 Great to be at Slush again this year. So thanks for the introduction. So I'm Larry Chu. I'm the head of technology M&A at Goodwin Proctor, based in Silicon Valley. I've had the pleasure over the course of a 20-year career doing more than 100 deals valued at an aggregate value of over $100 billion. Why is M&A important? Well, the statistic is that 90% of tech companies exit by way of M&A, right? So IPOs are relatively rare. Probably most of you will consider, if you're running a company, an M&A exit at some time lifespan. What's going on right now? There's a lot of interesting activity. In the US, M&A is down about 20, 25% this year. It's relatively stable in Europe and Scandinavia, so I think $75 billion worth of M&A last year. But the good news is that there's record amounts of cash on corporate and VC balance sheets. I think the Atomico report that came out yesterday, there's over $1.5 trillion worth of cash, only in technology on corporate balance sheets. So that means there's a lot of shopping to be done. So most M&A in the tech space is strategic M&A. That means that these businesses are not valued on a traditional basis, right? They're not running DCF analysis and backing into evaluation. There's usually a product or people or marketplace-driven reason why buyers are doing M&A. The traditional big buyers, Google, Oracle, Salesforce, these guys have been extremely active and the good news for everybody in the room is that they've been probably more active in Europe and abroad, Scandinavia and Israel than they have been in the U.S. in the last 18 months. So we're lucky enough to have two incredible founders, Barat Vassan of August Home, which has a Scandinavian element because we just closed the sale of August to Assa Abloy, great Swedish Finnish company. And Risto Larismaki, our hometown boy, who we sold to, Idean sold to Cap Gemini earlier this year. Both exits, I can't reveal the purchase price, but they were meaningful exits. Lots of zeros attached to them. So, you know, let's kick off the discussion. You know, my mic is sort of winging out, but the question is, how did you guys sort of decide when was the right time to sell? Did you have a lot of sort of anxiety around that? Well, I mean, wow, I don't know what's happening, but we never went really for sale. I mean, we never were looking for, like, exactly a right time for the sale. But... I want to introduce a beat, you know, just start rapping your... I think it's your mic, Larry. All right, so, thanks. So, about when was the right time to sell? So we never went for sale. We were always, like, just trying to build an amazing company and deliver the best work in our domain. But, of course, as a CEO, I was always looking around, like, what's happening in this market. So we were very aware of the market in itself. And in our market, in the design industry, you know, it's been quite active last four or five years, M&A, in general. And year ago, last summer, for any weird reason, there were, like, multiple companies approaching IBM. I was like, well, wow, this is pretty interesting. I need to take a look. And that's really how it started. And it started to feel, actually, a pretty good idea for multiple reasons. So, you know, through two acquisitions, I've had the same philosophy. You're building the business for the long run. And part of what you're trying to change in the world is an entrepreneur or something that isn't just relevant to your users and your own company, but it's also relevant to these big companies. And in many cases, they're looking for leadership. They're looking for, hey, can we get a good group of people and give them a platform to do something globally, something even bigger? And so for us, I don't think we were thinking about a sale in as much as how do we get to the next level? How do we get abroad? How do we get to Europe from the US where we are very strong? And Abla gave us all of those things that are just different. You know, by ourselves, we'd have to raise more money. We'd need a platform, build out channels, and it just made it easier to get to this future version of the world that we were trying to get to. Larry's busy getting mic'd up right now. So why are we moderating ourselves? So why Abla? I mean, look, Abla is a Scandinavian company. You're not a Scandinavian dude. Well, as we all know, Scandinavian companies are the best companies. So let's start there. Yeah. Now, you know, I think a lot of it is the feel. As you talk to people, it's really a long-term relationship. It's a marriage, almost. Like, you've built this thing with care. They're, you know, your people, your startup for three, four, five, 10 years. And you're getting married now. They're giving you a bigger platform. So in many ways, it's about that relationship and that crossed around, hey, will that really happen or will things change down the line? Right? And we felt really good about us when we did the deal and that's kind of how we ended up there. So I'm hearing from both of you, like the best way to sell is to not be for sale. Like, you're still building the company. So to that end, like, how did these deals come about? So you're going about your daily business. You're scaling your company. Everything's going well. You get a knock on the door one day? Well, first, we work with a lot of companies, right? So in many ways, it helps to have dated a little bit before. And so we've always talked to us. We've talked to other companies in the lock space. We work with Amazon, Google, Nest, all these big companies. And I think the hard part about M&A is you can't forecast when it's going to happen. You can't force it. There's a lot of things you need to come together. They need to be ready. You need to be ready. Price has to be right. And so in many ways, it's easier to just say, look, we're going to try and build the business. And there's a lot of partnership and BD work to be done. If you can get started working well together on a few projects, the strategic conversation around M&A becomes a lot easier down the road. To get granular a little bit, though, and I think most M&A in this space happens with partners and customers, right? People in the ecosystem that you already know. When you're having those conversations, like, how do you bring up the topic? Do you bring up the topic? Or do you say nothing? I mean, you play really hard to catch, right? At least in our case, we never knew the company which Acquire does, Caption, an amazing company. We never knew them before. I mean, we never worked even in one single project. But there were multiple other companies who were trying to approach before that. It's really a topic you don't raise in that sense. You just keep doing really, really good work. And then at some point, if you feel that, say, right thing to do, you might give a hint. But at least in our case, it was more like, we just keep doing good. Yeah, when I'm talking to entrepreneurs, I always sort of say you should be really thinking ahead about who's likely to buy you. In some cases, you can actually, if you're in technology, you can build towards sort of maybe a product roadmap infirmity or something that a buyer might have. But it's always good to sort of try to predict who might be on the scene. In your case, you didn't know them at all. But you did know that other sort of consulting firms, larger consulting firms were looking for digital transformation assets, right? And did you talk to the founders of other companies who had been Acquire? Because there was a ton of activity leading up to Acquire. So we're talking with a very small community, design scene in itself. So yeah, I mean, we knew quite well some of the companies. And especially the companies which got Acquired became quite transparent about everything. But I think what was more important, I personally started looking into this space like maybe two, three years ago, just to be prepared if this would happen. So I went to meet pretty much every single banker you can imagine in this industry. And trust me, the guys will tell you everything. And I learned what was probably the most important piece I learned, what are the key value drivers for a company like mine, when the thing might happen, like you're being sold. And that's something you can start preparing and you should start preparing like way before, like years before you actually start selling. It's a good point. Bankers can give you good strategic advice for free, obviously, you had some of those conversations. Did you find that they gave you sort of a consistent view as to who might be logical buyers for you guys or did you get lots of different perspectives? I think we've got a lot of different perspectives. I love bankers, nothing against bankers, but it's a little like selling a house. They always tell you it can be sold for more than it's worth and it's gonna be easier than it is gonna be. And a good filter for you as an entrepreneur is to talk to the folks that they're talking about directly so you get a sense for is there a fit? Will they really relate to me? Is there something here that's to be done on the M&A side or is it just looks right but it's never gonna happen? When you guys got that first offer, and I know in both cases it was competitive, how did you go about sort of making that situation competitive, getting the best deal for your company? I don't know why we still go first on this one. Well, sorry, my voice is going away. I'm having too much fun in slush, way too much fun. But, well, some of this stuff is probably kind of between us girls, but what would I say? I mean, being transparent. So we ended up being a place where we had multiple different picks coming in and we didn't really want to start squeezing anyone. We just, we were quite transparent. And, personally, I knew quite early on which company is the one we go with, if at all. And so... But what was important to you? Was cultural fit? Culture, the fit in terms of what I could say. So I had one thing in my mind all the time. So, idea is all about people. We are like 250 people. And I was always thinking like, which one of these companies, I'm able to actually tell and announce the news in a way that everyone believes this is actually good for us. Because there were a lot of fear about like what's gonna happen and all that. And I knew quite early on which one of the companies which we ended up selling the company would be the one I can be honest as always. What were the questions that you asked to help you decide which way to go? We talked a lot about where a startup based in San Francisco, we have an entire culture of folks that are thinking about disrupting this space worldwide and we didn't want to lose that. And so a big part of it was thinking about what the best home would be. If it's a competitive situation, then price being even, those are the types of things that end up making the difference. And so you have a lot of conversations about how would life be the day after? How would it be 30 days after? How would we have conversations about budgets? How much process is there? How will you react when things go wrong? Things you talk about in a normal relationship is kind of what we talked about with them over the M&A process. Why then, it's not even doing a negotiation. It's after the negotiation, over drinks or over dinner, these are the kinds of things you want to suss out. There's a big trend going on right now that in addition to the traditional tech buyers like doing a lot of buying, there's a lot of what I call old school buys new school. And like both your acquisitions were sort of, you know, they're sort of non-techy, more traditional buyers, industrial company in your case, you know, old consulting company in your case. Was there anything that came out of that that you found different? Like even little things like how people are compensated in Silicon Valley or you know, how operations are run, how nimble you're going to be. Like, would any of that stuff come up? So I've been fortunate in two ways, right? I do consumer and I've done hardware and I've had two exits. First one sold to Intel, it was in the fitness tracking space. This one was sold to a more traditional buyer. I'd say the biggest difference between a technology buyer and a industrial buyer is just the amount of diligence, their world view about all the other types of deals they do because your deal is going to be very, very different from all the other stuff they do. So there's a lot of getting on the same page where they have a particular way of doing diligence, of valuing things that may not gel the same way from the tech space. So I think for us, that was the biggest thing is to educate them on, hey, this is how the technology space works and their perspective is very much well-willed. This is kind of how the lock space works. So there's a question that I see that's actually dovetailing nicely here where you guys were saying there was a lot of discussion about after the transaction what happens after the transaction. I think a lot of people fail to do that, fail to ask those questions. And I'd say the statistic is roughly two-thirds of M&A fails because in that integration phase, things go wrong or you don't plan ahead. So the first question here is like, what happened after you got acquired? Was there, were there management changes? Bigger changes or is life pretty much the same? I know your deal just closed last week. It just closed last week, so. Maybe you can talk about it more. Yeah, I mean, we had exactly the same question right after the deal, like what's going to happen? And people were a little bit afraid that something's going to happen. And then after three months, people were a little bit afraid because nothing really changed. And so. But you tried to guarantee that things wouldn't change in the process of it. So I mean, for a company like IDN, again, the culture is everything. The DNA is something we need to hold and protect. And that's what GapCheminy has been actually doing very well. They kept IDN as a separate thing, but we are integrating, of course, our sales and we are learning a lot from a massively experienced group of 200,000 people. And so we are still on that journey, but no management changes, not of the massive changes at all. Personally, I've been flying way more in Paris now than lately, which is nice. There's some great questions coming up that I was going to ask anyway. But two of them here, what was your biggest faux pas made by the corporates? Or let's just make it general. Is there anything that happened in the process that you wish you did differently? And what advice would you give to your 20-year-old self? That's like 20 years ago, man, I don't know. I'll go with the faux pas made by the corporates when courting us, right? I think one of the big turn offs was, imagining what life would be like after the acquisition. And so every time you got stuck on some type of deal point or some type of structuring issue or some type of diligence thing, I think there was a sense that one of the parties, at least, was super painful. It was like a root canal, like going to the dentist type of thing. And we're like, well, this is just, this is supposed to be the phase when everyone's trying to be nice. And so, you know, if life after is gonna be, is gonna be even more painful. And so I felt like, if you're a corporate, there's lots of issues to be resolved, but you also have to figure out a way to mask your anxiety about the deal when you're interacting with a small startup that's trying to move quickly, that maybe doesn't have all of the structure and process that you might have at a big company. Was it hard to negotiate in a tough way against people that you knew you were gonna work with, like right after the deal closed? Well, that's what good attorneys are for, right? Because you guys have gone after the deal, so you guys can be the bad cop. You can be the bad cop. And I think that is important. It helps to have a lawyer or a banker be that person if you don't wanna be that person, or have a COO, CEO type of thing when you're negotiating. That way you don't burn the relationship because you have many, many more issues to deal with after this deal is done that just doesn't end over there. So what advice would you give 20-year-old Risto? Move to Silicon Valley immediately. Like now, don't look back. Expand on that. Why do you think that was important for you guys? There's been plenty of successful companies here in Finland, Rovio Supercell, they're all, they all stayed here, and you win. I mean, for us, it was, I mean, it saved the company. And probably it was good to be here to learn like a lot of stuff in the last 15 years, but the speed, the passion, the genuinely willingness to change the world, those are the things that happen in the Silicon Valley. And it's really made for me, and I think it's an environment where I like to be, and I think it's good for everyone. Well, at least most of us. This is a good last question because we only have a minute left, but because most of these deals are strategic and there's no real sort of way to place the right value on a company, the question is like, what's the best method to evaluate the value of a company? Like how do you know it's the right price? It's a little bit like that. You know, if you've revenue, it's a little bit easier to value as well, but a lot of it gets set by the market. We have a competitive situation, so it gave us a good sense for, you know, if the best company is valued this way, is that enough to clear our investor preferences? Is that a good deal for our employees? And there's also the opportunity cost of, like I've raised over a hundred million bucks and I'll tell you that fundraising is no fun. You're always spending time. This is the first conference I've gone to in a long time where I'm not raising money, there's no business development, but otherwise it's a constant coin. It sucks up time and resources. And so if you don't have to do that, I think that's a big part of, hey, what could 2018 look like if we were just focused on building the business instead of all these other things that need to go into a startup? Yeah, my view is that I actually did my homework once in my lifetime. And yeah, first and probably last time. And as I said, you know, I went to meet all the bankers, I met a lot of the founders in this industry and I tried to learn like what, where the other prices and the structures of the deal. Cause it's not only about the headline number, it's about the structure. That's actually even more important. And so through that, I was able to set a certain numbers and elements in my head and I went after them. Great, I think we're out of time, but congratulations you guys. Great deals 2017. We'll be around if you have other questions. Thank you so much.