How2Exit Episode 31: Kison Patel - CEO and Founder of DealRoom and and M&A Science Academy.

Ronald Skelton  0:06  
Hello and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling.

Hello, and welcome to the how to exit Podcast. Today I'm here with Kison Patel. Kison is the CEO and founder of m&a science providing the best crowdsource based educational resource and technology solutions to the m&a industry. Aside from geeking around with finance people, he's in love sharing entrepreneurialship life lessons that he learned along the way. Listen closely, if you're thinking about buying a business, growing it and selling it, Kison is the guy that talks to works with your potential buyer on a regular basis. Welcome, Kison. Thanks for being on the show.

Kison Patel  1:03  
Thanks, Ron, my pleasure to talk to you.

Ronald Skelton  1:06  
You know, I always I always start off in the same spot. How did you end up in m&a. Tell us kind of how you got started in this and how it connects to where you're at right now. That would be great.

Kison Patel  1:17  
I can tell you it was not the traditional winter I really school went into banking at Goldman Sachs and winded up here. In fact, it was the opposite. I failed out of undergrad, like literally with academic deficiency, had a very short attention span struggled and found myself in a tough spot but aspired to get into real estate thinking that was my path forward to find success. Found out I was terrible at selling houses couldn't quite make the emotional connection with those types of sales, mounded up in a little startup that was building a boutique m&a advisory practice, and got my start there. Worked with that firm for about a year wanted to go in a different direction when it came to strategy and areas of focus. Started a practice at a pretty early age around 2003. Built that up over a decade and ended up working with a focus in hospitality for most of that time, starting to small private assets, got up to working with larger corporate chains like Kimpton extended stay America like into, and then went into the financial institution working with community banks, helping big banks by little banks, small banks. So, and  that led up to the recession, where I felt like I hit my wall on the advisory side, because you're always living deal by deal, want to do something different got into the tech area, found myself in this startup that didn't pan out the way I wanted to, but expose me to the way software engineers were utilizing project management tools. I thought this is really interesting, and something that our industry needs, or m&a needs, and started a company deal room in 2012. With the goal of bringing that project management functionality into the industry, learned a lot of hard founder lessons and building a tech startup over the following five years. Around 2017, things started really picking up for that company, I got into podcasting started a podcast called m&a science that evolved into a digital media business of its own. Or today we have several different business lines, we have a spin off product called firm room, which is a self service virtual data room. We run an online academy program, I'm a Science Academy, a few books published, but all things related to education, and technology serving corporate finance.

Ronald Skelton  3:44  
Awesome. So as we were saying in the intro, I like I want you guys to really hear this out because you work on a day in and day out basis with corporate m&a, like guys that have billion dollar valuations. And most of my audience and you know, a lot of the guys I work with and network with, they're buying companies doing roll ups and stuff with the intention or even hope, you know, and hope intent goal strategy, to eventually sell it to those corporate buyers eventually sell it to those PE firms and stuff. So I want I want everybody to realize today that you've been working in that space for a while you're gonna have a deep insight into, you know, what those big corporate guys corporate m&a want, what they're looking for. And, you know, what trips, these type of deals up, you know, and stops, stops it from being able to sell or get full valuation. Right. So we were talking a little bit about the show about, like integration. And you know, what it looks like on that on that side. So I think we can just dive in and say, What is your biggest concern or what's the biggest thing that's on your mind right now around corporate m&a?

Kison Patel  4:52  
It for us has been interesting journey when we see in the last five years a big transition where the industry traditionally I operated in a finance, focus, spend a lot of time creating a model, forecasting synergies, getting your board to approve it, go out and buy the company. Hope everything else goes well. Well, if you look at all the research, it points to, hey, integration phase either makes or breaks your deal. Now we see a bigger emphasis on that. When you look at how integration goes, well, it's all about the people. And then the day people have to be motivated, and they have to be aligned on goals. That's what drives those results. Gotta have good leadership. Now we're seeing the shift from a finance focus to a people focus, and m&a. What does that mean? Taking this end state of where you're trying to go what you're trying to achieve? And bring it to that front end of the process? Can executives align around this and stay can that person that's going to be responsible to execute these integration activities to achieve that end state be involved early, to help outline what this go to market is going to look like? What's it going to look like for the customer? What how's that journey going to evolve, because each organization has their unique way to serve the customer. What's that going to look like when these organizations come together? And then as you take that, that outline, and move forward through a diligence process, you want to create a workstream that runs in parallel to your diligence to be able to plan on how you're going to integrate these companies together. And it should be an iterative process that as you learn about the company, or acquiring through a series of diligence, that you can update your integration plan accordingly, as you learn about risk and opportunities. And then I think there's also an element with the company requiring to help them understand your organization, where they're going to fit into it, what it's going to take to make this integration successful. So both teams are aligned on the objectives to make it happen. That's probably the the big premise of where we see happening and changing. I think, for me, what's on top of mine, specifically within that, is that go to market integration. Because each company has a unique way of going to market. And bringing that together, it seems like that's the failed point, we only might allow synergies, we're gonna acquire this company, and you can't just buy a company expecting it to make money and things are gonna be fine and dandy, not in this market. So hyper competitive market, you have to do things to create value on top of that, and that's how you're gonna get that valuation number for a successful exit. So with that, there's obvious cost synergies, if we don't need to CFOs to accounting functions to support functions, we can combine them, likely you're going to eliminate some roles and systems. And that's going to allow you to capture it pretty straightforward. People tend to go right after that. It's the revenue synergies that get really complicated, because your go to market motion is across functions. And getting that alignment, to come together is where things go awry. And that's one of the more difficult parts. And even for myself, I've reached out to some of the best of the best in industry. And they still have a lot of uncertainty that, hey, we're still learning this, we're still trying different things and figuring it out. I think for myself, the big top of the mind area is understanding this go to market integration, really trying to synthesize some learnings, and see what kind of adjustments can be made to capture more value making it more successful.

Ronald Skelton  8:55  
You know, there's entire libraries or sections of libraries on change management. And it's due to the fact that people resist change. So when two companies, one acquires the other, they merge, or they come together in any sense, there's change for the customers. Integration, I can see the go to market strategy. And in the side of that conversation you mentioned, what are the customers expectations, those customers have a built in set of expectations, a way they've been treated, they expect to be treated, the quality of the product, everything else, so I can see and how they're marketed to like what the message is and everything else. So that whole go go to market strategy. Is there a process that you've already, like, you mentioned that you talk to a bunch of people, as anybody kind of got an outline to say, here's how you figure out what the current customer experience is, and know what the expectations from the customers are? Right? And then, you know, how do they align or how do they overlap and where's the gaps? Is there any is there anybody out there doing that?

Kison Patel  9:57  
So I would say it starts with you There's leadership alignment component, right? The leadership of both sides alignment with the goals are because if you don't have that, then you don't have a great start. So that's the primary is the strategies? Are they aligned on it? Do they have some pillars of goals, what they're trying to achieve how they see go to market coming together. So leadership alignment is key messaging comes after that. When you announce an m&a deal, you automatically just created a rift across the board between your internal employees, vendors and your customers with a bunch of uncertainty. Right? That's all you created, as soon as you announced that deal. How do you counter that? is where you got to communicate a lot to add clarification that you can answer a lot of these questions, you know, what does it mean for the employee? Am I going to have a job? What's you know, what's, who's going to pay me what it was? It's gonna affect my benefits? And who am I gonna be reporting to? Right? Then you got your vendors? Like, was it was it? Was it gonna change things in our relationship? And then for the customer as well, you know, how is this going to impact them, they have to have concerns about the way their their service is going to be changed. So the more you can communicate that, I think I've seen a lot too now we look at press releases for m&a, there's a lot more transparency. And what that strategy is, this is where we're usually there's a good reason you do m&a, you don't just buy a company, and especially these days you buy coming by a bad company is probably a bad idea, you're gonna lose a lot of value of money on it, where you build an alignment acquisition against the strategy and what the company is trying to achieve, then there's a good rationale behind it, maybe it's around capabilities, that because we're buying this company is going to add capabilities to our stack that's going to make our offering much better, and allows us to serve our customers better. You know, those are great things. And we're seeing that transparency. So communication is key answer, even delivering bad news is fine, we're yes, we're going to lay off 500 people. But we're also going to create 750 jobs, or maybe we're going to create three, we're going to create a good transition process, we're going to support these team members, through helping them identify other roles in the organization or support them to transition to roles outside of organization. We're not just putting them in a bad spot. Communicate, that's the number number one thing. I think with this too, in terms of other large learnings around the go to market integration. I'm still learning this right. But there's this NPI model. When a large organizations have who are small, you do a product launch and you do it. And it's pretty infrequent activity, when you're larger, it becomes more frequent. And then new product launch runs across so many different functions in your organization that have to be aligned to make it successful. So usually, we'll build this MPI model, a new product introduction. In m&a, there's a model where you can have a modified MPI model for those new products that you're acquiring, you're not going through as much as an organic approach. But when you can acquire a product, you can run it through that same type of process and be able to allow your teams to get in line, the product marketing, the sales team in the training and resources they need to make that successful.

Ronald Skelton  13:24  
So is this a, you know, sometimes there are some problems out there in the world where nobody's got it solved yet? And that's because it's just extremely complicated. And it's not an easy solution. If you Google right now and look for why m&a fails, or why mergers fail, or why acquisitions fail. And you look at all the examples, right? How many times have AT and T bought a company, you know, ended up five years later sold it for pennies on the dollar versus what they paid for it, right? And it's, you know, it's if you look at what's, you know, top reasons why m&a deals fail, almost every time it's integration, right? You know, they, they bought it failed to integrate it in. If you could solve this, or if you could come up with a system that works at, you know, different, it's different, the small to medium sized business versus corporate versus, you know, global enterprises, they're gonna have, you know, a different system and process, but I think the core of it would be the same, right?

Kison Patel  14:19  
It's complex. It's complex to varying degrees. Because how you integrate a company could be slice and dice a different day, different ways. The depth of integration goes in different way. You're doing very light, partial full integration transformation. So there's different ways and then the business you're acquiring, is that close to the core or far from the core. So there's a lot of factors. And when you look at what integration actually is the largest magnitude of change management this organization is going to go through, you're essentially peeling back layer by layer, years and years and years of processes that were created. Did and reattaching it to another organization. That is, it's complex, and it's not something computers can solve. It's not a quantitative exercise to figure out algorithms to do this. It's highly qualitative. At the end of the day, it's people, the people, challenges that you're gonna come across, and those aren't easy to solve.

Ronald Skelton  15:20  
It's interesting, somebody asked me, What did you get out of computers and go into marketing and stuff as like, computers are logical, they're very zero and one, if there's a problem on the computer, it's usually the idiot that programmed it, or the idiot on the side of the keyboard. It's rarely, rarely the, like the computer itself, or the hardware unless there's a hardware design flaw, but I'm saying humans are absolutely intriguing. And what you're dealing with inside of this integration is the entire scope of human psychology, right? resistance to change, fear and uncertainty, doubt, all that stuff comes into play, like, you know, everything from an all the way down to the customers, the employees need to know that there's a potential future, there's an upside at the new company, there's, you know, you know, there's a lot of communication that needs to be done inside of that to create excitement and remove that fear, uncertainty and doubt. I think people try to do that, but do less of it on their on the customer side of it. You know, you see companies all the time that one acquires the other, and they make the big announcement, and but there's nothing else right. You know, my wife worked as one of the trainer, you know, and people over at DirecTV when AT and T bought it. And that's what like, there was an announcement that a AT&T bought 'em, but you know, it just kind of like, looked like it was gonna say the same. Right? The customers didn't see anything different surfer, they kept getting features rolled back, like the 24/7, report, support went away, all this stuff started going away. And next thing I know, AT&T is like, well, this isn't working, I gotta sell it off. So I think that was a failure in communication. I honestly think that, and you've been around this more than I have. So I'm putting this out there to get some feedback is like, are we on the right track is communication is the key, through, you know, end up communication, set expectations live up to those expectations, through all time, every every communication channel you can open, you know, is that one of the factors here that would help solve this problem, or,

Kison Patel  17:15  
Oh, big time, that's huge, is having a good communication strategy. Usually you have a con department you'd work with, for the corporate side. And then you'd want to make sure they're getting inputs from the right stakeholders across that whole timeline of them, going through the process.

Ronald Skelton  17:35  
You know, it looks like it almost be easier nowadays, with all the social media and like, people put their feelings out online constantly. Like with the right tool, with the right tools, I think you can actually judge, customer and client sentiment, they're there, how's the market feeling about you at the current time, and watch those conversations, and communicate online with them, I don't know how many big companies are doing. I know that at a small level, my guys, the guys I work with, they're not doing that very often, they might have a social media manager, but they're not actually actively monitoring, tracking and looking for conversations about them. So

Kison Patel  18:13  
You don't, you don't see that too much. I mean, just corporate social media tends not to be overly sophisticated to begin with,

Ronald Skelton  18:22  
It's like, send a bunch of data out and don't listen to anything they say about this gut feeling I've got from the big guys, like the top corporate guys, is, you know, content content, content content, but not a whole lot on, you know, interacting and listening as to what's being said, you know, on the content, what are the comments like, what are the, you know, you know, what's the, what's the consumer feeling about this, like this change or this thing? And then we talked about if that's the consumer side of it, right? A lot of people are there is that brand loyalty, people are gonna just stick with something until they are so mad and they need to switch. But your vendors and everything, you buy two companies by each other, and their manufacturing are merged together, and they're manufacturing similar items. Those suppliers have to be concerned. You know, there's this the other guy supply he'll I don't have the other guy as a supplier, do they get a better deal? All right. Like, I still think everything, everything here inside of business, and it intrigues me because I think everything in life has to come down with conversations. I often say that everything you have now everything you ever want to have in the future, everything you've ever had in the past, all comes down to the conversations you've either had avoided having or probably should have, like the separate what separates the difference between you and I? And if God forbid, a bad example, because of his recent history, but like Donald Trump, is who we're talking to and what we're talking about, right? I'm talking to small medium businesses about buying, you know, auto mechanic shops and pest control companies and all kinds of stuff. You're talking to corporate guys about, you know, you know, corporate deals and stuff and he's out there trying to build new golf courses and take an you know, and billion dollar transactions. So it all comes down to communication. So where do they start? I mean,

Kison Patel  20:07  
Yeah, I mean, when we think about where things go wrong, it does fall back to communication. We've seen the stories before you sell a company. And then after you sell the company, you watching get destroyed. You know, next, you know, you're looking back and seeing a sinking ship on fire and have a lot of regrets on the transaction. Because it is you especially as a founder, you worked with his team, they're like family, and you want to see them in a good spot. And that's why you almost need to make that part of your exit strategy. is the primary goal, purely the capital? Or is it also to take care of people? You know, that that needs to be part of it? Or leave the the big thing? I don't know how, you know, if you teach it in some ways you can. You can always look online, just find questions that you can ask. But I think that's what it comes down to is really expanding on the questions that you're asking. If you're owning a business, and you get approached by a buyer, a lot of times we by default, have our perspective in what we're looking to get out of the deal. Capital Gain getting that check at closing. You know, what other factors, right? A lot of times you don't get into? What's going to be my role after this deals done? Are they going to want me to stick around for a transition period? Do they not want me around at all? We don't really clarify that? Or if I am, they're going to put a retention model, or maybe they build an urn out into this deal. And now I'm part of this for another two to four years, five years? Who knows? And what is that going to look like? My title is going to be different. I'm not going to be CEO anymore, you know, what's the reporting structure governance going to look like? What kind of autonomy do I have? Because that's probably not going to be as much as I currently have. And we don't really ask those questions. We don't we don't discuss those things. I think there's just other things that you have to shift that framing to the buyers perspective. And really understand, it helps you understand the value of your business better, too. A lot of times we misconstrued with the value of the businesses, it's not you will get an appraisal and here's the value your business absolutely is not the case, the value is based on the buyers perception, the based on what the buyer believes, your company's worth. And it's a different buyer to buyer, you got a PE firm, it's fairly purely based on your financial performance and past performance. Great, they're probably going to construct some kind of multiplier on the formula. And that's where they determine your value. Or if you're dealing with a larger strategic, and all of a sudden, they're calculating all these synergies around cost synergies, how they can take your product and incorporate it into their master massive, massive distribution model and create all this revenue. They're very different view of looking at the value of your business. So it's really important to understand the buyers perspective, how they're looking at your company. And I think it starts there, because you want to understand what's the strategy? What Why are they actually interested in your company? Is that the people? Is it the product? Is it the revenues? Was it the market? What? When you understand that? I think you just keep that same curious mindset and just really asked questions. What have you done this before? Was it your first time doing an acquisition? Okay, is probably elected, it's gonna go wrong here. Hey, you've done this before you. In fact, you've done about five a year for last few years. Great. Can I go talk to some of those other CEOs that have the required to hear their story and experience?

Ronald Skelton  23:57  
You've probably heard about, you might get to know of that letter. You know, many CEOs go, Hey, I love the check I got, I hate my new job.

Kison Patel  24:03  
Yeah, absolutely. And then that might be a sign right there. If they know, I've seen organizations or great acquires, and they're happy to make those reference introductions. But I think that just digging into it like asking how well thought out, okay, great. Here's your strategy. How are you going to do that? How are you actually going to execute? You understand the why you're interested? What it is that you're interested about it? But how are you actually going to do it? How are you going to approach integrating the companies together? What's that gonna look like?

Ronald Skelton  24:33  
You know, what I'm hearing here is there's a, there's a commonality in the space that we operate in, and the people that I work with, operate in and kind of, you know, small to medium enterprises that you know, I'll leave it at that because that's a pretty broad spectrum. Report is key. Right? Those business sellers want to know that the business is in safe pair of hands, I call it before the board right? Once there's a board of directors in place, it becomes a little bit More about numbers and performance and other stuff. If you're if you're buying a business that's still owned by the original founders, or the founders family, and you're dealing with one or two people, usually there's a lot to do with, you know, brand, like loyalty or, you know, legacy, I guess is the word, I'm looking for legacy. How well, you know, safe pair of hands for the customer says Hera powerheads, for the employees. But it sounds like that has to carry on inside of the corporate side of it to that report, knowing who your buyer is what they're wanting to do, you know, that still carries there, even if they've lost sight of it.

Kison Patel  25:39  
Yeah, I agree. Yeah, you know, it is a little bit unique company to company, and like who your stakeholders are, I think that that's another factor of it. Because you could get thrown off, there could be some some surprises there. Because people have different look, begin digging, ask those questions to understand what that entails. And I think there's, there's resources you want to tap into, and I think we're on you're probably familiar, there's a whole ecosystem of experienced folks. And if you can tap into that, even ask other people, especially if you can find people that have done deals in the similar space, I'm probably going to be a lot of value. I mean, the worst thing to do is just rush into things and not have the right consideration the right places, and you make some mistakes, because those are expensive mistakes, when it comes to m&a, you can't take it back.

Ronald Skelton  26:39  
So in that in the space that you operate in, you know, there's like, there's kind of a standard, everybody, everybody in this space knows that, like prior to 1.5 million. And the in most industries, every industry is a little different. But in most segments out there, before you hit the 1.5 million in EBIT, ah, you're probably getting a one to 3x Unless it's a strategic purchase, you mentioned that strategic purchase earlier. And they they the valuation is different because of the synergies and the all that can we talk about like the valuation model? And does the integration or the how how well they believe it can be integrated in, you know, that, that that come into that into that valuation model.

Kison Patel  27:27  
I mean, this part of it, it's almost part of whether you should do the deal or not, if you did a great deal. You there's a big emphasis, we've seen shift in the industry on the people side. With that comes understanding the culture elements of the organizations, because we seen some of these fabled deals that Daimler Chrysler, you know, German company buying the iconic American manufacturer and as a lot of current cultural risks, and why that was a difficult time for the those employees of the companies. And I think that's, that's a big risk factor. If you can buy a company, all of a sudden, it just the culture is don't mesh at all. It doesn't work out. So I think, emphasizing, that becomes a bigger thing earlier, if you can get an understanding. Sometime it's between executives, talking about values. And what does that actually mean? We start talking about values, you expand into these things that help you understand cultures of the organization, help you understand the leadership approaches, it was one organization very top down versus bottoms up, that's not going to blend well together, helps you understand decision making approaches, problem solving. I think that that's a big factor that's really becoming more important when you when you do think about those elements of getting people involved to actually make integration successful. And so that I think for the buyer, that's a big part that they're looking at, then if you get in depending on the deal, right? What are we actually buying? What are they putting together? If it's specific things around technology, you may have some technical views on how this product can integrate with our stack and things of that sort. Yeah, I mean, I think there is a good amount of consideration because you don't want to buy a company where you plan to integrate them. You can't integrate them. That creates problem or the opposite. You think you're not gonna integrate them that you do need to integrate them.

Ronald Skelton  29:43  
Is there a is there a play here? We talked to exit advisors all the time on this show, and one of the things I'll say is when business owners come to them and they want a certain number, they recommend that they work for the next couple of years, two to three years to get their books right get the right revenue, do all these different steps to maximize that valuation? I honestly think there's they're missing a piece if they're not looking at their culture, right? If they look at, like, where's my culture now? And the environment now and what the customers expectations now are? And who are my maybe top five acquisitions targets people, the top five to 10 people that would would consider buying me? And what is their cultural life? And where are the gaps, I think there's something that you could play, if you're going to spend two to three years prepping yourself for maximum valuation, and you don't deal with your corporate culture, I think you're making a big mistake, I just seen a deal bust. In the due diligence process, we were I was just, I was just kind of advising jumping in on certain conversations and helping the guy, you know, through private channels. And the reason he backed out of the entire deal was after talking to some of the other key executives, the CEO manages by screaming, stomping his feet and throwing a fit, right, I mean, this guy is kind of very brass. And but that's the culture people there expect to be yelled at, when they don't get something done. And the new buyer is like, I don't know how to manage like the, the CEO swears that the guys won't do it if he doesn't do it. And I was like, that's because in response to that, my my friend was in this deal. This is, it's just like kids, if you train them, if you yell at your kids every day, they won't do anything until they're yelled at. Right. If your employees expect that they're waiting for it, they're kind of expected that that's the people, the people that you hired, that stuck around and tolerated that esta culture you created, right. So I think culture is critical here. I think that and the, the environment, I think you can shape that towards those buyers, you know, as we're doing know, we're about to kick off another roll up, we haven't, are tossing two different ideas up is somewhat industry. But the number one thing we got to look at is who are our top 10? You know, people would buy us and what are their cultures? Like? What are their environments are? So as we buy these different companies? How do we adapt them, shaped them and kind of fit that mold? Right? We do that on it and all this other stuff. If we know, all the guys in this space, use agile and they use, you know, God forbid QuickBooks or whatever other accounting system as we're doing it integrations, we moved to those systems, because that's the top 10 people that might buy us, we're gonna have to change it anyway, some of some percentage of the people that we're working with, aren't that we're buying or acquiring or rolling in, use that, right? So why not pick something that's most aligned with our potential suitors? I think the culture has to be done there too. Well, what's your-

Kison Patel  32:35  
You know, if I, if I was gonna sell a company in two to three years, there's a little things like cleaning up apps and books and stuff, I would start courting some of those potential acquires you a lot of these large corporations will have a department called corporate development that's responsible for inorganic growth activities, which majority entails acquisitions. And that's our job is to know the market and know when opportunities may arise for their organization. But to even make that introduction, saying, hey, you know, I see what you got your companies there and wanted you to just know about us. A lot of times, you can even just talk about informal, wanting to know about what we do, but even explore potential partnerships, I got that that might be a good place to start. But at least get those early conversations to learn about there. And they do corporative knows it's not a short tale process to acquire a company that could be long, too. I talked to one that spent 10 years to you know, quote, a company to finally acquire them. And I've heard even longer, but you know, so they know, and I've got, we've got it. And even our space, I got the corporate of folks of potential companies that require us they check in once a year. We want to know how we're growing. What's that looking like? What's shaping and you know, the timings right, yeah, we may make something happen. So if I was at, I would start courting, you know, and then there's a different model of selling, right, you either go very strategic, you take this approach. You know, at some point, it's nice to get an advisor that's experienced with this. If you get to a point, when you want to be very proactive and create a competitive auction process, then you could go through a selection process to hire an investment bank to help drive that kind of process. But if you really want to spend the time to understand culture, in that real how these organizations were fit, especially if you're prioritizing and taking care of your people for long term session, then it makes sense to do that. If it's just objectively trying to get the highest price then hire the best bank to do that. You know, it kind of depends on your priorities, but if I'm playing the long game, I would start courting some of these buyers earlier.

Ronald Skelton  34:57  
You know, it's done more than, than me Most people want to publicize, I worked in the tech industry before I came to Oklahoma got into real estate and doing what I'm doing now, in the mergers and acquisition space, one of the tech companies that I worked for, we switch CEOs and the CEO that came on, it was eventually he was an executive from the company that eventually bought us. And hindsight shows that they invested in the company, we needed a new CEO, like they invested significantly in our technology, it was one of our core seed investors, right? We needed a new CEO, one of their executives stepped down came over, implied got the job as our CEO, and within a year and a half, you know, they bought they bought that company, I had left to go get my MBA at that point, but they bought the company. And then that, that gentleman, and I won't say names here, but that gentleman ended up being the CEO of the big huge tech company that's been around for dozens and dozens of years. Right, he's since then stepped down and owns a venture capital company now. But the point is, is that slow tail integration, that was I think, that was brilliant in the fact that company was kind of pre integrated in, right, the CEO for over a year, year and a half was from that culture grew up in that culture that, you know, the, the acquirer, you know, had their eyes on us, and we needed somebody they just basically sent somebody over is what it looks like, to me, maybe that's not true. Maybe you really quit came became the CEO, and then they wanted you back. So they bought the company for $370 million dollars, but you know, 365, or whatever it was, but, uh, I honestly think it's that a lot more than people think, is that slower integration, that's like, okay, we're probably going to sell to these guys. We need we need this role. They have somebody, let's bring them in and let them run it, change the culture change the, you know, systems processes, make it integrate in and then, you know, maybe they'll offer a better offer. Is, was that just a one offers that happened morning that I that I've seen?

Kison Patel  37:00  
Say that one more time, like

Ronald Skelton  37:02  
I asked if that, like, do you? Have you seen that before? I guess is a better question. Have you seen that for before where, like big tech company or big, you know, big company has one of their executives running a company that they intend on acquiring within a year or two?

Kison Patel  37:17  
Yeah, I mean, there's, there's the session variable in that in terms of a lot of times you typically want the current executives to stick around, usually two years is sort of a goal to create a retention package around because that way, it's relatively smoother. But then you have times when there is more imminent, and they'll find somebody in a business unit, or that's the goal is they're going to integrate it into as more of an add on acquisition into an existing units will relieve the executive and have one of their current leaders take over.

Ronald Skelton  37:49  
Yeah, the original founder of this, he wasn't even there. When I get there. I've met him a few times, he's jumped out on a few of my networking things that I do for mergers and acquisitions. Now, he too, is a VC now, but I'm a venture capitalist. But so in that particular case, the owner, the guy who the founder, created, it raised the money, he'd already stepped aside and had another company, you know, had other CEOs running it. He was working on other projects. He's a serial, you know, he created, you know, multiple companies, tech companies. And so I just think maybe that's a one off, but I thought it was brilliant after it's from hindsight, now that I'm in this space, I seen it is absolutely brilliant. And

Kison Patel  38:30  
We see some fun deals like that people exit and then come back, buy the company back. You know, I think there's this, I had a good interview with Tim Wentworth, he was the CEO of Express Scripts. And I liked how he framed that. A lot of times people think after the deal is done for a co executive, it's kind of like career end, or they gotta move on. But for him, he's sold businesses, where it was an opportunity for him to further grow his career, or he ended up becoming a CEO of even a bigger unit. So I think that's kind of an interesting view, too, is when you think about selling your company, it may not be the end of the road and of the story, but it could actually be beginning of a new chapter and open up more opportunities for you to continue growing. I don't think that's the mind frame. Most of the time, when we look at doing these m&a transactions.

Ronald Skelton  39:25  
You know, I've started that I've never had either one of those guys on the show, I'm gonna reach out to both of them and say, and quite frankly, if, if they agreed to it, when we get done with your show, I'm going to recommend their talk to you too, because they're at your space now. Right? Like, I'd love to talk to them, learn from them and stuff like that. But I also give a third party edification to you and what you do in the m&a Science Podcast, because I think that they would be great. And I'll just say it, it's Enrique Salem from Symantec, who now has a VC firm, and Sunil Paul, who had created, he created Brightmail. And then guess what I'm gonna reach out to them see if they want to be on the show. And then if they do, we'll see what we can do about getting them, getting them your way to just I think it would be great guest. They've bought and sold a few companies since then their investors think something might be might be wrong with them. 99% Sure, Sunil Paul was a seed investor are one of the early investors to LinkedIn. So they've been around for a while. But, uh, yeah, so I'm just curious of the space and how it translates down to the small to medium enterprise market, a lot of times our guys are just trying to get a deal done. And, and I think there's some foresight to be to be had by looking at it and going, how do I grow this into what fits in that mid market space, right to the next level of, if you talk to anybody in the small to medium, their objective, their goal is to cross that line and get the higher multiple, right. You know, as well as I do, there's tears, you know, you operate under certain level of revenue, your tears are your multiple, or your evaluation is going to be one level. And if you get above that, you start attracting the big corporate guys, you started attracting, you know, strategic purchasers and stuff, and you didn't get, you know, a multiple, that's a multiple of the last one, right? So you can get 123 Extra, most businesses below this, you start getting 567 1011 12 I think there's some other industries out there doing 18 to 20x, not unheard of, on EBITDA. But, uh, I think there's a, I think there's something missing there in our space, I think people are not looking at that corporate culture, and how to develop one that's just easier to leave, if they're really going to keep it for five to 10 years and, or three to five years, or whatever their goals and timeline is, and then sell it to a bigger player. I think they're missing a step if they don't.

Kison Patel  41:55  
Understanding how the buyer thinks it goes back to that. Because if you can go out and talk to the private equity folks, your corporate strategics talk to him, they're pretty candid. They're like, Hey, this is why we wouldn't be interested in you now. But maybe down the road. And just ask them, How do you look? We do it for our company. How do you look at valuing our company, I reached out to the court, the folks that look at businesses like ours, and I asked him how Where do you see the market right now? I'm just curious. And we're not looking to sell right now. I'm having a fun ride. But I'm curious to get a sense of what you're looking at.

Ronald Skelton  42:32  
We did that. We did that on our last project, our CEO, was reaching out to the big Peony firms and some of the potential strategic guys and said, Hey, we're building this thing. But if we were building it for you, what would you want us to build? And we took notes on that. And we actually started applying that. And so I think that there's, I think there's a lot of synergies all the way up the food chain, right, whether you're buying and I think it kind of drops off of your mind, the local laundry mod mat or the, you know, some, I think if you're below seven figures, if you're buying something small, you're probably going to be an owner operator for a while. But if you're if you're starting to get into the play, where you're buying these companies with the intent to grow them, and secure them, and you know, hand them over to a peony firm, or hand them over to, you know, a billion dollar enterprise. You know, there's some conversations and stuff that needs to be had along the way as what do I need to build? What do I need to design right? Inside of this corporate, not only just go market strategy, the corporate culture, customer expectations, all that stuff.

Kison Patel  43:40  
The learning journey.

Ronald Skelton  43:41  
All right, so we're about 40 minutes into this, I want to make a quick stop here and just make sure people know how to get a hold of you. Right. So the double check that for me, it's a put your LinkedIn profile. Cool. So for everybody that's listening, it's K-I-S-O-N-P-A-T-E-L. You can look him up on LinkedIn. And it's a standard linkedin.com/in and then his name spelt out K-I-S-O-N-P-A-T-E-L. K-I-S-O-N-P-A-T-E-L. That'll be in the show notes that'll be in the description of the show. And you'll be able to reach out to him as any other way if you'd like people to contact you as LinkedIn your preferred

Kison Patel  44:28  
Yeah, I'm I'm mainly on there. I'm not a lot of other social media.

Ronald Skelton  44:32  
Cool. Let's talk about what's coming. What's what's happening in your world right now. I mean, we've got a we got about 1015 minutes here left. What's coming up on the m&a Science Podcast what's coming up in spite of the content and of course as you guys are putting together anything cool coming out,

Kison Patel  44:51  
oh, boy. So it's a lot to keep up with when you have different business lines. That's where it where and that's where I'm like, no, no new business lines. This is keep building what we're doing. Uh, you know, for us, hirings, brutal. So we're, for actively hiring across, we've never in our company history have been hiring across every function. And we're 35 people, and we have 13 open roles right now. So that's a big challenge that we're working across, I think the main product line that we have is dealroom, dotnet. And that that one's doing well, it's a lot that we're investing into it. Now, it's sort of at a good place. So we're really excited about just seeing the direction it shapes because it's just, you know, we talk a lot about AI and things like that. And you're like, Alright, how practical is this stuff. I think that industry in the next five years, you're gonna see a lot of tools evolve that be, you know, you see it now in the marketing and sales space, we actually do use some of this technology, and it looks really cool. And I think that's going to start moving over into finance. So I'm excited in that particular area on the tech side, I think, for us was unique. And then our positioning is that we do all these interviews, we identify patterns from them to find proven techniques, and we aggregate it, document it, published books and handbooks and all kinds of resources. I think that's starting to really catch on, you know, because our industry has been lacking that m&a hasn't had a lot of standardization. And I think people are really realizing objectively everybody wants to make m&a successful, that they're tough, they're complex, there are a lot of resources involved in making these deals happen. So now we're starting to see a shift there as well, where companies are being more proactive about adopting the practices that allow them to execute better.

Ronald Skelton  46:50  
It's interesting, as I've taken few courses and stuff, you know, we've gotten more college degrees than the average full should have. But when I decided to do something new, I was like, I'm not going back to college. For this, I don't need another MBA. But there's are people out there that know this space. So kinda like in the real estate space, I went out and hired a few of them. And they're reasonable. I think the top courses are on 20 grand for the year, you guys have some really cool courses of courses, it looks like they're geared more towards that corporate structure and stuff. But none of the ones that are at the level below, like this small to medium sized businesses that I've seen, have a clear cut deal room type of solution. And be honest, your your price points kind of outside of the scope of most of these guys 1000 bucks a month as they're starting right.

Kison Patel  47:36  
It depends, you know, for our software solutions, they do range quite a bit. I mean, we can do some pretty expensive stuff for larger companies. But we do have our academy program, it's like 150 bucks a month. So somebody is interested. I would say for us to we're big advocates of the diversity in our industry, we do have a scholarship program that enables two years of access through all best in class training templates. So if anybody women, people of diverse backgrounds, there's a program they can apply for on our website to

Ronald Skelton  48:13  
Cool. So I'm a disabled vet with an American Indian car, does that count? Obviously, the data I would gladly pay. So, you know, one of the things that I did, and you know, just I've seen the deal room, and I thought, well, you know what, and and I've seen I've been through some of the courses, and there's no clear, clear, you know, do this, then do that. This is where due diligence clicked down. So I actually created one inside of my asana and it's, I've got a business acquisitions, workflow, right, and generate the leads, you know, build report, you know, start asking questions about financials, like all the way through there. Okay, now it's time to look at the cultural I actually have cultural on their cultural, legal financial due diligence, you know, submit their letters of art, you know, I have a step by step through there. And I'm, you know, from looking at your website, you know, it's like, I built something that was crudely very crudely kind of what you guys really built out on on the bigger scale. So but it's missing, it's, I think it's really missing inside of the, that that small business acquisition space. You know, I hear people coming out of these courses going, Okay, but what do I do next? I was like, Well, you just grabbed the reins. And Ron, I guess it's like, you know.

Kison Patel  49:34  
Hire a good attorney, like, start there.

Ronald Skelton  49:39  
So, um, so one of the questions I love to ask is, if somebody's just not you just mentioned your corporate sponsorship and that type of stuff. If somebody's just getting started out in this space, and they want to get into mergers and acquisitions, maybe they're in college, maybe they're not, but they just this is the space that kind of intrigues them. What's your advice to that? To those individuals like where do they start?

Kison Patel  50:02  
Oh, well, you know, there's more than just investment banking roles, I feel like you could always find like a little boutique bank that may not have such high pedigree requirements. But then there's a lot of these roles outside of that. There's the corporate side, there's private equity. There's a lot on the backend, we talked about integration a lot in this interview, that there's more of those project management skills are required for the that type of activity. So I would expand the scope and just look at these different areas, a lot of the consulting consultants are hungry to hire and have entry level roles to get into the legal side, there's, yeah, there's a lot of different little niche providers that serve into the m&a space. But I would widen the scope and just see what kind of opportunities are in there, because once you can get in, then it becomes a lot easier to move around.

Ronald Skelton  50:54  
That's awesome. So pick a spot get in and start getting some experience is what I heard. Did I misinterpret that at all?

Kison Patel  51:02  
No, that's absolutely.

Ronald Skelton  51:04  
Cool. And then the other one I would say is, you know, with everything going on in the m&a space, all the opportunity that's out there in front of you know, I mean, so many of these businesses, they, they just must change hands. And that's at all levels, right? You know, they just in the next 10 to 15 years, there's just a huge opportunity in this space, what excites you inside of m&a? Like what are you really excited as to what's happening in the space?

Kison Patel  51:31  
This space is just a massive opportunity to make improvements, this thing is really behind times and a lot of ways. So for us, it's fun, it's just everywhere you go, there's a lot of opportunities. And I could foresee myself spending a good significant amount of time, just continuing to identify areas that we can build solutions go to market with various products. So that's what excites me about the space. It's just wide open for disruptions, improvements, enhancements, all kinds of things are there. And I don't think it's going away. When we look at what's driving m&a today. A, it's not just the typical things like we're just trying to grow revenue market share, there's a lot of companies that their biggest threats are these little up and coming startups that can come and totally disrupt their business. So for them, when you think of these large, you know, and remember the exact stats of hey, 20 years ago, here's the fortune 500 companies, what percentage exists today. But nobody wants to go out. Nobody wants to be the blockbuster, you know, you know, Kodak type of company. So that's where these acquisitions are driving that they you essentially need to disrupt yourself. And what better way to do it than through an acquisition, you know, can you but it's hard. It's really, really hard, those transformative acquisitions, where you're buying a company to really disrupt your business lines. It's a way to stay relevant. And when I see that continuing, and you look at the good acquires, that's what they're doing. They're constantly disrupting their business lines, adding on the capabilities really trying to stay relevant as possible. And they're the ones they're going to come out ahead.

Ronald Skelton  53:18  
I got it. So we're at the top of the hour, and I hate we could go on and you and I could go on for quite a while here. I really enjoy this conversation and stuff. Is there any like what's one big takeaway, if you could leave the audience with one like a dolly? Remember this one thing from this conversation? What would you want that to be?

Kison Patel  53:36  
Beat them. You know, a lot, a lot of times we enter our conversations with people interactions with a lot of things in our mind, of where we want to take the conversation, we're points we want to get out there. If you can. Get rid of all of that if you can get to this point where you can assume what you know is wrong or that you know, nothing and intently Listen, so that you can understand the other person's thinking. Understand, how they feel, why they feel that way, what their goals are, what their challenges are, and be able to align yourself around those goals and challenges. You'll find yourself in a better spot. When you take a listen first, then people tend to reciprocate and they'll listen to you. And you end up progressing things. So a lot better and faster. So beat them.

Ronald Skelton  54:31  
Well, I really appreciate you being on the show. And I honestly, I'm looking forward to watching you and see what you do. Because if you can solve that integration issue and actually create a system inside of dealroom or inside of one of your other tools out there that helps companies even improve a slight bit of integration and become more successful in that. I think it'd be parked in your jet right beside the lawn muscles and terminate and tormenting companies like Twitter like he's doing right. I just think there's something There is a huge problem to solve. And if anybody's, you know, got the tools and the team around to do it, I think you've got a better shot than most. So, I appreciate having you on the show. I'm looking forward to seeing what you do. And maybe maybe in a year or so we can actually speak back or maybe shorter, I'm gonna swing back around and see how that's going and what you guys got and, and, you know, see what impact is going on inside of that integration space. So, thank you.

Kison Patel  55:24  
Hey, thanks for the kind words, enjoy the conversation, Ron.

Ronald Skelton  55:29  
I'm gonna end the show now. Thank you guys, everybody for watching. And we're going to end this, this is the show. Have a great day. Hang out just for a second. Hey, it's your host, Ronald Skelton. I want to thank you personally for watching the show today and invite you to call our new hotline 918-641-4150 That's 918-641-4150 Call us and tell us about our show, ask questions, suggested guests or even tell me about a business you have for sale and we'll reach back out to you again that number is 918-641-4150 call our hotline leave us some information. Thank you, the investors and entrepreneurs professional mastermind. The investors and entrepreneurs professional mastermind combines that or traditional peer to peer mastermind introduced first in Napoleon Hill's famous book Thinking Grow Rich, with accountability partnering, where your peers help you ensure that you set goals take action and get results. If you want to scale both hash roadblocks and achieve success faster than you might think it's possible, I suggest you take a visit over to tiepm.com That's T i e. P m.com. And check out the investors and entrepreneurs professional mastermind