you know, uncovered a number of things that at least I and I'm sure a of other people would have never thought of and thank you for giving me this advice to the people on the show. Before we wrap up, is there anything you'd like to leave about artists and just give a quick overview of the company? Yeah, I mean, we... We focus on doing exit preparation as a lead-in to exits. It's more work and it's sustained work over a period of time. But the reason we do it is because over 20 plus years, we've proven it leads to higher value exits with more certainty over and over and over again. And so that is the core of what we do. We're doing it for dozens of growth companies at the moment. And the payback for CEOs and boards is not just higher price, but they also can get a much faster, much more efficient exit process once they move to the stage two, which is the sale process. Things move much more quickly. So they're not wasting any time doing this. And I'm constantly amazed. at still how few companies and boards don't do this and therefore how all of them are literally leaving generational money on the table as themselves. Yeah, don't leave it too late. thanks very much, Victor. appreciate your uh time. Thank you. Thanks. Really appreciate it. Really enjoyed it. Thank you. Bye.