Episode Transcript
[00:00:01] Speaker A: Welcome to the Dealmaker Uncut podcast, where we speak to some of the UK's most exciting entrepreneurs and hear their investment journeys. We'll discuss the challenges, successes and lessons they've learned along the way with expert deals commentary from Jonathan Boyers, head of Alvarez and Marcel Corporate Finance, and me, Chris McGuire, executive editor at Business Cloud.
Welcome everyone to the latest episode of the Dealmaker Uncut podcast, powered by and Alvarez and Marcel. My name is Chris McGuire. I'm the executive editor of Business Cloud. As always, I'm joined by the deal maker himself, Jonathan Boyers. Jonathan's been involved in deals totaling over 5 billion pounds during his long career and he's now the managing director and head of Alvarez and Marcel's corporate finance practice in the uk. Big welcome to you, Jonathan.
[00:00:45] Speaker B: Thanks, Chris. Great to be here.
[00:00:47] Speaker A: We're surrounded by gifts and in a second you're going to reveal who exactly has given us those gifts. I do need to start off by thanking the very, very clever People at WattMedia who produced Uncut Podcast. They're the kings and queens of video creation and without them, we couldn't produce this blockbuster of a podcast. The Dealmaker Uncut podcast has already got listeners all over the world and we've entered podcast charts in several countries as well. You've clearly got a big family, Jonathan. So pleased about that. In today's show, we're going to interview our very special guest and after the break, I'm going to ask you some questions that we've been sent in by our dear listeners. So, Jonathan, who are we talking to today?
[00:01:26] Speaker B: Well, today, Chris, we're going to be talking to Graham Donahue, the CEO of Forge Holiday Group and also, it transpires.
[00:01:33] Speaker A: Part time beekeeper, which explains the honey. Welcome to you, Graham.
[00:01:39] Speaker C: Well, thank you. Thank you, Chris. Thank you, Jonathan.
[00:01:41] Speaker A: If some people think that you can buy in viewers, okay. And you have successfully bought us, so you can talk about whatever you want. I'm going to talk about Forge Holiday Group, but it's not your first rodeo. You've been involved in lots of other businesses as well.
Just explain a bit about. Because you've been involved in lots of deals before. So just explain some of the deals you were involved in before you became the CEO of what was Sykes's Cottage now become Forge Holidays.
[00:02:04] Speaker C: Yes, I mean, I've had three big roles, I think, in my career over like almost 30 years working in digital.
I was lucky enough to work for Thompson Holidays, who then became TUI for seven years. I was the digital director at a very young age. They put me on the board when I was 30 to be that rather annoying sort of individual that could educate a retail environment mostly about the Internet. During that time I was involved in lots of deals. The biggest was probably when we merged with First Choice, which was a pretty big deal at the time. But we also. I was involved in buying Late Rooms, which was Manchester Base, online travel, comfortable hotels. I was also involved in buying Coventry Airport. Randomly, I know, and involved in lots of different things.
Directly involved in the tourism business. And then I moved there and went to a very entrepreneurial business, which was Monday Supermarket run by Simon Nixon. And they had just IPO'd the business when I joined and I was a PLC. So very different environment, operating within a very different way of looking at deals. We probably turned out more deals than we actually acquired. But I guess the biggest one there was Money Saving Expert, where we acquired a business from Martin Lewis.
[00:03:18] Speaker A: Martin Lewis is also born on 9th May 1972. As am I. I read it there.
[00:03:24] Speaker C: Very good. Okay. So I was very much involved in that deal, which was an interesting deal. Took a very long time to get that deal because it was just 80 million, wasn't it? 87 million? It was, yeah, yeah. And it worked out incredibly well because a lot of it was cash and some of it was shares in terms of structure and the share price grew enormously. And then obviously post that I was involved in Sykes and I joined in 2016.
[00:03:46] Speaker A: I'm just going to set the scene. Forge Holiday Group. 33,000 properties. Handles 700,000 annual bookings a year. 1800 staff transacts more than 500 million pounds a year.
Just give us a sense of the company and some of the brands that exist within it.
[00:04:02] Speaker C: It's really four divisions and what it is now is very different from when it was, which is when actually Jonathan helped back in 2015, the founder, Clive Sykes Zelda business.
So there's four divisions. There's an agency business where we look after 22,000 properties on behalf of property owners. People have a second home mostly in the uk. We then have an operator business where we have almost 800 cabins in the UK, public forests business called Forest Holidays and different business there. That's the one where we work with the Forestry Commission. We identify land and then we build and we own the assets effectively in the forests. Then we have another business which is a caravan business where we have seven and a half thousand caravans. Where a bit like an agency business. Again, we look after caravan on behalf of people who own caravans in The UK with the largest agency there. And then we have an international business.
But obviously that's very different from when I joined in 2016 where it was 5,000 properties and obviously owner led or founder led ply of Sykes.
[00:05:10] Speaker B: So, Graham, you became the CEO of Sykes Cottages as it was in 2016.
And as you say, I was involved in helping the family. It was a family business, helping the family sell that business. And it was sold to Living Bridge. And there was, there was a great example here of a transition from a family owned or family run business to a business bought by private equity, then transitioned through to a professional management team. So I'm interested in your experience when you joined that business. It had recently been acquired and that journey had just started. So how you landed in the business and just talk a little bit about that, that situation, that transition.
[00:05:59] Speaker C: Well, prior to that I had no experience in private equity whatsoever. So it was like a bit of a baptism of fire for me and my experience as PLC or large sort of organizations. And so I had actually finished my supermarket. I was on that classic garden leave where I was spending a lot of time getting to know my family. Again, if I'm honest here, you are familiar. Get to know my family, getting to know my garden. And then I had a call from a headhunter who sort of said, have you heard of this business called Psych Prodigies? They've recently taken some investment and they could do with some help in terms of scaling and professionalism. And I did that classic, you know, I heard of them, but how big are they? And you know, if I'm honest, at first I was like this really small, really square, tiny. But I went and I met the founder who I liked and you know, a big part of it for me is about liking people I work with. And I then went to London, I met the private equity organization Livenbridge and got to understand a bit more about sort of private equity. And what was important for me was to understand, well, what happened because there was a CEO when it was the acquisition happened and then suddenly this CEO was moving on. Why, you know, what was the story? And I think what I discovered is there was a life changing amount of money that often happens as, you know, had sort of passed from one role to another role. And then it was hard to make that transition. They were looking for someone to come in and sort of help with the rigor that probably is required in private equity in terms of thinking about long term planning, having more corporate governance, more structure, being on your numbers, doing what you say and when I joined and came into the business, that pretty much was my role to come in was to take the plan they had and really think about how do we, how do we execute that plan?
And over three months we spent a lot of time looking at the plan and in my infinite sort of a wisdom with the management team, we said, you know, we inherited a good plan here, but let's just double the plan. And that was a journey when we started, particularly on acquisitions.
[00:08:00] Speaker B: Okay, so I mean, we're going to come on and I mean, this is a business now that looks like it's getting close to being worth, I don't know, a billion pounds. So of course, keep telling me there's a lot happened to the business since that time.
I think you brought on board, you exited Living Bridge and brought on board Vitruvian.
So I'm just interested in how that transition went and in the run up, what the differences might have been between the two. And if you could just talk about that area of growth and that changeover.
[00:08:37] Speaker C: Well, you know, I think from that 2016 to really 2018, we decided that we needed to, you know, one way of growing was to do a lot of deals.
And we still had to grow really fast organically. But it turns out again, you know, you were involved in some of these deals. We know very much. Well, you know, really fragmented marketplace in the uk, relatively high addressable market. A lot of, you know, family or mom and Popish style travel agencies out there and travel businesses. And so we went around really approaching them all. Quite an unusual way of doing it. I was handwriting letters to founders asking them whether I had the privilege of having an interview to consider whether to sell their business to us. And we market mapped out the UK and discovered there was about 120 potential acquisitions we could make across the UK of all different size and so forth. We then went to a, at that time, Leverbridge and said we probably need to refinance the company, to borrow about 100 million at that time to sort of then go and have a fund to then start doing some acquisitions. And then we started on that sort of a journey. And over that period, I think we did something in the region of maybe 15 or 16 sort of acquisitions of lots of different, various sizes.
[00:09:52] Speaker B: It was a sector, it was one of those sectors where there was a fragmented sector with maybe three or four acquirers, either private equity, funded or quoted, that we're all competing. Wasn't it a land grab in that sector?
[00:10:06] Speaker C: Yeah. And I think if I look at the original deals and the value creation story and how much we were paying and how we value businesses back then and now, quite different. So it was a great opportunity because we could create value quite quickly. And within 12 months we were creating sort of a value, even though.
[00:10:25] Speaker B: So you were paying some quite high prices, weren't you, at the time? And even then still created.
[00:10:30] Speaker C: Yeah, because we value. Where we looked at the value creation was we didn't care about what we paid. I cared more about how quickly I could synergize and create value. And we had this brilliant business that had 50 million people coming to our website each year, and we had an excess amount of demand, but we didn't have enough supply. So supply was available. So the real measure for me was within 12 months, could I buy something that was going to be synergized in terms of value creation through leveraging our traffic to less than 10 times an earning multiple. And so sometimes we paid more, but ultimately within 12 months we could create value. And how often could we do that? How quickly could we do that?
[00:11:13] Speaker B: It's a great example of where deals, even deals with quite full prices could still create value because of the synergy. I think one of the. One of the other things that strikes me as I've watched the growth of this business, because I have, is that you seem to have used technology really effectively to turbocharge the business. I'd be interested in that bit of the strategy as well.
[00:11:38] Speaker C: So when we decided back in 2016 to double the business in terms of the plan. So the plan, the plan we inherited as a management team, or six, I inherited as a CEO, was to get to 10,000 properties by 2020. And my usual style was like, well, let's just double it because that sounds better. How are we going to do that? We need to do some M and A and grow organically.
But we also at the same time said, well, we need to make sure everything we're doing technically we're building and we're thinking about the business as a platform business. And we're leveraging data and we're leveraging the capability of data to sort of to think like a platform, to be able to ingest all of these businesses that exist really quite quickly to create the value. So we invested a hell of a lot technology in the early days, and we got to about 250 sort of developers and engineers and product people and data science people.
And that became really the sort of the core cornerstone of the ability to differentiate ourselves through technology, but obviously with our people as well, through service. And experience.
[00:12:41] Speaker A: You describe yourself as a technology company masquerading as a holiday company. That's the way you describe yourself.
[00:12:48] Speaker C: Yeah, it depends, you know, depends who we're selling to and you know, what value we want to try and get for the company and an exit process. But, but yeah, we leveraged, we, we do leverage technology a lot. And you know, I think it's been one of our, we talk in our business about superpowers. You know, one of our core superpowers in our business is the way that we think about technology and we're always trying to get first mover advantage and we're trying to think about, you know, the scalability because everything we're trying to do certainly at platform level is to think about this business, you know, two or three times bigger than it is today, you know, so even today when we're, you know, 600 million plus sort of a transactions going through the business and we take three and a half million people on holiday, our plan is double that. So our people, our skills, the management team, the technology is always to try and double that as well. So yeah, so we, we leverage technology a lot. So every acquisition we made within a defined period of time, we had to integrate it into our platform because that was the only way we could get value but also maintain all the brands locally. So it's one of the key differentiators. It wasn't about destroying these local brands and the local value and creating challenges for the people we're buying it from. We want to maintain them. So that's why we have a portfolio of about 23, 24 brands. We have like power brands that have a lot of traffic, but then you have all the original brands. But it's all driven by the same platform, the same technology to get economies.
[00:14:13] Speaker B: Of scale and very impressive.
So Vitruvian made their investment in 2019 and from. I think we can all remember what happened in 2020. I'd just be interested. Would you mind talking about the challenges, the management challenges, the challenges of managing within investor relations and just how you got through that Covid period?
[00:14:35] Speaker C: Yeah, well, it was a tough time and you know all about timing really because I think we did the deal. I think it was sort of a November time and if you remember, and again KPMG and you guys were involved. We had a ready made deal to be done as soon as we did the deal, which was to buy a portfolio of companies for about 54, 55 million. And we sort of did that and we actually did that and then we're sitting in November to sort of a December, all thinking quite good, ready to start the new financial year. And then obviously we started hearing these rumors about, you know, this, this thing coming from China and, you know, and thinking, you know, that will never impact us. And by the time we got to March, it was like, we have 150 million of pounds worth of transactions where we've collected the money from our customers, we have passed it onto our owners, so collect from customers and now everybody wants it back. No one can go on holiday. And I was taking phone calls from, you know, Members of Parliament, you know, I was taking, you know, we were getting quite a lot of pressure. One of the things I learned is when you're big and you're the biggest, you're a target as well. And we were very much what I would call a target during that time. So it was a super, super tough period. But we were a brilliant business going into it and my view was we're going to be a brilliant business coming out of it. So if I'm honest, we saw it as an opportunity to double down in investments, to double down in market share, to really say we didn't know when we're going to come out the other side. And we had to support other investors. I think we had bigger problems to deal with in the portfolio than us. Thankfully.
We've always been about protecting cash and preserving cash, so we knew we were okay. I mean, it wasn't a limitless amount of cash and cash is king, but we were holding onto it. And so we knew we could weather the storm, but we couldn't make anybody redundant and we couldn't really use furlough as much as we had 10,000 people a day calling us, asking for the money back. So that was really tough. So as a management team, we became really quite resilient. 8:00 in the morning, we called it Mini Cobra calls, dealing with it. And I'm so blown away to this day about how resilient the team were, how amazing the team were during the period and actually how much stuff we got done.
[00:16:50] Speaker A: Steve Byrne, who's the CEO of Travel Counsellors, was on our first episode of the Dealmaker Uncut podcast and he talks about the fact that he never used the word survival. What I find interesting in obviously your business is that a lot of your business is obviously domestic as well. So the word you hold a lot, you heard a lot during COVID was staycation. And that was right in your ballpark, wasn't it?
[00:17:12] Speaker C: Yeah, we were using the word Thriving, it was like surviving to thriving, although we would never really use sort of a surviving because of the. I guess what that sort of means. But, yeah, it was more about, how do you come out this stronger, better, more focused. And that was our view. And we did.
As soon as Boris Johnson started talking about people going on holiday, it was like, it was tough because you still had 5 or 10,000 people calling you, asking for money back, and then you had another 5 or 10,000 people asking, can I go on holiday? And it was like. It put a lot of pressure on the business. But we had obviously, record year. I think we did something in the region of about 75 million EBITDA that sort of a year, which was obviously, was our best, you know, performing, paid every way, I think. And we. And foolishly, I think now we thought, this is it, you know, no one's ever going to go on planes ever again. You know, this is going to be the future. I think everybody's fallen back in love with staying in the uk.
It didn't quite pan out like that, which is another story.
[00:18:13] Speaker A: I want to ask you about the D word data and I want to ask you about the I word innovation as well. Okay, so if for the benefit of the listeners who can't see your wrist, you've got. You've got one of those watches on your wrist which records all your information.
Absolutely. So you collect all your blood pressure, you take your anxiety levels, it monitors your sleep pretty much, you know, you know, all the way.
[00:18:34] Speaker C: I don't want to wave you.
[00:18:35] Speaker A: No, absolutely.
[00:18:36] Speaker C: So if I fall asleep.
[00:18:38] Speaker A: If you fall asleep, it sets off an alarm as well. And I went into your offices in Chester and you've got this, you've got a data wall where everybody in the business can see what you're doing when you're doing it, how many bookings you're having in terms what venues, you know, where they're coming, how many late bookings you have. You always wanted to share that data, so everybody knew it. But then on this other wall, you've got this. You've got about 30, 40 old mobile phones from the original ones. And they used to be like breeze block size, like this big. And these cost thousands of pounds to the tiny little mobile phones as well. And I said to you, I said, why do you do that for? And you said, two reasons. One, because I want people to understand how you have to innovate. But if you don't innovate, you become obsolete. And look at these, look at these relics as well. So Just explain your approach to data and how you view innovation in your business.
[00:19:25] Speaker C: Well, data again is another one of these superpowers, you know, I think, you know, and I've learned over the years, I was very lucky.
Money Supermarket in particular, you know, we have, you know, 100 plus people in a data science out of a team and we're really a data driven business. We think of data or I think of data with my team anyway, in free buckets data, which a lot of people have insight and action that DNA. And so we use the data a lot. But then we have commercial people working with data, intelligent people, data scientists, data engineers, to work out how you can create value and the story you can tell. And when we did the deal, the transition from livingbridge into Vitruvin, as you were mentioning, that was a big part of our story. We used to talk about the data flywheel, all these different things. And then we used to use the data to build product. And so, you know, we used our data to build our own revenue management tools. We use the data to build our own search engine, you know, sort of a platform. We use the data to build all of that insight you see on those wallboards. And what it does is it creates a heartbeat, a rhythm that people can see and, and you can see when things are red, when they're green, when they're sort of amber. So it became a real sort of a superpower. And I've, you know, I've always been bit geeky about data and about macros and about signals and about trends, but also how you use that to create a competitive edge. And I think when it comes to storytelling, particularly in deal making and transactions, you know, when we did the deal last time around the exit, you know, we brought my objective or the team's objectives to make it a really competitive process. And we had 20 plus, you know, people, you know, all competing with five, you know, really good final round, sort of the bidders. It is because we were using all of these different superpowers then going across the globe and then talking to everybody who we knew. It was interesting. So we were bringing technology acquirers end to our sort of, you know, into our sort of a portfolio as well. I think that allowed us to have a really healthy competitive tension sort of a process to maximize the value, but also to give us opportunities about who we could work with.
[00:21:37] Speaker B: So Vitruvian have been invested for nearly certainly five years now.
So you must be starting to think about the exit horizon. What I'm interested in is how much of the strategy. Because you've diversified, haven't you, into a few other areas, how the diversification strategy has been developed and how much thinking you've done about what the exit will be. People will often not realize how much of the plan that a private equity house will back is focused on understanding what the exit will look like.
[00:22:14] Speaker C: Yeah, I mean we try not to obsess too much around the exit, the time period. But private equity forces you, you can't help it because you know, you're always on this sort of a cycle and like, you know, we've certainly lost two or three years maybe with COVID and what's gone on and you know, tough economic sort of a climate. But we tend to think in sort of, you know, legacy chunks and legacy sort of the steps, you know, we tend to think, I mean today I had a two hour call with my team where we were talking about a strategy session we have in a couple of weeks time and we are talking like what's our story? Not over the next sort of a two or three years, the next 10 years, what does that look like? Very early on in each of the investment cycles I've been involved in, we start to think about what is our narrative, what is our story, how do we build for success, how do we create value. We do not obsess around value around, enterprise value around. We want to be a unicorn or whatever the thing may be. We really think about what's the story and how do we get there. A big part of the diversification was exactly that. We recognized that we were running out of headspace, if you want to call it in, say the UK market. In our core business it was getting difficult to buy things because we'd bought almost everything and the things that we were left to buy. There's probably some antitrust issues or there could be some antitrust issues. Yeah. So we avoided that. We had gone international and we realized and recognized that there might be 21 million properties that people rent out globally and it might be 105 billion market. But actually it's very different in the US, in Europe, et cetera. We went to New Zealand and we are the market leader there. But we haven't really been able to scale that. So we went more horizontally into forest holidays. That was a big transaction for us as a management team. Hundreds of millions, but also looking at other categories and saying what we do is we take people on holiday, we make sure they have a really good time and we do it in a very responsible way. Where else could we play and that became a core, sort of a cornerstone. And the story we're trying to tell and the narrative, the narrative we're trying to tell us all about how, you know, how much headroom is there, how good are we at that and how can we create value.
[00:24:21] Speaker B: And so, so it's interesting, your market because you're, you effectively got two lots of customers, haven't you? You've got, you've got the owners and you've got, you've got people who are, who are visiting there. One of the, obviously the things we haven't talked, we talked about technology, but we've not talked about AI.
Very interesting.
[00:24:39] Speaker C: Just see my face light.
[00:24:40] Speaker A: Yeah.
[00:24:40] Speaker B: What you might, what you might see coming over the next two or three years in that regard.
[00:24:44] Speaker C: Yeah, I genuinely, I am obsessed.
Probably all the wrong reasons. You know, I can just see the shift that's happening in the pace of change in AI, you know, and we know about, you know, Moore's law of his principal. Every year it's getting, you know, halving in price and double in capability. AI's blown that out of the water. We're seeing, you know, 4x10x growth in terms of way AI is being used. I think 2025 is going to be the year of what I'll call the AI agents. So these are agents that are sort of a digital agents that are actually performing tasks for you.
[00:25:17] Speaker A: GP Bull handed us on the top 10 tech predictions for the year and number three was AI agents.
[00:25:22] Speaker C: Was it? I mean, we're using it a lot in our business. We have agents handling conversations with owners, conversations with guests. We use AI in a lot of marketing technology. It's given us a real competitive advantage. We use AI in a lot of the meetings that we have in terms of transcribing and producing insights and making this much more efficient. So we've just gone through an AI maturity study where we try to work out where are we, what does good look like and how do we get to again, superpower, world class. And I think businesses that are leaning into and learning about it, I think you can give yourself a 30% competitive advantage. And now this is not about replacing 30% of the workforce, to be clear, but when you're a gross scale business, you may not need to hire as many people at the pace that you need to hire them if you're leaning into leveraging it. If anybody wants to watch Jensen hang, who's the CEO of Nvidia, did a one and a half hour CES presentation a few days ago. Mind blowing. Just in terms of the capability. So you can tell I'm a fan.
[00:26:30] Speaker B: Yeah. Fascinated to see what you do with that over the next few years, Graham.
[00:26:34] Speaker A: I'm a bit worried that we're not speaking to a human being, we're speaking to an AI generated bot. But we'll find out in the interval. So just going to go for a quick break. When we come back, Jonathan and I are going to be discussing Graham and the story we've just heard. And then you're going to be answering some questions, Jonathan, based on your vast knowledge.
[00:26:52] Speaker B: Yeah, thanks, Graham. Really, really interested.
[00:26:54] Speaker C: Thank you.
[00:26:54] Speaker A: Foreign half of the Dealmaker Uncut podcast. We've just interviewed Graham Donahue, CEO of Forge Holiday Group. I have to be honest with you, I'm obsessing at the moment about these Luke the nuke dance flights that he's given me as well. So looking forward to trying them out. But beyond that, Jonathan, what was your take on what you heard from Graham?
[00:27:22] Speaker B: Well, just really interesting. Obviously this was a business that was a client of mine some time ago when we sold it to livingbridge. And the way that they've developed that business, it has changed beyond recognition.
Very interesting example of transitioning a family business into private equity ownership in a really positive way. And then the introduction of technology.
So the new skills that Graham and the team have brought into the business, the introduction of technology to develop both the business, both for the benefit of the various stakeholders, the owners, and to make the customer journey better.
I just think it's been a really great example of how private equity can drive for growth. They seem to have negotiated the COVID period quite deftly. I mean, I mean, we heard the story, but the business has come out much stronger. So I just think a really good example of value creation.
[00:28:26] Speaker A: We did a story at Business Cloud. I interviewed Graham way back when and I said, is this the best tech unicorn you haven't heard of and didn't know was a tech unicorn? I did use a little bit of journalistic license then, because we're not sure if they are a tech unicorn, but they're definitely not a million miles away. I think what you realize is they send three and a half million people away on the holidays. You know, that is a lot of people going on holidays and they've got a big chunk of the market as well. What I find fascinating about their business model is they use AI hand in hand with their people, you know, so they've got that real good people focused element of the business, but it's fundamentally driven by technology, which is why Graham used the. The phrase, you know, we're a technology company masquerading as a holiday company, but it's that technology that's really helping drive multiples. So, no, I should be fascinated to.
[00:29:13] Speaker B: Know they still do a good job of looking after owners of properties and people are going on holiday as well.
[00:29:19] Speaker A: Absolutely, absolutely. So this is the bit when we ask you some questions, Jonathan, you have to see how clever you really are about all things corporate finance. If you have got any questions, feel free to send them in. Jonathan, contracts can be a bit weighty in terms of the number of pages. What do you tend to look for at the end of a deal and are there any red flags? So if you see a deal, what would be your red flags?
[00:29:43] Speaker B: So I think what you're asking about are the key elements of a negotiation towards the end of a deal.
I think the question is what the type of deal is. If it's a simple sale to a trade buyer, then the issues are generally much more focused on the buyers been seeking protections.
Can they rely on their due diligence or are they trying to rely on. On the vendors providing warranty comfort? And often the vendors will insure themselves against that risk when there's private equity involved, which is increasingly the case. I think often the detail is focused, the focus is between the management team and the private equity house on the balance of power, between the ongoing shareholders. And I think I often see some really, really important discussions between management and the private equity house on how the businesses will be operating and governed going forward.
[00:30:47] Speaker A: Okay, second question.
We both spoke earlier when we spoke to Graham about the rise and rise of AI. Lots of legal tech companies now who are able to cut a way through these big weighty contracts and actually crystallize it to a summary question. We've got Jonathan. We hear a lot about AI. Are you seeing a lot of AI businesses and is that driving at multiples?
[00:31:10] Speaker B: So as we, as we just discussed, AI is already transforming the way businesses across the spectrum of sectors operate. And I think, you know, you neglect it at your peril. Even within, I mean, even within corporate finance. We've been, you know, we've been looking at, you know, we've got to the point where you can get documents produced by AI initially or research done by AI. Every industry is going to be made more efficient by AI, where people can really capture it, then I think there's a competitive advantage to be obtained that will be reflected in valuations. But there's an element of defensive stuff here that businesses that don't capitalize on it could fall behind quite quickly. So it's an area that is completely going to completely change the business world and therefore, inevitably the deal arena.
[00:32:08] Speaker A: Okay, and final question, and I want to take you into the deal room right at the end of those negotiations. Is there much negotiation between buyers and sellers when it comes to concluding a deal? Do you get an element of brinksmanship?
[00:32:19] Speaker B: Well, the classic issue in a deal is when most of the due diligence is done and a deal is getting close to completion, the balance of power will often swing from the vendor to the buyer. At the start of a deal, the people who are thinking of selling the business don't have to sell. They've got their business and it's an idea. By the end, the buyer's done a whole load of due diligence. They know all about the business, the vendors have started to count the money and the money's getting closer to arriving and the business might have been for sale for quite a long time. And so the balance of power will often move. And it's the competitive tension is what will often give the vendor the power in that bit of the negotiation. Sometimes buyers will have phoned information out and they'll decide to reduce the price. You can have a small renegotiation at the end of a deal. There's often details around completion accounts that we'll need doing at the end. But I think the main issues are around the buyer focusing on what they've learned during due diligence and deciding whether they're still happy to do the deal or if there's any areas that they need to get protection against Jonathan.
[00:33:42] Speaker A: After 35 years, you should know your subject, and you clearly do as well. If you've got any questions you want to ask, you want Jonathan to answer, please send them through to us via the show Notes. That's all for this episode of the Dealmaker Uncut podcast, powered by Alvarez and Marcel. Final shout out to WAT Media and the star of the show, Jonathan Boyers. Thank you, Jonathan.
[00:33:59] Speaker B: Thanks, Chris.
[00:34:00] Speaker A: Don't forget to subscribe to the podcast, tell your friends and family and follow us on social media. This is the Dealmaker Uncut. Thank you for tuning in to the Dealmaker Uncut podcast. We hope you enjoyed today's conversation and found it insightful. If you like what you heard, be sure to subscribe and tell your friends. We'll catch you in the next episode of the Dealmaker Uncut podcast.
