The Wise Exit

Cashing Out Podcast | E20 | Kison Patel

00:00:09:06 - 00:00:30:00
Todd Sullivan
Welcome to the Cashing Out podcast, where our fellow founders share real stories and offer honest advice around selling their companies to some of the top acquirers in the world. My name is Todd Sullivan, CEO of Exitwise, where we help business owners create the exits they deserve. Today, my guest is a very experienced and well-known M&A professional and entrepreneur, Kison Patel.

00:00:30:16 - 00:01:00:04
Todd Sullivan
Kison entered the M&A world as a sell side M&A advisor representing commercial banks and hotel chains Over the years, with hundreds of transactions under his belt, Kison realized that many business acquirers lacked efficient technology to manage their transaction ins and to ultimately make them successful. To address this problem in 2011, Kison founded Deal Room, an M&A lifecycle management platform for buyers to improve transaction processes and post M&A integrations.

00:01:00:16 - 00:01:26:18
Todd Sullivan
Then in 2016, he founded M&A Science, a collection of M&A educational resources to share M&A, best practices and training anyone looking to master M&A. In our conversation, Kison and I discuss what we're doing to improve on the M&A industry's performance when it comes to selling companies and also how buyers can improve post integration processes to deliver the value that all parties envision.

00:01:27:10 - 00:02:03:02
Todd Sullivan
I hope you enjoyed my conversation with Kison Patel. So, Kison, thank you for agreeing to chat with me today. I'm really happy that you're willing to take time out of your day. You're one of those few professionals that have really participated in all sides of the M&A transaction, right? From advising founders on the sell side and then advising private equity and corporate buyers on post deal integration to make sure that, like all the parties can can realize that strategic value.

00:02:03:16 - 00:02:20:21
Todd Sullivan
So I think what you have to share with our audience, which is our fellow founders, I think they're going to get a lot out of this conversation. And frankly, I was just I was incredibly fired up that you were willing to take to talk to us today, that I had no problem bumping Mark Cuban from this time slot.

00:02:20:21 - 00:02:22:12
Todd Sullivan
So thank you for being here.

00:02:23:22 - 00:02:27:05
Kison Patel
Hey, thank you for having me, Todd. It's a pleasure to chat.

00:02:28:20 - 00:02:55:23
Todd Sullivan
So I think what would work really well is if we kind of give our listeners your background, it's a little bit nontraditional how you got into M&A. But I think our stories are pretty similar, how you started on on the sell side. You think you could take us back to the beginnings there when you were representing banks and hotels and and then what brought you to solve the problems you're solving today?

00:02:56:03 - 00:03:16:13
Kison Patel
Really different start into the industry because I came up through a real estate background where I found myself in my early twenties working in a real estate company trying to sell houses. And people do want to buy a house from a 21, I think was back then. I did and I was fortunate. I had a real interest in commercial, the business side.

00:03:17:15 - 00:03:56:21
Kison Patel
I wanted to do something there. My dad actually introduced me to a couple of guys that were starting up an M&A advisory practice. One of the principals recently sold his company to McDonald's, a consulting practice, and that's where I got introduced to this whole practice of consulting buyers and sellers. And it was interesting. They had a model. They were generating a lot of leads online that happened to be participants or principals of Indian descent that were interested in buying and selling businesses, and they figured, why not hire this kid?

00:03:57:12 - 00:04:23:23
Kison Patel
We could barely understand him. He can probably do something about it. I worked with them for a year, sold about three small little convenience store subway franchises, and I just wanted to grow past it thinking, Hey, there wasn't a real organized strategy with this startup. And I went instead. Stemmed off in my own to build a practice that ultimately focused on hospitality.

00:04:24:00 - 00:04:46:05
Kison Patel
Where I started with small private hotel deals end up working with Kimpton extended Stay in America, and then I got an opportunity to sell a bank, which I thought was really fascinating industry in industry and learning how the mechanics and financials and valuation work. And then I worked with some of the regional banks to do some acquisitions and sell side for smaller community banks as well as some fundraising.

00:04:46:15 - 00:05:11:15
Kison Patel
That was a fun little space that led me all the way up until the recession in 2007 when all havoc broke out. I love downsizing this little practice of five and participate as a solo practitioner doing distressed deals for the subsequent years with an interest in getting into the tech area. And that's where I ultimately did a tech start up that failed miserably.

00:05:12:06 - 00:05:33:18
Kison Patel
But in that experience, I got to work with software engineers and was intrigued again to how software engineers would utilize project management tools to manage developing software. And that's where I took that experience, reflected back on them and thinking, why not a project management tool for M&A, which led to the inspiration to start Deal Room in 2012? And then the rest is history from there.

00:05:34:20 - 00:05:58:10
Todd Sullivan
Good for you. Gosh, there's a I guess, a lot to unpack there. It sounded like at the beginnings, the firm that you first worked with, they had some formula for attracting leads online. Right. So I'm sure you were kind of aware of that because you've been doing such great content moving forward. I know that you're kind of a focal point of the M&A industry around education.

00:05:58:10 - 00:06:03:03
Todd Sullivan
Where do you get any learnings from that kind of early experience on driving leads online?

00:06:03:13 - 00:06:26:01
Kison Patel
And this is like back when we used to still fax offers to each other, and that was such a new thing that I forgot there was a it was a biz by cell merger network. There was a couple of these websites that operated maybe a notch above like a Craigslist in terms of a format, and they would put an anonymous listing for a business you had for sale.

00:06:26:16 - 00:06:43:16
Kison Patel
And you would get a bunch of people inquiring in. And then you took those leads and built your database of buyers. And then you just ran a circuit, you know, to spend time with the buyers, figure out what they're looking for, go knock on doors, try to get those businesses, list them, and keep building that database of buyers.

00:06:44:21 - 00:07:11:16
Kison Patel
I think that was intriguing just to see that whole process and that experience. I when I started my own practice, we created a monthly newsletter that we would send out to that buyers list to keep them up to date on what the current listings were. I think that was a big asset. Valuable asset that maybe led to some of the things that we do today where we have our email newsletter and these podcasts and things of that sort.

00:07:12:11 - 00:07:29:00
Kison Patel
Um, yeah. I mean, I remember to East of Fax the newsletter in the beginning, know you'd buy some software, so a bulk fax newsletter. And then eventually you evolve and start emailing it and you do the old little book hack to send it to everybody at once.

00:07:30:07 - 00:07:55:22
Todd Sullivan
Oh, that's great. So in starting your own firm, right, a similar to me, you know, I decided to do this after selling, you know, a few companies. I sold my own, but then I started selling for friends and realizing there's just a a better way to try to help people. So why not kind of hang a shingle? And and I think, like you, what's interesting is you can kind of grow that with bodies, right?

00:07:55:22 - 00:08:22:04
Todd Sullivan
But now you take on expansive responsibility. And we're in a place today very not dissimilar to 27, 27, 28, Right. Where the economy is really, really changing. Fortunately, we figured out kind of the lead side to be able to to scale and maintain. I'm interested, just in your opinion, do you think that M&A today is going to take a real hit?

00:08:22:05 - 00:08:25:02
Todd Sullivan
Where do you think kind of the big opportunities are going to lie?

00:08:25:12 - 00:08:28:22
Kison Patel
I feel like the thing I've learned from watching these cycles is M&A shifts.

00:08:29:17 - 00:08:30:00
Todd Sullivan
Yeah.

00:08:30:07 - 00:08:45:20
Kison Patel
It just shifts. You might have different people doing it for different reasons. You know, we saw oh seven. A lot of these deals are still happening, which just turn into distressed deals. But you're probably going to see some of that. You're going to see some of these companies that can't make the stretch to the next round of funding.

00:08:45:20 - 00:09:06:20
Kison Patel
And then they end up going on the chopping block while you're seeing organizations that have cash ramping up and prepping to do more deals and increase their volume. So and then you got some traditional roll ups that are just going to continue doing what they do. And that's, you know, not be impacted as much. So I think there's still things that move.

00:09:07:03 - 00:09:15:19
Kison Patel
Um, but, you know, you're seeing the change, obviously some of these larger high profile, heavily bank deals, those things are definitely slowing down.

00:09:16:21 - 00:09:40:14
Todd Sullivan
Yeah, I think the big ones definitely are. But we see kind of that M&A versus series A where the venture firms maybe are not throwing more money into businesses that don't look like they're going to be their next unicorns. Right. And so those founders are kind of caught off guard saying, well, you told me to grow like this and I'm spending like crazy and I've got a bunch of overhead now that I can't.

00:09:40:14 - 00:09:59:23
Todd Sullivan
That's not sustainable. I think we'll see companies like that really have to pare down and then, you know, look for exits. Least that's what we're seeing already this this quarter. It's interesting because I had a I had a company at the time in 20 that went through that we were being acquired and on signing day it was canceled because of the economy.

00:10:00:19 - 00:10:20:22
Todd Sullivan
So they're going to be it's it's going to be a tough times for some of those smaller companies that are not profitable. It's my guess. So what I also loved is that you go into technology, right? Get some fascination with it, learn I probably tools like what, JIRA, at least Atlassian products that you now learn from.

00:10:21:00 - 00:10:21:18
Kison Patel
The first one.

00:10:22:17 - 00:10:39:05
Todd Sullivan
Yeah. And then bring it back into into back into our world. Right. Which is not living on fax machines anymore, but certainly not making a technical leap that you've seen. Is that is that kind of the genesis for you, for, for deal Room Excel trackers?

00:10:39:05 - 00:10:41:00
Kison Patel
I just remember the Excel, just when.

00:10:41:00 - 00:10:42:05
Todd Sullivan
You look at yeah, you.

00:10:42:05 - 00:11:09:18
Kison Patel
Start with tiny little deals and maybe you're managing diligence on email with a bunch of questions, but then you work on bigger deals, you know, 10 million, 20 million plus, and then you go, you get a longer list and you usually put them on an Excel and then back then the data rooms are insane. And you think they used to charge you like a dollar 25 for page or something, that back then they'd still come to your office and they'll bring a portable scanner, scan all your documents, put it up on a server.

00:11:10:14 - 00:11:14:14
Kison Patel
Oh, it's funny that they still charge four pages in in 2020.

00:11:14:15 - 00:11:23:03
Todd Sullivan
Well, I was I was going to ask. That's where it comes from because I was not doing this while they showed up and actually scanned in documents.

00:11:23:10 - 00:11:44:22
Kison Patel
But that's a problem model. Some of the providers are still on like physical servers that are not, you know, fully integrated on the cloud, but, um, yeah, and that's, that's where I saw hits. This opportunity is highly, highly inefficient, right? There's the pure cost of managing a data room. I saw cloud technologies emerging. We're already seeing other industries adopting project management tools, and that's spreading out.

00:11:45:02 - 00:12:10:19
Kison Patel
So specialized project management tools and why not build something to be competitive from both across price perspective, but also capabilities perspective, to be able to bring together the data room and all the workflows because the back and forth, it gets tedious. You end up batching everything. You have this long list, 300 items of diligence requests you need from the company you're looking to acquire.

00:12:10:19 - 00:12:45:01
Kison Patel
And when you start, it delays it because it ultimately, when you look at that list, there's certain items that really should get answered a lot sooner than later. And so you don't have that prioritized iterations on those important items, which you do in today's tools. Right. And then the other pieces management of that, that workflow itself, it's there's a time piece of it you have all these follow ups that when you when you do diligence, you're always going to have more questions.

00:12:45:10 - 00:13:06:15
Kison Patel
And when you try doing that in Excel, you're literally trying to have a conversation on a spreadsheet. I remember that was the most frustrating part. Then you eventually got to give in and have a phone call saying, All right, let's just talk through this stuff. But, um, you know, like today's tools, like social media, you got a little chat thread and you can go back and forth and you really have that the information exchange the way you needed to.

00:13:07:06 - 00:13:28:17
Todd Sullivan
Yeah. And gathered I, I know in our processes we still see the Excel sheet. Here's the prioritization whatever is highlighted in yellow right we got to do first and maybe from a time perspective it could be organized better. And what we see is, you know, our founders are delegating right to a CFO or even a controller to do a lot of that work.

00:13:28:17 - 00:13:54:04
Todd Sullivan
And so there's there's a gap maybe between that second question that an acquirer is asking based on answering the first question. And yeah, I can get it can get really hairy and, you know, we're we're just in the lower middle market. So I can imagine that the bigger deals really work should require something more sophisticated. But I guess investment banking, when I'm curious to see is it an easy sell, right.

00:13:54:04 - 00:14:07:07
Todd Sullivan
Because your product is clearly better than what's out there today. So are you running into, hey, we're not going to fix it if it's not broken, we make enough money. Like what? What's what do you run into as objections?

00:14:07:07 - 00:14:09:20
Kison Patel
I think with the banks it was there. Was that.

00:14:10:12 - 00:14:11:01
Todd Sullivan
That's right.

00:14:11:14 - 00:14:36:12
Kison Patel
Yeah. Yeah. There wasn't big incentives when you looked at the key stakeholders. Yeah. You know, the rainmakers get compensated off top of the deals. And so we, we, we struggled there were, we ultimately found was the corporates were the early adopters because I think there's a few different factors but they were very value driven that they could see internally in the organization of this creative value.

00:14:36:12 - 00:15:01:14
Kison Patel
People were valued for creating value, so that that was a good incentive and then they own so much more in the workflow. There's this exercise of pipeline to source the deal, the diligence we're all familiar with, but then the integration part, the exercise of actually cashing in on that promise. Every note you get once you close on the deal to deliver on the investment thesis, which is the hardest part by far.

00:15:02:11 - 00:15:13:06
Kison Patel
And that's always been our focus in the these past five or so years is how do you improve the process and end to ultimately deliver on the value from integration.

00:15:14:05 - 00:15:39:07
Todd Sullivan
That I mean, that to me was the the reason one of the reasons I was so excited to talk to you because that was a problem. We seemed to what we identified on the sell side, where founders are facing enormous headwinds, trying to get a deal done today right? So the success rate in lower middle market M&A is like 30% of deals work.

00:15:39:07 - 00:16:02:18
Todd Sullivan
And we just found that, you know, frankly insulting as founders that we could put out money and more importantly, lose six months of our time and not get a deal done. So we went to solve that problem. And then and so we have transaction after transaction and we know how to get the deal done by putting the right people in place, people and process in place for every founder.

00:16:03:02 - 00:16:22:12
Todd Sullivan
You're on the back end seeing that. And by the way, this is so valuable to founders because if you are going to put a significant portion of your compensation in in the hands of the acquirer, right. In the form of an earnout, that integration better work, they try to incentivize you by saying you got to be here for three years.

00:16:22:12 - 00:16:47:07
Todd Sullivan
And if you do this, this and this, you make money. But that is really just a mystery for a lot of founders going into this kind of next chapter. I'm really interested. Right? Your your software goes out beyond just the process of running in M&A transaction for the buyer, but then helps on the integration side to to realize the performance everybody wants.

00:16:47:07 - 00:16:49:11
Todd Sullivan
So can you talk a little bit about how it does that?

00:16:50:13 - 00:17:13:19
Kison Patel
Well, let's let's break down some fundamentals, because I, I think that's the thing that's really, really interesting in this experience, being able to work with corporations and working on these larger deals. I mean, we were with Emerson and we've worked with him on multiple 11 figure deals and just seeing how this stuff plays out and then reflecting back on this advisory stuff where I'm like, I had no idea any of this stuff.

00:17:13:19 - 00:17:44:07
Kison Patel
I didn't care about how any of this stuff happened post close, but ultimately that's what actually unlocks value. So when we think about these and it's it's I think there is like a balance, right? Because Perriello I mean you're you're you're pretty limited on who you let in under the tent year work on the deal and it's it's a tricky thing to balance because you're setting up a lot of these key terms that you're going to have to live with throughout the deal.

00:17:44:07 - 00:18:14:01
Kison Patel
And yeah, nobody likes, um, you know, to anybody to, to renegotiate back on, on any of the terms and you know that just Yeah so it's, it's, it's tough where you want to do this and when you think about some of these things related integration it starts early. It starts in those early conversations um, really starting with the vision, I would say first and foremost is can we get aligned around a vision on what this end state's going to look like?

00:18:15:15 - 00:18:36:10
Kison Patel
I think that allows you to make sure on the same page, right of why we're buying the company. What are the value drivers. I understand where we're trying to go ultimately with it, and I think sometimes that doesn't get as clear. Again, if you start pushing some of the stuff off where we get into, Hey, this deal makes sense, we get the numbers and we do the deal.

00:18:36:23 - 00:18:58:01
Kison Patel
Then post Deloitte, you have your teams trying to figure this out. I think there's a there's some of that executives exactly alignment on what this vision is ultimately going to look like. What that really shapes into is outlining the go to market, you know, from our customers, like what is this going to look like for our customers when both companies are combined?

00:18:58:13 - 00:19:31:19
Kison Patel
Because each company respectively is there to serve the customer, but as a combined entity, what's that going to look like for for the customer? Are we going to deliver value? And, you know, how's that can impact their experience because there's always this big talk around culture when it comes to integration. So much of the fallout is because of culture incompatibilities and things around it, which I think cultures are unique, but at least understanding what makes these cultures unique at a time can help you frame things to make it work better because there's this approach.

00:19:31:19 - 00:19:52:19
Kison Patel
And how much do you integrate? Are we fully integrating, partially integrating and just understanding? And it starts with values, right? Everybody's got the same common fluffy words written on there about a company page and but being able to understand it because if you can have the conversation of what that actually means, you start understanding the way of working in those organizations and leadership approaches.

00:19:53:06 - 00:20:10:17
Kison Patel
And they have a very top down traditional or leadership style versus the smaller startup is very bottoms up. Well, you can't just put those companies together. How are you going to manage that? Are you going to start looking at it as we got to do this deal and give them some autonomy so that we don't destroy this company?

00:20:10:17 - 00:20:22:00
Kison Patel
Or maybe you find some clear red flags that A, this probably isn't going to work together. And we probably should put these big considerations on reasons not to do the deal because of the, the, the big cultural impacts there.

00:20:22:19 - 00:20:25:18
Todd Sullivan
Um, that's, that's great. I mean, sorry, go ahead.

00:20:26:08 - 00:20:48:03
Kison Patel
Oh, yeah. I mean, I think those are like the top three, the couple other ones I'd probably mention is just while you're doing diligence, if you can be very iterative about your integration planning, kind of, a lot of times that gets pushed and again, getting people involved at the right time. But I think more and more we're seeing that evolve where the integration people, the managers are getting involved.

00:20:48:03 - 00:21:12:02
Kison Patel
Earlier in early in the deal. But if you can run that parallel track so that you're iterating on your integration plan as you're doing diligence, yeah, that can help you get a leg up so that you can really not get caught off guard, have a comprehensive plan to hit the ground running as you close. Um, and then I think the other element too, that gets forgotten about is diligence isn't like a one way street.

00:21:12:02 - 00:21:40:00
Kison Patel
It should be a two way. So think of it as reverse diligence. How do you help that company you're acquiring Understand your organization? What are your business lines? Where exactly are they going to fit in and be part of that journey? So it's not just, you know, this way that's really disruptive and they don't feel part of it, which makes the compromises the people experience, and they could be more vulnerable and you're going to end up with an attrition problem.

00:21:40:14 - 00:21:55:15
Kison Patel
Um, so those are probably the key areas that I, I've been experienced, I feel like is all stuff that I had never thought about looking back when advising companies that I would emphasize first and foremost above everything else and doing a deal today.

00:21:56:22 - 00:22:21:19
Todd Sullivan
Okay, there's way too many good, good things in this. And I'm so glad that you're bringing these things up because when when we are advising, we're essentially a deal Sherpa and we surround them with the M&A dream team. The founder who wants to sell the transactions that we love to do is where a order is already integrated or they're they know the acquirer, right.

00:22:21:19 - 00:22:49:14
Todd Sullivan
And they might have many strategic partners partnerships out there that give them the opportunity to know, potentially know their acquirer and have the acquirer kind of understand the culture or the way that company likes to operate. And so that's definitely a leg up, right, in an M&A transaction where you kind of know each other, you know, if culture is going to work or not, the ones that where you they don't know the acquirer at all.

00:22:49:21 - 00:23:09:22
Todd Sullivan
We really like to encourage kind of the the CEO if if the founder is going to report directly to the CEO to kind of sit down and just get to know each other. Right. Or is this somebody that you can sit next to 12 hours a day and work with and then it not only beyond the personality, then the vision is the vision is similar.

00:23:09:22 - 00:23:32:10
Todd Sullivan
You see it the same way. Does the product actually achieve the goal that the vision is is kind of laying out in the end? I guess then that would dictate go to market, right? Does the company that's being acquired, which is typically smaller, does it have the resources to to do the go to market strategy that you're talking about or do more resources need to be added?

00:23:32:10 - 00:23:53:21
Todd Sullivan
Is that is that a sales team? Does that sales team work well, there are so many things that could be happening, as you're saying. And I'm I'm touching on half of the things that you're talking about, but you can do a lot of that. Perriello I to say, no, no, no, maybe we shouldn't be dancing together because there are too many missed or red flags missed marks here or yeah, we're seeing a lot of good things.

00:23:54:04 - 00:24:16:07
Todd Sullivan
Let's go do the yellow. I will go into, do a diligence and have a parallel path, because that parallel path is tough to do until you've given somebody exclusivity and you're willing to share. Right. Everything so you articulated all these things that we see and we inherently do because we're more about the relationships, hoping that post integration is very valuable.

00:24:16:17 - 00:24:24:08
Todd Sullivan
But frankly, we don't have much impact on that once a transaction is done. So I'm glad that you're kind of training and encouraging these these things.

00:24:24:23 - 00:24:49:14
Kison Patel
I mean, the practice as practice has to evolve and I think ultimately you're trying to create as positive a people experience as you can through this transition. It shouldn't because ultimately it it can be very disruptive. But can you can you do it in a way where you can have the teams aligned on it and aligned around the priorities so that the change is a good change for the organization?

00:24:51:10 - 00:25:12:02
Todd Sullivan
Okay, that's that's awesome. Can you talk to me a little bit more about M&A science for people that wouldn't know what that is? Because I feel a kinship here where we are all about there's just an enormous gap in the knowledge about what M&A is, all the different parts, and that's natural. Like a founder has got to be hyper focused building a business.

00:25:12:08 - 00:25:34:03
Todd Sullivan
And what do they get once, maybe if they're lucky, two times to be able to sell a business in their lifetime. So it's never going to be an expertise. And you are educating not just sellers of businesses, founders, you're educating, you know, community from multiple segments. So can you take me through M&A science like how you launched that and what it's doing today?

00:25:34:03 - 00:25:55:08
Kison Patel
Yeah, I mean, I've never had no idea what I was doing at the time, but I had the room getting it off the ground, going through all those founder lessons, figuring out how to get a productive engineering team, figuring out product market fit, figuring out the go to market and stumbling and falling all along the way. And it was probably around 2017 where we started getting some meaningful traction.

00:25:55:09 - 00:26:18:13
Kison Patel
We're working with a number of corporations, and the one thing I was maybe boggled with was that every time we went to the new company, I couldn't pick up all the stuff that we did for the previous company and repurpose it. It was you had to relearn how they thought about M&A and like these new ideas. Is there any two companies that think about M&A the same way that a different approach, different model, Everything.

00:26:19:09 - 00:26:49:12
Kison Patel
And that's what I came to this realization that the bigger underpinning problem in the industry was that the industry itself was siloed and that all these firms, consulting firms have developed their own proprietary way of approaching M&A and that there is a lack of standardization in best practices. The question was where's the evidence behind all of this? Right around that time, a good friend of mine, Andy, who is a marketing leader, suggested to do a podcast.

00:26:49:18 - 00:27:04:14
Kison Patel
He just, Hey, man, you should do a podcast. And my response, I remember, was like, What the hell is a podcast? I had no idea. And he just kept encouraging me to do it. And he said, Don't worry about it. It's the next best thing. You just got to it's got to be the next big thing. You just got to do it.

00:27:05:02 - 00:27:32:01
Kison Patel
Yeah. And I was pretty excited, but I said, All right, I got to do something for marketing anyways. Why not get it? And then it dawned on me. I was like, You know, I could actually use this an opportunity. We do a lot of these interviews for researching product development, a similar approach. He's like, Yeah, I just published the same thing like an interview practitioners and learn about their experiences and lessons learned and try to identify what are the things that actually work and don't work in the industry.

00:27:32:16 - 00:27:50:13
Kison Patel
And that's where my science started in 2017. Here we are seven years later and we just had a million downloads last month. No idea. Last week I should say. But yeah, I had no idea that it turned into a community of others that really are seeking out these best practices.

00:27:50:13 - 00:28:13:15
Todd Sullivan
Yeah, I love it. Right. We're our podcast. You know, we started it this year and it's gained a ton of momentum. And what we really focus on are founders business owners who are solving problems but then get to go through an M&A process. Now, you know, you haven't sold deal room or M&A science, right? But you've seen M&A from a lot of different angles.

00:28:15:03 - 00:28:37:22
Todd Sullivan
I think for us to continue to give value in education, we have to bring on more professionals like you that have figured out how to solve for different problems within M&A and just continue to share best practices. Right. So we can all we can all learn. So yeah, I appreciate it. It's a great resource. I'm on YouTube and subscribe to the channel.

00:28:37:22 - 00:28:55:07
Todd Sullivan
And actually you had a guest. Trish Parang Yeah, we had, we had to hours on cashing out and we talked about his book about planning for the exit. He was fantastic. So yeah, I mean thanks for what you're doing right.

00:28:55:10 - 00:29:21:21
Kison Patel
Know his is takeaways really that he what I like to buy is his thinking is how much he actually goes. I feel like that's a big, big thing that doesn't get talked about is how much effort and time goes into developing the relationship to make M&A happen. And that was actually interesting chatting with him as well, was that when you actually want a deal successful, you spend so much more time in curating and nurturing those relationships far ahead of time.

00:29:21:23 - 00:29:25:04
Kison Patel
And yeah, I can't think of anything else that's more true.

00:29:25:20 - 00:29:44:23
Todd Sullivan
Yeah. Yeah. Well, is there is there anything else that you can think of advice that you want to impart to your mostly founders of businesses who who are is our audience today about M&A, what they should be looking for? You know, the the horror stories, the best practices. Any advice that you want to give.

00:29:45:12 - 00:30:04:10
Kison Patel
You know, to me is prepping curiosity. Are like the two big pillars of exiting a business prep. I think more you can have and especially if you can find somebody that's gone through before just to help you get your business ready, like have your information organized and think of it just selling your house like you don't want a little mold stain on the ceiling or something.

00:30:04:15 - 00:30:32:09
Kison Patel
Get that stuff fixed up. That's the same thing with your books, your operational procedures, things of that sort, because some of these companies that may be looking at business are going to be large publicly traded companies. If they come in and they look at it and there's like there's so much work to do. I think of like sock to audit reports just to get your product and company really ready to go full enterprise or scale, then that that's going to be a big detractor that's going to impact your valuation.

00:30:32:09 - 00:31:05:07
Kison Patel
So get get somebody that really can help you do the preparation and I think is huge. That just tremendously builds value upfront by doing that. And then the second thing I think is just being curious. I feel like sometimes you have different stakeholders that drive the process, but you as a founder, if I talk to any founder that has a significant amount of regrets from a sale because obviously there's financial terms involved, but it's always looking back and seeing what you've put hard work effort and the legacy that you strive to leave behind.

00:31:05:16 - 00:31:30:13
Kison Patel
All of a sudden start sinking and burning has a sinking burning ship here. You know, you don't want that. And I think so much of that could be avoided if you just be an unwieldy, curious to understand. Ask those tough questions about the acquire strategy, what their goals are, how they plan to integrate it, what your role is going to look like, post clothes, who are you going to be reporting up to what your title is going to be?

00:31:30:20 - 00:31:53:16
Kison Patel
You know, really dig into all those little things. So I feel like those things don't get asked and then it becomes the tough things to solve for after the close that creates that friction and that, you know, leads to the bigger issues. I think the more of that you can really on surface and just being really curious to understand all these little things and how it's going to impact what would be the helpful.

00:31:54:11 - 00:32:21:23
Todd Sullivan
That's great. Oh yeah. Those, those two points are really key that that preparation can really be even years ahead, right, of that M&A process because kind of getting your books in order right. It may be a much bigger task for some companies than others. So yeah, we are big fans of getting your house in order years before and creating systems that can you can really point to that adds scale and value in an M&A transaction.

00:32:22:23 - 00:32:35:19
Kison Patel
It's like operating practice. I mean, we're doing it. We have zero plans to sell, but we the way we structure our company is just to make that part of your process so it's presentable. And any point in time, even for investor.

00:32:36:20 - 00:32:59:06
Todd Sullivan
Yes. And I love the second piece to like the curiosity, because, you know, I have one founder right now under Louis and boy, she wants to know everything. Who am I going to work with, What are our goals? And she is asking all of those questions and really, she is the poster child for the way a founder should be.

00:32:59:11 - 00:33:25:10
Todd Sullivan
You don't want to just say, okay, there's a big number coming my way and cross my fingers on everything else right? Is you want the company survive, leave the legacy like you said. So yeah, really, Those are great. I really appreciate that. Thanks again for listening to the Cashing Out podcast. For more founder exit stories, please subscribe to the Cashing Out podcast on Apple, iTunes, Spotify, or wherever you listen to your favorite podcasts.

00:33:25:20 - 00:33:43:08
Todd Sullivan
And please remember exercise dot com and the Cashing Out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.