077 - M&A Masterclass with Founder Partners

Prepare to navigate the high-stakes world of mergers and acquisitions with insider expertise as Dimitri Steinberg and Brian Flynn from Founder Partners join me, Àlex from MarsBased, for a riveting discussion. In the ever-turbulent market of dwindling venture capital and faltering tech stocks, our guests share invaluable wisdom from their impressive careers on how to steer a company towards a lucrative sale or merger. We'll be revealing the art of reading between the lines during negotiations, the strategic finesse behind successful M&A, and why having seasoned pros at your side is a game-changer.

As we peel back the layers of M&A strategy, you'll discover why timing, organization, and information management are critical for startups looking to sell. Dimitri and Brian illuminate the intricate dance of revealing just enough to pique interest without oversharing early in potential partnerships. We also tackle the nuances of inbound acquisition offers, dissecting how to filter out the noise and recognize serious contenders. And if you're considering an advisor for your next business sale, you won't want to miss our insights on aligning incentives for a mutually beneficial outcome.

Finally, and after all the verbose AI-generated stuff, I've got to say that this is one of the most fun and insightful episodes I've recorded. The 60+ years of combined experience of these two gentlemen cannot be summarised in just one hour, so we will have to invite them again!

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🎬 You can watch the video of this episode on the Life on Mars podcast website: https://podcast.marsbased.com/

Episode Transcript

Àlex Rodríguez Bacardit (00:00):
Hello everybody.
I'm Alex.
You are founder of Mart Space.
I'll be your host today.
In this episode we talk toDimitri Steinberg and Brian
Flynn from Founder Partners.
Founder Partners is a platformfor entrepreneurs that want to
IPO or sell their business.
They are very, very experiencedin the art of M&A, but also in
creating and growing high growthcompanies.

(00:21):
They are a group of veryexperienced and seasoned
entrepreneurs, former bankersand investors that help
companies that just want to goglobal with a global mindset,
global ambition, with very, verylittle, if any at all,
investment, that want to conquerother markets, and they just
want to make it big.
But, above all, they wanthealthy, healthy companies.

(00:46):
We discuss M&A because there's alot of consolidation in the
market.
The market has dried up,especially the investment side,
in the last 12 months.
2022 was rough, 2023 was evenrougher for companies and after
this decline in thetechnological stock, in the

(01:06):
amount of venture capital beingdeployed in the market, there's
time to sell the company andmaybe for some of these
companies in distress, maybethey can save something out of a
company that just maybe didn'treach their peak.
But now we're facing tailwindsnot we, not Mars based, because

(01:27):
we are not VC backed, but mostVC backed companies.
If they didn't reachprofitability before 2022,
chances are they're in for downrounds, extension rounds, rich
rounds, whatever you want tocall them rounds, or even down
rounds, and some of them mighteven be in for selling the

(01:48):
company.
So if you're here to listen toDmitrys and Brian and learn from
them because these twoexperienced gentlemen have got
over 60 combined years of M&Aentrepreneurship experience,
they have got a lot to share.
We discussed the incentives ofM&A boutiques.
We discussed being in bothsides of the table.

(02:09):
We discussed financial tricks.
We discussed when's the righttime to approach all of these
parties, how to signal or hownot to signal certain things,
what's the protocol, when tomove forward with an LOI, how to
drum up interest from othercompetitors or potential
acquirers, and much more.

(02:32):
This I'll let you know right now.
This is an episode with a highpercentage of wisdom nuggets
permitted.
This has been one of the mostinteresting and insightful
episodes we have recorded and Ilook forward to recording a
second part with them because Ileft out so many questions.
Also, if you like this podcast,just make sure to leave a like

(02:52):
and subscribe to the favoritepodcasting platform that you use
.
And also, here's the.
You know we're doing thequestion of the day.
We'd like to know what is yourfavorite M&A story you've ever
heard.
It can be a funny one, it canbe a fuck up, it can be
something insightful, it can besomething of a big corporate.
It doesn't have to apply to you, you don't have to have

(03:14):
experience it first hand.
But if you're the great stories, just share them in the comment
section down below on YouTubeand, without further ado, let's
enjoy this episode with Brianand Dimitri.
Brian, dimitri, welcome to Liveon Mars.
Welcome to the show.
How do you think?

Dimitri (03:28):
Doing.
Great Thanks for having us.

Brian Flynn (03:31):
Ditto, good to be here.

Àlex Rodríguez Bacardit (03:33):
Well, it's been a while since we last
recorded one episode about M&Aand we were talking in the warm
up about how there's going to bea lot of consolidation in the
market.
Right, there was some in 2021,you know, following a crisis, 12
to 18 months after a crisis,there's a lot of consolidation.
Maybe companies that are notable to raise more funds, maybe
some companies run out of cash,maybe they just hired too much

(03:56):
of the lost clients and you knowthey run out of business, and
one good way to kind of likesalvage something out of your
business is maybe sell it.
Maybe not always for a lot ofmillions, but you can save
something out of the business indistress, right?
My first question of course, wecan introduce a little bit

(04:16):
founder partners and whoeverwants to start, but I want you
to explain what are the mainreasons for having people with
gray hair in the M&A, and youdon't want a company that's
starting out helping you in thisprocess.

Dimitri (04:31):
Dimitri, why don't you answer that question, since you
got more gray hair than I did,but I'm hiding it.

Brian Flynn (04:42):
So, look, I think that one of the most important
things to think about, you know,if you are considering hiring
an advisor, is you know, whatshould you be looking for?
And there are all kinds ofdifferent things that I think
are important in that regard.
You know, one of those thingsmight be the degree to which

(05:03):
your advisor is focused on whatyou need help with.
So some investment banks do allkinds of different things.
Other investment banks areexclusively focused on M&A.
Other investment banks are evenmore focused and they not only
focus exclusively on M&A, butthey may focus exclusively on
sell sides or exclusivelyworking with founder led

(05:25):
companies or technologybusinesses.
We're focused in all of thoseways, but that's number one.
But the other thing that Ithink really important is the
degree to which your advisoractually has germane relevant
deep experience.
How long have they been an M&Aadvisor?
How many companies have theysold?
How many deals have they donein all kinds of different market

(05:47):
conditions?
And that matters, becausethere's just a tremendous amount
of pattern recognition thatcomes from M&A, and a lot of the
times, you sort of have torealize that in an M&A process,
a tremendous amount of valuewill either be created or
destroyed, and a handful ofpoints, what I described it,

(06:07):
what Brian and I described, thesort of critical inflection
points, and you sort of don'tknow ahead of time when they're
coming up and you have to havelike a sixth sense about how to
deal with them.
And that, frankly, just comesfrom reps, from having seen it
and done it over and over again.
And I think that's one of thecritical reasons why experience
is important.
You know it when you see it andyou sort of know how to react

(06:33):
in the right way in real time.
And that's very, very importantin an M&A process because
ultimately you can't takeanything back.
It's a little bit like thetoothpaste and the toothpaste
container you can't put it backin.
And so you've got to make sure,when you hit those critical
inflection points, you make theright moves.

Dimitri (06:54):
Yeah, I think that's a really good point, dmitri, or
points you've made, dmitri.
One other thing I'd add to itpart of the gray hair and I'll
take for example myself andanother one of our is that when
you've been on all sides of thetable in M&A, you're actually
really well positioned.
So Dmitri and I have known eachother for 30-some odd years.
We started our careers togetherat Morgan Stanley in the M&A

(07:16):
department and then, afterbusiness school, dmitri's had
this incredible career on WallStreet.
I took a different pathafterwards, as an entrepreneur.
So I've learned how to sell myown businesses, not just be an
advisor to other entrepreneurs.
But the other thing that I did,and another person on our team
has done, is joining on the buyside.

(07:38):
Basically, I ran corporatedevelopment for a public company
and bought a bunch ofbusinesses, and I know from
having a lot of friends thatwere also running corporate
development in companies outhere in Silicon Valley from
Facebook, google to lesser-knownname companies what's done in
on the other side, in otherwords, how a business plan is

(07:59):
put together, what are theinternal politics of an
organization and how do younavigate that.
With all that gray-hairedexperience on all sides of the
table, I think that that canreally help entrepreneurs when
they're trying to navigate theirown exits and or react to
inbound, for example, so theyunderstand how a process works,

(08:22):
and then that, coupled with whatDmitri just recently said,
which is the patterns ofdifferent things it's the
patterns of all sides reallyhelps.

Àlex Rodríguez Bacardit (08:29):
In one minute.
How would you describe for youguys to have founder partners to
give some context to theaudience before we segue into
the next questions and the wholeprocess?
Oh, bro, is this Sure?

Dimitri (08:39):
Founder partners is a platform comprised of two types
of entrepreneurs or two types ofprofessionals.
We call them builders and dealmakers.
The builders are folks thathave started and sold at least
two companies two to sixcompanies and they have shifted
from becoming an entrepreneurthemselves to being a coach, so
from player to coach.

(09:00):
And the other group ofprofessionals which is what
Dmitri does full-time are thedeal makers.
These are folks that have beenWall Street, they've gone into
corporate development, privateequity and or CFOs and they're
consummate deal makers.
And by stitching these twoskill sets together we have
founder partners are able tocover the full arc of the
company, build through the exit.

Àlex Rodríguez Bacardit (09:20):
Because one of the things I really
wanted you to talk about is thispart of about the experience.
Right, we're talking about thegray hair, but it's mostly
accumulated wisdom andexperience and track record.
Right, obviously, you need tohave some credentials, some
authority, which you bring tothe table, because obviously you
have created companies.
That's something I reallyrespect.
That's something I would lookfor in a partner in an M&A

(09:44):
boutique or an advisor in theM&A process if I were to sell my
company.
But the other thing is like Isee some parallelisms with me
being an investor when I havebeen a founder of a company
other investors might not readbetween the lines in the reports
that we receive or in theone-to-one meetings we have with

(10:05):
the companies like I'm seeingsomething.
I'm able to read the signalsthis company is selling sending
to me without actually tellingit to me.
Right, what are the things thatyou are able to see because
you've been a founder yourself,like Brian?

Dimitri (10:19):
A lot of things.
It's exactly what you said.
Just actually reading inbetween the lines, sometimes
seeing things that people aren'tsaying, it's like how people
react or what they're not sayingactually in selling a business.
But oftentimes it's also justasking, I think, the right
questions.
I think that that's really oneof the most important things.
If you're a buyer or you're aseller.
On the buyer side, you've gotto ask a lot of data points.

(10:41):
You start seeing when foundersaren't giving you the right
information, how they areresponding In a negotiation.
For example, if you're dealingwith a seller of their equity
and they're not responding, theymay actually have other
alternatives.
So, trying to build arelationship of true
transparency so you can actuallyget the data, but don't give up

(11:02):
on asking the really importantquestions.
Dmitri, you've got a lot ofexperience in this, a lot more
than me on the M&A front.

Brian Flynn (11:10):
Yeah, I mean, look, at the end of the day, it's a
little bit like Sherlock Holmes,the dog that didn't bark.
It's not only what people say,it's what they don't say and, as
Brian noted, reading betweenthe lines.
In an M&A process and whenyou're dealing with potential
buyers, you have to understandwhat they're looking for and you

(11:31):
have to understand how toposition the business well.

Dimitri (11:34):
This goes back to seeing all sides of the table
Entrepreneurs that are out thereand their first or second time
entrepreneurs and they'reselling their businesses and
they don't hear back, forexample, from a buyer.
That could be another examplewhere the entrepreneur's like,
oh my God, they don't like me orthey told me you're going to do
this, you're going to do that,but the reality is that there's

(11:56):
a whole bunch of other thingsthat go on behind the scenes.
When I ran corporatedevelopment at Macro Media, I
had like 25 different companiesthat we were looking at buying
and those priorities wouldchange a lot.
We didn't necessarily havechampions there and when the
priorities would change, weweren't necessarily always able
to communicate effectively withthe sellers.

(12:17):
The seller is like, oh mygoodness, the deal's not going
to happen.
There's all sorts of differentexamples like that things that
aren't said.
Don't blame it necessarily onyourself, but there may be other
existential threats or otherthings that are going on in the
background.
That's why you want to havesomebody who has the gray hair,
who's seen those movies over andover again over 30 plus years.

Àlex Rodríguez Bacardit (12:40):
Now, how about what you were seeing
in the last weeks or months?
Because I've been seeing a lotof M&A in the consulting already
consultancies sector, becausewe've been asked.
Obviously, when there is everytwo or three years, we get some
requests by big players.
There's been a lot of action inthe Spanish ecosystem.
Some big private equity firmshave acquired a bunch of big

(13:03):
consulting firms.
They're lumping them togetherto create a macro consulting
firm and then try to sell it tothe next one.
Obviously, what they want islet's just buy a bunch of them.
How many developers you got?
I give you X or H developer yougot and let's just lump them
all together.
It's a recipe for failure fortheir products and their service

(13:24):
, but it's probably a goodinvestment for them because
private equities don't buy ifthey don't think they can.
They can sell it at amultiplayer.
This is I'm just in this sector.
I've seen consolidation inother markets in PropTech,
perhaps in Spain, a little bitin Fintech, but I don't know
what you guys are seeing inSilicon Valley and the US in
general.
Dmitry, do you want to take off?

Brian Flynn (13:44):
Well, look, I think that what you're describing the
roll-up strategy of privateequity firms has been a strategy
that's been employed for well.
I know exactly how long it'sbeen employed because when I was
in a private equity firm 30years ago, we were one of the
first firms out there executingon it.
It's been in existence sincethe early 1990s.

(14:05):
The thesis behind that is thatthere are markets, there are
industries that are number one,highly fragmented, with a lot of
so-called mom and pop operatorsout there with a highly
fragmented group of customers.
There exists the opportunity tobuy up these very small

(14:26):
businesses at relatively modestprices, ie low multiples of
earnings, put them together,extract some level of
combination, synergies, costsavings, presumably some measure
of pricing power, andultimately exit at a much higher
multiple than you came in at,because now you've built a
business that might be ofinterest to institutional

(14:48):
investors, the public market,what have you?
The challenge, of course, isidentifying the right industry
in which to do this.
There are some industries thatthis makes a ton of sense.
There are other industrieswhere you run real risks.
Alex, you maybe have justdescribed one.
I mean the consulting industry.
These are body shops, these arepeople.

(15:10):
You've got to be very, verycareful about how you manage
them.
When your most important assetswalk in and out the door every
day, it's a very, very differentdynamic than if it's a business
with hard assets that you havea lot greater degree of control
over.
The strategy itself can makesense, but it's very fact in

(15:33):
circumstance specific.
I can't comment exactly on howlikely a consulting firm roll up
, how likely that is to besuccessful, but you're
absolutely right to be cautiousabout it because of the nature
of the assets and the nature ofthe dynamic that comes with that
.

Dimitri (15:53):
I think that sometimes you look at markets that got
overloaded, meaning there's toomuch money that would chase into
those markets greedy investors,especially in the zero interest
rate environment.
This has happened from economiccycle to economic cycle.
Let's take AdTech, for example.
Here in the United States itwas a really big deal to have an

(16:15):
ad network.
There are over 300 of them.
Then there are all differentpermutations within advertising
technology.
So much money chased that thing.
Then there are these companiescalled Google and Facebook that
basically dominate and suckedout the oxygen out of that area.
Everybody was left to offer thelittle morsels.
They were forced, these littlecompanies to actually

(16:37):
consolidate before the musicstop.
We're seeing that in marketingtech lots of types of different
companies the music will stop.
I think that that plays intodon't miss those windows.
If you actually are anentrepreneur in some of these
markets, know who those partnersare that you'd want to
essentially marry up with and doit when you get the timing

(16:59):
right.
I think in the United Statesright now it's clearly a buyer's
market, and I believe that'sthe case in Europe.
It may not necessarily be thebest time to be selling, but I'd
say, no matter what, if you'reon the sell side.
You're an entrepreneur.
Have your company alwayslooking good.
Have profitable unit economics.
More buyers that do come aroundand sniff around are going to

(17:22):
be interested in well-runorganizations.

Àlex Rodríguez Bacardit (17:25):
All right, yeah, that was going to
be my next question.
Let's talk about timing.
You know Brian is a founderthat when you build startups
maybe it's not the case withagencies kind of like, because
we're bootstrap or bootstrapcompanies we tend to be a little
bit more organized and clean.
We have our houses cleaners,just because we don't run out of
money, right, and we don't haveto rush things, we don't have

(17:47):
to take shortcuts, we don't haveto cut corners and whatnot.
But startups you run out ofmoney, right, you raise around
that you know, in the 12 monthsyou got to be fundraising again,
so on and so forth, and yourhouse isn't exactly very tidy,
right.
And so if there comes a timearound when you have to sell
your company, you will neverhave your data room and the

(18:08):
right place you will never have.
You know, obviously you need tocompile all of this data.
All this reports, all theseKPIs are not exactly up to date
and it takes a while to preparethat.
So if there should be apotential buyer for your company
, if you don't have all of thisinformation, you're signaling
that is your first time, right?

(18:29):
So when is the right timing tostart compiling this data, to
have all of these data prepared,which is so you don't signal
that that they are contactingyou for the first time.

Brian Flynn (18:40):
Yeah.
So I think that that's a greatquestion.
It's easier, you know it's sortof easier to go along than to
sort of do it all at once.
So start off being organizedand continue to be organized is
a great way, right?
So you know, to have a place, avirtual place where you are,
where you're keeping thecritical documents and critical

(19:03):
information about your business,and keeping that in an
organized, accessible kind offormat will make your life
easier if and when you sort ofneed to pivot to a sell side.
And you know, back in the day,you know data rooms were
physical.
You know there was a reasonthat was called a data room.
It was a room in which all thedata was located, and Brian and

(19:25):
I both as analysts 30 years agohad the experience of being the
data room analyst, sitting in adata room, monitoring it and
making sure people didn't comein and steal stuff.
Now we have virtual data roomsand it's a very different world.
And now we have all differentkinds of alternatives or ways in
which you can create virtualdata rooms from you know pricey

(19:47):
dedicated service providers tosort of homebrewed things, like
you know, using Google, or youknow Dropbox or Box or whatever,
to get what you need.
But at the end of the day, youknow, having a sense of what
should be in a data room sort ofthe key tabs, if you will right
, sort of how it breaks down tothe basic corporate documents,

(20:09):
financial matters, informationabout IP, material agreements,
information about customers,suppliers, what have you you
know it's good to sort of createa taxonomy of that and start to
populate it.
And some of the companies thatwe work with or get engaged with
have done a very good job ofsort of keeping themselves

(20:30):
organized and it's an easy lift.
And in other cases, you knowthey need to sort of go back and
backfill and create it.
But the truth of the matter is,you know, we live in a world
today where virtually everythingexists in a virtual form
somewhere and, you know, withreasonably diligent efforts you
know, can be assembled.
I think it's actually not asproblematic as it, you know,

(20:52):
once was when we, you know,everything was physical.

Dimitri (20:55):
Nowadays, pulling together a data room shouldn't
be too difficult and shouldn'tbe too time consuming a process,
I think the most importantthing for entrepreneurs to do is
to have, not necessarily aclean data room, but have a
clean business.
What I mean by that is gettingto making sure that you've got a

(21:15):
great business engine, aprofitable business engine,
starting at profitable uniteconomics and I use the baseball
analogy which is get to firstbase.
First base is to getting tosustainable cash flow positive,
because if you're sustainablecash flow positive, you've got
an infinite amount of time to doanything.
Even if you're getting into themarkets that are starting to
consolidate.

(21:36):
You know you also look betterright.
You're in a position ofleverage, so that doesn't mean
necessarily you know you don'thave to go fill out the data
room in advance of.
You know getting to asustainable cash flow positive,
I get to that first base rightaway.
That's the most important thing.
The second thing I'd say is youknow create a situation which I

(21:57):
think is even more importantthan just the data room per se
which is the right partnershipsfor the company, so that you
have optionality.
You know through thosepartnerships so you know they
make the income statement orbusiness development
partnerships that you canactually flip to one.
So if you get an offer fromsomebody from outside.
You don't have a partnershipput in place.

(22:17):
You can call one of thepartners if you really want to
conduct an M&A process, and thenthe other thing I'd say around
a data room is just what kind ofdata you want to share in an
initial conversation.
It depends on what kind ofconversation you're having.
I like to say always have asimple deck about the business.
You know 10 slides or so, right.

(22:39):
So there's an overview of thecompany, maybe a couple of the
key metrics, but don't shareeverything right away.
There's it's kind of aprogressive set of discovery.
One of the things I see happen alot and it's terrible where
entrepreneurs don't know thegreen, yellow and red lights of

(23:00):
information disclosure atdifferent points in time.
So, for example, lots of timesentrepreneurs will go down to or
go up to Redmond, for example,go to Microsoft, and they'll be
so excited because there'll be aconference room filled with
like 15 Microsoft folks, mostlyproduct managers and chief
software architects and they'llprobe and they'll try and learn

(23:20):
as much as they can about anarea they want to be in, because
they actually are thinkingabout a build versus buy.
The entrepreneur leaves themeeting, feels like it was a
great meeting, they don't hearback.
And they didn't hear back, butthey shared too much information
.
So I think it's reallyimportant that entrepreneurs,
you know, don't go down thatrabbit hole too many times when

(23:40):
they should be focusing onbuilding their business.
So, kind of understand, don'tgive the keys to the kingdom of
the other side.
Just be progressive in what youshare.
Know the red lights of like hey, this is too much information,
I'd be giving it this stage ofdating versus the green light.
Hey, I've got kind of that 10page deck.
I'm okay with people knowingroughly.
You know what we're doing ingeneral, right?

Àlex Rodríguez Bacardit (24:03):
I agree with the, you know, with the
point of having a sustainablebusiness, profitable one,
because it gives you theposition of power and
negotiation, but then again,then you eliminate 99% of the
startup to eliminate quickcommerce, e-scooters, mobility,
pretty much every all of thesesectors that only make sense if
you have astronomical units ofunit economics, right.

(24:24):
But on the other hand and Idon't want to give myself to the
confirmation or survivorshipbias, I think it's confirmation
bias when I look to my portfolioand I see that the best
entrepreneurs are the ones whoare worst, reporters are the
messiest, are the, you knowthey're not tidy, they don't
communicate well, and I don'tknow.

(24:45):
Then maybe it's because I'm anangel investor and I invest in
very early stages of the companyand, granted, I'm not involved
in the company's pastures B, forinstance, right.
So maybe there's a correlationbetween that and when's the
right time to bring in a CFO.
Is that a key moment for astartup that potentially might
want to sell and, if so, what'sthe right time to incorporate a

(25:05):
CFO into the company?

Dimitri (25:07):
Okay, we'll come back to the CFO.
Let's start with likecommunications and what I've
seen over you know, 30 plusyears of investing, advising
businesses you know I'd say thebest entrepreneurs are
oftentimes the bestcommunicators.
Frankly, I've seen thecompanies where I've personally
invested in that have actuallydone not so well, or the ones

(25:30):
that weren't communicating solike, when you're like the
entrepreneurs that arecommunicating, like, even if
it's a monthly one pager totheir angel investors.
Here's the metrics that we youknow that we focused on and
here's what we did versus plan.
Here's what's working, here'swhat's not working and here's
where I need the help.
And they do this on a regularbasis.
They're communicating.
They're gonna be in a good spot.

(25:52):
When you have irregularcommunication, to me that's
highly correlated withsomething's not going so well
within the business.
Frankly, and back to like CFOstuff, I think it's really start
out with a bookkeeper.
I think founder CEO shouldprobably, you know, have a
bookkeeper if they're not doingthe numbers themselves, and that

(26:13):
could be part time andinexpensive.
Usually.
Wait until company gets to acertain size where it makes more
sense to have a full-time CFO.
And what's that size I don'tknow.
In our portfolio and companieswe look at, it could be, you
know, 5 million, 10 million orso, and it still may not
necessarily be a full-timeperson.

Brian Flynn (26:32):
It's almost like a red flag for us.
If a company has a CFO tooearly on, it shows a sense of
misplaced priorities and perhapsa lack of sort of understanding
where resources should bededicated.
And you know, given the powersof automation about what a CFO
needs to do, you really don't asBrian has pointed out you

(26:55):
really don't need like an actualhigh-powered, fully dedicated
CFO till the business is quitefar along and the money that
you'd pay a CFO and having beenthe CFO of a startup company, I
sort of say this for a degree ofexperience you know to a
certain extent I was probablysuperfluous when I was the CFO
of that company, or certainly Icould have imagined the company
operating without a CFO.

(27:16):
And you know, really thoseresources are probably better
allocated towards a you know,more engineering talent,
investing in sales and marketing, whatever it is, or simply just
banks.
So the company's got morerunway.

Àlex Rodríguez Bacardit (27:30):
So I'm flipping the question and
sending it back to you, Dimitri.
Then what is too early to bringin a CFO?

Brian Flynn (27:35):
Well, I think you have to think about what roles
that the CFO, what roles does aCFO or would that particular CFO
play in the organization youknow, sort of a CFO and a big
company and then sort of youknow, think how it maps to like
a small company, right.
There's sort of a controllingfunction, the controller
function, and then there's sortof the treasury function, right,
which is sort of financing andraising capital and things like

(27:59):
that.
The control function isbasically something that can be
done, you know, by an accountantfor somebody of that you know.
With that sort of that leveland on the sort of the treasury
function, the truth of thematter is that people who are
investing in startups, venturecapitalists, angel investors
they don't want to hear from youCFO, they want to hear from the

(28:21):
founder and the man and theteam that's actually running the
business, developing theproducts, selling the products.
The CFO just does not have alot to add, even in the
fundraising of early stagecompanies.
So the CFO you know the role aCFO could play in an earlier
stage company might be ifthey're, you know, very

(28:43):
strategic and the business sortof would benefit from that sort
of seasoned advice.
Maybe the founder is, you know,technically brilliant but lacks
other sort of skills orexperiences that the CFO can
sort of plug.
Organizationally, maybe, theCFO is also effectively the
chief operating officer, thechief administrative officer,

(29:05):
and is keeping you know all ofthe trains running on time,
while the founder is really theproduct visionary.
So you know, your title can beX, but your actual
responsibilities, you know, canbe far more diverse than that.
And that's where I think a CFOcan make sense at an earlier
stage company where you knowtheir roles and responsibilities

(29:26):
are much broader than theirtitle might otherwise imply.

Àlex Rodríguez Bacardit (29:30):
How about the?
Let's say you engage in M&Aboutique because you want to
sell your company?
Let's get into the real meatand potatoes now.
Let's start a process.
So you say you want to sellyour business.
You bring in somebody like youguys, for instance, and you
start to get a lot of inboundrequests, right, maybe you got

(29:51):
some of them before you engagedM&A boutique, and it's hard to
separate the grain from thechaff, like we've never wanted
to sell the company.
But every now and then, at morespace, we receive requests right
, and out of the 10 years we'veexisted, only two of them made
sense and they were our biggestclients, you know.
And so in that case, for me itwas easy I should listen to

(30:11):
these ones, but I shouldn'tlisten to the other ones.
Right?
For me, it was a matter of whyare these people wanting to buy
me if we don't know each other?
I don't know who's on the otherside, how they work with their
company culture.
Who am I gonna be talking to?
What do they value in our team?
Are they just buying pounds ofdevelopers and it could be March

(30:34):
base, as in any other companyor they really want us versus
our biggest clients?
Maybe perhaps it was not thebiggest offer, but we know each
other.
We know how they would react,how they treat us.
We've got a great relationship.
So how do you separate thegrain from the chaff when we got
too many inbound requests Likewhat would be your advice here?

Brian Flynn (30:54):
Do you have to be clear whether or not you're just
trudging along and you have nointention to sell your business
and you get over the transom,unsolicited inbound, versus you
hire an advisor or you don'thire an advisor but you are
intentionally running a processand you are now trying to make

(31:16):
selections and grade andprioritize the inbound interest
and which ones you think aremore or less interesting.
If it's the former, it goesback to what Brian was saying
you built a great business oryou're building a great business
and you're really not focusedon exiting and then you're
getting these over the transominbounds.

(31:37):
I think, alex, you askedexactly the right questions.
Why would the parties beinterested?
Do they make any sense?
How does that fit into my ownthinking and aspirations for the
business?
I'll say the following when westart from scratch and we think
about identifying buyers andmaybe we can use this framework

(32:00):
to answer the question you justput forward the way we think
about it is almost as if you'rea detective trying to solve a
crime.
It means motive, opportunity.
I think you can use the samekind of framework when thinking
about buyer.
Motive is the strategicrationale and that's the most

(32:21):
important criteria.
Means does the buyer have thefinancial wherewithal to
actually do the deal Anopportunity.
Is this the right time?
Is the buyer actually motivatedto transact?
Does the buyer have their ownmanagement team in place or are
they suffering from their ownexecutive turnover?
Is the buyer been an activeacquirer or are they someone

(32:45):
that's never done a deal beforeand they have a non-invented
here syndrome?
Is the buyer themselves beingsubject to being taken over?
You can apply these criteria toassessing the inbounds and which
one of these parties checks asmany of these boxes as strongly
as possible.
That's one thing to think about.

(33:06):
The second thing to think aboutand I think you were going
there, alex, right, when youwere talking about these were
long-time customers or clientsof yours is the importance of
building real dialogues, if notrelationships, with potential
buyers in advance of thepotential transaction.
That's very, very important.
I like to joke most peopledon't get engaged on the first

(33:31):
date.
They need to get to know eachother really well.
That's important.
That's very important tofiguring out whether or not this
deal has strategic merit,whether there's a good fit from
a culture perspective, whetheryou, as the founder, would enjoy
potentially working at thiscompany, because undoubtedly
they're going to want you to bepart of the deal.

(33:53):
Developing these relationshipswith potential buyers and
figuring out a way to make theserelationships develop
organically or what Brian and Ihave often characterized as
let's build an income statementrelationship before we consider
a balance sheet relationship isa great way to prioritize and
assess potential buyers.

Dimitri (34:15):
Have in mind what your objectives are and objectives
for different constituents.
Let's say you're a bootstrappedfounder.
You have nobody else on the captable.
The buck stops with you there.
Well, maybe it should buck stopsomebody any founder, frankly
but you should always know areyou trying to build a $5 million
business and exit for $25million and then you're done, or

(34:40):
do you have bigger aspirations?
Do you want to build somethingmuch bigger or do you want to
have a lifestyle business?
There's a lot of it.
It starts with the objectivesof that founder, but then, if
the founder also has investorsor co-founders or other
employees, understand people'sincentives and where their
motivations are, where they'recoming from, so that then you

(35:02):
can hit the ground running.
You're not reacting the thingsall the time.
You're reacting in a proactiveway because you actually already
understand those goals andobjectives.
The other thing I just wanted tobring up is and Dmitri and I
advise founders let's saythere's three or four different
offers and they're all coming inat the same time because a

(35:25):
process is being managed.
Some of the offers may be withcompanies that an income
statement relationshippartnership has been put in
place or there's been a previousinbound.
Some of them have been drummedup because you thought about oh
my goodness, we're selling tothe same buyer the same kind of
ICP and we're strategicallyadjacent.

(35:47):
We have a product linestrategically adjacent to this
other party that's got muchbigger means, and so you bring,
let's say you've got fourparties that are at the table in
all time.
So what's the framework tomaking the decision?
It's not always just pureeconomics I mean you can also
hopefully get the economicsroughly around the same, but

(36:09):
it's actually a strategy.
That's why Dmitri said it's themost important thing for the
buyer, but it's also veryimportant for the seller because
you want to make sure thatyou're aligned in the same
vision.
Otherwise you're not going toprobably want to last at that
buyer for very long.
And last, but not actuallyprobably almost as important
great acquisitions are also whenthere's great chemistry.

(36:29):
So you're not going to go from,you're not going to get engaged
if you think that the person ofthe party is not that pretty
and they're not treating youvery well.
So it has to have a goodchemistry.
I mean those are the threethings that we like to have
founders think through verycarefully when they're going
through this M&A dating process.

Àlex Rodríguez Bacardit (36:47):
Now about the incentives, because
one of the things that I thinkthey are the most complex parts
of an M&A process and, havingbeen part of, known at all this
striking number of zero in mycareer.
But from the outside it strikesme as really complicated to
understand the motivations andthe incentives of the M&A

(37:07):
boutique and how to control them.
So on the one hand, you hiredthem on a retainer so they are
incentivized to be with you longenough because they want to
maximize a little bit of profit.
On the other hand, they don'twant you to run out of money but
, understanding that the companyis either profitable or in a
good position, they can milk youin a sense.

(37:28):
But they also might want to gofor the biggest offer because
they get a percentage of that.
So how do you control thesekind of incentives and tell them
sometimes you want anotheracquisitor that is perhaps not
the biggest offer as a founder.
How do you negotiate this?
How do you retain control?

Brian Flynn (37:47):
If you're talking about the relationships with
your advisor and how to sort ofoptimize and manage them.
I think that's where you'regoing.
And, alex, first principlesyour advisor doesn't decide
ultimately whether or not totransact.
You, as the principal, decidewhether or not to transact, and
you should certainly never signup an engagement where you're

(38:08):
sort of obliged to pay a fee ifyou don't do a deal.
At the end of the day, you wantyour interests and that of your
advisor to be as closelyaligned as possible.
So I'll tell you, from ourperspective, the way we think
about it and the way we thinkmakes the most sense, given that
sort of underlying firstprinciple, is that we assume

(38:29):
that our client ultimately wantsa successful transaction done,
number one and number two, theywant to sell the business for as
much as possible, and so thevast, vast majority of our
compensation should be tied tothat actually happening.
That's point one.
You also brought up the conceptof a retainer, and I think

(38:49):
that's actually very, veryimportant and, to give you the
perspective of an advisor, thereason we look to get paid a
retainer, even if it's arelatively modest one certainly
relatively modest in the contextof what the total compensation
might look like if we get asuccessful transaction completed
is it's a little bit of asignaling mechanism From our

(39:10):
perspective?
We have limited bandwidth, wecan only work on a relative
handful of transactions at anygiven time and we want to make
sure that everybody we'reworking with is pretty seriously
committed to trying to pursue atransaction.
And, as Warren Buffett hasfamously said, a check is a
commitment and everything elseis just a conversation.

(39:30):
But I think you also raised sortof another point, which is how
to make sure your advisor isn'tmilking you, right, that they
just don't drag things on and on.
I can assure you that, in thevast majority, of advisors don't
want deals to take forever,right, they want to try to get a

(39:51):
deal done and move on.
But that's a fair question.
Which is what does that meanfor me as the principal?
Well, first of all, withrespect to the retainer itself,
our perspective on a retainer isthat it shouldn't be.
You're better off paying oneretainer, independent of how
long the deal takes to get done,so that as an advisor, as a

(40:15):
client, you don't hear the meterrunning and you're not
motivated to terminate therelationship because you don't
want to pay the next month'sretainer.
You just pay one retainer andthat's for the rest of time
we're committed to you, for aslong as it ultimately takes.
The final thing you werebringing up, alex, which I think
is a subtle point, which iswhat do I do if I feel like my

(40:37):
advisor is somehow trying to getme to do the first deal
possible and maybe not hold outfor better terms?
Look, that's a fair question toask.
I think what that really speaksto is the importance of openness
and transparency between theadvisor and the client, setting
expectations, for the client toconvey their expectations and

(41:01):
for the advisor to understandwhat the client's expectations
are in terms of valuation.
We've been managed by clientsand it feels like they're trying
to not be fully transparentwith us and it feels somewhat
analogous to somebody cheatingat Solitaire.
What's the point, the goal here?
You're paying us to give yougood advice and help you manage

(41:24):
a process.
We should know exactly whatyour objectives are.
If your objective is I don'twant to sell this business for
anything less than 100, we'llobviously not entertain buyers
and we won't go down a pathwhere we know the bid's going to
come in at 50.
If we don't have that opennessand transparency, we can waste a

(41:45):
lot of cycles with a buyerthat's not serious or is not
going to meet your valuationexpectations, and that doesn't
do anybody any good.

Dimitri (41:54):
I think that's right, Dimitri.
I also say one of the thingsthat at least I've learned from
my days as a banker.
I ran a big practice softwareand internet M&A practice at one
of the four horsemen's back inthe mid to late 90s, and how
founder partners are verydifferent than those kinds of

(42:16):
firms.
Two things in particularbankers often will bait and
switch their clients and that'sreally important.
If you're an entrepreneur, whenyou're talking to the person
who sounds he's got the silvertongue, sounds like his awesome
banker, and then quickly yousign the engagement letter and
then you get the B team or the Cteam.

(42:37):
You get the person who's rightout of the MBA program.
There's never really soldanything before.
What the heck?
That's terrible.
So bait and switch.
You got to hold the feet to thefire of the person you are
going to hire Founder partners,which is really cool, is it's

(42:57):
whizzy wig.
What you see is what you get.
You want the gray haired personwho's been there and done that,
Not the 25-year-old ex-McKenzieperson who's really never done
that or somebody who's trying tobecome a banker.
The second thing I'd say is, inlearning about banking, it's
very transactional.
Bankers typically would thinkto themselves that oftentimes.

(43:20):
That's why they're terribleinvestors.
Any deals are good deals aslong as it gets done, Whereas a
founder partners, we really careabout doing the right deal
because we care about karma.
We are building a platform, notjust an advisory business.
Let me give you an example Oneof the companies that we sold to
Amazon.

(43:41):
The founder there was delightedwith the process, Also learned
about the builder side offounder partners when his golden
handcuffs were finishing up asa product manager at Amazon.
He wanted to start anotherbusiness.
He asked about the builder sideof our platform.
Now he's a portfolio company.
This is what we want to havehappen.
It's not get something done asfast as possible, collect the

(44:04):
fee and next move on.
That's not a great way to buildsomething that's really
scalable.
I think the founder partner isvery deliberate about trying to
be very different than what'sout there.

Àlex Rodríguez Bacardit (44:16):
I totally hear you.
I think there's anotherparallelism in what you guys do
and what we do at Mars.
Of course I know that M&Aadvice or boutiques they don't
want to milk you.
Of course, in theory, you wantto get the best offer, you want
to get the best acquire andwhatnot, but in practice, 95% of
the people out there in thisbusiness they're not doing the

(44:38):
right thing.
The same with developmentagencies.
You always hear horror storiesabout development agencies
outsourced to this company andthey screwed me over, they never
released the code, they lockedme with these stupid technology
and whatnot.
That's precisely why companieslike MarsBase exist.
We leave off of these badpractices of other people.

(45:00):
I assume it's the same for you.
The proof of that is most M&Aboutiques or advisors I know and
I respect they're terrible atmarketing.
Why?
Because they don't need it.
The best companies, advisorsand trustworthy people.
They've got these word of mouthrecommendations.
Marsbase for almost 10 yearswe've never had salespeople.

(45:20):
We almost exclusively workedthrough recommendation.
Why?
Because we do a great job.
Salespeople are people externalto the company.
That really resonated with me.
The other thing is, I reallylike your concept of what you
see is what you get.
I'm going to pay you theroyalties every time I use it

(45:41):
from now on, because I thinkthat's something that I suffered
at Deloitte and the othercompany I used to work for.
They were using my CV forpotential leads and lending new
clients.
Then I would never work inthese projects.
They were sending somebody elseEvery two weeks.
Alex, can you update yourresume?
Can you update your CV?
We need it, for we're going towork for this bank.

(46:04):
Okay, then why I'm neverassigned to these projects?
I know that they were doingthat One thing because we're
running out of time and I thinkwe'll have to record.
I got so many other questionsthe process, but it's been
really interesting For me.
One of the other difficultparts from the founder

(46:26):
perspective and I always hearthat at the people I interview
at StartupRenor on thesepodcasts is it was really hard
for me to conceal this from theteam how to keep the focus on
the one hand and keep thebusiness running.
Delegate it to somebody elsewhile the CEO on the C level
gets the deal done.
The second is when's the righttime to communicate and to whom?

(46:49):
How do you calibrate?

Dimitri (46:51):
that.
So it depends on a lot ofthings.
But let's just take companysize.
I remember at MacMedia, when Iwas running corporate
development strategy for thecompany and we were selling to
Adobe, it was a big deal publicto public deal, $4 billion
transaction.
We created a very small teamCFO, CEO, of course, and myself,

(47:12):
nobody else, nobody else untilwe got to assigned to LOI.
And then we had because I hadinformation in a publicly traded
marketplace that this would beterrible, be so distracting to
all different kinds ofconstituents.
And as we got closer and closerto assigned definitive purchase

(47:33):
agreement, it was only on aneed to know basis, right, so
tightly controlled.
I think even in small companiesI've seen entrepreneurs do it
two different ways.
Just be open about it.
So if the team is really small,yeah, might as well just be
transparent about it.
I mean, because why is the CEOkind of leaving with somebody
else every kind of odd timeswhen they're supposed to be

(47:55):
showing up at meetings?
It's just, it creates all sortsof like gossip and questions.
So then I think if it's areally small team, the CEO
should probably say, hey, look,we've had some inbound, we've
had inbound in the past andwe're bringing pretty good, you
know we just go explore it.
It makes sense.
But you know we're not tryingto actively sell the business.

(48:15):
You guys got your jobs to doand the best thing you could do
in helping us is outperform yourdeliverables, Because then we
got an even better business andwe'll keep you in the know as to
what's happening.
But don't get anxious, Don'tworry about what your stock
options are worth, right, Justdo your job.

Brian Flynn (48:35):
I think everything Brian said is spot on.
I think also, honestly, itreally is a facts and
circumstance, case by case, kindof situation.
You've got to read the roomright.
You've got to know.
You know what is the reality ofthe situation on the ground
Brian put out you know somepretty good.
You know, guide rails.

(48:55):
Like you know, smaller companymay make sense to just be open.
Conversely, at a much largercompany and he gave an example
of a huge company you know theimportance of keeping the
information confidential,particularly given the fact that
it was publicly traded.
You know, I think that you know, the kinds of companies we're
working with that have anywherefrom, let's say, 15 to 30 or 40

(49:18):
employees.
You know that might be sort ofthe sweet spot of the size of
the companies we're working with.
More often than not it's notbeing shared universally, it's
being kept within a relativelysmall group, whether that's sort
of two to three people, maybeup to four, and it's for the
reasons that Brian describedright.
We don't want people distractedfrom, you know, doing their jobs

(49:41):
and focusing on, you know,what's right in front of them.
And the other thing that I thinkis important to recognize is
that this M&A process isimmensely time consuming, and so
you just don't want peoplesucked into it and then all of a
sudden spending, you know, tonsof time or you know otherwise

(50:01):
not.
You know doing their day jobsand in fact you know that's why
it's often helpful if you've gota situation where there may be,
let's say, a company has twofounders and one can be, you
know, mr Inside, keeps thetrains running on time and
running the business, whilesomebody else can be Mrs Outside
and actually dealing with theM&A process.
You know we don't always getthat luxury of, but if you do,

(50:24):
you know that can often be agreat way to make sure that the
business continues to operate asit needs to while you're
executing and pursuing an M&Atransaction.
But I'll just, you know, I'llfinish by sort of going back to
what I said at the beginning.
You really need to look at thespecific facts and circumstances
to decide how broadly to sharethis information.

Àlex Rodríguez Bacardit (50:47):
Because in the M&A sector there's a lot
of survivorship bias.
Right, we only hear about thecompanies that are sold for
millions, hundred millions,billions, even.
Right, but more often than notmost M&A processes they fail and
they can be a big hit to themorale of the CEOs and sea
levels and founders of thecompanies.

(51:09):
How do you bounce back fromthat?
That's a genuine question I'vealways had.
It's like you're working sohard and a process that can last
for 12 months, lots of millionson the table, and then you walk
away without anything becausesomebody fucked up or because
the market changed, you know,big technological drop in the

(51:30):
stock exchange, and it went onand on and on.
What happens and how do youbounce back from that?

Dimitri (51:36):
It's brutal.
I sometimes think that justhaving being recognizing that
this is the risk of M&A, that itmay not actually happen is the
very first step.
Because if you have, if you'rereasonable about it and you know
you have like lowerexpectations, then you're
probably gonna be fine.

(51:56):
If you have a really highexpectations and God forbid you
take your whole team thinkingthat something's gonna happen,
then it's extreme.
It's like being an entrepreneur.
Entrepreneurs, usually youngentrepreneurs, have big extremes
like that's like anxiety anddepression.
It could be such big swings.
Same thing in the M&A.
But if you actually are a littlebit more calculated, more

(52:16):
reasonable that comes withreading a lot, having an advisor
, you know, I think I can tempersome of those expectations.
I actually like to even startout with a client and just say,
hey, look, even if we get to aterm sheet, for goodness sakes,
we got a long ways to go.
Dimitri and I we wrote, I think, a foundational article about
the 10 things that we've learnedin 30 years of doing M&A or 60,

(52:40):
some years combined over 100transactions.
But one of them is yeah, I mean, even if you get to assign term
sheet, you're probably only 50%of the way there, right?
Because there's all theseexistential threats, things can
blow up, kind of what you weresaying.
So having reasonableexpectations actually lower
expectations probably helps alot to manage the anxiety, so

(53:02):
you don't get super depressed,so that when the real one comes
along you're actually stillgonna do this song and dance and
do the right thing.

Àlex Rodríguez Bacardit (53:10):
Dimitri , you wanna add up something to
that, or?

Brian Flynn (53:13):
I think everything Brian said was spot on.
I mean, fortunately, you know,the very fact that you are a
founder means you are likely tobe a resilient person who has
already gone through hell andback, and so you know you talked
about survivorship biasFortunately, the types of people
we're dealing with, you know,have already demonstrated a lot

(53:34):
of ability to survive, and Ithink that's very important.
I mean, I've got, you know, twosituations you know that are
very apropos here.
In one case, the company wassort of a bit of a melting ice
cube and was being trampled byone of the 600 pound gorillas
and we couldn't get an M&A dealdone in time before the business
really started to fall away.
And the founder, I mean, hejust dug deep, he pivoted.

(53:57):
There was a kernel of anopportunity and he's pivoted to
sort of a different product andservice, raised some more
capital.
He's already sort of, you know,got the business back up to,
you know, half a million dollarrun rate.
This guy's a survivor and I amconvinced, truly I am convinced,
that I'm gonna have anopportunity.
We're gonna have an opportunityto help them sell this

(54:20):
reinvented business in the next24 months.
I believe that In anothersituation, you know, we had a
term sheet in hand, speaking towhat Brian just said, and the
buyer said hey, I need to take abreak, we need to sort of
finish out the year.
We have another deal, we'reclosing.
We need to take a three monthbreak.
You know that's not a pleasantmessage to hear.

(54:41):
It's not a pleasant message toshare with your client.
But in this case, you know,what made it palatable was our
business is healthy, you know,growing nicely, it's profitable
and you know when these buyerscome back in a couple of months
time, our business is gonna bemore valuable than it was a
couple of months ago and we'renot gonna cut the price.

(55:02):
They're gonna be lucky if theyget the same price they were
talking about A few months ago.
So we gotta have that realityand that attitude as well.

Àlex Rodríguez Bacardit (55:12):
I like that.
I like that Time for the lastquestion.
This is a signature question ofthe podcast.
You guys have to share each oneof you your biggest fuck up and
how expensive it was.
And don't give me like, don'tgive me the usual things, like
everybody tries to give me the Ihired the wrong person.
No, I will not accept that one.

(55:32):
Just try to think of a big fuckup that you've had in your
career.
If related to M&A, of course,all the better.
But if you can quantify inmoney how much was lost, don't
worry, we've had people settingfire to this oh, oh, oh, oh, god
, yeah, okay, this is great Okay.

Dimitri (55:50):
You want to go most expensive fuck up.
We'll go first.
I will talk about things otherthan M&A and, demetri, you focus
on the M&A thing because wecover.
I'm gonna talk about me as anmy biggest fuck up as an
entrepreneur and as an investor.
Demetri, you talk about awesome.
I like it, like your attitude,so I've started sold quite a few

(56:13):
businesses and I think I am myI.
I became a little bit tooconfident, little maybe to cocky
, and I thought that because Iwas a software guy, I've always
been a software and a digitalmedia guy, and so I thought, hey
, and I've been brought Demetri.
I thought I could build abusiness in the consumer package
good space, and it was calledNew York tapped, which was

(56:34):
basically bottling New York Citytap water and and I was pumped.
I thought it was a brilliantidea.
We are on the David Lettermanshow, we're all this free PR.
That came around and I was like, yeah, this is gonna be a cool
business.
And it went bankrupt.
I lost Demetri's 25 grand asthe angel investment and it was
just like God.
But that was a.
That was a screw up and and, bythe way, I've had others.
I mean, I've been a serialentrepreneur.

(56:55):
I've had some other failuresbesides all the things that look
Clammers and good on theoutside.
But what I learned it'sactually the screw ups are about
learning, frankly, right.
And so I learned I better stickto my native, my native
software.
Just don't go outside of that.
Don't look for me to doanything in biotech or
semiconductors, just state thesoftware.

Brian Flynn (57:14):
Yeah, Alex, have you ever seen a $25,000 bottle
of water?

Dimitri (57:22):
Thank you for rubbing it in my goddamn face.
Demetri, I love you.

Àlex Rodríguez Bacardit (57:27):
Love it .
I knew you were gonna go forthat.
Yeah, how much money was lostin the it's not so much.

Dimitri (57:32):
It was about the money, because I'm gonna get to the
money thing.

Àlex Rodríguez Bacardit (57:35):
Okay, yeah.

Dimitri (57:36):
I mean a big number.

Àlex Rodríguez Bacardit (57:37):
You're not getting out of these without
revealing the numbers.

Dimitri (57:40):
It was a ego Bruising embarrassment, and time and time
is definitely valuable, right,come on when you're like really
humping it on a company.
Here's an expensive one, Ithink and I ran the math on it I
made a $200 million mistake,jesus Christ.

Àlex Rodríguez Bacardit (58:00):
All right, I want to do that
directly to the top five ofthese podcasts.

Brian Flynn (58:05):
Brand you only top five only top five.

Àlex Rodríguez Bacardit (58:08):
Yeah, oh, we've got some really big
ones.
I mean yeah, yeah, yeah, yeah,yeah yeah.

Dimitri (58:13):
Here's a problem is I made another one too is about a
hundred million dollar.
They kind of fell into twocategories.
Actually, the one, the samecategory, missed out investment
opportunity.
Right, I mean, you've heardthis before.
There's the biggest mistakes I.
I did not invest in roblox, andI should have.
When I had the opportunity andmy, my Co-founder, founder
partners, is on the board ofroblox gave me the opportunity.

(58:35):
I said what is this?
Is the gaming?
It's, it's a game.
I'm not in a game and realizeit was gonna become a platform.
And boy oh boy, that was crazy.
But you know what, though?
Because I'm so positive, I tryand see the positives and all
the negative stuff.
The positive side is, you know,if I had made that, I don't
know if we would have builtfounder partners, and to me,
that's my true love I, I'd paymillions of dollars.

(58:55):
If then I had 200 million toactually do what we're doing a
founder partners, it's reallyfun.

Àlex Rodríguez Bacardit (59:00):
I Don't know we would you.
I don't know if you guys havegot a hard stop in two minutes,
but I don't.
Just the means for you, so Idon't know if you got time
constrained or you got only twominutes to share your M&A backup
for me.

Dimitri (59:12):
You can go on.
I need to leave in a coupleminutes, but, dmitri, keep, keep
.

Brian Flynn (59:17):
Yeah, I.
So I, before I joined up withBrian and I was sort of more of
a traditional M&A banker we Iwas working on a deal and you
know, set a boutique, so I meanit was, you know, very much like
the fees we'd earn.
You know much of it would gointo our pockets and this was

(59:38):
750 800 million dollar deal.
We had a nine million dollarfee and tied up with it and we
had fully negotiated everythingand on a Saturday we had like
five outstanding items.
We had top tier law firms andthere were five outstanding
items still left to resolve.

(59:58):
And then the the seller justwent radio silent on us and you
know I went.
I remember, I mean I remembergoing from sort of quizzical to
somewhat concerned to veryconcerned, to getting an email
from the advisor To the sellersaying can you speak tomorrow
morning, on Sunday, at 7 30 inthe morning, and having this

(01:00:20):
sort of Pit in the bottom of mystomach form Getting on this
call and being told by thesellers oh, we just sold this
business to someone else, thedeal is Done and dusted.
First time I'd heard that termand never forget it, since it
was in the context of losing anine million dollar M&A fee and

(01:00:42):
you know, you know you sort ofgo back and you, monday morning,
quarterback.
What did I do wrong?
How did we miss out on this?
They used us as a stalkinghorse.
They, they basically broughtour offer to the other buyer.
You know, and you know, at theend of the day, we did not
insist on a period ofexclusivity and we should have
done that.
We didn't do it because it wasa competitive M&A process, but

(01:01:06):
we should have just put our footdown at that point and said if
you want to get, you know, youwant to talk to us.
We need, you know, 48, 72, 96hour period of exclusivity
doesn't have to be very long.
And I think we were just soexcited and we thought we were
in the driver's seat, I think wehad a little bit of that hubris
that Brian was talking aboutand we, you know, we let that
thing slip away and, you know,disappointed client and,

(01:01:29):
needless to say, you know,seeing a nine million dollar M&A
fee go up in smoke in theperiod of 24 hours was Very,
very painful.

Àlex Rodríguez Bacard (01:01:38):
Gentlemen , thank you for opening up.
This makes this episode evenbetter.
This is the icing on the cakeof a really, really, really
special episode, so thank youvery much for being part of this
podcast.

Dimitri (01:01:49):
Thank you for having.