Lessons from the Trenches: Mastering Tech M&A, Integration, and Carve-Out Strategies Part 1

The power of an engineering background

An engineering background prepares you for a lot of uncertain things. Engineers are very good at scenario planning and designing stuff. And as we know, M&A is a science. You’ve got to look at all different things that could go wrong and then see how you can mitigate them. So, the engineering training is definitely helpful.

Key lessons from the trenches for corporate M&A success

I’m a big believer in starting with first principles. What is the strategic rationale for why you’re doing this acquisition? Is it because you want to go into a new market? So, is it market-driven? 

We’re going to talk about technology companies—that’s where I’ve spent most of my time. Is it a strategic technology that you want to acquire, for example? So, is that what’s driving it? Or, in some cases, is it people? 

We’re seeing a lot of enterprise software companies today looking at AI companies. In some cases, the products aren’t there yet, but they definitely want to acquire the team. That is really what drives these decisions. And, of course, it has to make financial sense. That’s super critical. 

Let’s talk about corporate M&A. Corporate M&A is very important because, for a corporation, it’s all about growth. They have organic growth strategies, and then M&A kicks in when it comes to inorganic growth strategies. Sitting down and understanding what products they have today and how to complement that through M&A becomes very critical.

Sitting down with the board is key. For example, in some cases when we’ve spent time with the corporate M&A teams, the boards have said, “Listen, we’ve decided that we have a very good footprint in North America, but we want to expand into Europe or Asia.” In that situation, what we’re looking at is basically a corporate M&A strategy with good direction from the board and proactively looking at targets in that area.

I’m a big believer in getting buy-in. If you do find some interesting acquisitions for a corporation, start by doing a little bit of homework to make sure the integration goes well. That’s how I would position some of the lessons and things to watch out for when you’re doing corporate M&A.

In our discussion today, you’re going to see I’m going to be using “no surprises.” So, what you want to do, especially in a corporate M&A scenario, is stay aligned with the board. 

If the board says, “Hey, we should be looking at an expansion into Asia or a specific country in Europe, like the UK,” you want to make sure you’re executing on that plan and not deviating from the strategy. So, no surprises—keep the communication lines open, even with the business units, over time.

Balancing proactive and opportunistic M&A strategies

I’m happy to introduce the concept of what I call proactive strategy and reactive strategy. Definitely, you want to have a proactive strategy. You want to keep your team busy. You want to make sure they’re tracking your ideal targets. 

And we might be tracking some of these ideal targets and saying, “They’re not ready yet,” or, “They just did a financing. If it’s a private company, these guys are valued at $500 million. It’s not going to go anywhere. It’s not accretive for us,” and things like that.

But there could be some catalysts—some event that happens—and suddenly that target becomes available. Maybe there’s an issue with one of their product lines, and now they need to sell the asset. The key is to manage your funnel and, at the same time, be ready to pounce on any of these opportunities.

I actually did that all the time. I’d say, “What are some of the aspirational companies you want to go after?” We’d continue to track them. Then suddenly, someone has to carve out a piece because of regulatory issues or a merger between two big companies. If you can move fast, you win.

You walk in and say, “Here’s a fully financed offer, ready to close in 45 to 60 days.” The other side might say, “Perfect,” and at that point, you engage with them. You can say, “Now, I want exclusivity.” You lock them in and move fast.

So, you’re absolutely right. You need a proactive approach and a team organized to take advantage of these opportunities as well.

Building and managing an M&A pipeline

We’re proactively building a pipeline that aligns with our strategy, but there’s obviously stuff that comes to us as well. 

A day in the life of a corporate development team is that you’re always getting inbounds from bankers. A couple of them might say, “Hey, have you thought of this?” Then you ask, “Do you have a mandate?” Sometimes they don’t, and they’re just testing the market.

 In other cases, there’s an active sell-side process, and they’ll say, “We’re running a process. Are you interested?” You say yes, they send you a teaser, and if you’re still interested, you sign the NDA, get the SIM, and move forward.

You’ll always have that inbound piece. Then there’s your second job, which is tracking the companies you actually want to buy. You continue to monitor their financing, their operations, and even indicators like layoffs. If they’re laying off people, does that signal trouble? That’s the perfect time to have a conversation with their investor or chairman of the board and make a move. It’s all about tracking. 

How do you rate opportunities in your pipeline? You rate them as actionable based on the information available at that time. For example, if a company just raised $50 million, they might have two years of runway, so they’re not likely to trade anytime soon. But something could happen that makes them actionable suddenly. 

You categorize opportunities as actionable, non-actionable, or with timelines like 6, 12, 18, or 24 months.

We’re looking for indicators to tag them as actionable. Otherwise, they’re in our pipeline but not actionable. 

Or you’re tracking them but not intensifying your approach yet. Sometimes the company’s valuation might be too high, so it’s premature to approach them.

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Handling opportunistic deals outside corporate strategy

For deals that are out of our strategy’s scope, there’s a separate bucket for those—what I’d call the idea bucket. It shouldn’t be a totally different business, but there are situations where companies acquire outside their core strategy. 

For example, some companies acquire purely for cash flow. These diversified companies have specific financial metrics they track, and their shareholders buy their stock because they’re looking for certain dividend yields. Their strategy is focused purely on cash flow.

It’s financially driven. In those cases, they don’t care if it’s a different industry. But over time, you become deeply familiar with certain industries and all the players in them, so you might start acquiring companies in that space. However, there are examples where companies acquire very different businesses.

The second scenario would be when you identify cross-selling opportunities. You might look at a company and think, “Can’t I cross-sell this product to my existing customer base?” Or maybe you want to enter a new space, and the only way to do that is by acquiring a company.

A good example is FedEx and Kinko’s. FedEx is a well-known delivery company, but back in the day, people also shipped documents. To do that, they often needed to photocopy documents first. 

I remember when I started in investment banking, I’d fly to meetings, and my assistant would send pitch books to Kinko’s to have them ready for me. It made perfect sense for FedEx to acquire Kinko’s because it created a seamless destination for shipping and document services.

Balancing synergies and opportunistic deals

You have to balance synergies and opportunistic deals. It has to be a combination. That’s the best scenario—if you can do both. Synergies need to be in your model, at least in these scenarios. There are also examples of what we call consolidators, like software companies that acquire others. In some cases, they’re fine running the acquired companies separately.

Sometimes they’re buying profitable companies and saying, “We don’t need to create artificial synergies.” If organic synergies happen, that’s great, but they won’t force shared platforms for HR or financial systems, for example. They let those synergies happen naturally.

So what is an organic synergy? For instance, you might acquire two companies and aren’t planning to integrate them, but then you realize they all buy Microsoft Office. You can leverage discounts through company-wide agreements, and the synergies fall into place without forcing them. 

What they don’t start with is, “We have six people in HR here, 12 people there, so we only need eight total.” That forced approach can be more challenging.

The thing is, on the buy-side—especially if you’re in a corporate M&A team—you need to defend your numbers. People will come back to evaluate your results. This is where your platform does a good job—not to plug in DealRoom here—but one of its unique features is integration monitoring. 

As an iBanker, I spent most of my time on transactions, and once the deal was done, it wasn’t my problem. But if you’re on a corporate M&A team, you own it. When modeling synergies, best practices involve under-promising and over-delivering. 

Be conservative in modeling synergies to ensure things work out well in the end. This is also a major difference between buy-side and sell-side M&A.

Deciding how much to integrate a company

Culture. Let’s say I’m an enterprise software company, old-school style—think IBM, with navy blazers and dockers—selling to banks. Now I acquire a FinTech or AI company in Silicon Valley. It’s a completely different culture. 

There’s no way I’m disrupting that culture by saying, “Hey, guys, everyone comes to the office at 8:30 AM, and these are the things we do, like company offsites.”

You have to ensure the acquisitions thrive in their own environment. You bring them into the fold, but you don’t fully integrate them. This becomes easier when the acquisition is on another continent since you don’t run into them frequently. 

However, it’s harder when it’s in the same city—say, New York—and the corporate development team has quarterly meetings. Suddenly, you have to adjust—ditch the suit because the other team is in sweatpants.

You need to be very cognizant of cultural differences. For example, when working with companies in India, France, or elsewhere, their work ethic and culture can differ greatly. In France, for instance, you might have to reschedule meetings because August is vacation time for most people.

Even when cultures differ, there are still things you can do behind the scenes, like aligning financial systems. A big corporation acquiring an AI company might pitch its ability to handle all the operational burdens—HR, compliance, and administration—so the AI team can focus on what they do best. It’s very culture-driven.

Evaluating deals that don’t fit the M&A thesis

I’ve been through those scenarios multiple times where deals don’t fit the M&A thesis. It’s a great teaching moment. Here’s how I’d approach it: if it makes financial sense, I’d go for it—as long as the valuation is right.

In this case, I’d run it as a standalone company for a year and let the synergies happen organically. During due diligence, evaluate the company as a standalone entity. Imagine you’re a private equity fund exclusively investing in data rooms. You’d assess it based on your typical criteria, like achieving a 20-30% IRR, and bid accordingly.

After acquiring it, run it as a 100% owned subsidiary. Over the next few months, have your best salespeople analyze the customer list and identify upselling opportunities. For example, you could introduce them to new modules or services they hadn’t previously considered.

If their platform caters primarily to investment banks, focus on their core needs, like data rooms and tracking document activity during deals. Then explore cross-selling opportunities to corporate clients for post-acquisition services, like integration monitoring. This approach allows you to gradually introduce your innovations into their product. 

But don’t go in thinking synergies are the only way the deal makes sense. Synergies are the bonus—they’re where you generate that extra kicker when the similarities align. It’s about knowing your space, your markets, and your customers to make the consolidation work.

Imagine you’re at a European private equity M&A conference, and they have a booth for this company. You send one of your best salespeople—ideally, someone culturally aligned with that country.

They observe the questions people are asking and then introduce themselves, saying, “By the way, this is my colleague visiting from Chicago or New York, and this is the product they have.” Someone might say, “You know what, we could really use the integration piece. The M&A part was seamless because we had advisors and stuff like that, but now I’ve got spreadsheets to track integration. Can we see a demo?”

Phase one could be keeping their product as is but selling a separate module. Over time, you develop a technology roadmap to fully integrate the solutions.

Planning integration based on partnerships and synergies

Don’t aggressively lead with integration. Let the M&A thesis stand on its own, without overly emphasizing synergies. Synergies can create stress—like saying, “Oh, we don’t need this person.” But wait, what if that person is close with a star salesperson? If they leave, it disrupts everything.

In those scenarios, I focus on non-people synergies that are less disruptive. For example, consolidating offices works well if someone’s offices are outdated and you move into modern spaces like Hudson Yards. Employees also appreciate upgrades like newer IT equipment or better tools.

Sometimes, it’s the little things, like switching to an expense management system. I’ve seen cases where employees hated submitting expenses on Excel, and the acquiring company’s modern system was a game-changer for morale. These things just happen automatically.

Focus on synergies on more real estate administrative stuff rather than focusing too much on people. People sometimes over model people synergies. You have to be very careful about that. 

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Becoming a buyer-led M&A organization

From my perspective, the more transactional experience your team gets, the more institutional intelligence you build. You start anticipating what’s underestimated, overestimated, or overemphasized, and you can address those things early.

Creating acquisition playbooks becomes critical. Mature corporate development teams have well-thought-out playbooks and track lessons learned in real time. They’re not afraid to say, “This didn’t work. We underestimated X.” Revisiting those lessons before making the next move is crucial.

The driver for a strong buyer-led M&A team is building that M&A muscle—getting reps in, doing the work. And to make it efficient, we build playbooks alongside it, tracking lessons learned from retrospectives.

You tweak the playbooks. You have to fine-tune them over time because things change. For example, be aware of regulatory frameworks in different geographies. In some European countries, you can’t lay off employees post-acquisition. Don’t even start modeling for that.

Working with the sell-side during M&A processes

In some cases with the sell-side, if I’m a buyer, it goes back to transparency and communication. If I’m on the buy side—whether it’s a software play where I’m acquiring as a consolidator, or I’m a strategic buyer very interested in these assets—the worst thing that can happen is I read about a potential process being launched in The Wall Street Journal, Financial Times, or on CNBC.

I’m like, “What? It’s out there, they’re selling, and we don’t know about it.” That’s bad.

What I want to do in that situation, if these are my prime targets, is track who they’re hanging out with—meaning, who their sell-side advisors are. In most cases, sophisticated sell-side advisors—like I was—would reach out at a high level under confidentiality before launching a process. They’d say, “Hey, have you thought of this combo? Does it make sense to you?”

At that point, I want to know what you like and don’t like about the deal. You might say, “We absolutely love it, but they have this operation in Asia. There’s no way my board will let me own that piece given the geopolitical stuff.” Or, “They have a development shop in an Eastern European country in conflict.”

From there, I started collecting intelligence. On the buy side, it’s my job to track which banker is close to my target. If they decide to sell, I need to know who’s likely to get the sell-side mandate. 

Sometimes it’s very mathematical—if a bank has lent them a lot of money, you can figure out which investment bank will at least be called to the beauty contest. You track that and build out your thesis. You identify the companies you like and communicate what you don’t like. 

Sometimes they’ll come back and say, “Amit, you’re not the only one with that concern. We’ve already told the board that if they want to sell this asset, they need to carve out that piece.”

For instance, they might put out a separate mandate for the Asia business. Maybe a company like SoftBank is interested in that geography. Suddenly, the situation changes, and you’re engaged in the process.

That gets us into the process and in a good position, and we want to be the favorite. You’re trying to create all the favorable conditions that help you pitch this internally.

Imagine you’re the chair of the board, and I come to you. You say, “Great idea, but how many times have we said in our meetings that we don’t want exposure to that geography? What are we going to do with it?”

If someone says, “We’ll buy the whole thing and sell that piece,” the answer is likely no. You want just this piece.

But if you’ve communicated that concern with the company and other buyers are asking the same question, the sell-side advisors will proactively create two mandates—one to sell that unwanted piece and another for the remaining business.

Maintaining control during M&A execution

To maintain control during M&A execution, you’ve got to identify the key risks and absolute priorities that need to be addressed first. You can’t leave those until the end.

I always start with a priority list of critical items that are deal stoppers for me. For example, customer contracts—what’s the nature of the contracts, and what are the outs? If it’s a two-year contract but has a 30-day cancellation clause, that’s a red flag. Or if it has a change of control provision, that’s something I need to address immediately.

You’re managing this process with a focused team—a paratrooper commando surgical strike team—churning through the issues. Keep communication open with the advisors. I love having advisors on the other side because they can become your partners. 

For example, you can say, “Hey, this contract template is weak,” and they might agree. This kind of communication can impact pricing because I might adjust the revenue or EBITDA multiple if contracts are weak and customers can easily exit.

You can ask ahead of time about these details, like pre-LOI, and sophisticated companies know that. If they really want to sell, they know they can bring in customers post-acquisition and sign new contracts.

Balancing the M&A process management with bankers

In my opinion, there’s a high-level banker process, but underneath that, we’re micromanaging internally. You want to stick to the banker’s guidelines and timelines, like when offers or final questions are due.

From LOI to close, it’s critical to work closely with the bankers and their team. Build a strong working relationship, especially with junior-level analysts and associates, who can move things quickly. Reserve issue management and resolution for the MD level.

Once you reach the LOI stage, the power dynamic shifts, and the buyer starts dictating how confirmatory diligence is run. Pre-LOI, you don’t have as much leverage to control that process.

It depends on how much leverage you have to dictate the process. Personally, I don’t take a heavy-handed approach. I’m very systematic and scientific about it: here are the 20 things we need to review, here’s the timeline, and let’s get the work done.

We track everything in real-time, daily, and ask, “Where are we on this?” Employment agreements, reps and warranties—whatever is critical. At this stage, the buyer’s corporate development team has to show leadership. Bankers are also motivated to close the deal, so they’ll work hand-in-hand with you if you provide clear direction on what’s needed.

Being transparent and clear about your priorities gets you through the confirmatory diligence process. Communication is key.

Handling proprietary deals without an advisor

If there’s no banker involved and you’re working on a proprietary deal, it becomes much more complicated. Every interaction can turn into an education process.

For example, you might have to explain the importance of a non-compete clause—things you take for granted in big deals. In large transactions, there are always top lawyers, Tier 1 investment banks, and due diligence at every stage of the company’s lifecycle, whether during equity or debt financing.

But when you’re dealing with a 20-year-old bootstrap business run by an entrepreneur looking to retire, the dynamic is very different. First, I want to identify a catalyst—is this a serious intent to sell, or is it just price discovery? If there’s no clear catalyst, I don’t want to waste time only for the seller to change their mind later.

In an ideal world, there should be an advisor involved. That signals the seller’s commitment to the process, as they’re paying someone to help sell the company. But when there’s no advisor, things get more challenging.

Proprietary deals can be better deals, but you need to be very fair to the seller. It can’t feel like a “gotcha” moment. You need to give them confidence that the value they’re receiving is fair market value. Otherwise, you risk having a disgruntled shareholder or team member in your company.

I’ve worked with conglomerates that maintained an active proprietary pipeline of bootstrapped companies. Sometimes it involved building relationships over 15 years. At 50, you might ask the founder, “Have you thought of selling?” and they say no. By 65, they’re ready.

Over time, you give them advice: “If you want to sell, make sure you have X, Y, and Z in place. Hire the right advisors, not just a friend who handled your house closing.” The better their internal documents and structure, the higher the valuation they’ll achieve.

In this scenario, you’re essentially their sell-side advisor while also being the buyer. But if they decide to run a process, you have to respect that and be prepared for competition. Hopefully, the time and trust you’ve invested make them more comfortable choosing you over others.

In some cases, price is the only thing people look at. But bootstrapped businesses care deeply about their customers and employees. These founders often want assurance that their people and clients will be well cared for, which can outweigh a slightly higher price from another buyer.

Scenario: Balancing opportunism with communication in competitive processes

Kison Patel: I had a deal I was looking at—hypothetically, let’s say. Same situation where they were going to engage a banker. I had already started early conversations but bowed out and said, “Let me know if that process doesn’t work out.” Now, my thinking is, if they do come back…

Amit Monga: A hundred percent. At the same time, I’d say that’s not the time to lowball them. You still need to be fair.

Let me give you an example. We came close to a deal, but the seller said, “Sorry, we’re going with a PE shop.” No problem—no hard feelings. We walked away. Eight months later, they reached out to us.

They explained that they went with the private equity firm, which came in with a six-month plan, a 12-month plan, and plans to cut FTEs. But the top senior guys—who were all close to the founder and lived in the same golf community—couldn’t stomach laying off people they had worked with for years. The deal didn’t go through. They came back to us, and we acquired the company.

Kison Patel: For context, my scenario is different. I’m playing the opportunistic persona here because we’re a small balance sheet company, and I’m Indian—always looking for a good deal.

So I know where I stand. If they run a competitive process, it’s still a distressed or subpar asset. I’m betting on being in the lower price range, letting them run the process, and hoping it doesn’t work out. This has happened before in the right market, where no one else came in, and they circled back to me.

Given that situation, where I’m focused on price in a distressed scenario, am I communicating the right way to the banker? Or should I be saying something different?

Amit Monga: You should always part ways amicably. Don’t slam the door on your way out. Say something like, “Given where I am with my investment and return appetite, it’s hard for me to pay more. Someone else—a strategic buyer or another party—will probably pay more. You should run the process, but if it doesn’t work out, I’m here.”

That approach has worked for me countless times.

Kison Patel: That sounds fair.

Amit Monga: Now, let’s say it’s six, seven, or eight months later, and they come back. That’s the time to ask why this deal didn’t happen.

Talk to the bankers. They’ll often share insights off the record, like who was looking at it and what went wrong. This is also your chance to revisit the asset and evaluate whether its quality has deteriorated.

For example, did key employees leave? Did the CTO or top sales reps leave? Did they lose a major customer? If DealRoom’s corporate client stopped using it, that would be a big red flag.

In that case, I’d renegotiate the price. I’d look at their CRM, analyze the sales pipeline, and adjust my numbers accordingly.

Kison Patel: That’s exactly what I’ve been thinking with some of these assets. They’re not trending up and to the right direction—they’re trending down and to the right so I might be on my side.

Amit Monga: Exactly. A lot of times, sellers present pro forma models that don’t make sense. They model synergies and expect you to pay for them upfront.

It’s essential to evaluate the asset as a standalone entity. I’ll do the modeling because it comes with its own risk profile. Synergies might happen, or they might not.

For instance, sellers might claim, “You have an office in Europe, so you can easily cross-sell this to other markets.” I’ll make that call myself.

Kison: Oh, that’s right. Sometimes they turn off when they see you have a banking background. We both have a banking background, so when they bring the banker in, you know what they’re going to do.

Amit Monga: Yes.

Kison Patel: The chart goes further up and further to the right.

Amit Monga: Exactly.

Kison Patel: I wanted to mess around with that because it’s an interesting conversation. They’ll say, “Let’s put in all these ad backs.” How do you handle that?

Amit Monga: This is actually a great discussion. Sometimes I look at it as a very generalized statement.

When I’m evaluating assets from private equity shops, they’re often margin-optimized to sell. That’s very common. For example, they might show 30% of sales coming from the West Coast but only have one salesperson. You find out they used to have four but cut down to one.

The reality is I’d probably need to hire at least two more to maintain momentum. You have to be careful and ask, is this model they’re showing truly a steady-state model?

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