10+ hours of podcasts, in 5 minutes.
9 quotes from 1 episode on Private Equity Funcast, each with a timestamped link to the source.
Financial sponsors complicate due diligence by running direct relationships with target founders, Jon Apter notes. Future M&A evaluations will also normalize quality of earnings reports for experimental AI token usage.
Acquirers in service businesses carefully manage diligence to ensure unbanked founders avoid feeling exploited.
“…what's really important with doing M&A at the size that we were is making sure that the other side who's oftentimes not banked doesn't feel like you're taking advantage of them because we're a people business.”
Integration succeeds when buyers ask leading questions and give new executives operational freedom.
“…if you're going to invest in bringing on people who are like you, you have to let them fly. You can't micromanage. You could train them and advise them and ask leading questions that might get them to where you want them to get to, but you have to give them a little bit of a leash.”
Sponsors excel at screening and quantitative analysis. Having financial backers conduct direct operational reviews sets a poor tone and complicates future integration.
“…the private equity sponsor is really good at screening and can help run the analysis, but they should not be the ones building the relationships with the other side.”
“…it does look a little weird and sets the wrong tone if the private equity sponsor is the one doing all of the diligence on the business because ultimately you got to figure out how to integrate them.”
Companies previously celebrated employees with high software token usage. Future exit evaluations will normalize these experimental AI operational costs to establish baseline profitability.
“Six months ago we were celebrating people who had the highest token usage…”
From Why Quality of Earnings Reports Will Soon Normalize AI Spend
“I imagine when all these companies go to exit, there will be some normalization around AI spend in these quality of earnings reports…”
From Why Quality of Earnings Reports Will Soon Normalize AI Spend
“…talk about what makes your company different and get a founder excited that their equity might grow faster under your platform than on their own.”
“It's definitely not a cost cutting exercise right now…”
From Why Quality of Earnings Reports Will Soon Normalize AI Spend
“Getting the right governance around your data and the right AI usage put in place, that's what the consulting model is going to look like in the future.”
From Why Quality of Earnings Reports Will Soon Normalize AI Spend
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