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Kind of break that down as far as for people that are entrepreneurs of how you have to remain calm under these type of umstances, because some people might have just you know, fell to the pressure and did things that they would have really regretted later on.
Yeah. Yeah, to be honest, I thought about that a lot during that deal cycle. That I grew up in sales, so tense negotiations were kind of familiar to me. I grew up in football, where coaches would you know, become emotional, so that behavior wasn't as threatening to me as someone else, And I grew up in the projects on a housing estate where you know, for all of his bluster, he was nowhere near intimidating as people as people I had seen.
So those things were super helpful to me. What I learned in that process and have since always used when exiting a company is that competitive leverage, competitive tension. You know,
it's key. Otherwise you're sitting opposite somebody trying to tell them that they should just pay more for something because you want more money for something, right, And that's difficult when you both want to buy my thing, and I'm able to say to you that the you've offered is nice, but it's not nice enough for me to do the deal with you because somebody else is willing to pay more. That puts a very helpful distance between me and you
and the negotiation. Right. If I'm just saying, you know, prices and one hundred has to be one twenty, that's not as impactful as saying, if you can't get above one twenty, there's somebody else who will do that. There.
And it's crazy because we just spoke with a sports league that they are we're in, they're in a contract with a major TV network, right, and they were saying that they the TV network pretty much told them like, look, I know that you don't have anybody else, but it's bidding for this contract, so we really can't negotiate. But I know that at some point you probably will have so at that point in time then where you're going to be in a position to actually have a conversation
with us. But until then you have no leverage.
Right.
So it's important for people to know that, you know, it's always good to have somebody else exactly that is bidding for it, because even if they're not going to buy it, at least it raises.
Exactly your interest exactly. In the last process, so with Fortira, where we sold at a billion euros, I did something I never did before, which was we had free parties competing until the moment the deal was signed. Right, So we ran Normally, what you do is you get offers, you say, Okay, I like your offer, I'm going to negotiate with you for thirty days to get it done. You have exclusivity for thirty days to get it done.
It's what you normally do. In the last process, which was twenty twenty two, we said, first man to the finish line, you know, get to it. As long as the offers financially were in the right zip code, whoever get it done first. And that was a new experience for me. And what that done in the negotiations was something I hadn't seen in my previous free transactions, which was, you know, somebody said I need this condition in the contract, and it's a completely normal condition. I did it in
the previous three deals. It's not something you want to do, But in this situation, I was just like, oh, actually, we don't really want to do that. No, you know, no market conditions, deal norms. A lot of them didn't get done because everybody understood that this was a race to the finish line and was highly competitive. So that like that changes dynamics in the negotiations when you've got that kind of competitive tech.
Yeah, I think in terms of deals, a lot of times people might have taken the twelve because they haven't done the proper valuation of their actual business. Well, they might say we may not get another offer, Well we'll do it here and we'll try to work up to this. So like, what's that process for you? Obviously that was you wanted the one twenty five. The next deal is we had a billion dollars, how are we figured out the valuation and how are we negotiating on it?
So good thing about tech is there's tons of comps and there's a lot of you know, there's a lot of formulas that guide you to what the price should be. Right. So a company, you know, a company in our space that as over thirty percent margins, over seventy percent of the revenue is recurring, that company's valuation will start at
nineteen times. It's ebitda like. That's you know, everybody knows that, and nobody's going to come into the room and try and offer you fifteen because everybody kind of gets that.
It starts there. So that's helpful. Then from that nineteen times foundation, yeah, it's on you to sell your kind of strategic advantage that you're offering a buyer, the opportunity you're offering the buyer the eternal investment that buyer is going to realize that bits on you between nineteen and twenty five or thirty times ebe where the deal gets done. But you get in tech, you get good you know, you get good formulas that give you foundation of value.
I think that the main threat to underselling in those situations is people sometimes think, well, they must know about right. So in that case, we're a tiny company selling to American Express. I think in that situation it would have been easier for someone to say, these guys must know what the valuation is. They must know better than we do. They buy companies all the time. He's a smart guy. I think that's actually a bigger risk. It was pretty easy for me. I didn't make I wouldn't have made
any money at twelve million euros. So discussion clothes.
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