Navigating the New M&A Landscape with Indy Guha (VMG), Jared Roesch (OctoAI), Dan Kang (Mercury), Michelle Edwards (Perkins Coi) | Inside Summit 2025 [LIVE]

incumbent and they're taking a bet on you, they're putting their personal capital, their reputation

“on the line. And one of the reasons customers turn is executive turnover, all the same dynamic”

supply to how young companies join big ones and figuring out that champion, are you on texting basis with them? Are they giving you a back channel on how things are playing out and how to work the room, all of that needs to be there? Welcome back to season 13 of the room podcast. Claudia, can you believe we've been doing this

this long? No, it's been five years, so many episodes, so many incredible conversations,

telling the stories of some of the world's most iconic founders and funders and whether our listeners are new for the first time today or have been with us from season one, we're so grateful for the community we've built. Completely, we've had the mission to open the door to the room where it happens for those entire five years and have been able to do so over 120 episodes with hard earned lessons from some of the top technology and consumer founders of our time. And we've been

“through a lot personally as we have indeed. I built, scaled, sold my startup drive, you were our”

first investor so you've been there through the entire journey and you've also recently graduated from HBS, you're now building it for a sell and through it all we've brought the funder and founder

perspective. Yeah, it's really been an incredible journey and I'm thrilled that I'm back full

time in San Francisco and we're probably here to stay. That means that there's more for us in terms of growth, both inside and outside of the physical room. But what's important to have really out there is these stories and we've been able to do so over incredible guests from the CEO and founders of Flexport, Proplexity, Particle, Zapia, Zillow, Vanta, I could go on these guests and their enterprises have generated over a hundred billion enterprise value and really frankly move the markets.

And growing especially in 2025 with everything that's going on in AI so I'm so excited to share season 13 stories that are maybe a little bit more AI focused than past seasons. Absolutely. And you can find as IRL and URL especially with our events such as our annual conference

“inside Summit or upcoming SF Tech Week events and beyond. And if you want to get information around”

those events, subscribe to the room podcast and subscribe to our newsletter at theroompodcast.com. Perkins Kiwi supports the most innovative entrepreneurs and investors in fast moving in high growth sectors, addressing their mirriad of legal needs. But the firm doesn't just provide end to end legal and business counseling to its startup clients. It also facilitates introductions to key advisors and sources of capital. Perkins Kiwi's interactive website

startup percolator offers access to programs, resources and rich dynamic content designed to assist entrepreneurs on their startup journey. To learn more, go to startup percolator.com and Perkins Kiwi C-O-I-E.com. This podcast is brought to you by Mercury, the banking platform businesses like the roompodcast used to simplify their finances. It's time banking did more than hold your money. Now it can. With Mercury, you can pay bills and seconds,

close the books faster and even send invoices. Not only does Mercury do away with a patchwork of tools, it eliminates guesswork, giving you complete and accurate visibility into your business as finances, all from one account. Applying minutes at Mercury.com. Welcome back to another episode of The Roompodcast. Today, I'm sharing one of my favorite

conversations from our second annual Insight Summit in San Francisco, a day where we had some

founders, funders and operators coming together for real talk about building, scaling and navigating the moments that define a company's trajectory. This session, navigating the new M&A landscape, brought together a powerhouse group of voices who see deals from every angle. I had the pleasure of moderating a panel right after my own exit with Michelle Edwards, partner at Perkins Kiwi, Indigua, General Partner at VMG, Dan Kang, CFO at Mercury, and Jared Roche, co-founder of

OctoAI, who recently exited to NVIDIA. Together, we unpacked what it actually looks like to sell or buy a company in 2025. From the legal and financial realities of today's deal structures, to the investor POV on how acquires make decisions, to the operator's view on what it feels like inside a live transaction, this panel gives a rare 360 degree look at a market undergoing massive change. We talk about why deals get sourced the way they do, how AI and shifting public markets

are shaping exit paths, and why the best M&A outcomes start years before a term she ever shows up. You'll hear candid lessons on cultivating strategic relationships, signaling readiness to buyers, managing your team through an acquisition, and avoiding the red flags it kills deals at the finish line. Whether you're fundraising, scaling, or fielding early acquisition interest,

summit to unlock. Let's open the door. Thanks everyone for being here, excited to kick off our M&A panel. Quick framing here, M&A has really become an increasingly

“important path for founders in 2025, whether as a strategic exit, an option for liquidity, a defensive”

move, or a scale play, today we're going to unpack what's working, what's not, and how founders should prepare. I sold my startup a few months ago, it was quite an intense process, sold to private equity after building for four years, and a lot of founders are asking, hey, what actually happened, how do we think about it, what are the do's and don'ts, and there's oftentimes not a lot of

transparent conversation about this topic. We have an incredible suite of experts here. We have

Michelle from Perkins, Kui, who is our M&A lawyer, extraordinaire, we have Indi Guja, general partner at VMG, Dan Tang, CFO at Mercury, and Jared, who also is an exited founder to Nvidia. So before we get into the meeting potatoes of the conversation, let's go around the room and maybe give a couple of sentences around what your experience has been with M&A, and just a hint of your background.

“Michelle will start with you. Yeah, sure. Hi, everyone. I'm Michelle Edwards. I'm a partner at”

the law firm of Perkins Kui, and I'm based here in San Francisco. I've been advising on M&A transactions for probably 25 plus years, so I haven't counted, but it's possible, it's hundreds. Right now, my practice is mostly weighted towards cell-side mid-market M&A, and I really enjoy helping advise founders on how to navigate the M&A process and successfully sell your companies. Thanks, Michelle. Indi, over to you. Tough act to follow, but I'm Indi Guja,

co-lead VMG technology, VMG is a consumer ecosystem focused venture and growth equity firm,

billion dollar fund for consumer brands and services, $400 million tech fund,

focused on commerce and post structures, supply chain, things that help consumer brands and services scale. And so I sit on the tech side. In terms of M&A experience, let's say no one near the range of Michelle, but certainly have got the pleasure of going deep a few times across different types of acquires, whether that's Citrix acquiring right, where we were the series A investor for two and a quarter billion, or Vista acquiring

gain-side for a billion and a half, and other examples like that. So hopefully we'll get to touch on some of those differences as we go through this conversation. Everyone, I'm Dan, I'm the CFO at Brickory, Prouts sponsor of the podcast. I've probably been involved in maybe a dozen different M&A transactions across all sides that used to be in primary equity actually at Vista. It's one of that you mentioned, where we helped acquire a company's primary lead software,

also on the sell side by last company, helped the founder sell the company for a $20 million

dollar outcome. And I've been involved on the corp depth side, actually, being at companies where we are acquiring companies, both at square, back in a day, and then also we did our most recent acquisition for Brickory. Last year. Hey, everybody, I'm Jared. I had done a start for the last five and a half. Actually, I've been one year since we saw the company this week. So the previous five and a half years before that, we had been doing a start-up. We saw the NVIDIA

last year. And then when we were started, we looked at doing an M&A of some other small start-ups, both from the start-up as the acquire, also been a little bit involved in a video. And yeah, mostly my experience is being in the heat of it. So it's safe to say with this girl, we can probably cover every nook and cranny possible with M&A. But let's start with maybe a little bit of the market landscape today in 2025. Indeed, let's start with you. From the investors side,

how do you see M&A shifting this year? Our strategic acquirers getting more active than private equity. How is that kind of influencing how you advise your portfolio? Hopefully we can make this a little bit interactive. There was a lot of optimism starting the year that this would be the year, the floodgates opened for dual activity, for public markets, and to agree with the bit of a snap in Q2 that did happen. Big picture, you sort of look at the numbers. First half of this year,

deal value across tech in terms of volumes is up 20% year over year. And volumes probably the more interesting number for many of the folks in this room. As much as I hope you all end up with the Google Wiz type outcome, that is the dramatic outlier. And when you look at it on a dollar basis, like 30% to 40% of all M&A is going to be that tippy top of three or four deals each quarter. But I said I'd make this interactive show of hands. How many of you think the median M&A event

“is above $300 million? Okay, Saviourou, my like it. How many of you think it's above $200 million?”

All right, below 50. Any hands? All right. So if you didn't put your hand up on that last round,

you're right if you thought it was below three times revenue is the typical acquisition

“multiple right now. And so I think those two numbers are worth grounding on $90 million,”

any bucks give or take. Three times revenue give or take. As you think about what's the right funding strategy for your business? How big is the end market? You're building for how bigger the pockets of potential acquirers for your business. But I'll probably stop there for now. No, that's great. Let's talk a little bit about the capital markets perspective. Dan, I'd love to hear your perspective here. Given where we are with interest rates, valuations, IPO windows, also an interesting segment

of companies that raised a lot and 2020, 2021 are not AI native. And so they're maybe having a hard time fundraising. What's driving more companies towards M&A versus continuing to raise? That

may be less than ideal terms. Go in public, chasing a secondary. Tell us more. I feel like M&A

for founders. It feels like the back up auction. I feel like every founder treats it. Going to be a public company, go IPO. It's like really exciting about that. But I think M&A could be like really strategic across a lot of different ways. You've been thinking about particularly with AI companies and how important in scale or having access to distribution networks. Really are beyond just creating like really sick product is for you'd have the impact that you probably want when

you think about starting up a company right? From a capital markets perspective, it is interesting right now. Reds are expected to come down. Equity markets are really hot. What that means is that a lot of buyers out there have the capital, what does that cash? Because they go raise that financing

“or because there are stock shifts worth more and they're able to afford a lot more. So I think there”

is increasing buyer appetite. There are a lot of companies out there scrambling to figure out what is our AI play. If they don't have it natively, they're probably going to go acquire companies to do that as well. I think it's a great opportunity to think about it. I think also founders, it's how do you have just a bridal optimism, irrationally, but also sense towards how do you be set up for a success? And sometimes it is access to capital or access to resources

that are hard to do with alone as standalone companies. So I think it's a big part of consideration set. I think it's a little bit different versus maybe about a year or two ago where capital markets were a lot more frozen. I think the choirs were a little bit stinger because of that because they just didn't have the ability to pay up on consideration. Which is the perfect segue into how deal terms have changed. Maybe Michelle for you. What are some of the most common structural

shifts you're seeing in deals compared to a few years ago? We had the wind serve deal happen.

“There's a lot of deals that are structured in that way, less traditional. What are your thoughts?”

I see today a lot more emphasis from buyers on the people in the team and the talent. They're acquiring. And you mentioned wind serve, which was quite a unique structure and probably most people here are familiar with a brief recap. Wind serve, I think, was in negotiations with Microsoft to acquire the company that fell through. Google came in, hired away the wind serve CEO key talent

for a couple billion dollars. But left behind the rest of the team and the company. And then I

think cognition came in and bought the remaining wind serve. But you saw that really created at least in the circles. I ran it on LinkedIn. A lot of commentary about where really is the value in a company as well as what obligations do founders have to team members and making sure that there's benefits to everyone when there is a successful exit. That could be a whole separate podcast. So I do think though there's kind of a rise in including traditional aqua hires and we may see

more unique structures going forward. The other thing I would just quickly mention for anyone thinking about selling their company in terms of structural shifts is probably going about. I would say a decade ago you started to see something called reps and warranties insurance, which is wind buyers come in and they acquire a company instead of founders you having to indemnify them right for breaches, the buyer buys an insurance policy. And that's much more favorable if you're selling your company.

I would say today as compared to like a decade ago, much more common to see that insurance, even in deals that are not as sizeable. So definitely something to think about if you're talking to a buyer about selling your company. That's super interesting. Thank you for that insight. Let's talk a little bit about the founder perspective before we get into some other pieces here. Jared tells a little bit about your deal. What was the moment that you realized? Okay,

acquisition is the right path for us. We ran for about five and a half years, so we had different faces. I think one thing that is maybe not full unique, but more unique is that we were doing deep learning inference AI stuff from 2017 in academia and like the company we did about 2019.

phase, the 1.0 of the company, where the whole world is very different. And so once Chatchee we did happen as everyone knows the whole world changed. Like for example, we were about to do a large deal with Microsoft on December 2022. And by the time we came back on January 5th, even our internal sponsors have been scrambled and the whole company was going to get re-ordered and mission change. And I actually went to a dinner a month later where all the people who were working on

touring, which were their language model at the time, were like all just talking about opening on.

“Even though that's what they had been working on for four years. So I think that really was a unique”

experience coming out of that, though, as in everyone showed up in the market with brand new companies. So all of a sudden we went from no one care about what we were doing roughly to there being a bunch of four-month-old competitors who were heavily capitalized. And so for us, a lot of it was we were seriously as well. So we were in this sort of this weird growth thing where we were venture capitalists in the most part are agents, sorry if anyone feels offended.

But no one really cares about your revenue dynamics when you're like two years old or one year old. No one's really like, "Oh, what's the gross margin?" Like, "Baba-ba-ba-ba." And so by the time you're five, though, people care. And so you have all those dynamics outplay going on. And then at the same time, we were like, "Is this market going to exist?" Because when the touching team moment came,

I was like in the first week, it was like this open source model stuff's going to happen.

It's going to come out of the market. Starters are not good at selling commodities. And in 2024, we saw that playout, which was like, "Open AI became cost conscious." And Thropic became cost conscious. So we're all like, "Is there going to be a market?" And I think that was kind of the moment at the beginning of that year. We were like, "Maybe we should consider what our other options are." And then I think on the human element, we'd all been doing almost six years, plus four or five

previous years of PhD in research and all this stuff we were all a little bit tired. And we're like, "Are we ready to go to war for another two to three years in this market?" And then I think back to the team side, when you're valuing it's high enough, you actually have to have enough people

“we were about a hundred. Most people, if they joined it series beer series C, the only way for them”

to get a really great outcome is for you to five X the company to be like five billion dollar company. So then when we started to think about, "How does this impact everyone?"

The reality is a good golden handcuff package from one of these large companies is actually

probably much better for most of the employees. So I think all those factors started going to play. And then so we spent, let's say, January of 2024, and we closed our acquisition September. So it was like a very long process. And I think one thing it might have shifted is no one was really doing M&A that year over a certain dollar amount. We talked to a lot of the big companies. And there's a lot of anxiety from the Googles and the apples and the other people in the world who

more really doing large value dollar value M&A. So that was like another really interesting complicated tension in that time. That's super interesting. What's one thing that surprised you the most about going through the process? I should not have been surprised by this, but decisions are made by human beings. And so it's not as like a normal, no processes is formal as you think it's going to be where someone, your champion is at the company or your

investor at every stage. Someone gets a conviction that it's a good idea. And then things just happen. I saw sometimes expect it to be very like rigid structure. And there's a lot of figuring it out as you're going. No matter who you're working with, everything is different. There's some legal terms to figure out. Your lawyers were actually a perkins. We were a perkins client. Perkins helped. We had an M&A banker help us. And there's a ton of just crossing the T's and

adding the eyes. And it doesn't really, it hasn't really done until it's done. So it was like, there's a little bit of anxiety up until the day you signed the documents. And then it's done in about 40 minutes. And that was just surprising to me. It was like, oh, it's finished. Someone woke up at RCO, woke up at 6am, signed a papers. And it was done by 645. And then we had to roll it out to the team and do all the integration stuff. But it was like eight months or nine months

to build to like 20 minutes of being finished. The thing that really weirded me out was the concept of a signature escrow. Like everyone signs. And it suddenly there were released and the deal was done. I wasn't a subway one that happened. Yeah, exactly. It was like actually my birthday in this month. So it was like the day after my birthday. Like I have birthday party. And I'm like, what's going on with your life? And you're like, oh, and you can't see anything. And I work with a bunch

of my friends. And then we had a Sunday night like we had to do all the deals. And we had to sign some extra documents and blah, blah, blah, blah. And then Monday it was like, okay, we're green light or Monday or Tuesday or something. It's like we're done. And then we rolled it out. So to your

“point, it was just, yeah, like, oh, it's finished. Does this resonate with other folks on the stage?”

The lack of structure, maybe? I would say certainly the closing call because they're frequently at 6am. California times so that the buyers can get the wires out. And also my experience we get on the call and founders are also surprised when it's like our signature pages released. Yes, is the wire being sent. It's being sent. Congratulations. And if we're like, oh, we're done. I would say behind the scenes, though, leading up to that 6am call. We on the legal side are like

coordinating and exchanging signature pages and things so that when you guys get on the phone,

it can be very quick. Even people on our side didn't insane amount of work. Everyone is amazing.

Maybe I'm susceptible. This is a person where you're like, when you're growing up, you're like, oh, the adults are very more organized. They don't procrastinate. You know, and when I was an academic professor is still procrastinate. You know, it's the same thing where you're like, oh, this is actually

I think that's where the magic happened in your process. It was X months before the closing call

“were somebody in Nvidia decided we need to partner with these folks. And I think that's the easiest”

part to lose side of. Maybe the closest proxy for those of you who are building businesses is just selling to the enterprise. Someone's got to believe in you and want you to win the deal as a startup relative to some incumbent. And they're taking a bet on you. They're putting their personal capital. They're reputation on the line. And one of the reasons customers turn is executive turnover. All the same dynamics apply to how young companies join big ones and figuring out

that champion. Are you on texting basis with them? Are they giving you a back channel on how things are playing out and how to work the room? All of that needs to be there. That point because when we started when no one cared about what Nvidia was doing or comparatively like 2016-17, we had had a ongoing path of observability to Jensen. And there were some meetings. And that was the relationship that ended up carrying some of this. And then

“some of the other executive staff at Nvidia. And I think to your point that the C was planted not”

even earlier that year, but five years prior or something like that. Dan, you were recently on the other side of the table buying a business. How did that founding team build relationships with Mercury to the point where this was a no-brainer for you? That position we did what was for accounting platform called T-O. A little bit unique. We had an internal thesis out of accounting and was a place that we wanted to play in. We thought to fit well with our product. So we started

scouring like, hey, who are all the folks out there who are building more AI-based accounting is like a buzzy tour right now. But you know, who are building like the next generation of equipbooks or whatever else might be. And he spent a lot of time just building relationships with a lot of people. The founders at T-O actually said and though to us at the time, they're like, hey,

we might go fundraise. We think we're going to go raise at 100 billion. Whatever crazy value

issue with no revenues. Like, all right, good luck with the baby chat later. And it actually ended up

“coming back around just because we had that touchboard. I think our vision of what this should”

look like was really well aligned. And I think that relationship building again, like, it is a very much human process. And how do you actually find right acquires that believe in a very similar vision? A little bit different than fundraising. I think a lot of times VCs are so on or out there. And you're telling a similar pitch to pretty much every single VC firm. When you are pitching to buyers, every single buyer will have a different purpose for why to care about you. Right,

sometimes people just might want you as a founder. We say, they think you're just so awesome with a person lately, right? Or other times it's, oh, we want the business. We all that distribution network that you built into a customer base, whatever might be. And I think understanding why the acquires motivated to talk to you goes a really long way. And actually, figuring out what did people on the other side of the table really care about and how to

actually make them into a champions. I think part of that is the part that not disorganized to me. But it was like, oh, they're not really 100% sure how you have a lot of degrees of freedom in here. It's not like there's a standard. We're going to purchase you and fly you right here kind of thing. So when I'm hearing plant seeds early, maybe years in advance, do something important relevant or understanding what other companies might see you as strategic

and treat it as a true sale where you're personalizing your messaging to your target. Okay, a couple of questions will do rapid fire across the room. What are the key moments where deals fall apart and what red flags should either the buyer be looking for or should the seller be looking for? Michelle, let's start with you. Sure. So where deals fall apart? I'm going to go to after you've got a signed sort of letter of intent, which is non-binding

but outlines the deal terms. After you reach that point, you'll enter an intense phase of legal due diligence. And increasingly today buyers, I would say both strategic and PE backed. And those can overlap a bit because there are strategic buyers who themselves have like PE sponsors in the background. So many of the deals today that I see even with strategic buyers, there's very intense due diligence. That's definitely a phase where transactions can fall apart.

Some of the issues I see can be around ownership of IP. Let's say you had a co-founder who contributed to the technology, who then left the company. Perhaps not on friendly.

Terms didn't sign the right documents and is never going to sign anything again. That can lead

to issues if you're not in compliance around tax or other applicable laws. I'll go one click earlier in the process in terms of getting to that term sheet. I'd say a couple of callouts. We touched on one executive turnover, who's your champion to make this happen. There are the ones who are articulated. The business case, you lose them huge issue, right? But maybe a couple of other ones to know companies are bot not sold. And so meaning, I think Dan, you touched on this,

hopefully you have multiple people you who are talking to you. Even if it doesn't start

that way, you want to get to that place to keep the process honest. And so if you're in a single threaded process, that is the biggest challenge, because you have very little negotiating leverage, you can't keep your counterparty honest. And one of the red flags, I think that was a phrasing Claudia, would be like the deal turns keep changing. It's like, ah, you know, we had said 250, but let's say 180, because we found this this and this. And when you feel that happening, the

certainty of clothes getting to an outcome super low. In fact, you might be distracting your team

“and as founders, if the deal falls apart, now you have to deal with a management team that feels”

deflated, demotivated. And that is a real issue. So I would say if you don't think you can get to high conviction with one buyer or better yet an auction process, don't do it. The probability of

the deal disappearing is very high. And you took your eye off the ball on scaling your business.

And there's a whole bunch of team and morale issues that come out of that. I'll tell about it from the choir perspective. For us, Berkeley has a pretty strong unique sense of culture, like who we are. We actually buy it's really heavily towards hiring and acquiring folks. So we feel like we don't want an acquisition, but it was like a really big part of our filter for. The choir errors will be told when they're looking for M&A devices. It's usually people in

integration where acquisitions fail. It's not usually within the deal terms. They'll like the structuring of the deal itself. So we spend a lot of time going through not only understanding like the technical abilities of engineers, but already just write the cultural fit, are the leaders that the founder of brought on board like the type of folks at BCB beaters at

“Mercury as well. We go pretty deep on the telling assessment side. I think if you feel shaky about”

your team, that's all going to come out during the deal process as well. So I think if you're building

a company regardless of whether it's for sale or not, you obviously want to surround yourself with good people, but that's going to be scrutinized even more. So of like you yourself as a leader, how you hire people, how you motivate people during the deal process itself. Yeah, I agree with everything everyone said. I'll take a slightly different point. I think this can fail both before the acquisition and after the acquisition to your point. So I would

see but as like a immune system rejection, but I think that's one place people can pre-rule it out. They can see like, oh, the team is great, but it's not going to fit because of like XYZ reasons. And I think that's one way false supporters are actually really excited about you. You know, the teams a little bit too big. The price is wrong. They already have a team that matches 40% of what your team has. Then it's like, well, then we're only going to take 30% of the

teams that we really want 30. You corrupt that teams wherever we're looking like maybe we just hire the people that we really want. You're like, they're playing that process. And then if you succeed in that, you can also fill on the other side, which is the number one advice I got being acquired is making sure that you actually find a way to find some wins inside the company and get integrated because I've heard many stories of people getting rejected immediately for this reason.

It turns out the culture wasn't a match or there's a bunch of politics or people should help and try to undo a bunch of decisions that were already done. So I think those are the two things that I've seen on the founder perspective failed the most. In terms of team, pulling on the thread that you started Dan, Jared, how do you think about managing your team? That's working and building that might not know that in that position is happening to you

tell them sooner or other than later, how do you manage that piece? In the period that we were stuck because we had some like quite close conditions. So we had to be very careful about because there's a lot of D.O.J. Strutniks, etc. stuff going on at the time. I think anyone we talked to wanted to be very quiet. So that was actually the hardest part because if you were going to small company, we were like about a hundred and odd people when you got acquired. I couldn't do some of

us friends to join. Some people that joined became some of us friends and besides the management team, it was like radio silence for 60 days or 80 days and even longer of us knowing that we were doing it. So I think smart people are very good at figuring out what's going on. People like reading calendars

“and stuff and interpreting what's going on. All of that said, you have to walk a fine line of”

letting people know that there are some good stuff happening because in those periods like we're also talking about fundraising like there's a level of basic anxiety of what is going on, what does the future look like. And so I think just trying to manage everyone's morale and give them some hope. It's a lot of the like soft human side of managing a team. I think in those periods. So I think that was hard and then even through the acquisition, it's like a grief

process for people where there's joy and hope and people have all kinds of reactions through it. And even as the deal terms and the reality kick in, so that I think that was really challenges on the human side. Like you have to take all the management muscle, you've already built and like apply it to everyone. And you will start with you. What do you wish founders did more of to set themselves up for a successful transaction? I'm guessing everybody on stage has

pointed view on this because we've circled this idea of long-term relationships in a few different ways. For the most part, for the type of acquisition you'd be excited about on behalf of teammates that have become friends or friends that became teammates, it started because you solved a key

the actual outcome. You were having conversations on how you would accelerate their roadmap,

why partnering with you was better than building internally, you probably had to overcome some political drama in that big company because if it was on their roadmap and they chose to partner with you, that means there was an internal team building the same thing and you had to convince the company that your product was better. And then the best version of that type of momentum ends up being white label integrations or proprietary integrations and ideally some joint to go to market.

And then the outshot of all of that is this is a no-brainer instead of paying these guys a 10% ref share. We should own the whole pie. Let's acquire this incredibly talented team. Long story short, figure out who your best distribution partners would be and how to get that distribution leverage. It helps you in the short term with growth rates and revenue and all of that goodness. But that is also the likely source of somebody knocking on your door wanting to

buy you. It probably isn't like a moon shot that comes out of nowhere. The one time I've seen that happen and I don't know if you can control for this. Therefore it's not worth spending a lot of time thinking about is a category goes and play somebody buys one company, the person who lost the first transaction way over pays for the second transaction, a good classic example of this.

“I think Salesforce bought demandware for like a billion and a half. That became Salesforce.”

Commerce Cloud Adobe then turned around and paid like four billion dollars for magento.

Which makes no sense. magento is an SMB business. Adobe's heavily enterprise. And if you're magento with full respect to vista because I think you guys benefited from that pretty nicely. You're just so grateful that you got hit with the lucky stick. There's no prior integrations. That happens but you can't count on that. Other than wanting to be in a category that has multiple players who are all doing well. That's a healthy category. Those are the categories where sometimes

that movie plays out. Otherwise partnerships with your biggest distribution partners. Amazing. The threat of long-term relationships. Super important. Your relationship with your investors is a long-term relationship and oftentimes founders have a hard time broaching the subject with

their investors. Even if they have a great deal at the table or this is something that deep

down they really want to do because the team's burnt out or they maybe have questions around how the market's changed. What advice would you have for founders in broaching this topic

“with their stakeholders? I think the way that you play is so consequential to how the outcome plays out.”

Where prepare for the leaks scenario even while you're really early just exploratory phases right when you're thinking about signing a term sheet like I will point you to tell employees and so on and the way that you manage that process has founders like you all have reputations as well. Those founders like you typically found multiple companies over time. Well, as you have someone pick it, an reputation does follow you through investors and employees.

Like your current employees are probably your network of folks that you really trust and want to work with they can. So I would just say take care of your employees, take care of your investors. When you're going through a sale process, it really feels personal. This is your baby that you're selling but there are also a lot of people who've signed up. They're livelihoods and their relationships to be part of that journey with you, whether it's on the investor side or on the employees side.

So just take care of it. I know like sometimes it could feel like a little bit of a fixed pile of the pace that it is in a long term or if you do want to be successful. So looking forward. That's great advice. Thank you so much for joining us at the room podcast. If you want more from the room every week, subscribe to our newsletter at theroompodcast.com/newsletter. We'll be back next week with a new episode and inspirational guest Tuesday.

10 a.m. Eastern 7 a.m. Pacific. See you in the room. Perkins Kuiz supports the most innovative entrepreneurs and investors in fast-moving and high-growth sectors addressing their mirriad of legal needs. But the firm doesn't just provide end to end

“legal and business counseling to its startup clients. It also facilitates introductions to key”

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