Corporate Development Strategy in High-Volume M&A

00:01:31 | Introduction & Jeff's Background

‍Kison: Can we kick things off with a little bit about your background?

Jeff Giles: Yeah, absolutely. Hard to believe, but in this coming March, it will be seven years with Core & Main, which has flown by. It’s been an absolutely remarkable run—loved every minute of it. We’ve been incredibly busy on the acquisition front, a lot of activity in both our core markets and some adjacencies that we’ve grown into. As I said, it’s been a ton of fun, and we’ve got a lot of runway ahead.

Kison: You’ve been doing deals for a while, even before Core & Main.

Jeff Giles: Yeah. My career journey is probably a little bit nontraditional. I started my post-MBA career at Emerson Electric, another great St. Louis company. I know you’re familiar with some of the Emerson folks.

Kison: Just there yesterday.

Jeff Giles: Fantastic company. Great leadership, a great track record, and really a great proving ground and training organization. I was fortunate to begin my post-MBA career there, focusing on business development and strategic planning. I had a little bit of exposure to joint ventures and partnerships—not really M&A—but it was really good experience.

Ultimately, at the time, I was looking for something a little more entrepreneurial and ended up getting into private equity. Most recently, I was with a firm called Bertram Capital, a great middle-market fund based out on the West Coast. I was the first hire in their business development organization, hired to build that out and grow it nationally, build the Bertram brand, and help generate deal flow.

The firm was founded by a fantastic guy named Jeff Drazen, a 20-plus-year venture capitalist in Silicon Valley. He had great relationships throughout the investor base and quickly raised a $350 million fund. We hired some great people to do execution work, but then they realized—where are all the deals?

Jeff and I met, and he asked me to come on board and build out that business development function, which I did. I was there about six years. It was a remarkable run, and I had the opportunity to get involved with other aspects of the business along the way. That was really my first foray into the deal business, if you will.

Jeff Giles: After Bertram, I joined another great St. Louis company, Barry-Wehmiller, led by Bob Chapman and Kyle Chapman, who are still dear friends. I couldn’t speak more highly of the firm they’ve built—the culture, the focus on truly valuing people in the organization. It’s a remarkable growth story and an example of how to treat people the right way and the impact that has on their lives and the business.

Bob’s goal is to build a better world through business, which all comes down to quite simply valuing the people in your care. Treating them like people, not like human resources, and giving them what we like to call "responsible freedom" to do their job and perform.

Candidly, I never thought I would leave Barry-Wehmiller until I met our CEO, Steve LeClaire. He’s another wonderful human being—down to earth yet an incredibly successful CEO of Core & Main, a $7+ billion company.

Steve and I connected back in July of 2017. We had a longer courtship period as I pondered the opportunity. Again, I never thought I would leave Barry-Wehmiller, given my role leading corporate development and focusing on bringing in family-owned businesses and corporate carve-outs while fostering a culture where people feel truly valued. It was fulfilling.

Ultimately, I did decide to make the change and joined Core & Main in March 2018. Since then, we’ve been incredibly acquisitive, completing over 40 acquisitions and deploying over $1.7 billion in capital into M&A over that timeframe.

Kison: That’s a lot of deals! There’s a rumor that Bob and Kyle Chapman are coming to the podcast.

Jeff Giles: I can neither confirm nor deny, but that would be a good get right there.

Kison: Quality guests. It’s good to take some of these learnings and apply them. How many deals have you worked on?

Jeff Giles: In my career? Gosh, 60-plus that I’ve been directly involved with. For the most part, I’ve led those deals. Certainly, I’ve had my hand in others at various organizations. I led a significant number at Barry-Wehmiller, where I was able to lead the process from start to finish. And at Core & Main, with the great team I have, we’ve been the most active acquirer in our industry, both in our core markets and adjacencies. We have a lot of runway ahead.

Kison: That’s why I had to chase you down, Jeff. Every time I go on LinkedIn, there’s another deal you announced! I had to figure out what you’re doing.

Jeff Giles: Yeah, we’re blocking and tackling, making it happen.

‍Kison: Can you tell me a little bit about the platforms you were previously on and how they shaped your approach to corporate development at Core & Main?

Jeff Giles: That’s a great question. Honestly, it was a tough decision to leave Barry-Wehmiller because of the relationships I’d built, the organization’s culture, and its growth plans. It was a dream job.

When I was assessing the opportunity with Core & Main, I made sure early on that the leadership team was aligned with that approach, and that I could influence how we did things. We were private equity-backed at the time by Clayton, Dubilier & Rice out of New York. They were fantastic partners—very supportive of our growth.

They have a solid reputation for investing in businesses and supporting strategic initiatives like M&A, rather than slashing and burning to cut costs. We didn’t want to be known as a company that buys businesses, lays people off, and generates returns that way. We want to invest in people.

When we acquire companies, we want every person who joins our organization to feel welcomed, valued, and like they’ve joined a family-focused organization. I think we’ve done a great job building that culture at Core & Main. At the end of the day, it all comes down to people.

When we work with business owners and leadership teams, the most important thing is identifying a strong cultural fit. Absent that, it doesn’t matter how good it looks on paper. If the cultural piece isn’t right, it won’t be a good investment.

Kison: What does buyer-led M&A mean to you?

Jeff Giles: It means being proactive in developing relationships early on. When I first joined, one of the first things we did was a large and detailed market mapping exercise. We started with our core markets and then researched some adjacencies we’ve since grown into.

You need to understand the landscape—who the players are and the long tail of companies in the geographies where you want to grow. We built a 400-plus-page deck that we update frequently, so we know who the key players are at any given time across the U.S. and now into Canada.

From there, you can prioritize, identify business owners who might be closer to retirement, or who don’t have a succession plan in place, and start building relationships. We’ve done 40-plus acquisitions since I’ve been at Core & Main, and most of them have been outside of formal investment banking processes.

They were built on one-on-one relationships that either I or my team developed. I’ve got a phenomenal team member, Noel Mock, who’s 100% focused on deal origination. He does a tremendous job developing relationships and bringing people to the table when the time is right.

We’ve even had business owners approach us directly, which I consider a dream scenario. We’ve acquired businesses that raised their hands and reached out to us, saying, “Hey, don’t forget about us.” That’s a big difference between what we do and what generalist private equity firms do.

Kison: Let’s break this down. You mentioned a framework: first, build a market map. Second, prioritize companies. Third, build relationships. Fourth, make a real pitch to do the deal. Does that sound right?

Jeff Giles: Absolutely. That’s spot on.

00:04:31 | Building Market Maps & Identifying Opportunities

Kison: Can you tell me a little bit about the platforms you were previously on? I’m curious about what you learned and how that shaped your approach to corporate development at Core & Main.

Jeff Giles: It’s a great question. Honestly, one of the reasons it was such a tough decision to leave Barry-Wehmiller was the relationships I’d built internally, the organization’s culture, and the growth plans they had in place. Everything about it was a dream job.

When I was assessing the opportunity with Core & Main, I made sure the leadership team here was aligned with that approach, and that I could have some influence on making sure we were doing things the right way. We were private equity-backed when I joined, by Clayton, Dubilier & Rice (CD&R) out of New York. They were fantastic partners for us—very supportive of our growth.

They’ve got a solid reputation as a firm that invests in businesses, supports growth and M&A, and other strategic initiatives, as opposed to just slashing and burning to cut costs. We didn’t want to be known as a company that buys businesses, lays people off, and generates returns that way. We want to invest in people.

Every person who joins us through acquisition needs to feel welcome, valued, and like they’ve joined a family-focused organization. I think we’ve done a remarkable job building that here at Core & Main.

At the end of the day, it all comes down to people. When we’re working with business owners and leadership teams, the most important thing we focus on early is whether they’ll be a strong cultural fit for us. If that’s not there, it doesn’t matter how it looks on paper or what the model says. If the cultural piece isn’t right, it’s not likely going to be a great investment.

00:12:31 | Developing Relationships in Buyer-Led M&A

Kison: What does buyer-led M&A mean to you?

Jeff Giles: I would say it means being very proactive in relationship development early on. One of the first things we did as a team when I joined was a large and detailed market mapping exercise. We started with our core markets and then researched some adjacent markets we’ve since grown into.

You need to understand the landscape—who the players are and the long tail of companies operating in all the geographies where we want to grow. We built a 400-plus-page deck that we update relatively frequently, so we always know who the key players are across the U.S. and now even into Canada.

That’s step one—understanding the opportunity set. Then you can prioritize, develop relationships, and identify business owners who may be closer to retirement or don’t have a succession plan in place. Of course, culture fit is key as well.

We’ve done over 40 acquisitions in almost seven years since I’ve been here, and the vast majority of them were outside a formal investment banking process. They were built on one-on-one relationships that someone in our organization developed—whether it was me or my fantastic team member Noel Mock, who is 100% focused on deal origination. He does a tremendous job of developing relationships and bringing people to the table when the time is right.

Given how active we’ve been, we’ve almost created a network effect. We’ve had business owners approach us directly, raising their hand and saying, “Hey, don’t forget about us!” We’ve even acquired businesses that reached out to us, which is a dream scenario.

That’s a big difference compared to a generalist private equity firm. No disrespect to that model—there’s a real need for it—but it’s harder for them to differentiate their message when talking to business owners. Even if they have a strong investment thesis, they won’t be as deep as a committed strategic buyer like us.

Their day-one plan is often preparing for an exit in three to five years. We come in with a very different approach, and that message resonates with business owners who care about their people, their legacy, and the long-term performance of their business.

Kison: So, I’ve got a few stages here—building the market map, prioritizing companies, building relationships, and finally, making the pitch to do the deal. Does that sound like a good framework for us to break down?

Jeff Giles: Absolutely. That’s pretty spot on.

00:20:31 | Expanding into Adjacent Markets

Kison: Let’s start with the market map. You mentioned identifying core and adjacent markets. How do you define adjacency without going too far afield?

Jeff Giles: Great question. Companies often struggle with this. We started by clearly defining what our core markets are—primarily the waterworks industry. We’re a specialty distributor of water infrastructure products like pipes, valves, fittings, hydrants, and other ancillary tools.

We also have a good-sized fire protection business that handles fire sprinkler fabrication and loose supply distribution. We’ve grown into geosynthetics and erosion control, natural gas, and concrete structures.

When we look at adjacent markets, we focus on understanding our existing customer base, supplier relationships, and whether we can sell new products to existing customers or vice versa. For example, geosynthetics and erosion control are highly fragmented markets that align well with our core business. Any large project that requires our waterworks products will likely also need erosion control products. It’s not always the same customer, but it’s often the same project.

Concrete structures are another example. Large infrastructure projects need catch basins, manholes, and retaining walls in addition to the usual pipes, valves, and fittings. It allows us to offer a more comprehensive product basket.

Kison: So, it sounds like a key step is to hypothesize synergies when expanding into these adjacencies. You’re not just picking them randomly—you’re looking for either cross-sell opportunities with your existing customer base or ways to leverage your supplier network.

Jeff Giles: Exactly. Another area we focus on is acquiring businesses with exclusive distribution rights to certain product lines. In some markets, distribution rights are highly coveted, and we’ve been able to access those by acquiring companies that hold those rights.

Kison: What about the natural gas example? That doesn’t seem like an obvious adjacency. How did you put two and two together on that one?

Jeff Giles: Good question. Natural gas might seem farther afield, but it actually fits well. It’s a large, fragmented market with highly specified products. The fabrication capabilities required for natural gas are very similar to what we do in our fire protection and fusible product fabrication businesses.

We know how to run a fab shop—it’s just a slightly different product going to a different end market. But it’s still an extension of our existing business. Plus, it helps us grow our total addressable market.

Our core markets are still incredibly fragmented with plenty of opportunity ahead, but we don’t want to stand still. We want to grow into markets that complement what we’re already doing and where demand characteristics can help balance the ups and downs of our core business.

Kison: So, even though the end customer might be different, you’re recognizing the commonalities in the distribution model and how you ultimately sell.

Jeff Giles: That’s right.

Kison: Building the market map makes sense, and it keeps your strategy focused and intentional. Once you have that, how do you prioritize?

Jeff Giles: Core markets like waterworks and fire protection are always the priority. This year, we’ve been incredibly acquisitive across both core and adjacent markets, and we’ve already made it a record year for M&A.

One big acquisition we did was Dana Kepner, a large waterworks business that had been private equity-backed. It’s a fantastic business with a very similar culture to ours. It’s fitting in nicely and filled some key geographic gaps for us.

From a top-level strategy, geographic expansion is one of the easiest and most desirable ways to grow. Even with 350-plus branches across the country, there are still geographies where we can gain market share.

We literally have a map that breaks down every district—not just by state, but more granularly—so we can see the long tail of suppliers selling into our markets. Some companies sell HVAC or plumbing products in addition to waterworks, which might not be our first target, but we’ve been successful in buying companies with a mix of products. That’s also helped us grow into adjacent markets.

00:25:31 | Prioritization of Acquisition Targets

Kison: How do you determine which companies on your list to prioritize? Do you use a scoring system?

Jeff Giles: The core markets—waterworks and fire protection—are always our top priority. Within those markets, we prioritize by geography. We look at regions that are growing or where we don’t have enough market share.

We also look at population growth, water infrastructure needs, storm drain, sewer—all of that. Our FP&A team helps us analyze the data, but sometimes it’s as simple as looking at a map and seeing where the white space is.

Kison: So, geography is a major driver for your strategy, and that helps narrow down the list. Do you end up with a list of 20 or 100 companies to focus on?

Jeff Giles: We have hundreds of companies in our target database that we’re actively developing relationships with every day.

Kison: Once you have that list, how do you prioritize within it? You mentioned earlier that culture and leadership are critical. How do you assess those factors?

Jeff Giles: Culture is tricky to assess early on. You really need to develop relationships and dig deeper during the diligence process.

We’ve passed on deals that looked great on paper, but the culture wasn’t a fit. You have to have the discipline to walk away in those situations, even if the financials look solid.

One of the things we look for is how the business owner talks about their people. Do they truly care about their employees? Or are they just trying to sell to the highest bidder and walk away?

We’ve had a great mix of outcomes—some business owners have stayed with us and thrived, while others have transitioned out after 6 to 12 months. Either way is fine, as long as we know their intentions upfront. We like to see business owners who say, “I want to help with the transition, take care of my people, and make sure the customer relationships remain strong.” Those are the leaders we gravitate toward.

When you encounter someone who doesn’t seem to care about their people or legacy, it’s usually not a fit for us.

Kison: I imagine that’s not something you can assess from a data set. It must require getting to know the person.

Jeff Giles: Exactly. Private company data is limited, and financial estimates only tell part of the story. Building relationships is the only way to really understand their culture and long-term plans.

Kison: How do you approach that relationship-building phase?

Jeff Giles: It’s about developing meaningful relationships over time. You start with introductions, have genuine conversations—not always about M&A—and plant seeds. Some owners say, “No, we’re not interested,” but circumstances change.

We’ve seen situations where a business owner wasn’t ready to sell, but two years later, they reach out. It’s all about timing and trust.

00:39:31 | Building Trust & Transparency with Business Owners

Jeff Giles: I want to learn as much as I can about the culture of the business by really understanding who that owner, founder, or leader is—whoever it may be. What makes them tick, right? What’s key for them? What’s next for them?

I’ve certainly had meetings with business owners, and I’m not saying this is necessarily a bad thing, but they’ll say, “Look, I’ve been doing this for 30, 40 years. My dad, grandfather, or uncle started the business. It’s all I’ve ever known and done. But now it’s time for me to pull the ripcord and ride off into the sunset. You can take our name off the building—I don’t care. Do what you want with it. I want to take my check and go.”

That’s usually not the ideal scenario. I like to hear them say, “I’ve done this my whole life, I’m incredibly invested in it, but the most important thing to me is finding the right home for my people because I care about what I’ve built.”

These people are, in many cases, literally family, but also, figuratively, people who feel like family because they’ve worked together for so long and built such close relationships. I want to hear them articulate that within the first five or ten minutes of our discussion about a potential acquisition.

Even if the timing is zero to three years away, if they say, “When the time is right, I need to find the right home for my people,” that’s the kind of leader we’re looking for. The next statement is usually, “Obviously, the economics have to work out, right? No one wants to give their business away.”

I can definitively say that we’ve acquired companies where we were not the high bidder because there was a close cultural fit and alignment. The owners felt very comfortable that we would take care of their people, provide them with growth opportunities, and give them the right home. That’s all you can ask for.

Kison: So, you’re trying to learn what may drive them to sell, the timing of that, what their culture is like, and potentially some elements of the economics.

Jeff Giles: Yeah, we usually don’t get into economics early on. That’s a tough one, right? They’ll often ask, “What multiple range do you pay?” We’ve got some general things we can share.

A lot of times, business owners who’ve only ever run their business—if it’s a waterworks distribution business—they’re not familiar with what an M&A process looks like. We’ve got a great packet of information that we can present or pass on to them. It outlines what our M&A process looks like from start to finish, so they know what to expect.

We’ve got a very formulaic, standardized process that’s repeatable and has worked 40-plus times for us.

Kison: You think that really helps—having this brochure... Let’s not call it a brochure, but kind of a pitch deck?

Jeff Giles: I wouldn’t even call it a pitch deck. It’s a process deck that shows a timeline and what happens at each step of the M&A process.

When I was building out our team and structure, I wanted everything to be formulaic, process-oriented, and repeatable. Regardless of whether or not there’s an investment banker involved—which there generally isn’t—we follow a structured process.

If you’re the business owner, we’ll have a series of meetings to determine mutual interest. We’ll sign an NDA and start with an initial request list of 12 to 14 questions—basic financials and a few other key things.

Once we have that, we develop a valuation range and provide a formal written indication of interest that outlines what that valuation range is and what the next steps look like. They digest that and usually say, “We’re in the ballpark.”

Sometimes they’ll say, “That’s not quite what I was thinking because my buddy at the club sold his business for 10 times EBITDA, and I think I should get 10 times, too.” I’ll ask them to tell me more about their business and their friend’s business. Then they’ll say, “Oh, he has a software business.” Okay, that’s different!

Generally, we’re in the same range. We’ll ask a few more follow-up questions—10 to 12 items—over a two-week timeframe. After that, we present a formal letter of intent with a specific valuation point, grant exclusivity, and start our due diligence process, which we target to complete in eight to ten weeks.

Most of the time, it stretches a little beyond that. We’re not the bottleneck—it’s usually the business owner running their business while trying to respond to our diligence requests. They may not loop in their leadership team and are often working with their M&A attorney, outside CPA, or internal finance team.

It’s a lot of work for them. We say, “Look, we can move as quickly as you can provide responses.” Some sellers want to finish in four to six weeks, but they quickly realize it’s a lot to digest.

We’ve streamlined our diligence checklist multiple times to focus only on the absolute key items needed to get to a signing and closing.
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00:43:31 | The Due Diligence Process

Kison: So, once you get alignment on the drivers of sale, timing, and culture, the next step is probably signing an NDA, right?

Jeff Giles: In some cases, the NDA is signed before the first in-person meeting. Some owners won’t meet without an NDA. Others are more exploratory.

Once we get to the NDA stage and they’re willing to exchange information, we usually have someone who will move forward—assuming we can align on valuation. That’s why we try to get to an indication of interest quickly, so we’re not wasting their time or ours.

If we come in with a valuation range of $40 to $45 million and they’re expecting $70 to $80 million, I’ll ask them to explain why. If there are valid reasons, we’ll explore it further. But generally, it’s just a misunderstanding of what businesses like theirs are trading for.

We’ve parted ways with owners over valuation differences, but some have come back later, and we’ve successfully acquired them.

Kison: Are there any industry reports or data you reference to help owners understand valuations?

Jeff Giles: Yes, there are some decent market data sources out there. We were talking earlier about GF Data, which was acquired by ACG. We subscribe to it, and they’ve got good private market data across different industries and size ranges.

I’ve shared snippets of that with business owners who come back and say, “My business is growing at X, my EBITDA margin is Y, so I deserve a 10X multiple.”

I’ll respond, “Okay, here’s some private market data from the last 15 to 20 years. Let’s focus on the most recent couple of years and see where businesses like yours have been trading.”

If you’ve got a premium business with some secret sauce, significantly higher margins than the industry standard, and it’s sustainable, then we can talk. But if it’s a typical business in the industry, there’s likely to be a discrepancy in valuation.

Again, we’ve been able to find common ground a lot of times.

Kison: Let me go back to that first meeting. Do you have any go-to lead questions to facilitate the conversation and understand their motives, timeline, and other key factors?

Jeff Giles: Absolutely. I’m not afraid to ask any question, but one of the keys is starting with, “What do you want to do? What’s the ideal scenario for you?”

I like open-ended questions to get them talking. My goal in those sit-downs is to have the business owner do as much talking as possible while I do as much listening as possible. I’ll ask about their business, family, and goals. That gives me a holistic sense of who I’m dealing with.

Understanding what makes them tick goes a long way in determining if they’re going to be a good fit for us from a cultural and strategic standpoint.

Kison: You’re asking out of curiosity—like you were doing with me earlier.

Jeff Giles: That’s exactly right.

Kison: Have you ever convinced someone to sell their business?

Jeff Giles: I don’t like to convince people of anything. I like to understand their motivations and desires, articulate our goals and vision, and find common ground.

I’m not trying to hard sell anyone. I don’t say, “You should really sell your business to Core & Main because of X, Y, and Z.” Instead, I’ll share what we’ve built at Core & Main, our long history, and what it’s like to join our organization.

I’ll talk about our culture, training programs, and product access. I’ll ask them how their systems and tools compare to ours and whether they offer growth opportunities for their people across different geographies or business segments.

That often sparks ideas. They start thinking, “Wow, that could be cool. We’ve got some up-and-comers who could thrive in that kind of environment.”

For many owners, it becomes a way to plan ahead and ensure they’re taking care of their people by joining a company that offers more opportunities than they could provide on their own.

Kison: So, you guide them toward selling their business rather than convincing them.

Jeff Giles: Exactly. It’s better than convincing.

Kison: And you’ve got the process deck to help guide them.

Jeff Giles: We do. And speaking of technology, we use a product called DealRoom that I believe you’re familiar with.

Kison: Never heard of it.

Jeff Giles: You should check it out—you may like it.

Kison: I’ve got a beer for you every time someone inquires and mentions Core & Main.

Jeff Giles: There you go! Say Core & Main, and we’ll get a discount on our next renewal.

Jeff Giles: Seriously though, I’ve used several different tools for deal tracking, CRM, pipeline management, and diligence process management. DealRoom has been a fantastic tool for us—from a technology standpoint, support, reporting, and customizability.

What I need in a system like that is efficiency, usability, and reliability. We haven’t had any issues with DealRoom. It’s intuitive and user-friendly. It’s made our process much more efficient.

Kison: Is that where you track all your pipeline activity?

Jeff Giles: Absolutely. All of it goes in there. Every interaction with every business owner or management team is tagged to each project card.

If we leave a voicemail, we may not log that, but every meaningful interaction is recorded. It’s institutional knowledge—not just something I or Noel or someone on my team knows. Anyone can access it and see the status of any deal.

For example, we might see a note saying, “We met with them in March 2024, had a great sit-down, and they said they’re not quite ready to sell but may be in a year or two. When the time comes, they’ll give us a call.”

Kison: How does that flow into execution?

Jeff Giles: It’s our data room. Occasionally, a banker will come to us with a pre-populated data room, but even then, we take everything and put it in DealRoom.

Everyone on our team—whether it’s someone in corp dev, a functional team member in diligence, or our integration team—has access to the data. It’s all neatly organized and tracked within DealRoom.

We even give business owners access to the data room side of DealRoom. They can populate it and answer questions there. It keeps everything in one spot and makes it easy to track.

We’ve streamlined the process so that sellers say, “You’ve got a thorough, organized process, and your team is incredibly responsive.” That’s thanks, in large part, to the tools we use—like DealRoom.

Kison: That’s great to hear! You’ve tried several tools, but it sounds like DealRoom stands out.

Jeff Giles: It does. There are other tools we’ve used over the years that worked well for a while, but we had to transition for various reasons. So far, DealRoom hasn’t let us down.

Kison: You use DealRoom for pipeline, diligence, and integration. Are there other tools you use to manage the process?

Jeff Giles: DealRoom is the primary one. We also use GF Data for private market valuation data, but for overall process management, DealRoom is our go-to.

Kison: Okay, so you’ve got a good tech stack in the back end. We’ve talked through this whole process—market mapping, identifying potential targets, building the relationship, getting some clear indicators that there could be a fit, and there’s some interest to sell. The NDA gets signed, and then you start going through the valuation process. At what point do you build out an investment thesis for a specific deal?

Jeff Giles: We generally have a pretty good idea even going into that first meeting. If you’re a business owner in a high-priority geography, we’ve probably had that circled for a while. We’ve got a good estimate of what the size of your business is. We know where your strengths are from a product perspective or where there might be some opportunities.

In that case, it’s very easy to generate the thesis: “We would like to acquire XYZ company to grow our presence in this geography and gain greater access to these additional products.” The thesis can be that simple.

We validate that throughout diligence, but our business isn’t rocket science. There are some pretty compelling strategic advantages we have with our size, scale, and the moat we’ve built around local knowledge and expertise.

You may not know this, but every municipality—or virtually every municipality—has its own specifications for a fire hydrant, for example. That’s great for us because if fire hydrants were standardized across the entire United States, there wouldn’t be as strong a need for us. We have product on the ground in those local markets, and that’s just one example.

By having the footprint and branch network we have, and the people operating in those local markets every day with a focus on solving customer problems, we’ve built a pretty strong and wide moat. That gives us great comfort in what we’ve built and what we’re continuing to build.

Kison: As you move through that process, do you build a formal investment thesis that you have to get approved or pitched?

Jeff Giles: We do, yes. That was one of the things I developed early on—making sure we had an investment committee of sorts, which is really comprised of our executive leadership team. I’m a member, along with our CEO and six others—eight of us total.

Before we submit an indication of interest (IOI), we’ll have a call or meeting to talk through the investment thesis and why we want to move forward. We’ve got a very straightforward template to present the opportunity. It’s standardized so that every acquisition proposal looks the same. We discuss it and decide whether to move forward.

For the most part, the opportunities I or my team present receive agreement early on. Any acquisition we move forward with has unanimous support and approval.

Before submitting an LOI, we have another checkpoint with our executive committee. We present what we’ve found since the IOI, narrow down the valuation range to a specific point, and confirm our comfort level. We outline how we can create value, check how it looks against our return hurdles, and highlight key diligence areas—both risks and value drivers.
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00:56:31 | Managing Bid-Ask Spread & Valuation Challenges

Kison: I could dive into five more topics right there, but I’ll be mindful of our time. Let’s dig into the bid-ask spread. Sometimes you come in at $40 to $50 million, and they’re at $70 to $80 million. What’s your approach to bridging that gap?

Jeff Giles: Every business owner and transaction is different. Part of M&A is just problem-solving. Every deal has some issue or challenge at some point in the process. Sometimes it’s valuation on the front end.

It goes back to the relationship—building trust and asking the right questions. I’ll say, “I get it. If I were in your shoes, I’d want max value for my business too. This is your one bite at the apple, and you want to do well. Totally understandable.”

But then we talk through what they’ve built and what the go-forward plan looks like. Businesses are generally valued based on trailing earnings, but what we really care about is the sustainable level of earnings going forward.

We also care about the synergies we bring to the table, but I firmly believe we shouldn’t pay someone for value we’re going to create after the acquisition. We should pay them for what they’ve built and what that looks like to us going forward.

There’s usually a lot of back-and-forth and explanation. Sometimes we come in with a range, and the owner says, “We’re in the ballpark.” Other times, they say, “That’s not what I was expecting.” We respond, “Okay, let’s talk about why you think that.”

We try to have an adult conversation based on rational logic and facts.

Kison: That’s interesting because it gives you a sense of how sophisticated they are. Sometimes it’s, “My buddy with a software company got X multiple,” or, “I saw a public deal announcement.” I like how you dig into the why. Are there other levers you use, like rolling over equity, earnouts, or other tools?

Jeff Giles: We’ve never acquired less than 100% of a business. That’s our model.

Kison: Is it always cash?

Jeff Giles: It is. We’ve had a couple of deals with a small earnout component. We try to avoid earnouts, but they can be a way to bridge a valuation gap.

Our businesses are highly integrated into our platform, so it can be harder to track earnouts, which can lead to disagreements and disrupt what’s been a good partnership. We try to find other paths forward.

If valuation is the only difference, we say, “No harm, no foul. Let’s stay in touch. Maybe you’ll grow into those valuation expectations, or something else will change.”

We’ve had situations where we parted ways over valuation, and they later came back, and we successfully acquired them.

Kison: Know your boundaries and don’t be afraid to walk away.

Jeff Giles: Exactly. You can’t be emotional about it. It’s hard, but you have to stay rational.

Fortunately, we’ve had very few deals fall apart late in the process. Usually, we identify challenges early. But sometimes, diligence uncovers an issue we can’t overcome.

For example, if a business is selling a significant amount of product through a Disadvantaged Business Enterprise (DBE) that isn’t performing a commercially useful function, that’s a red flag. If it’s just a pass-through operation shuffling papers, we have to walk away.

We’ve done that before, and while it’s unfortunate, there’s no way around it.

Kison: Stay above board.

Jeff Giles: Absolutely. We operate with the utmost integrity and within the bounds of the law.

Kison: Evaluation before LOI is signed—you know, what are the good indicators and red flags that you’re really looking for?

Jeff Giles: The DBE piece I mentioned is certainly one. We’re sensitive to that, so we dig in early. In our industry, we sell through DBEs, but they must be established companies performing a commercially useful function. That’s part of what’s great about American industry—giving opportunities to those who may be less advantaged to have a meaningful business and contribute to society.

But those who skirt the laws and regulations? That doesn’t fly. We catch that early.

On the financial side, we’ve got return hurdles that we look at. We make assumptions on growth and what value we bring to the table—whether through operational efficiency or great buying programs that can benefit companies we acquire. Those are key.

We put together an investment model with our return hurdles and the synergies we can bring to the table. We evaluate and stress-test it in partnership with our operational teams. We ask:

• Does this plan make sense?
• Are these growth assumptions reasonable?
• Is this assumption on customer loss accurate?
• What about shifting or moving around the supplier base?

It’s an iterative process that involves my team, the rest of our executive leadership team, and operational leaders in the field.

1:07:31 | Integration Planning for M&A Success

Kison: A big part of buyer-led M&A is making sure integration goes well, right? We’re not doing the deal just to close. We’re doing the deal for it to be successful. How do you make sure that happens?

Jeff Giles: Great question. That’s one reason you hear stats like "70% of acquisitions fail."

Kison: It’s a fable number, man. Who determines what that actually is?

Jeff Giles: If you continue the sentence, it usually says "fail to meet expectations set out in their investment thesis or model." It doesn’t mean the business went to zero or bankrupt. We haven’t experienced that.

A big reason for that is we get our integration team involved very early. As soon as we sign an LOI, the integration planning begins.

Our integration team rolls up under our finance organization, ultimately reporting to our CFO. He’s involved in every acquisition we move forward with. Someone from the integration team is on every call and in every meeting from day one.

As part of our standardized process, when we reach critical mass with responses to our diligence requests, we schedule an on-site meeting. It’s usually a day and a half in a hotel conference room. We go through each functional area with people from our HR team, IT team, tax team, and finance team. If we’re working with a third-party provider on a quality of earnings analysis, they join too.

We usually incorporate a site visit depending on the business. If it’s a traditional waterworks branch, we like to see it, but it’s not always a key factor. We can check the yard and warehouse on Google Maps, but obviously, we like to see what we’re buying at some point.

The on-site diligence meeting is critical for multiple reasons. It’s not just about checking boxes on our diligence request list—it’s also about interacting with the leadership team. We often loop in a few more team members and gain access to the next level of leadership.

Our integration team spends a couple of hours walking through what the future will look like post-close. They provide a list of items we’ll go through together. It can look overwhelming—like an eye chart—but it’s not a rigid list. It’s a framework for the areas we’ll focus on together over an appropriate timeframe for each acquisition.

Jeff Giles: It’s these types of things that we’re going to be focused on, and we’ll work with you over whatever the appropriate timeframe is for each individual acquisition. There’s a lot to discuss, but again, this isn’t our first rodeo. We know what we need to look for.

For example, if we’re going to be talking about an ERP migration—something we do when necessary—we discuss it and talk about the timing for that. We’re not perfect. Nobody is. Do we miss things every now and again? Or do we sometimes look back and think, "Shoot, we should have prioritized that piece of the integration plan earlier, so we hit it on day one?" Sure.

But we get the vast majority of it right. By the time we hit closing day, we know the business. We know the people. We’ve had relationships with them.

The other piece I didn’t touch on is that virtually every transaction we complete has an interim period—usually two to four weeks—between signing the purchase agreement and closing the transaction. During that period, we’re focused solely on integration planning. We’re not trying to run the business yet. We close the transaction with a plan in place, ready to hit the ground running.

We’ve already built relationships and developed trust. Shortly after the closing, we hold a leadership kickoff meeting led by someone from our integration team and the operational leaders who’ll be overseeing the business.

That team spends half a day or a full day together, talking through a variety of topics—what it’s going to be like working together, prioritizing different aspects of the business, and further understanding their culture and customs. We want to make sure that if there are things they’re doing every day that are essential to who they are, we don’t take those away or unnecessarily change them.

One thing we never say is, "Nothing’s going to change," because things will change. We try to minimize disruption, but change is a fact. We want to make sure there’s a good reason for any change, and we clearly articulate that reason. We want them to be on board with it.

During that interim period between signing and closing, we also focus on ensuring the leadership team is fully aligned with us. Whether it’s the owner or whoever is running the business, they need to be the ones communicating to their team: "This is going to be great for the business and the people, and here’s why."

We don’t just say, "Trust us." We explain the benefits and why this is the right path forward. If the leadership isn’t aligned with the go-forward plan, it sets you up for failure.

Kison: That’s a lot, Jeff. I feel like I’m going to need to talk to your CFO or someone on the integration team to continue this conversation. What surprises have you seen over the years in deals—either in diligence or integration? Those are always fun things to learn from.

Jeff Giles: I don’t know that I have anything super intriguing, but every transaction is unique. It’s a series of problems that need to be solved to get to signing and closing.

You’re dealing with different personalities. People prioritize things differently. We’ve had business owners who wanted to accelerate the process in ways that just weren’t possible.

In their view, they’ve answered all our questions. And yes, they’ve given an initial response, but now we have follow-up questions on 40 of those. We need to talk through those, and then there will be more follow-ups.

That’s why we articulate what the process is going to look like from start to finish. It’s iterative. We’re going to send you a large list of questions and discussion topics, make it manageable, but there will be follow-up. That’s why it’s called due diligence.

We need to make sure we’re comfortable with the investment we’re making. It’s not just about checking boxes. We want to test the investment thesis: Are we getting what we think we’re getting? And can we sustain it going forward?

Kison: I know you’ve got a lot of rocks to look under.

Jeff Giles: Exactly. We’ve been fortunate to acquire businesses from owners who were forthright. They were running the businesses they said they were running and treating their people the way they said they were. For the most part, we’ve gotten what we expected and been able to build on that base.

Kison: I’ll reserve that question for folks who’ve retired from CorpDev or aren’t with public companies. Those tend to be the ones with wild stories.

Jeff Giles: That’s right—or non-public CorpDev leaders.
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1:10:31 |The Role of Technology in M&A

Kison: I’ve got a couple of questions about what the future looks like. I know we mentioned technology. First, kudos to you, I think you're like ahead of the game. I noticed this pattern trying to be as unbiased as possible, but. The best in M&A tend to use good technology products like DealRoom. 

Jeff Giles: Yeah, no, I mean, it's incredibly important. Again, the key for us is we want to be on the cutting edge of what’s available and what we need to run our process efficiently. But that’s the key—it has to be efficient. It has to work within our process, and we have to rely on it without a second thought. That’s what we’ve seen with DealRoom, and we’re incredibly comfortable there.

Kison: Close your eyes and imagine 10 years out. What do you think the future of this technology will look like? My head of product is going to get this recording, by the way. We’ve got AI today, but in 10 years, who knows? There’s probably going to be an AI-driven M&A robot that could do things. Where do you see technology going?

Jeff Giles: The good thing—which hopefully gives me some job security—is that I don’t think an AI-powered robot is going to replace the in-person meeting, the establishment of rapport, and the evaluation of culture and fit. Unless we’re talking about an AI that’s truly indistinguishable from a real human…

Kison: Wow, you’re going way out there—really high-level stuff.

Jeff Giles: That might be 20 years out.

Kison: Let’s keep it 10 years out.

Jeff Giles: I guess I should start investing in robots then, right? Be in control of my own destiny.

No, but seriously, I think automation will continue to focus on repetitive tasks—like contract review or identifying various risks. That can certainly be streamlined. I also think identifying and prioritizing opportunities could benefit from AI, synthesizing data we already have—whether from databases, research tools, or access to additional studies and reports—and turning it into meaningful, actionable insights.

I don’t know exactly how or when that will happen, but it’s probably already happening to some extent. It’ll certainly increase in the near term.

But no matter how advanced technology gets, I always go back to the people aspect. You can’t replace that. Even if more of the people we hire in the future are working in different types of roles than today, they’re still people. We’ll still need to find cultural fit, build relationships, and align on what the future will look like.

We’ll continue to invest in technology and stay on top of the best tools available, but people aren’t going anywhere. We’ve got a pretty good team.

Kison: Technology in M&A means less time on tactical stuff and more time on strategic, value-adding activities and real people issues that create value.

Jeff Giles: There you go! You should answer the question yourself.

Kison: I’m just talking back to you.

Jeff Giles: No, that was perfect.

Kison: When it comes to corporate development evolving, especially with buyer-led M&A, it seems like companies like yours are driving that process more. For example, how your team engages with the target company before close to prepare them for what’s coming post-close—that’s clearly buyer-led. Do you see your organization evolving further in that direction?

Jeff Giles: Interesting question. I’d think about target identification and prioritization. As we continue to expand into adjacent markets, that could be an opportunity to shortcut some of that research and analysis. Buyer-led M&A will always be about relationships. Bankers aren’t going anywhere. They’ll use technology to streamline their processes and automate as much as they can, but a one-on-one, person-to-person relationship is incredibly meaningful.

That will always be a priority for us, no matter where technology takes us. You can’t take the human out of the equation.

Kison: You’ve just given me my next startup idea: a banker robot.

Jeff Giles: There you go. Get me in on the seed stage.

1:14:31 | Surprising Moments in M&A

Kison: Now for every legal department’s favorite question: What’s the craziest thing you’ve seen in M&A?

Jeff Giles: Oh, goodness. I’m not sure I’ll have a great answer for you on that one. I may have to plead the fifth.

Kison: Because of the public company?

Jeff Giles: Yeah, I was given strict orders on that one.

Kison: What about a totally PG, kindergarten-appropriate story?

Jeff Giles: Hmm… trying to think of something pre-Core & Main.

Kison: Nothing to do with Core & Main at all.

Jeff Giles: Yeah, Jeff’s own personal experience.

Kison: Even something funny, like a post-close purchase. You’ve got to have something.

Jeff Giles: Well, there was one. I don’t think this will upset anybody. We bought a business, and they had a pet alligator in the back of one of their facilities.

They treated it like a pet—they would feed it, and it just lived there. That wasn’t on our diligence list—to ask if they had any wild animals roaming around that they treated as pets.

When we took over the business, we had to make sure someone came and took that alligator and took good care of it so it wouldn’t disrupt our business.

Kison: You put it up for adoption?

Jeff Giles: I don’t know exactly what happened, but there was no harm to the alligator and no harm to our people. But we no longer have a pet alligator.