Executing Strategic M&A in Today's Market

The impact of changing regulations on M&A deals

Historically, up until recently, we've typically done between three and five deals a year, including both outright acquisitions and strategic investments. I've been here a little over a decade, so that's a fair number of deals.

We're in a regulatory environment that's completely different from what we've seen before. Historically, if the number one player in the industry was acquiring the number two, you'd expect some regulatory pushback. But now they're scrutinizing even when companies enter entirely new industries.

For example, in our case, we were looking at acquiring a company called Etraveli, which focuses exclusively on flights in the travel market. We didn't offer flights on Booking.com and thought it would complement our accommodations business, much like what our competitors—Expedia, Trip.com, eDreams, and Despegare—have been doing for decades. 

It was shocking when the regulators blocked the deal because we believed it would actually increase competition in the flight market, where we were becoming a new competitor. This decision had nothing to do with our accommodations business. 

But the regulators have completely changed the rules for assessing what they call non-horizontal mergers—when a company moves from one industry into another. There used to be clear guidelines, but those have essentially been discarded, particularly for large companies.

The ruling essentially states, and we’re appealing it, that because we're successful in one sector, we shouldn't be allowed to expand into another sector that might indirectly benefit our core business. We believe this ruling is fundamentally flawed, which is why we’re appealing.

This is the buzz right now, especially with large acquirers. What they've essentially decided is that any big company is bad, regardless of how they became big. No one is accusing us of being nefarious; we've just competed well over the years. 

But their stance is that if you're big, especially in tech, you're bad. And if you're doing M&A, it's to help your company grow even bigger, which, of course, is true. No one does M&A to hurt themselves.

Their argument is, if you're big, that's bad, and if you're doing M&A to get bigger, that's also bad. So they can just block it. The facts don't seem to matter. They don't have to show any actual harm or an increase to your business—they can just block the deal. And that's the new precedent they're trying to set, which could be applied across all industries in Europe.

The ripple effects of regulatory overreach on M&A and investment

The UK has its own regulatory body too. That's another challenge. Each jurisdiction has its own regulators, and you have to navigate through all of them.

We got approval in the US, approval in the UK, and in other jurisdictions. But the EU regulators blocked it. You can have 4 out of 5 regulators say it's fine, but if the 5th one says no, it blocks the entire deal. They're all looking at the same facts and circumstances, for the most part. 

The dynamic in the UK isn't that different from the dynamic in France, for example. It's incredibly tough in this environment for larger players to get M&A deals done. I think this will have a huge chilling effect, not just on M&A, but also on investment.

I've had bankers reach out to me about deals, and until we get this appeal sorted out, I won't even consider them. There's just no way to get it done. If you're a private equity investor looking at these companies, you'll think twice if M&A is not a viable exit strategy. And for VC investors, they’ll question where this is all heading.

What I think will happen is the opposite of what regulators intend. It'll become harder for smaller companies to access capital, and when they do, it’ll be more expensive. That’s going to stifle innovation—the exact opposite of what European regulators should be aiming for. But, they have their own agendas.

We’re seeing a macro effect here.  And I’m not against regulation. I'm not someone who says we should throw out all regulations. I believe smart regulation can play a productive role, benefiting not just the industry but society as a whole. 

But what often happens is well-intended regulations get manipulated along the way, shifting dynamics, and suddenly you have people saying, "big is bad," and we have to stop it.

In our case, many articles have pointed out that the European Commission is essentially arguing what antitrust experts call an "efficiency offense." This means we tried to make our product better for consumers by making it easier to use and lowering costs, which, in turn, improved our competitive position. 

There's nothing anti-competitive about improving your product. Traditionally, regulators wouldn’t stop that, but now they say they can block these types of transactions, even if they’re good for consumers and improve the product, simply because it might help an already strong company. And for them, that's reason enough.

This also complicates your deal with the added steps of getting approval. Normally, we would have expected that deal to be reviewed and approved by regulators in six months. Instead, it took over two years. 

This doesn’t just take time—it consumes a lot of management energy and focus, and it makes lawyers rich. Ultimately, in our case, the deal was blocked. We think the ruling is terrible, so we’re appealing it, which is another two-year process.

Meanwhile, we're in limbo, as are others who are watching this ruling. That uncertainty is generally bad for business.

Shaping strategy through M&A setbacks

We’re fortunate that we don't have an M&A strategy per se. For us, M&A has always been a tactic. We have a corporate strategy that's entirely independent of M&A. My team and I, as leaders in M&A, look for opportunities to execute transactions in support of that strategy, but our success doesn't hinge on M&A.

So, from the way we operate, it doesn't really affect our fundamental strategy, because we've never relied on M&A as the solution to execute it. It might slow us down in some areas, but it doesn't change the strategy. 

We may end up thinking more creatively about partnerships. For example, if we can't acquire a company in a sector, maybe we can partner with them in a way that helps both of us achieve our objectives.

Using M&A as a tool, not a strategy

All our M&A evolves from our strategy. Historically, we were focused on accommodations, primarily selling hotel rooms and other accommodations online. But we made a strategic decision, which we’ve openly discussed, to shift toward what we call the "connected trip." 

This is about enabling the consumer and helping them through every element of their travel experience. How do we help people experience the world? How do we get them to the airport? How do we help them find a flight? Once they land, how do they get to their hotel? Where do they eat? What do they do? That’s our vision of the connected trip.

We decided to expand beyond accommodations to help the consumer purchase all elements of their trip in an integrated, seamless, and cost-effective way. That was the strategy. Then we asked, how do we execute it? For flights, we could either build our own platform, partner with someone, or acquire someone.

Initially, we partnered with Etraveli before considering acquiring them. As we got to know them, we thought, maybe we should acquire them. We tried, but the deal was blocked. Now, we continue our commercial partnership with Etraveli. 

We have a strong and growing flight business. While we’d love to own and control that part of the business, we have a productive partnership that both sides are happy with.

Ideally, we’d prefer to own the asset, but since we can’t, we’re working together at arm’s length very effectively. So, yes, in this case, we would have liked to own it, but when that wasn’t an option, we made the decision to continue the partnership for the long term.

So it goes back to focusing on the strategy itself, rather than just doing M&A. You can get into trouble if you start relying on M&A as critical to your strategy.

M&A is inherently difficult. I firmly believe that the vast majority of M&A is bad for buyers. It's almost always good for sellers because buyers pay all the money upfront and take on all the risk. Most deals don’t work out in the buyer’s favor from a value creation perspective. That's the first challenge.

Then there are times when, for whatever reason, you simply can’t do a deal. So, if your strategy is dependent on completing a deal, that becomes a problem. There are exceptions—like in roll-up strategies, where you're consolidating small companies—but in general, if your corporate strategy is 100 percent dependent on M&A, that's a bad place to be.

How global regulatory collaboration is impacting M&A activity

It definitely makes it harder. They’re all talking to each other, and they’re not shy about it. Everybody knows that, and they’ve admitted it to us in our process. They’re generally birds of a feather. 

If you're a hammer, your job is to hit the nail, and they’re all hammers. When you have four or five regulators involved, if one decides to block the deal, the others might back off, thinking, "I’ll be the good guy on this one."

I don’t know how often that happens, but all these bodies see their primary objective as regulation and blocking deals in certain circumstances. In today’s political environment, where they’re firmly aligned against anything big, it just becomes much harder to get a deal through when any one of them can block it, and they’re all communicating.

That makes things complicated, and that’s why we’re seeing a slowdown. We’re not a small company—our market cap is around $100 billion—but we’re less than a tenth the size of Google, Amazon, Apple, and Microsoft. These much larger companies, and even smaller ones than us, are also in the crosshairs.

I'm not saying there shouldn’t be some regulation. Should Coke be allowed to acquire Pepsi? Probably not. Should we be allowed to acquire Expedia? I can see regulators having concerns about number 1 and number 2 coming together.

But in a transaction where we’re entering a new industry we don’t even participate in, and regulators block it because it might improve our product and strengthen our core business—that feels like overreach. It’s not good for consumers, and it’s not good for innovation.

Adapting to regulatory rules

You really have to focus on your core business. There's no way to circumvent the regulations. You can’t trick regulators—it doesn't make sense to even try. Ultimately, we have to play by the rules they set, even if they change those rules mid-stride. 

There's no bypassing the regulations; you just have to understand the guidelines and do your best to execute within them.

Ideally, those rules are applied to everyone equally. But increasingly, we're seeing selective application of regulations, which is a different issue that trickles down into the M&A environment. 

In general, you have to accept the rules and work within them. If you can’t do M&A in a certain area, you have to admit that and move on. Then, you look at alternatives. Maybe it's a partnership where both parties are happy with the commercial terms, and you hope it works out.

Ensuring strategic alignment and long-term value in M&A

The alignment of strategy on paper is usually easy. Many M&A deals look good on paper—they make for great PowerPoint presentations. The challenge is in the execution of the details. It often hinges on how the two organizations are structured, how they operate, and whether they can fit together culturally and structurally.

A key factor is understanding what the founders or owners want. We've walked away from many deals that looked good on paper because we didn't want the same things the business owners did. 

It's like marrying someone with completely different life goals—it's a recipe for disaster. If you're not aligned on long-term goals and how to achieve them, you shouldn't enter the relationship, no matter how good it looks on paper.

We spend a lot of time with the management team to understand how they think about the business, how they manage and incentivize employees, and what their personal objectives are. If they don't align with ours, we walk away. 

We rarely come in and replace management. Typically, we're buying companies because they add something we don't have, and they do it better than we do. We're betting on the people running the business.

If they're not aligned with us before the deal, we can't expect them to be aligned after the deal, so we’d rather not proceed.

So, you view the target organization as puzzle pieces—the structure, operations, and culture. You start with the management team to understand how well it’ll fit and whether you can work with them.

We’re a very bottom-up organization from an M&A perspective. There's no deal where corporate leadership says, "We like this deal, so we’re going to do it," and forces one of our brands to take it on. The brand must be excited about the transaction, confident they can integrate the deal, and work with the people involved.

If they don’t believe they can make it work, we don’t move forward. They’re the ones dealing with the day-to-day realities—how their marketing team will work with ours, where the CEO will report, and so on. Those are the things that determine whether a deal is successful or not.

Things will inevitably go wrong. It could be a small issue or a big one, but when it happens, you need people who are aligned with you on your objectives and can work together to overcome the challenges. If there's no alignment, as soon as things start going sideways, the deal falls apart.

Sourcing deals

We’ve been in the M&A game for a long time, and we’ve established some credibility and a broad network across the M&A market in the travel industry.

Deals come from bankers, private equity firms with portfolio companies they want to sell, and sometimes directly from founders. We also get leads from members of our brands who are aware of or working with companies they think we should look at from an M&A perspective.

All of these sources funnel deals to us, and our job is to separate the wheat from the chaff, figure out which ones are the most attractive, and then work with the brands to execute those deals.

The Rocketmiles acquisition success story

Hopefully all of them, but I'll take a smaller one as an example because it's instructive of what can happen when things go wrong and how you turn lemons into lemonade.

There was a small company many years ago called Rocketmiles, which had launched a product focused on high-end leisure and business travelers interested in earning miles. They created a creative structure where a customer could book accommodations and earn miles from their preferred airline. 

For example, I could book a hotel in Paris for a week and earn 10,000 miles on Air France or British Airways. We thought this was a smart structure for a certain market segment, and they were growing quickly. We loved the management team and acquired them with an earnout structure that incentivized them to grow their cash flow over time.

Not long after the acquisition, we realized the market for that segment capped out quicker than expected. The management team faced a challenge: how to hit their earn-out goals when the market wasn’t as big as they thought. Our deal allowed flexibility, so we told them if they could drive EBITDA over the next few years in other ways, they’d still get their earn-out.

What they discovered was that their integrations with airlines enabled them to create a strong B2B engine, which became a key part of our overall B2B strategy for selling accommodations to other businesses. That platform now does very little of their original business but has become an important part of our operations.

This was a situation where we trusted the management team, and they trusted us to find a solution. When we hit that bump in the road, instead of giving up, they pivoted, and we supported them. 

In many organizations, they might have just said, "Sorry, you're not hitting your targets." But we asked, "What else can you do within the organization?" They came up with this new strategy, and it worked out.

The team stayed with us for many years, and even though they left after their earn-out, they remain good friends of the company. This example highlights the importance of trust and collaboration when things don’t go as planned.

Key targets and red flags when building an investment thesis

In terms of building an investment thesis, it has to fit the corporate strategy. If it doesn't, we're not interested. However, many things can look good on paper, so we're very analytically driven. We focus on understanding the unit economics of the business. Can the business scale? If it's not profitable now, what needs to change for it to become profitable?

We approach it from a bottom-up perspective, looking at profitability and scalability. Since we're valued based on profits and cash flow, a company with high revenue but no profitability isn't appealing to us because it won’t create value for our shareholders. The company needs to drive meaningful EBITDA and cash flow.

That doesn’t mean it needs to have huge cash flow today, but we need to justify the valuation based on its future earnings, not just theoretical revenue multiples. We mostly analyze on a DCF (discounted cash flow) basis rather than using current EBITDA multiples, especially since most of the businesses we look at are in growth phases. 

For more stable industries, it might be easier to use EBITDA multiples, but in high-growth sectors, you really need to understand the business and what it can achieve over time.

From my perspective, one key factor is a rational management team with a credible business plan. We see so many business plans that show moderate growth until, suddenly, the year we’re talking to them, the growth skyrockets—what we call the "hockey stick" growth pattern. In 95% of the cases we look at, we see this pattern, and 90% of those never execute it.

The first thing I look at is how credible the forecast is. Do I believe the management team? Or are they selling me a bill of goods? It’s a big red flag when modest growth suddenly turns into hockey stick growth, and 99 times out of 100, it’s happening "next year." 

Occasionally, it does happen, but you have to ask the hard questions: What’s changing? What’s going to drive that 50% growth next year when you've only been growing at 15% annually?

Usually, they can’t point to anything substantial. They’ll say, "We’re going to keep doing this," but if you’ve been doing that and getting 15% growth, why would that suddenly jump to 50%? The explanations tend to be pretty thin.

The AI hype

I haven’t heard that one much yet, but I’m sure it’s coming. AI is the new mobile. For those of us around during the first mobile boom, mobile was going to change everything—and in some ways, it did. 

We all operate on phones now, and it changed how we interact with technology in a fundamental way. But it didn’t change the industries much. The same players from pre-mobile are still around today. There wasn’t a brand-new mobile company that took over the world.

My sense is the same thing will happen with AI. It’s unlikely that an "AI company," whatever that means, will suddenly take over the world. AI is a capability, not a company or a product. The companies that already have real products and can deploy that capability are going to be the winners—not just someone claiming to be an AI company.

Managing the hidden costs of M&A

When we evaluate M&A opportunities, it’s much more about understanding the historicals—what have they been doing to generate growth, and can we expect that to continue? I can’t think of a situation where we’ve made an M&A bet on something different happening in the future. That’s just not how we operate.

Most M&A turns out to be bad for the buyer, so if you’re hoping a deal will work, it probably won’t. You need to have strong conviction that you’ve done the analysis, understand the metrics and trends, and can project them under reasonable circumstances. 

Betting on something dramatic happening in the future is risky—it’s more likely that something changes for the worse than for the better. Most plans assume nothing will go wrong, but things always do, and there’s usually more downside than upside in a financial plan.

We’re willing to pay a premium for a de-risked business—one that’s proven, executing well, and is a leader in its space. I’d rather overpay for a business that’s sure to execute, even if it doesn’t generate massive value, than overpay for a risky home-run bet that never materializes. 

Risk is a big factor in M&A because you’re not just paying the cost upfront to the sellers—you now hold 100% of the risk for the next five years, and you have to execute on what the company promised.

The other cost that’s often overlooked is the massive amount of management time and energy required to integrate and run the acquired business. This pulls focus away from the core business, and there’s a real cost to that. 

Many companies make bad deals, not just because the deal was bad, but because of the toll it takes on the rest of the organization. They lose focus on their core business while chasing a new opportunity, and that can cause them to lose their way.

Even in good deals, the cost of management's time and effort is significant, and it almost always affects the existing business in some way.

There are definitely integration costs and OPEX costs. For example, let's assume we had acquired Etraveli. Now, we’d have a flight business within Booking.com. 

You’ve got people running the flight business, people running the accommodations business, and then another group managing the coordination of both. On top of that, you have a senior person who now has to focus on two businesses instead of just one.

All these people have limited time, and no matter how hard they work, there are only so many hours in a day. Now, those hours are being split between two priorities instead of one. You have to be sure that if you’re incurring that distraction, it’s going to be worth it.

Especially because, as I mentioned before, most deals don’t really work out from a value perspective. That means all the time spent thinking about that business, trying to make it work, and integrating it could have been much better spent focusing on the core business you had in the first place.

The importance of an integration team in M&A success

We didn’t always have one, but we’ve developed an internal integration team over time. They’ve done a great job educating the business units on what it really takes to integrate something they’re interested in. 

Most business folks don’t deal with M&A as part of their day-to-day—whether they’re in sales, marketing, or tech. Their job isn’t M&A or integration, and the process of doing that can be a massive, years-long effort that demands a lot of time, energy, and cost.

When you sit down with someone and ask, “What’s on your plate today?” and then say, “Now imagine adding 20 other things to that in the next six months. How are you going to handle that?” they often realize they can’t. 

If you can’t figure out how to manage those extra tasks, you can’t do the deal because those tasks are essential for successful integration. Without a plan, you’re almost guaranteeing failure.

It’s a long and sometimes painful education process, but once the operating units understand the scope of integration, it raises the bar. They start to realize just how valuable the deal has to be to justify shifting their priorities and focusing on something new.

Balancing valuation and integration costs in M&A

We factor the integration costs into our analysis, considering what it will take to integrate the company. These are nominal incremental costs that reduce the DCF value by the estimated amount, but it’s not a huge factor.

The bigger issue is that you should never pay the full DCF value because if you do, you won’t create any value. You’d be working hard to generate value that’s already been paid to the seller, leaving no value creation. So, you need to pay a discount to the DCF value for the deal to be worthwhile.

The real question is whether the difference between the DCF value and what we’re willing to pay is big enough. This leads to more qualitative discussions with management about whether there’s enough upside to justify the effort.

Even though I’m responsible for due diligence and valuation, once the deal is done, I’m not responsible for execution. That responsibility falls on the brand that now owns the business. 

They need to recognize the risks and determine if the potential upside is worth taking on the challenge. It’s crucial to ensure they go into the deal with their eyes wide open, fully committed to doing what it takes to make the deal a success.

Other reasons deals can go awry

We've talked about how misaligned management incentives can be a big problem in M&A. But industry trends can also change unexpectedly. Hopefully, you’ve built enough flexibility into your model, so if growth slows or a new technology disrupts the market, you're not caught off guard. These things are hard to predict. 

And then, there are black swan events like COVID. If you look at deals made right before COVID, many businesses survived and are performing well now. But if you evaluate them purely from a financial perspective and look at the cash flows over that five-year period, you'd realize they might not have been worth what was paid. 

Even if the company performed well through the pandemic, losing two years' worth of EBITDA impacts the deal significantly. If we had known about COVID beforehand, would we have paid the same price for those businesses? Probably not.

These black swan events are unpredictable, but having a strong management team is crucial to navigate through them. When something like that happens, you need a team that can adapt and turn challenges into opportunities.

As for selling companies, we've never done that. We've been fortunate enough to be happy with all the businesses we've acquired. The only time we’ve sold something was when we recognized it wasn’t part of our core business, like our in-house customer service operation at Booking.com. 

We sold it to Majorel and made a commercial deal with them to outsource our customer service. So while we do review our assets regularly, we've never sold a business we've acquired through M&A.

We're not religious about holding onto every acquisition, but so far, we haven’t found a reason to sell. Our strategy hasn’t needed a radical reboot, like shifting from print to digital, which some companies have had to do. 

From the early 2000s until recently, we were focused almost exclusively on selling accommodations. We've built around that core business and executed well.

We've been fortunate. My boss, Glenn, who hired me, took on the CEO role, and I moved into Corporate Development. Back when he joined in 2000, our stock price was $3. A couple of weeks ago, it hit $4,000. It’s been a 20-year run of effective strategy, so we’ve never felt the need to radically transform our approach.

Key lessons in M&A: Doing deals that matter

The biggest lesson I've learned, and one I try to instill in my team, is that we’ve been fortunate we've never been in a situation where we had to do a deal. Our company's back has never been against the wall, forcing us to make a desperate move. So, we’ve always approached M&A as a tactic that can enhance or accelerate our existing strategy.

In that context, we see ourselves a bit like doctors—the first rule is "do no harm." If things are going well, you don’t want to disrupt that with a bad M&A deal. That’s one of the reasons Glenn hired me 12 years ago. I told him, as a banker, I did deals where I often questioned why they were happening. 

My role was to help the client get the deal done, but I wasn’t always proud of them. When Glenn asked why I wanted this job, I said, "I love doing M&A, but I hate doing bad deals." I wanted to do deals where I could look back and be proud, knowing they created real value. 

Here, we don’t have pressure to do a deal just for the sake of doing one. I get paid the same whether we do zero deals or six in a year, because the focus is on analyzing and assessing the deals rigorously and critically.

Our job is to evaluate deals and provide that assessment to the broader organization. Then, together, we decide if it's the right move based on the facts and risks. 

If the analysis is done correctly, we’ll make the right decision 95% of the time. What I've appreciated most is working in an organization where the goal isn’t just to get the deal done, but to make sure it’s the right deal.

Aligning objectives between acquiring and target company management teams

We’ve talked about the importance of aligning objectives between the acquiring company and the management team of the target company. When we engage with the leadership, whether it’s the CEO or whoever is running the business, we have candid conversations about what we’re going to do together.

We trust the CEO or leadership team, but they also have to trust us. We structure the deal in a way that both sides share the risk. 

Ideally, the management team will look at the deal and say, "Yes, there’s some risk here, but I believe in this vision, and I believe in this company that’s acquiring us. I think I can achieve more as part of Booking Holdings than I could on my own." When they truly believe in that vision, it's a good fit.

But the management team also needs to want the same things as we do. Some management teams are focused solely on growing revenue as fast as possible, and we’re clear that’s not how we operate. 

Yes, we want growth, but we want profitable growth. If they’re not interested in figuring out how to grow profitably, we’re upfront that it’s going to be a rough, ugly road that won’t end well for either of us. So, it’s better not to go down that path at all.

Handling surprises in M&A deals

Fortunately, I can’t think of any major post-close surprises, but there are often challenges during the due diligence process, particularly when dealing with different types of companies, like startups or businesses in different countries.

For example, we had a company that had been doing business with hotels in a country like Iran, where U.S. companies are prohibited from operating. They were based in a country where such business was allowed, so they initially thought it was fine. 

However, as we dug deeper, we found that while they were allowed to do business under their country’s rules, they had been conducting transactions in U.S. dollars. This meant they were actually operating under U.S. regulations, and what they were doing was illegal. 

They could have been fined by the U.S. government. We discovered this at the last minute and had to restructure the deal to address this significant liability.

In cases like this, we work quickly to disclose the issue to the government and take responsibility, even if it was an honest mistake by the acquired company. The company didn’t realize they were violating regulations because they were unsophisticated in these matters, but by doing business in U.S. dollars, they had exposed themselves to U.S. jurisdiction.

These last-minute discoveries can lead to tough conversations, especially right before signing a deal. It’s critical to have built a strong element of trust with the sellers and management team. 

If that trust isn’t there, deals often fall apart when issues arise at the 11th hour. But if there’s trust, you can have those difficult conversations and work through the challenges.

There was another deal where, at the time, our brands operated very independently and competed against each other. The acquired company expected collaboration among brands like Booking.com and Priceline, but we had to be upfront that it wasn’t how we operated. 

They later experienced that firsthand when they shared an idea with another brand, only to see that brand launch a similar initiative on their own.

Fortunately, our company has evolved to be more integrated, but these situations highlight the importance of being candid with sellers about both the positives and negatives of joining the organization. 

No company is without flaws, and it’s better for everyone to go into the deal understanding both the good and the bad. If a CEO is used to focusing only on revenue and compensation tied to it, they need to know that in our company, their compensation will be based on EBITDA. If they aren’t prepared for that, it’s going to cause problems later.

Being transparent about everything, the good, the bad, and the ugly, helps establish trust and alignment, which allows everyone to better navigate challenges when they inevitably arise.

The importance of buyer-led M&A processes for long-term success

Looking back over all our deals, I think there’s only been one where we "won" the asset in a sell-side process. And honestly, it wasn’t one of our best deals. The issue with sell-side processes, as you mentioned, is that they are driven by bankers with strict timelines, limited access to management, and a push for competitive bids. 

You don’t always have the time to do the deep work, dig into the details, or get to know the management team as well as you’d like.

For us, if we can’t do that, we’ll walk away. It’s not worth the risk of discovering something problematic after the deal closes or realizing that management isn’t aligned with our vision or plans, or worse, that they plan to leave shortly after we acquire the business. 

Often, you can’t have those candid conversations during a sell-side process because there’s always a banker in the room.

We don't go into deals hoping they’ll work out. We need confidence that the details are right. Even if everything looks good on paper, we won’t proceed unless we’re certain. Most of our deals have been negotiated one-on-one, which takes a bit longer—maybe six months instead of four—but it’s worth it to ensure the acquisition is a good fit.

While we don’t move as quickly as you might in a seller-led process, this approach gives us a much higher likelihood of success. It’s what we need to be comfortable with an acquisition.

‍