Second installment of Paul Giannamore's M&A Masterclass series, covering the sale of Nomor, a Nordic residential and commercial services company. It walks through the deal lifecycle—pre-sale planning, valuation, choosing a sale process, introducing competition via a Dutch Auction, initial offers, management meetings, and final negotiations—while examining the psychology of selling: structuring a competitive sale process, managing buyer expectations, countering a buyer's "shutdown move," and using psychological levers to maximize price. Timestamps cover Introduction; The Asset; The Hunt; The Plan; Choice of Process; Introducing Competition; Initial Offers; Management Meetings; Broad Process; The Shutdown Move; Judgment; and Closing Thoughts. Intended for business owners considering a sale and M&A professionals. # Channel Presentation Observations: "The Psychology Behind Selling a Business: A Case Study | M&A Masterclass" ## Creator Self-Identification (Explicit Claims) - **Stated profession and experience:** The presenter identifies himself directly in the transcript: > "I'm Paul jamore [Jammore], I'm an investment banker and I negotiate for a living" - **Claimed tenure:** He references "my 20 plus years of doing this" when describing M&A deal planning. - **Role positioning:** He repeatedly frames himself as a sell-side advisor ("we're the sell side we're setting the process") and references working with clients and a team ("exactly what I advise everyone on my team to do"). ## Claimed Series and Format Scope - **Part of a multi-part educational series:** The video is explicitly presented as **Part Two** of a sequence: > "today we're going to take the concepts that we discussed in part one of this series and we're going to apply it to a real world m&a transaction" - **Stated pedagogical structure:** The video promises to cover pre-sale planning, choice and set of process, and using "Leverage information judgment to gain an advantage in a formal [sealed bid] process." - **Cross-referencing behavior:** The presenter directs viewers to Part One "on the link below" and states "we'll be building on this series." ## Intended Audience (Observable Address) The closing remarks explicitly segment the audience into three groups: - **M&A advisors:** "for you m&a advisers out there I hope you learned a little something to help you tighten your game" - **Business sellers / potential clients:** "and for you sellers we love to kill it for our clients in fact we work with many of our clients years in advance of an ultimate sale" - **General viewers:** "don't hesitate to reach out to me on the contact form below or join me on LinkedIn" Throughout the transcript, the presenter alternates between **adviser-directed advice** ("as an adviser you really need to remain cool calm and collected") and **seller-directed coaching** ("you as a seller need to be an active participant in your own process"). ## Claimed Content Scope - **Case-study methodology:** The video centers on a single real transaction — the 2019 sale of "No More AB," a Nordic residential and commercial services business owned by management and Norvestor (a Norwegian private equity firm), ultimately sold to **ServiceMaster** at 1.93 billion SEK via a Dutch auction. - **Self-claimed credential for the case:** The presenter states the transaction "was nominated and ultimately became the finalist for European transaction of the Year back in 2019" and that he later "got to sell that business again." - **Topics demonstrated:** sell-side M&A mechanics, valuation ranges, CIM preparation, acquisition universe construction, sealed-bid/English/Dutch auction design, the investment principle, incrementalism, process control, and negotiation psychology. ## Observable Presentation Patterns - **First-person deal narrative:** The entire lesson is delivered as a memoir-style walkthrough ("5 years ago in London I woke up to this email..."), including quoted emails, internal deliberations, and an emotional arc (frustration, "I was pissed," resolution). - **Analogy-heavy teaching style:** Concepts are illustrated via accessible analogies — Sotheby's Picasso auctions, hunting vs. fishing, a doctor/chemo second-opinion analogy, and the Dutch flower market (2 million flowers sold every morning). - **War/military framing:** References to "the fog of War," "no plan survives contact with the Enemy," and Sun Tzu ("it's the cool detached Warrior who wins not the hothead"). - **Candid, informal register:** The transcript includes colloquial and profane language ("I don't give two shits I'm out of here"), signaling an unscripted, conversational delivery style. - **Audience-engagement calls to action:** Explicit requests to subscribe, connect on LinkedIn, use a contact form, and watch the prior video. ## Claims vs. Demonstrated — Summary | Type | Evidence | |---|---| | **Creator claim:** investment banker who "negotiates for a living" | Explicit self-statement in transcript | | **Creator claim:** 20+ years of experience | "in my 20 plus years of doing this" | | **Creator claim:** award-finalist transaction | European Transaction of the Year finalist, 2019 | | **Demonstrated:** deep sell-side M&A procedural detail | Full walkthrough of IOIs, bid rounds, management meetings, Dutch auction | | **Demonstrated:** dual-audience address (advisors + sellers) | Segmented closing remarks; alternating second-person coaching | | **Demonstrated:** series continuity and lead-generation intent | Links to Part One, subscribe prompt, contact form / LinkedIn invitations | # Delivery Observation: "The Psychology Behind Selling a Business: A Case Study | M&A Masterclass" ## Overall Delivery Style The speaker (Paul, an investment banker) delivers a **first-person narrative case study** structured chronologically, moving from a dramatic cold open through pre-sale planning, process design, bidding rounds, and resolution. The tone is conversational and experienced-practitioner, blending storytelling with explicit teaching asides. ## Recurring Phrases and Verbal Habits - **"At the end of the day"** — used repeatedly as a transition and emphasis marker: - > "at the end of the day an acquisition is not just a financial transaction" - > "but at the end of the day go into it with a blank slate" - > "at the end of the day the Market's going to set this price" - > "at the end of the day as you move this long the price should be going up" - **"Lean into process"** — a signature catchphrase reinforcing his core doctrine: - > "you want to lean into process as much as you can" - > "every chance I get I try to lean into process as opposed to directly negotiate" - > "I'm going to lean into process I'm going to run this right" - **"You know"** — frequent conversational filler, especially before analogies or generalizations (appears dozens of times, e.g., > "you know a fisherman baits a hook throws at the water and waits right"). - **"Quite frankly"** — used for candid asides: - > "quite frankly that's okay" - > "quite frankly they're testing the water" - **"Right?"** — tag question used to check shared understanding with the listener (e.g., > "companies actually buy companies for Unique resources and capabilities... so I really want to understand the asset... right?"). - **"Time money and effort"** — a fixed triad repeated when describing buyer investment: - > "they don't want to spend time money and effort attempting to bid" - > "you want the buyers investing time money and effort each step of the way" - > "they invested a ton of time... hundreds of thousands of dollars in legal fees" ## Teaching Habits and Structural Patterns - **Cold open / in-media-res hook:** The video opens with the crisis email before introducing himself: - > "5 years ago in London I woke up to this email Paul bad news our highest bidder has simply reconfirmed its bit" This creates a narrative question resolved only near the end (the Dutch auction). - **Self-introduction after the hook:** Standard course-style credentialing: - > "I'm Paul jamore I'm an investment banker and I negotiate for a living" - **Extended analogies to explain M&A mechanics:** Repeatedly borrows from outside domains: - **Fishing vs. hunting:** > "it's very important that you think about it with the mindset of a hunter rather than a fisherman" - **Art auction:** > "let's say sou bees is going to auction off the Picasso" - **Medical diagnosis:** > "it's like if you were to get an unfortunate diagnosis... are you really just going to sit back and say sure doc" - **Marathon:** > "it's a kind to and Marathon right... once that finish line is in sight and these guys take off" - **Dutch flower market:** > "how do you sell flowers in the Netherlands" - **Rhetorical questions to the audience:** Frequent direct address: - > "what do you think is going to perform better for the seller right" - > "how do we do pre-sale planning how do we choose and set process" - > "now what the heck are we going to do" - **Numbered/listed reasoning:** Enumerates causes explicitly: - > "because number one you might scare that buyer off... and number two one wrong move and you've got a busted auction" - **Hypothetical scenario-building:** Uses "let's assume" and "let me give you an example" framing: - > "let's assume for a second that no more had only one potential buyer in the world" - **Named-concept teaching:** Labels psychological principles as portable concepts — the **"investment principle"** and **"incrementalism"** — each introduced, explained, then re-invoked later ("incrementalism and investment"). - **Anecdotal cautionary tale with humor:** The convenience-store buyer story: - > "he would like to buy this business for his son and I know he's got a lot of money... gets his Cofe the convenient store runs into a billionaire no" ## Tone and Register - **Blunt, occasionally profane informality** for emphasis: - > "I don't give two shits I'm out of here" - > "what's another 5 million suck right" - > "sellers get pissed" - > "we'll just kick them in the teeth" - **Colloquial intensifiers and asides** throughout: "asinine ridiculous," "lowsy offer," " Stellar." - **Self-deprecating/honest admissions** of emotion that he then frames as things to control: - > "I was pissed because not only did we not hit the 1.9 billion" - > "it's the cool detached Warrior who wins not the hotthead" ## Authority-Building Moves - **Experience claims:** > "in my 20 plus years of doing this I don't think I've I've ever had anything go to plan" - **Named frameworks and citations:** References **Sun Tzu** (> "I do hearken back to sunu") and military metaphors ("fog of War," "no plan survives contact with the Enemy"). - **Concrete numbers as evidence:** Frequent specific figures (1.8–2.1 billion SEK, 50–60 buyers, 10 strategics, "20 times EIT") giving the case study verisimilitude. - **Outcome validation:** Closes with credentials of the deal itself: > "nominated and ultimately became the finalist for European transaction of the Year back in 2019" ## Closing Patterns Ends with a multi-part call to action typical of a series format: - > "don't hesitate to reach out to me on the contact form below or join me on LinkedIn... I invite you to subscribe" - Cross-references prior and future episodes: > "for those of you who have not watched the first part of this series you can watch it on the link below" ## Stability vs. Isolated Moments - **Stable patterns (well-supported by repetition):** "at the end of the day," "lean into process," analogy-based teaching, rhetorical questions, blunt register, triadic "time money and effort." - **Isolated moments (uncertain as habits):** Profanity ("two shits") and the "kick them in the teeth" phrasing appear once each and may not characterize his delivery generally; the Sun Tzu citation appears once. The lecture-style sign-off and subscribe CTA can't be confirmed as habitual without other videos in the series. # Position Record: "The Psychology Behind Selling a Business: A Case Study | M&A Masterclass" ## Speaker - **Paul Jiamore** (transcript spelling "Paul jamore"): self-identified investment banker who "negotiates for a living." All positions below are his. ## Framing and Purpose - Applies concepts from "part one" of his series to a real-world M&A transaction (No More AB, a Nordic residential/commercial services business based in Stockholm, owned by management and Norwegian PE firm NorVestor). - Focus: "the psychology and the mechanics of an m&a transaction," from first client discussions to resolving the shutdown-move dilemma by the highest bidder. ## Case Facts as Stated - Fall 2018: meeting with CEO; board decided by early 2019 to run a formal process. - Initial valuation: "1.8 to 1.9 billion SEK, or 200 million USD"; aspirational target ~**2.1 billion SEK** ("North Star"). - Buyer universe: ~6–10 strategics, ~50 PE firms → **50–60 total potential acquirers**. - Indications of interest clustered at **1.3–1.4 billion SEK**. - A preemptive bid came in at **1.7 billion SEK**; client rejected it, demanding "north of two billion" for a process-ending offer. - After management meetings, bids clustered **1.75–1.8 billion SEK**; by round five/six: one at 1.7, two at 1.8, highest at **1.85 billion SEK**. - Final outcome: **Dutch auction**, first approached at 2.1 billion SEK descending; deal closed at **1.93 billion SEK** with **ServiceMaster**, the bidder who had previously stood pat. - The transaction was "nominated and ultimately became the finalist for European Transaction of the Year" in 2019; he later sold a portion of the business again after the Renil/Terx emergence (transcript garbled). ## Key Positions and Reasoning ### Formal process vs. direct negotiation - Sellers should **run a formal process**; buyers should "do everything in your power to avoid a formal process." - With only one buyer, auctions are extremely risky — you may scare them off or bust the auction; direct cross-the-table negotiation may serve better. Two to six-plus buyers justify auction-like processes. ### Hunter vs. fisherman mindset - Selling a differentiated middle-market asset by passive listing ("fisherman") is "typically a very bad way to do it." Actively research and target the buyer pool ("hunter"). - Sotheby's/Picasso analogy: 500 well-capitalized art buyers outperform 500 random people off the street. ### Understanding the asset and buyers - Companies "buy companies for unique resources and capabilities," not just financials — so understand scarcity, scale, geography, resources. - Advisors should go in with a "blank slate" on client-suggested buyers; he recounts a client proposing the convenience-store owner as a buyer for a $100M tech business. - Sellers should actively think about which acquirers could extract synergies or face defensive pressure — analogized to being an **active participant in personal medical care** ("second opinion," reading journals). ### There is no objective price - "There's no objective price for a business it is subjective." Price is set by the market, narrative, process, and leverage; the job is done at "full price discovery" where "we can't [extract] one more penny." ### Planning - "No plan survives contact with the enemy" — he has never had an M&A deal go to plan, but planning forces thinking "three or four steps ahead" and prevents emotional action in "the fog of war." ### Sealed bid auction mechanics - Confidentiality rules out open-outcry (English) auctions except in 363 bankruptcy sales; a **sealed bid** format keeps participants unaware of each other. - Start with **indicative bids / indications of interest**, requiring minimal buyer work to keep the funnel wide (goal: 10–20 IOIs). - Initial offers tend to be low — buyers are "testing the water" — and sellers "get pissed," which he says is misplaced frustration. ### Investment principle - People don't value concessions that come quickly; buyers who "roll over too quickly" signal more money is available. - The more buyers invest (time, travel to Stockholm, legal/diligence spend, board involvement), the harder it is for them to walk away — some are reluctant to bid without sunk investment. ### Incrementalism - Avoid pure positional bargaining (which "nine times out of ten" ends at the midpoint); instead, use process rules to extract small incremental bid raises — psychologically, going from 1.8 to 1.9 billion feels smaller than bridging 1.3 to 1.9. ### Process setting and ambiguity - Sell-side controls process; "every action you take in an auction process... reveals information." - Balance needed: buyers must know roughly when the process ends (the "finish line," like marathon sprinters) or they hold back reserve prices; but full transparency on round count invites gaming. - Negotiate price/structure and purchase agreement terms **simultaneously** before exclusivity, since exclusivity destroys leverage. ### The ServiceMaster dilemma (contradiction preserved) - ServiceMaster, lowest of four remaining bidders, stood pat rather than raising before management meetings. - Client said they should be **booted** for "bad behavior" (rewarding a reconfirmed bid signals weak competition). - Jiamore chose to keep them, reasoning he had "more to lose by booting them out" (losing 25% of the bidding pool), while acknowledging the signal cost: "I'm not going to adhere to my own process rules." He noted this is "not always a decision I'll make" — fact-specific judgment. ServiceMaster ultimately won at 1.93 billion SEK. ### The shutdown move and Dutch auction - Highest bidder (1.85 billion SEK) reconfirmed with a 24-hour accept-or-reject deadline, attempting to "wrest control" of the process. - His response: "do absolutely nothing" — walked the streets of London to think. Diagnosed that buyers still had "gas in the tank" but each believed they were already overpaying (20x EBITDA, industry high) and feared their bid would be shopped. - Solution: introduce **risk of loss** via a **descending-price Dutch auction** (citing Dutch flower markets and US Treasury auctions): start at 2.1 billion SEK, each bidder gets **8 hours** to accept before the price falls, bidders unaware of how many competitors exist. - Result: acceptance at 1.93 billion SEK on the second pass through. ### On shutdown moves generally - An appropriate time for a buyer's shutdown move is "way earlier in the process"; at the very end it "backfired" here. ### Discipline, not vengeance - Advisors must remain "cool, calm and collected"; clients are "perpetually pissed with the other side." Cites Sun Tzu: "it's the cool detached warrior who wins, not the hothead." - Discipline rule-violating acquirers "to retain the construct of your process," not out of spite. ### Balance and judgment (final position) - "These aren't hard and fast rules... some of these rules are meant to be broken." - Lean into process but "don't throw the baby out with the bath water" — read the flow, bid increments, and be willing to switch to one-on-one negotiation or change auction format "over coffee" overnight. - Sellers should stay actively involved, voice gut feelings, but he respects clients who "listen to reason" and defer to sophisticated advisors — he himself overrode his own impulse to boot ServiceMaster. ## Preserved Qualifications and Tensions - He simultaneously defends process discipline and admits breaking his own rule with ServiceMaster — resolved by stated fact-specific judgment, explicitly flagged as not a general rule. - He wanted 1.9+ billion SEK from the "final round"; the shutdown move frustrated this — resolved only via an untested (for him) format, "I'd never done it before." - He dislikes military metaphors ("I don't like to use military strategy") yet invokes Sun Tzu. - Buyer fears that bids would be shopped persisted despite his claim that "we were very fair and we gave the same instructions to all bidders" — credibility limits acknowledged, not eliminated. # Video Attribution Observation Record ## Video Identification - **Title:** The Psychology Behind Selling a Business: A Case Study | M&A Masterclass - **Video ID:** `01a168c8-2609-7d96-8683-70c8e1ca8542` - **Format:** Single-speaker educational/experiential video (M&A masterclass, part 2 of a series) ## Speakers & Roles ### Identified Speaker - **Paul Jamore** (transcript renders surname as "jamore" / "Paul") - **Role:** Creator / sole presenter - **Self-identified role:** "I'm an investment banker and I negotiate for a living" - **Speaking style:** First-person narrator throughout; presents as the sell-side advisor in the case-study transaction - **No guest, narrator, or other speakers appear in the transcript.** ### Referenced Non-Speaking Parties (do not speak; roles attributed by the speaker) - **CEO of "No More AB"** — client; Nordic residential and commercial services business based in Stockholm - **NorVestor** — Norwegian private equity firm; co-owner of the business with management - **ServiceMaster** — identified by speaker as the ultimate winning acquirer - **Buyer B / "highest bidder"** — unnamed bidder who attempted a shutdown move - Unnamed client in an anecdote about a $100M tech business ## Referenced Sources & Third-Party Claims - **"Part one of this series"** — prior video; linked below per speaker - **Sun Tzu** — cited on warfare/strategy ("the cool detached warrior who wins"); no specific edition given - **Sotheby's** ("sou bees") — used as an example of English/open-outcry art auctions - **Dutch flower auctions (Netherlands)** — ~2 million flowers sold each morning; used to explain descending-price auctions - **US Treasury auctions** — cited as descending-price auction example - **Chapter 363 bankruptcy sales** — cited as typical open-outcry business auction context - **Case study claims (unverifiable from source):** transaction nominated as finalist for **European Transaction of the Year 2019**; sale price of **1.93 billion SEK**; subsequent resale of a portion of the business after "Renile Terx" (speaker's rendering) emerged ## Promotional Segments - **Closing segment (flagged as promotional):** - Invitation to reach out via "contact form below" or LinkedIn - Request to **subscribe** for the ongoing series - Cross-promotion of **part one of the series** via link below ## Provenance & Availability Notes - **No curated metadata supplied** — no channel name, publication date, verified speaker credentials, or comment information provided - **Comment availability:** Unknown / not stated - **Third-party verification:** All transaction figures, outcomes, and award claims are speaker-attested only; no cited documents, filings, or external sources in the transcript - **Uncertainty:** Speaker's name spelling ("Paul Jamore") inferred from transcript phonetics; entity names "No More AB," "NorVestor," and "Renile Terx" are as rendered in the transcript and may differ from official names 5 years ago in London I woke up to this email Paul bad news our highest bidder has simply reconfirmed its bit and set it to explode tomorrow when can you talk I was in the late stages of bidding on the sale of the business and what was supposed to be a glorious final round of bidding turned into a massive disappointment my highest bidder not only didn't increase his purchase price but now was attempting to use a shutdown move to rest control my process I had a problem on my hands and I needed to solve it quickly I'm Paul jamore I'm an investment banker and I negotiate for a living today we're going to take the concepts that we discussed in part one of this series and we're going to apply it to a real world m&a transaction how do we do pre-sale planning how do we choose and set process how do we use the concepts of Leverage information judgment to gain an advantage in a formal cide process I'm going to focus on the psychology and the mechanics of an m&a transaction beginning with my very first discussions with the client all the way to how we solved the Dilemma of my highest bidder trying to shut down my process back in the fall of 2018 I had a meeting with the CEO of no more AB a Nordic residential and Commercial Services business based in Stockholm no more was owned by management and nor Vestor a Norwegian private Equity Firm and the board was in the process of determining whether now was the right time to sell in recent years they had been approached by a variety of strategic acquires as well as private Equity firms interested in buying the firm so they brought us in for a few meetings and we do what we typically do when we took a look at the business I learned as much as I possibly could about the asset I learned as much as I possibly could about the potential acquisition universe and we put together valuation and typically our valuations are range constructs this business will sell from X to Y now at the time I thought that that business would likely sell for around 1.8 to 1.9 billion SEC or 200 million USD we had conversations with management we had conversations with the board and by early 2019 the board made the decision to go to formal process now the board could have reached out to the buyers that approached them over the years and said hey make us an offer but being owned by a sophisticated private Equity Firm that's in the business of buying and selling businesses they know better if you're going to sell an asset you run a formal process if you're going to buy an asset you do everything in your power to avoid a formal process so when we sat down in pre-planning sessions in early 2019 one of the first things that I focused on is the asset itself how unique is it how differentiate is it is it one of 5,000 firms that are exactly the same or is it a completely differentiated unique asset what sort of scarcity value does it have is it a massive scale in a particular industry where is it located geographically what sort of resources and capabilities does the actual Target the asset itself bring to larger acquires or bring to private Equity firms because you know at the end of the day an acquisition is not just a financial transaction companies actually buy companies for Unique resources and capabilities that could be leveraged in the future so I really want to understand the asset I also really want to understand the buyer universe so when I think about the no more process we ident ified between six and 10 potential strategic acquires those are companies that are in similar or the same line of business typically publicly traded companies or large private Equity platforms that could acquire a company no more and then we looked at potential private Equity suiters like how many private Equity firms have the capacity to buy a business the size of no more in the geography that no more is in doing the sorts of things that no more is doing and we came up with between 50 and 60 total potential acquires in our acquisition universe and the reason why I bring up the acquisition universe is when we're starting to think through what sort of process we'll use the asset itself as well as the acquisition pool is very important and I'll give you an example let's assume for a second that no more had only one potential buyer in the world unfortunately there are companies that literally have zero buyers or only one buyer but if no more had only one buyer it's very unlikely that I would have run a a formal auction on no more it's possible but it's unlikely because when you've only got one buyer it's extremely risky to run an auction process because number one you might scare that buyer off if they don't want to participate in an auction and number two one wrong move and you've got a busted auction so when you've got one buyer you might be better served by doing direct cross the table style negotiations but as you start to get 2 3 five six is a nice juicy number the more buyers you have into the mix the more it allows you to move into auction like sale processes when you're selling your business it's very important that you think about it with the mindset of a hunter rather than a fisherman you know a fisherman baits a hook throws at the water and waits right that's akin to a business broker putting a listing online and waiting for buyers to that's not what you want to do it works for some businesses but if you've got a differentiated Middle Market asset it's typically a very bad way to do it uh it when I think about that sort of process it's almost like the distinction between let's say sou bees is going to auction off the Picasso right they could put 500 well- capitalized extremely motivated art buyers in an auction room or they can bring 500 people off the street and put it in an auction room what do you think is going to perform better for the seller right the well- capitalized sophisticated art buyers rather than the 500 random people taken from Midtown Manhattan that's the difference between fishing and hunting so as we build our acquisition universe as we build our buyer pool it's very very important to spend more time on that than I think a lot of us would like to um I think for a lot of advisors out there especially industry experts you know you've forgotten more than your client knows and I know it's really easy to gloss over conversations that they may have had with folks that approached them over the years and I also know that you're going to hear some asinine ridiculous right like I once did a deal where was a $100 million Tech business and my client said hey you know before we go out to Market I think we should add soand so to our distribution list because you know I see him at the convenient store every morning and um he would like to buy this business for his son and I know he's got a lot of money and I think this would be perfect so I think he should be a buyer and I'm thinking to myself gets his Cofe the convenient store runs into a billionaire no he was talking about the guy that actually owns and works at the convenience store wasn't an ideal buyer to have an approv for $100 million business so I understand sellers are not used to this and they're going to say some crazy stuff but at the end of the day go into it with a blank slate so when I think about no more from the very beginning I wanted to sit down with the client understand every private Equity Firm that i' ever talked to them I wanted to understand every strategic acquir and not just what happened or not just who was it but what was the conversation and as we did that we discovered that there was one a choir that sat down with them for lunch or dinner and said no one can create more value than us no one can pay more for this business than us and we would like you to avoid a formal process and just come to us when you're ready to sell and we're going to write a huge check we're going to do a preemptive offer we're going to make you happy so we discovered those things by asking questions it's also important for sellers to sit back and think about what sort of firms can create value by buying your business how can a large acquire buy your business and leverage your technology how can they get Revenue enhancements based on some specific capabilities you have how defensive might your acquisition be you know You' got two acquires that can't afford to lose your geography you're in a really good position so it's important for you as sellers to take control of your Financial Health in the same way it's important for you as an individual to take care of your own personal health right it's like if you were to get an unfortunate diagnosis and the doctor says man you're out of luck like we've got to give you this chemo and do all sorts of stuff I mean are you really just going to sit back and say sure doc I'll do it I'll see you next time no I think a lot of us are going to say well okay what is my my problem do I need a second opinion you'll get online you'll read forms about individuals who had this sort of disease who've gone through treatment you'll read medical journals you'll understand treatment protocols you will be an active participant in your personal health you should be an active participant in your financial health so thinking through buyers who's approached you who haven't you thought of you put your thinking cap think about this think about and it's okay to say crazy stuff you know at the end of the day it's better that you come up with these ideas and talk to your adviser about it than not say anything cuz you can miss the one acquire out there that can create a tremendous amount of value and really give you a blockbuster deal in the context of no more we spent the time understanding the asset we spent the time understanding the buyer pool and we're always thinking like Hunters so we want to make sure we understand what that buyer pool looks like we got it all laid out who are the key contacts who are the different individuals what have these companies done historically from an m&a perspective can we find out any sort of transaction statistics about deals they've done historically we really do a lot of research up front and this is all part of putting together a formal m&a plan and I know the older days that you know no plan and survives contact with the Enemy ABS that's absolutely correct I mean in my 20 plus years of doing this I don't think I've I've ever had anything go to plan when I'm doing an m&a deal but it's the act of planning that allows the advisor is think three or four steps ahead and when you get into the fog of War all sorts of crazy goes on it's easy to act emotionally but if you put together a plan it has forced you to think about all the Alternatives that could possibly happen when you get into the battle so again as we walk through the pre-planning process you are thinking about the end of mind which is taking an asset that has no price on it right it's going to be arrived at the bargaining table I don't care what management thinks it's worth I don't care what I think it's worth at the end of the day the Market's going to set this price there's no objective price for a business it is subjective it depends on the narrative that I use how I take that business through process and how I luse leverage to push up the price get full price Discovery and at the end of the day end up in a position where we've gotten full price PR Discovery and we can't eat one more Penny out of that transaction that's when I know my job is done and it's done well so as we move forward with pre-planning we've now understood the asset we can begin to put together the Sim or the confidential information memo which is simply a sales tool it is a deck that actually explains the operational and financial information on the company sometimes it's 20 Pages sometimes it's 100 Pages depends upon the size and complexity of the business but it's the primary selling tool for a formal cell side process and so as we're assembling the Sim and we're putting together the buyer universe and we're doing all the research on the buyers now we can start to think about choice of process and before I get into choice of process I'm going to take a step back to part one of our series here and I want to talk about some of the ingredients and the concepts in the formal cell process at the end of the day we're trying to take a business that has no price right there's no price tag on it and we're trying to push pedal of the metal and E every penny out of this but we don't know what the price is and we don't know where it's going to end up we've kind of done some math right we're going to assume right now that we're operating in buoyant and dynamic markets and it's a great time to sell but we really don't know what that business is ultimately to sell for until we get to that point but as I said in our prior session we can be aspirational and so what I typically do we'll come up with a valuation range which I think is reasonable and I say okay it's going to be from X to y and if all things go well if lightning strikes twice we'll get to why and I'm going to push order through that and that's going to be my target I'm going to get ridiculous I want to be like a kid I want to ask for my cake and my candy I don't want to eat my broccoli I want everything this is what I'm going to shoot for as I start to put together my plan so in the case of know more we came up with approximately 2.1 billion SEC which is a little bit north of 200 million USD and when I say SE I mean Swedish Chona this is a business-based Stockholm so we figured that the business was likely worth somewhere in the 1.8 to 2 billion SEC range and I wanted to go north of that and make that our North Star that's our Target okay we've got a Sim put together we've got an acquisition Universe we've got a Target now what the heck are we going to do there's a variety of different ways we can commence a process you know as I've discussed before we can do one-on-one direct negotiations which certainly did not make sense because the only time you would ever want to do oneon-one direct negotiations is when there's only one likely buyer affiliate business now for the majority of you out there if you've got a differentiated business that's kicking off cash flow and you've got resource and capabilities and you got a business that you could sell you might find three potential buyers for it five potential buyers 10 the list goes on the more buyers you have the more you want your process to be auction like and when I talk about auctions as we're thinking about the choice of process for no more a standard auction which is kind of derivative of the open outcry auction which is what we typically refer to as an English auction right any ascending priced auction is an English auction and you know subab sells at Picasso they're using a open outcry English auction they're starting at roughly 50% of where they think the price will ultimately end up they're starting with big bid increments so $100,000 painting we're going to start at 50k we'll use $10,000 increments and we'll decrease them as we go up we'll hope to breach 100,000 that's a very plain vanilla and aution now we're probably not going to sell a business using the format of an open outcry market now it does happen it happens typically in what would be called a 363 bankruptcy sale that's where we would typically see open outcry auctions but when we're talking about selling a private a privately held business uh confidential is obviously extremely important so we're going to use a sealed bid auction mechanism meaning it's private no one buyer knows any of the other participants with an open out C auction you've got 500 people in a room you look around you know who else is bidding in a sealed bid auction no buyer knows who the other buyers are now they can assume right I mean they're sophisticated if you know if you're buying a certain specific let's say a chip manufacturer right a microchip manufacturer like the chip manufacturers are going to know who the other manufacturers are and who's likely to participate but at the end of the day it's confidential and it's a private furthermore um this is not something you're announcing right I mean you take your business out to Market you use a closed bit auction is very quiet you're not putting stuff on the internet you are inviting a small group of participants to come in and participate in your sealed bid auction so as we start to get a little bit more granular as I was thinking through the no more process I looked and I said to myself well we've got roughly 40 or 50% private Equity firms we've got roughly 10 strategic acquirers the majority of the firms that we were dealing with had had experience in auctions before right because sometimes acquirers just don't know how to participate in an auction they don't abide by auction rules they really struggle with the concept of an auction these buyers are inexperienced and they just hey tell me a purchase price and I'll tell you if I can pay it or not but those aren't the folks that we necessarily want to deal with in this particular case these buyers were sophisticated strategic and private Equity acquires that were used to participating in auctions so we thought to ourselves let us start with a more of an informal auction and will become more formal over time and so what do I mean by that my job here right out of the gate is look at my buyer universe and begin to mold perceptions and I have to be very careful with this because sometimes when investment bankers go out and deal with Buyers they'll throw out big numbers huge guidance and so I don't want to scare anyone but I need to figure out how to very smoothly and gently bring competition because again a formal process includes both auction like mechanisms so same side of the table negotiations with buyers are bidding right they're competing amongst themselves for the right to buy the business and cross the table where I'm negotiating directly individually with each party in the case of no more we had 50 buyers now I could have gone out sequentially and dealt with buyer one-on-one I could make a an off I could ask for an offer they make an offer I do a counter offer concession counter offer concession back and forth typically that would be extremely costly timec consuming and likely not yield the results I want right because there's no competition and they really pushing things up and furthermore I don't have anything to comp I don't have offers to compare I want to be to look at everything simultaneously and I want to do this in parallel so I'm going to begin to use some auction-like mechanisms the first thing that I want to do is I want to dig deep I want to get as much information as I can on all the different acquires I want to understand their motivations their capacity to pay I want to understand who the different individuals are there at the organization because remember people think that organizations so entities versus entities are doing deals it's not necessarily the case show organizations are doing transactions businesses are doing transactions but it's the people at those organizations for the selling entity it's the sellers the ownership and for the buyers it's the corporate development team it's the senior Executives there those are the individuals actually doing the deal so I want to understand as much as I can about those folks so I fared out as much information as I possibly can on the Southside to understand how my client's business might create value for each individual buyer it's a lot of work but it's worth it after that I say to myself well how do I introduce competition and typically I tend to take the approach of casting a relatively wide net on the front end and I instead of using formal bids I like to use indicative bits and you'll see this it's prolific throughout Investment Banking great investment bankers are going to ask for indicative offers or indications of interest at the front end of the process and the purpose of that is we want to introduce as many buyers as we can to the front end of the funnel and we want them to put put an offer on the business in round one it's simply something that says I will pay X for the business here's what I'll do with it here's how I'll Finance it here's what I'll do with management and here's what the regulatory constraints I might have and we want buyers to provide a bid do all on the same day um doing the smallest amount of work is possible because if we want a more formal like a full-on Loi or a more form bid it's going to require buyers to do more work and a lot of buyers will just fall out of the process because they don't want to spend time money and effort attempting to bid on something that they don't know much about and they don't want to incur the cost of figuring it out if they don't think that they're going to likely Prevail in process so you want to make it very easy and as far as process rules at the very beginning that's the extent the process rules we're the cell side we're setting the process here's the rules 2 weeks from now provide us an indicative bid we've cast a wide met we've got a wide funnel come on in bring them all in so in this process what we hope to do is we hope to get 10 15 20 maybe indications of interest and it'll allow us to kind of understand where the market is at in general terms with regard to valuations now in the case of no more I was hoping to get 2.1 billion SEC or more but when our indications of Interest came in they tended to Cluster around 1.3 to 1.4 4 billion SEC so substantially lower than where I wanted to end up and quite frankly that's okay and you know it's frustrating I think for clients I deal with this on a day-to-day basis when those initial offers come in sellers get pissed this is offensive I can't believe it's so low but at the end of the day IIs in front-end offers tend to be low because buyers don't know a whole heck of a lot about the business yet quite frankly they're testing the water I mean why are they going to go all in on a first bid um unless of course they want to preempt process so in the case of no more we did have a buyer that said I want a preempt process I want to shut down the process before other buyers have the opportunity to spend a lot of time money and effort learning about the business only to increase their bid so one of the acquirers stepped up and said here is our preemptive bid no one can pay more than us 1.7 billion SEC the client immediately responded this is ridiculous for a PRM of offer if you want to shut down process I expect to see something north of two billion SEC not 1.7 billion so at the front end of this process right after the IIs I had conversation with this that particular buyer and said you didn't win like clearly this is a low bid for a preemptive bid and we intend to do substantially better throughout this process proc now after indications of Interest your goal as an advisor is to try to whittle down the playing field as much as you can you know there's going to be a lot of garbage in their companies that you really feel like are are had an analyst at 2 o'clock in the morning write up an II just tendered it just to see what was going to happen you try to whittle those down because as you move through the process you want to boot potential participants from your process because at the end of the day as you move this long the price should be going up and the buyer field or the pool of participants should be getting narrower and narrower it is very very difficult to simultaneously negotiate with more than seven or eight buyers at any given time so again start wide get as many indications of Interest as possibly can and that after the indications and the answers come in now we go back to each buyer and we ask them if they're really serious say hey we are now going to have management meetings so you're going to have the ability to sit down with management you'll be able to spend a half day with them you're going to be able to learn more about the business it's going to cost you money you're going to have to get on the plane fly halfway across the world you're going to have to hire outside advisers yourself to really invest in this process but in order to do that you need to increase your bid your bid's not sufficient like you didn't win a management meeting and so typically before management meetings we might have two or three rounds of bidding even before we get to management meeting and it's important for buyers to actually be able to purchase their seat so to speak or purchased the opportunity to sit down with management so typically what would happen is after the indicative round we would go to the next round and the next round would be like hey we are holding management meetings 3 weeks from now in Stockholm if you're interested in participating please revise your bid and we would give very similar bid instructions as we did in the indicative round and they'd be require to Tender a revised bid and what we hope to do here is a couple of different things you know I like to think about the investment principle I guess I can talk about the investment principle in a variety of different ways one way that I think is pretty easy for want to grasp is like we as humans don't value something that we don't expend effort to get right like we don't value advice we don't pay for people don't value concessions that come quickly and so in the context of an m&a deal I always get pissed when inexperienced buyers roll over too quickly because I know from experience that hey this guy didn't decrease his concession sizes he kind of went all in at once and conceded on everything he could hope that was going to be good but you know the seller who doesn't do this every day said well wait a second they just gave us an extra 5 million bucks there's probably another five or 10 more when I'm thinking to myself there's probably not so when you don't make the other side work for something they're not going to Value it so you've got to really battle it out the coral area to that though when I think about the investment principle is very similar when you're investing in an m&a relationship if early in the process each individual buyer had an invested time money and effort into the relationship and then you want to see big numbers up front it's very easy for them to walk away I mean there's almost no some cost it's like hey I spent a few hours I read some materials I put in a bid now you're giving me a big counter offer I don't give two shits I'm out of here right but the more effort they expend the more they get to know the management team the more they're talking about it with their board the more they put their individual name on this the more they want it and the more difficult it is for them to walk away so we always have to think about a formal process in the context of investment you want the buyers investing time money and effort each step of the way the other thing you want to think about is incrementalism right it's you know somebody comes in and says I'm going to give you 1.3 billion SEC for no more I could turn around and say Hey I want 2.5 for it and then I find myself in a bargaining basically positional bargaining 1.3 2.5 1.5 2.1 and we go back and forth and typically we'll end up somewhere kind of around the middle nine times out of 10 folks when they do that end up in the midpoint I think it's generally a losing proposition a lot of ways for sellers when they have the ability to run a formal process to get engaged in that sort of stuff and as I always say as a process Setter you want to lean into process as much as you can on the cell side you are a process Setter and you control the process you attempt to make sure the other side doesn't rust controler your process and wherever you can use process and process rules to extract resources out of the other side you do that instead of having that sort of direct negotiation so again we've got this process we start with indicative bids what we're trying to do is we're trying to get investment by the other side all the other buyers we want them walking through the process spending more time money and effort and we want them to focus on slowly and incrementally increasing their bid because now listen there's a huge gap between 1.3 billion sa and 1.9 billion there's not that big of a gap between 1.8 and 1.9 and so from a psychological perspective it's way EAS yeah what's another 5 million suck right versus what's another 500 million so incrementalism and investment as we went through the bidding round for no more we decided to bifurcate things we started first with the strategics and we kind of did a you know we did it to during kind of Scandinavian summer break so we started this process in July and we focused first on the strategics and the reason why we focused on the strategics is for this particular asset we thought that the strategics were likely to be able to pay more than private equity and we also knew that we could bring in private equity later in the process so what we did is we started very informly we set up an indication of Interest deadline and while we were dealing with the strategics we had fireside chats with the private Equity firms to allow them to meet management allow them to invest in the process allow them to not be excluded in the event we wanted to go to a broad process with both private equity and strategics we could easily pivot and do that but we wanted to really see where we can get with the strategics now we had gone through three rounds of bidding prior to management meetings and that's not typical per se but in this particular process that's just the way that it worked out and so we began with 10 strategic acquirers and by the time we were beginning to make the decision on management meetings we were down to four in fact one of the four service master was the lowest bid and we had a lot of discussions internally as to whether or not service master should be invited to the meeting or not you know service master went from second bid to third bid and instead of increasing the bid increment they stood pet they said we're just going to reconfirm our bid and we don't want to bid anymore until we're able to sit down with management and really think through the investment thesis and so you're often times faced with that sort of decision when you're running a process it's important to really exercise some judgment here and the Dilemma that I was faced with on the one hand if I got rid of service master I would lose a bidder which is effectively 25% of my bidding pool at this point in time gone just by saying hey you bid didn't make it you're not coming to management meetings but then I had to really think hard about rewarding bad behavior right like so they just reconfirm their bid and I'm going to let them slide in as I told you in session one information is important and it's not just what you say or what they say it is your actions every action you take in an auction process or in a negotiation reveals information so on the one hand if I kicked them out they would be like those guys are serious but then none of the other buyers would know about it because it's a seal dection they don't even know the existence of service master if I do let them in then and I have just signaled to them that hey they just reconfirmed their bid um and it's sufficient to get in and maybe there's not as much competition as we think and so as we talked about it we ultimately decided to let them come to the meeting and the reason why we decided that is I didn't want to lose a bidder I relied on judgment saying that even though I'm giving a potential signal to them that competition isn't is fierce and that I am not going to adhere to my own process rules we were still running a really loose process at this point in time and I thought I had more to lose by booting them out than keeping them in and that's not always a decision I'll make but from a fact specific situation it made sense to me and it made sense to me because service master was the one from the get-go telling management no one can pay more no one can pay more than us no one creates more value they were the ones that attempted to preempt the deal with all lowsy offer what we it is allows the offer so I thought to myself well I don't see a whole lot of downside um in keeping them in the process allowing them to have the management meeting and if this kind of activity continues we'll just kick them in the teeth so we had the meeting immediately after a management meeting in pretty much any sort of process you're running that's when you would ask acquirers to once again revise their bid folding so they meet with management we answer some questions there might be some followup it could be a few days later a week later 2 weeks later but at some point shortly therea the management meeting in order to stay in the race they have to revise their bids that's what we did and so thankfully management was Stellar it was really a phenomenal performance by management they did everything right everything that I talked about in the first session of this series and so we saw a huge jump in bids the bids began to Cluster at 1.75 to 1.8 million SEC after the management meeting so now we are getting into round five we again provided more information we have the acquirers are not only negotiating the offers but they're also negotiating the purchase agreement at this point in time so we provided a draft of a purchase agreement and it's important to do that um because in a very competitive process once you go into exclusivity with a single buyer you lose a lot of Leverage and so in certain circumstances we're going to be negotiating not only the broad terms like price and structure but we're also going to be negotiating ANC terms in the purchase agreement simultaneously so we provided a draft of a purchase agreement and asked each buyer to have their attorney Mark up that purchase agreement and then tender it to us along with their bid and so we went to another rout and here's where we started to see a few cracks in the Surface by this round we begin to see bid increments decrease and this is one of the things that I think advisers should pay close attention to as you're running through a process like when no more we might start at 1.3 and then it goes to 1.5 and then it goes to 1.7 we see 200 million second increments but by the time purchase price starts to get a little bit uncomfortable for buyers we start to see buyers reconfirm bids so not move up in price we see acquirers making 100 million or 50 million increments so by the time we get to the fifth round we had these things clustered in the high 17s low 1 18s right and we started to think that now would be the right time to get the private Equity firms spun up for a broad process because again my target was 2.1 and already this thing was trailing off here I was starting to compressed bid increments so we thought let's add some additional competition into the mix now whenever you think about a modified auction like this I think it really takes a lot of judgment and balance to have clear and concise process rules but somewhat ambiguous and what I mean by that is I want to be in control of how many bidding rounds I have right but I also don't want to be so ambiguous that buyers never know when it's going to end right am I going to have 10 Rounds am I going to have 20 rounds because if I do they're going to start holding back right if you feel like you're always going to be going into another bidding round you're not going all in on price because you're going to think well I put my highest reserve price there they're just going to shop that deal and somebody's going to come in right over the top so you're always holding something back it's a kind to and Marathon right like it's like you see guys running for an hour and they're pacing themselves but then once that finish line is in sight and these guys take off they sprit to the end so at some point you need to show buyers the finish line and sometimes you do that at the very beginning of the process you say we're to do two bid rounds or one bid round or five bid round is what we're going to do but sometimes you remain a little bit more ambiguous and that you use your judgment to determine whether or not you're going to show the buyer the finish line and so we finally got into about the fifth or sixth round and we had um one offer at 1.7 we had two at 1.8 billion SEC and we had our highest bidder at 1 85 billion SEC and at that point in time that bidder was the favorite that bidder um was always the highest bidder they communicated very well the management teams liked each other and I started to think to myself um this is probably the most likely buyer but then I stopped myself and here's why whenever you start a process as an investment banker as an advisor I think it's very very important that you don't go into it with any preceded Notions and you the seller should do the same thing right don't go into a process favoring any buyer let the market and the facts speak right I I used to you know joke around the office it's exciting to say like oh company XYZ is likely to Prevail they're going to create the most value um but I find that that tends to sometimes distort Behavior so I think better and I have to even as an adviser who does this every day I had to spout myself and say you know what I'm going to lean into process I'm going to run this right and I don't care who's going to Prevail at the end of the day whoever Prevail is going to put that best offer on the table we set a bid date for when Wednesday morning and I was in London at the time and I remember waking up and getting an email that says Paul bad news our highest bidder reconfirmed their offer and set it to expire tomorrow when can you talk and man I was expecting to try to get to 1.9 billion SEC on this thing I thought these we told the acquirers this is going to be the final round like Come All In and our best buyer just reconfirmed their bid like why wouldn't you just go up and try to snatch this well I had some conversations with some acquirers and here's what was going on a lot of them had gas in the tank but they didn't really believe they believed at this point in time that every one of them thought they were overpaying for this asset which quite frankly they were right it was an extremely healthy price it was 20 times EIT do it was the highest in the industry at the time it was an extremely high price so they thought they were overpaying already they were not 100% sure that anything they would put on paper wouldn't be shopped by us um we attempted to build the credibility that we wouldn't do that I think we were very fair and we gave the same instructions to all biders but of course doesn't matter how much credibility you have if you're going into this and and you're a buyer you got to think okay the seller might play games with me here and I think most bids just didn't think they had to do more so here's where we ended up I had two bids now at 1.85 and I had two bids at 1.8 the highest bidder now was neck and- neck with number two and I still had service master at 1.8 of course this was the company that has told us that every single meeting that no one can pay more than us I started to think to myself well are they credible or not so I got up that morning and I was pissed because not only did we not hit the 1.9 billion SEC that I wanted that we expected now I have my best buyer comes in and says I'm going to use a shutdown move I'm going to rust control your process and here's what I mean by that I mean their offer said 1.85 billion not a penny more and you've got 24 hours to accept or reject this so they now are attempting to change the rules of my hey this is the final bid round buyers and now the buyer's going to step in and say hey take this or leave this that's not the way it works and so I'm extremely irritated but I did exactly what I advise everyone on my team to do which is do absolutely nothing I showered I got dressed cup of coffee and I went out and walked the Streets of London and I really wanted to think through the process what sort of options did I actually have at this point in time so as I walked that morning I thought to myself I've got four bids who are essentially neck and neck they've all proven that they really want this transaction every one of them is trying to take the discussions offline and engage in one-in-one direct negotiations and then it hit me I needed to introduce risk into this situation I needed to put these buyers in a position to lose now again they invested a ton of time this has been a multi-month process talked about the investment principle these guys got on the plane they flew to Stockholm they spent a lot of time meeting with management dining with management they've done a tremendous amount of diligence every one of these acquires would spent hundreds of thousands of dollars in legal fees and due diligence and I needed to pick a horse and in order to get that purchase price to where I needed it to be I had to introduce risk into the equation and as I walked that day it hit me how do you sell flowers in the Netherlands how does the US Treasury auction off treasury Securities they don't use an ascending price English auction they use a descending price Dutch do I'd never done it before but I thought to myself why not because every chance I get I try to lean into process as opposed to directly negotiate so it's exactly what we did so what is a Dutch auction a Dutch auction for example in the Netherlands 2 million flowers are sold every morning in the Netherlands and the process is a Dutch auction the price starts high and it descends as the price goes down when somebody wants to buy flowers at a certain certain price they hit the button they buy the quantity of flowers and they want at that price and when they're done it keeps moving down until all the flowers are gone do auctions are great for Speed they move very quickly but more importantly they're great for risk because if you're willing to pay $2 for something um and you think you can get it for a buck 75 do you really want to take the risk um that somebody's going to come in and buy it for $1.98 for example so that inro reduces risk into the equation so as I walked that day I set up the call remember we did it at 1:00 in the afternoon Central European Time and I said why don't we begin at 2.1 billion SEC and run a Dutch auction which means we go out to each individual acquire and say acquire a the price on the table is 2.1 billion SEC you don't have 48 hours you don't have a week you have 8 hours at the end of 8 hours you've either rejected this or it expires and we go to the next bidder and once we go to the next bidder and we're going to go overnight once we go to the next bidder we're going to give them eight hours and the price is going to go down if they reject it or it expires then we're going to go to the next bidder and the price will continue to fall it may come back to you or it may not come back to you but this is where we are right now acquire a here you go 2.1 billion suck you've got eight hours the biders don't know how many biders there are they don't know if there's two they don't know if there's one they don't know if there's 10 but at the end of the day it introduces substantial risk because you know if somebody's got a bit of 1.85 billion SEC now and they're willing to pay 1.9 for it do they really want to risk somebody else swiping it off the table for a price that they would have paid and so we went through all the acquirers once and by the time we got back to acquir a they hit the bid at 1.93 billion SEC the deal closer service master two or 3 weeks later why I wanted to give this no more example today is because it provides a lot of insight in the process that in your process rules for example acquire be one that was at 1.85 billion SEC and used the shutdown move they attempted to change the process rules right except our bid today or otherwise we're out the door that wasn't my role as a process Setter I certainly didn't want them to have the opportunity to do that and unfortunately for them I think in many circumstances had they done a shutdown move earlier in the process maybe not the no more process because I don't think we would have accepted the 1.85 billion but an appropriate time to use a shutdown move is way earlier in the process if you wait until the very end um if in fact we didn't have any of their buyers that was a buer be saying I don't think there's any buyers at this level I think we're the only one here so quit messing around take our L out the door unfortunately for them it backfired the use of the Dutch auction is leaning into process again you have decisions to make always you know whenever you start a formal cell site process you on the sou side you're the process Setter but you're always negotiating process and substance right you're negotiating the process rules but you're also negotiating the substance so the terms and price of the transaction and to whatever extent you can lean into process and allow that to do your negotiating for you you shouldn't do it um as I think back to that transaction I was at the point where we instituted the Dutch auction where I was almost prepared to negotiate one-on-one because we felt like there was a little bit more gas in the tank and we didn't think a traditional ascending price English auction would get it done we didn't think that buyers would really revise their bid forward based on not only the activity that we saw like the decreasing bided increments the moaning we heard from buyers directly as well as them Desiring to have one-on-one negotiations with us so I didn't feel like another round or a survival round was going to be the way to go and that's why we went the Dutch auction Route and so I think for our purposes you should always attempt to control the process the best that you can you need to fight the shutdown moves from the other side which will inevitably happen but just remember you want to stay in control of this process however the longer you do this and the more experience you have the more judgment you'll have and you have to always keep in mind that these aren't hard and fast rules you know some of these rules are meant to be broken and I always tell folks lean into process as much as you can but don't throw the baby out with the bath water you've got to have balance you've got to actually pay attention to what the bidders are actually doing pay attention to the flow pay attention to the bid increments and use your best judgment as to whether you need to lean more into process or whether you actually need to go on to for example one-on-one direct negotiations or entirely change the process completely change from an English auction to a Dutch auction do it one morning overnight over coffee wake up change the process you have the ability to do that but it's something that you learn over time with judgment you know you as a seller need to be an active participant in your own process and work directly with your adviser you know as I mentioned prior to management meetings one buyer stood Pat and we had a disagreement the client actually said they should be booted from process now they're ultimately the acquir that won the deal at the end at 1.93 billion um but there was a disagreement they said they should not be rewarded for standing Pat and just reconfirming their bid and again sometimes you just have to feel the flow and try to keep people into the process to continue to invest in the process and give them the ability to increase their price later on in the process you know I was informed largely on this one based on what the acquir constantly said no one can pay more than us we can create the most value we want this deal they were particularly difficult to deal with and they were the acquir I went to First with the 2.1 billion set counter offer and they'd laughed at me actually literally if you look at this email above like I literally sent this over to them and they laughed at me uh but within a few days we're ultimately the prevailing bidder here I mentioned this because it's important for sellers to actually be actively involved in the process with their advisers and have these conversations and if you feel like if something in your gut tells you to do something different like bring it up but at the end of the day I do respect clients who can listen to reason and see the value that their advisers if they have sophisticated advisor can bring to the table and override these sorts of decisions because believe me there's nothing more than I wanted to do is boot these guys when they reconfirm their bid before management I wanted them out I would have love to call them and say you're losing you're out you're done you're out of the process but at the end of the day I have to think about what's the greater goal and that's all about like the whole emotional Detachment from this now as an adviser you can sit down and listen to your client who is disappointed who's pissed that you reconfirm their bid that they didn't increase their bid and now we're going to sit down with them and waste time with the management meaning no those guys can piss off and you have to stand back and look at the bigger picture and say okay unfortunately we're sending the wrong signal Now by allowing them to come in but it's potentially more of a negative for us if they're out so let's let them ride and let's try to correct our mistake or providing them information that displays any sort of weakness later in the process and that's what we did and although I don't like to use mil mil strategy when I'm talking about business transactions I do hearken back to sunu a little bit you know he says that it's the cool detached Warrior who wins not the hotthead or the Seeker of Fortunes and almost every deal I do my clients are typically perpetually pissed with the other side right they get offended by the offers these guys should be offering more paying more doing this doing that as an adviser you really need need to remain cool calm and collected it's important to discipline acquires who violate your rules but don't do it out of Vengeance don't do it out of spite do it to retain the construct of your process if you believe it's the right thing to do and again that's where you have to use judgment that you learn over time this no more transaction was obviously very interesting for me it was the first time that I'd ever used a Dutch auction in a process I found it to be fascinating I'm a big fan of auction Theory although it's not always applicable to m&a but that no more transaction was nominated and ultimately became the finalist for European transaction of the Year back in 2019 and then of course subsequent to its sale to service master when renil terx emerged I got to sell that business again so a couple of years later I was on the cell side and sold a portion of no more once again to another acquire thank you for joining me today as I reminisce on the tale of no more for you m&a advisers out there I hope you learned a little something to help you tighten your game and for you sellers we love to kill it for our clients in fact we work with many of our clients years in advance of an ultimate sale don't hesitate to reach out to me on the contact form below or join me on LinkedIn further will be building on this series so I invite you to subscribe and finally for those of you who have not watched the first part of this series you can watch it on the link below thanks for joining me today and I'll see you on the next one you