Spilling the Tea: What Really Happens in Device Deals | LSI USA '23

Transcription

Brent Reinke  0:07  

I, I do have to preface one thing is like I agreed to moderate this panel and then found out what they really wanted to do. So I think you'll enjoy it. Again Brent Reinke, shareholder with Straddling Dr. Carlson Roth. Those of you not familiar with the law firm, we've got 120 lawyers firm, wide 12 offices in five western states, I do corporate law. Actually, I work in our Westlake Village office, which is in between LA and Santa Barbara where Amgen is located and there's a lot of life science activity going on up there, which is really exciting. Before we get into the the panel discussion, at first, I was going to have to as a as a California native apologize to you guys, especially the ones that are from out of town about the weather we provide it, but it looks like there's some sun coming out. So I hope it stays that way. Because, frankly, we're getting a bit tired of all these atmospheric rivers as they call them. But based on the gist of what I think is going to be discussed on this panel that I got last week, I learned two things when we had about a 10 minute conversation. First, I was kind of the odd person out because these guys know each other really well. Which was was great to hear. And secondly, they have a lot of interesting stories that I think they're going to be able to tell. So even if we didn't have sunshine today, I think these guys will bring a little bit and probably a few smiles to your face based on the stories they have. There was an aspect of me that felt like almost had to do a disclaimer, and I was talking to Rak about this the typical one where the you hear on a TV station where they say the views and opinions of those about to speak are not necessarily those of me. We'll see if that's the case by the end of this. But I'm looking forward to the discussion, especially with the industry knowledge and experience that these guys have. So real quickly, not going to take a long time to do it. But I wanted to you know, more formally introduce the panelists, and I'll go from my immediate left. So it's Rak Mehta is the partner at Centerview Partners, which is an investment banking organization. And then we have Eric Wolf, who's the SVP of corporate development and strategy at BD. And then last but not least, who is apparently the one that thought of this panel and how to how to handle that is Chris Cleary is the VP of Corporate Development at Medtronic. So honestly, I feel like more of a monitor than a moderator on this one, just to make sure they don't go to outside the box. But I'm just going to turn it over to you guys and let you take it from here.

Rakesh Mehta  2:43  

All right. Well, before we get going, I'll just do a quick informal survey. How many people like the vest underneath the blazer? I just informal show of hands? How many people like that? I like it. Yeah, yeah. See, a lot of people like it. Fight me, Chris. He's been trying to get me to take this off all day, and it's not working. So look, 

Chris Cleary  3:02  

When you start sweating, you're gonna have an excuse.

Rakesh Mehta  3:04  

That might happen before this is over. So, you know, Chris called me a little while ago and just said, Hey, we're gonna do this panel, it can't be sort of the normal, happy horseshit. Let's let's try to just really be candid. Let's try to tell people what happens in between the deals like you know, people hear about the deal, it gets announced, but no one really knows the chemistry the back and forth that happened. So let's, let's just discuss that. And I'm like, Are you sure because I have a lot of tea to spill. I mean, I've been doing this for 25 years. I've known these guys for a couple of decades now. And I know a lot of words, and he was like, yeah, absolutely. You should absolutely talk about that. So I guess what I'll do, I'll start off by saying, the first thing you guys should know about these two is that they're not very nice people. So I you know, I say that, by the way, everything I say today is going to be true and verifiable. And by the way, whenever a banker tells you that you shouldn't dress that you should do your own homework, but we were it was early days of COVID. You know, everybody was scared. My wife's immune compromised. I just moved to Phoenix. I was trying to buy a house. And I called you know, the I was selling Companion and Eric was head of strategy at the diabetes business and Chris was doing whatever he does Medtronic and so they summoned me on a call we just put a bid on a house we've not gotten it and you know as you start these calls as one does, made some small talk and he says how you doing Rock and I'm like well, you know guys, I just you know my wife is really attached to his house and I put a bid in and you know, the broker used my bid, get somebody else to bid and took it away from me. And instead of showing some sympathy, these guys are like, wait, wait, wait, rock, wait, wait. So the seller got a bid. And then they took that bid, and ran it all over town and got a better price and left you at the altar by yourself? Is that what you're saying? And I'm like, yeah, guys, but my wife, he's like, Fuck you rock. You've done that to us seven times. So you're gonna get no empathy from these guys. So that's a starting story.

Erich Wolff  5:38  

It's great. Let me go next. All right, good. And there's a few people in this room or actually in this meeting, but this is a story about Chris and transatlantic transaction making. So we were, we were in, in London meeting with a an Asian company that had wildly lofty valuation targets in their mind, they wanted to sell their business for billions and billions of dollars, company was doing called sub $100 million of revenue at the time, there was jetlag, there was, I think, a little bit of food poisoning, perhaps. But we were, we're sitting across the table from each other. And we're gonna make a small, I'm looking at some folks in the room laughing. We're gonna make a small equity investment in their company, and then structure a way to ultimately acquire the entire the entire company. So we're sitting there, and Chris is taking it upon himself to be the lead negotiator. And he begins telling the other side who again, wants billions of dollars for this business, that pick a number, Listen, guys, pick a number, we're going to put in $50 million dollars. You tell us what valuation you want, we'll do it. You know, the, the number I care about the most is the is the acquisition number. So me and a couple of my colleagues are sitting next to Chris, and we're furiously scribbling math. And we're

Chris Cleary  7:02  

Gonna interrupt and say that while these guys are writing notes to themselves, like is Chris drunk. The other side is writing notes for themselves. And they're saying, Oh, my God, we're rich, we're rich.

Erich Wolff  7:11  

So we're trading this math. And we quickly get to the point where there's absolutely no possible rational reason for them to quote unquote, pick a number that we're going to agree to. So we had a call a timeout, pull Chris into a breakout room and explained to him that his math makes absolutely zero sense. We need to now go back in we need to do a complete Mia culpa, beg him and try to salvage the deal. So

Rakesh Mehta  7:42  

well see I said, they're not nice people.

Chris Cleary  7:45  

The title of this panel isn't the one time Eric was right.

So look, I'll tell a story that involves rock when I was pretty new, I started in 2014. And I think, what 15 for 12 that about right 2015 16 and a 15 began is 16. And we're buying 12 It's a heart valve company. And, you know, I get on the phone with him and his partner from JP Morgan at the time, Will Thiessen and, you know, we're we're having I'm being once again convinced that Rock's wife dynamic in Arizona, is true that there's another buyer and they put in a better bid and we have no chance and the other side prefers them quite a bit. You know, plus, I'm ugly. And you know, it's going on and on. And I start using movie lines. And I'm saying, Well, you know, go go go lunga lunga. And usually when I say a line from Caddyshack, I have to explain it and make people that are 30 year old associates watch the movie and come back but these guys were like sharp. They're like, Oh, wow, Caddyshack, reference, this could be really interesting. So we start building a relationship with each other around this deal in around arcane, like, you know, in the 80s and 90s, movie references, and we begin to have an actual relationship and, you know, it actually comes to pass. And what happens is, you're not nice people, you have a long collective elephant in memory. And I remember that they always said, there was another bid. And I had dinner with Andrew Clealand, who was the CEO of 12, like, I don't know, six months later, and I knew it was him. He didn't know is me. And I'm like at dinner, and I'm trying to get out of him without him knowing it's me, like who the other bidder was, and I can't do it. And then I formed a suspicion that the other bidder might have been another CEO. That was the owner of company we bought Heartware, and I'm thinking that can dunk God show how to be the other bidder. And I did the exact same thing to him. I set them up. I wanted to find out not only what his bid was the or if he was the bidder, but what his bid was in the only reason I wanted this was so I could go back to Rock and go there. I freaking knew they didn't have a better bit than we did. It was all bullshit lies what you told us. And you know, the point is, if you wonder like what we're doing in you know, when we go offline on deal negotiations and stuff like that it's this. It's absolutely senseless, where I'll silly things that we just need to know. Like Eric just you guys

Rakesh Mehta  10:25  

Are trusting your life's work in our hands basically. But look, I'll sort of keep building on this theme of these guys not being very nice. So you know, a lot of times you guys meet with them at Investor conferences, and, you know, medical conferences, and you meet with them. And, you know, a lot of founders call me CEOs call me go, you know, I met Chris Cleary, and boy, that guy's direct. He's straightforward. He's loved, loved talking to him. And I'm like, Look, he wants you to think that he's nice. He's not. Because let me let me let me take a step back. Okay? These guys are borderline psychopaths. Okay, and I'm gonna, I'm gonna go, I'm gonna go a little deep on this, because when these guys, what I'm about to say, is not verifiable. But it probably is true, which is when they were growing up, they were probably torturing puppies. Let me tell you where I'm going with this. Because they want to be nice to you when they meet you. Because if somebody tries to buy you, they want to get the call to say, Hey, are you interested in buying us? You know, Chris met with us, Eric met with us. They were really interested Rak, you gotta call them. And the reason they want you want to get that call, they're being nice to you at the conference, because you're not asking them for anything. But when you're ready to get them to buy you and you call them. That's when they get to crush your dreams, and say, No, we don't want to buy you. So it's, you know, now it's not cool. It's not cool to you know, kill puppies, so they kill dreams. That's what they do.

Erich Wolff  11:59  

Alright, that is a gross exaggeration. I will tell the counter story to that we there's folks in this room who actually worked on this transaction. We had, we had a Israeli organization that we found had absolutely core AI and machine learning capabilities based in based in Israel. And the the team all came out of the same unit of the Israeli military. They were very, very close knit group. And I hit number one objective was to acquire them and then keep them right. So our objective was, this is going to be an aqua hire, we care about the people we care about the team we care about. Maintaining that culture, in that organization, then having this is when I was at Medtronic having Medtronic build on those capabilities. And so the three founders and I met in Luxembourg, I flew over there was sort of this halfway point, I had other businesses there. And we sat down over a meal and literally hashed out all the aspects of the transaction, valuation, you know, continuity of the team, the vision for sort of where their their technology would fit into our broader ecosystem. And, and we ended up getting the deal done. And I remember this vividly, we went and did a town hall with Omar Issa, who is the CEO of Medtronic at the time, and he comes in, we welcome everybody to the to the family, and we have some time with some of the engineers and I'm in the car, headed back to the airport with Omar. And Omar says, Eric, I don't know if you noticed this, but half of the staff was barefoot, and there was a dog running around with a diaper on. So it was it was one of those moments, it's very, it was a very big sort of culture shock, I think to you know, legacy, you know, mega cap companies, but we ended up keeping that business, we kept everybody intact. When I left Medtronic, the CEO of that business actually took my job in the diabetes business, and Medtronic has continued to, to invest in pile on to that Israeli infrastructure. So I'm at least Nice.

Chris Cleary  14:17  

Yeah. And look, I, I've got a dog. And she's quite healthy. And it ties into this next story. So you know, we were we were an investor in a distributor for Mazhar surgical robotics, an Israeli company that did a spine robot for a long time. And, you know, we we knew we wanted to buy it, but we we couldn't make the math work, because the minute we did the distribution agreement, the valuation on the Israeli market ran away, it was very difficult to catch up to it and figure out how to make financial sense out of the acquisition. So you know, at some point, we we got to the point where we just had to figure out a way to do it. We ultimately ma Hold it saying, this is our life without a robot. This is our life with a robot. And the difference between the two lines is the deal model. And we figured out a way to make that work. And the pivotal component was that we realized that the CEO or her Domi, probably could sell it to another party and didn't just have to live distributing it through Medtronic forever. And that was the pivotal thing that made the model work. So you know, good for us, we cracked the model. And, you know, it's time to get serious and Ori needs a banker. So I'm at home petting my dog. And I'm like, I call rock because I don't want anything from him, I want to give something to him. I said, Corey, needs a banker, you should talk to him. So he does, and you know, all of a sudden, rocks got an engagement that you know, if he's good at his job he could get paid for. So we send a letter to Ori the traditional way, it's a public company, you have to do all this in writing, and says we want to buy you for I can't remember the prices, but it's a price per share. And I call rock afterwards. And he goes, Yeah, we had a board meeting. You know, all of a sudden, it's not like you and me. It's like we and you know you face.

I was interrupted my bike ride. Yeah,

we I was on a bike ride. We had a board meeting, and we don't have any response to your bid. And I just lose it. I'm like, that's not the way this works. When I say something, you have to say something. If when I say something, you don't say something, then the entire process breaks down. And there's no communication and without communication. Where are we really are we animals? So Rocks, like this, it but he won't give it up? Right? He's holding the investment banker line, we have no comment. So then I call up Ori and I'm yelling at them like God damn. You've got to give us a counterproposal. He's like Chris, Chris, don't be upset, what would be a good counter proposal, just tell me what to say. So just say number. Or he says a number you guys come down, I'm flying out to Minneapolis, I want to come to your place. And we'll work out the final numbers. So you know, I calm down. And my wife, me and my dog are there when Ori he gets there. And I'm not saying the story about the dog. Because what you said even though it was mean, spiteful, and unverifiable. But the dog was there. So where it comes in, I got a bottle of white wine. We go out in the balcony, in Ori I handed I didn't do it on purpose, but I handed him a huge red wine goblet. So he takes this bottle of white wine, he's a little bit nervous, you have to realize when you're doing a deal negotiation, you're dealing with like, Ori 15 years in this company, right? I mean, the price action, it mattered to him, mattered to all his employees, it mattered to the company's position in the Israeli exchange. You know, like everybody he knew, like this was a meaningful negotiation. Of course, you're nervous. He takes a bottle of wine, he pours about three quarters of it into this goblet. And he just starts drinking it and he's drinking one hand and petting my dog, Chloe with the other who's climbed up in his lap, and I'm looking at it going, Okay, I'm just gonna let him have that bottle. We go back and forth for no more than like three minutes. This was not a surgical procedure. It was like about this, about that about this elbow, and then put, you know, we arrived at whatever the heck it was right? 58 bucks, I gave her and he stands up. He goes, that was an enormous relief. And he drains the glass. Because Is there any more I got Sure. Empty the quarter of the bottle that slept. He drinks that it goes. So relieved, he puts the dog down, he walks up. He's like he came in walking all heavy, walked out, walk in real light. And I'm thinking you know what this is actually, this is what you live for. This is the actual good stuff that happens in deal negotiations, despite investment bankers best attempts to prevent it. Yeah. 

Erich Wolff  18:39  

Why did rock get paid?

Chris Cleary  18:41  

Like, where were you on that one?

Rakesh Mehta  18:43  

You know, on that deal. I never actually spent any time with the company. So they asked me to come out to Tel Aviv to you know, I understand the technology. And I fly in and I'm waiting at the airport. First of all, I tell them, I can only be there for a few hours because I have to be in Germany that night. So I fly and I'm thinking oh, they're gonna serve me a great, you know, I'm gonna have I love middle eastern food. They're gonna give me great food. So I get to the office around 1030 We're talking and I go, or he's like, Okay, should we break for lunch? I'm like, Yeah, let's see what you get. He goes sushi. I like I was hoping it'd be something else. But when I flew in, I was waiting for my ride. And all of a sudden, I see this guy just walking across the airport. And we look at each other. He goes, we both look at each other. Go What are you here for? We both know why we're there. We can't say it. We're just kind of like alright, well, I guess I'll see you took off and off we went. So it was a great transaction.

Chris Cleary  19:53  

From a bankers perspective. It was a dream job. 

Rakesh Mehta  19:58  

You want to moderate well

Brent Reinke  20:00  

Oh, you know, how do you? How do you moderate this? Well, I mean, obviously you guys have, you know, had experiences that were trying, but at the same time develop a really cordial relationship. Right?

Rakesh Mehta  20:15  

Well, in private, we're a lot more mean to each other than,

Brent Reinke  20:18  

well, you only when you're videotaping, and it'll be all over. So yeah, exactly. You really bash each other? Yes. Is

Chris Cleary  20:24  

there a way to end up the puppy thing?

Brent Reinke  20:27  

I mean, what, you know, what, what I know, in your careers, I mean, what does it really take to kind of maintain that, you know, kind of relationship? I mean, obviously, they're tough negotiations. There have to be, but how do you maintain the

Erich Wolff  20:41  

 Oh, well, first, I mean, so first of all, it's a small world, right? So all of us are going to bump into each other. And we'll continue to bump into each other. You know, rock. I've done multiple multiple deals with with Rocky, but I was

Rakesh Mehta  20:54  

counting between the three of us, we've probably done like, 15 deals together.

Erich Wolff  20:58  

 Yeah, we've done a lot of deals. And what I'll say is, you know, the negotiations, we have word fiduciary for our firms, we have an obligation to our shareholders to do you know, good transactions and smart transactions and strategic transactions. And, you know, Roc has the same responsibility for his clients. And so, you know, over the years, we've been, we've all become very, very close friends. But but, you know, Rock, he does his job. I mean, there, there are multiple times where, you know, you're looking for an edge on a deal, you're trying to figure out how competitive it really is, you know, back to the example that Chris gave, and, and so the relationships deeply matter. I think, from a strategic perspective, engaging and helping sellers understand what a future looks like, as part of the bigger organization matters. It's not just dollars, it's not just structure. It's, it's the relationship aspect of it. So I would not to get pick a corny sidebar, but I think the relationship element,

Rakesh Mehta  21:57  

but I think I think what's really important and deal making is, you know, sometimes the buyer is wrong. And it's Chris, you know, it's, it's my job to point that out to Chris and Eric, and it's their job to then convince people internally that they're wrong. And sometimes our client is wrong. And what what you really need is candor in that interaction, because if you know, you're you're not doing your client, you're doing your client a disservice if you're only parroting the client's point of view. You want to add Eric's absolutely right. That's my job is to advocate but sometimes, you know, we're not right. And when that happens, it's my job to turn around and go to my board and say, Look, this is a perspective they're bringing to the table. We may not agree with it, but it's a real issue. And let's figure out how to solve it. Right. And so that back and forth is was really, really important. That's well,

Brent Reinke  23:02  

I mean, you're you can take yourself out of the situation a little bit more than the people that are in it. Yeah, you have

Rakesh Mehta  23:08  

to have this passion and give back. Yeah, because look, I mean, you guys build companies, you guys are very, you know, immersed in doing something that will really changed the way medical practice happens. And you get passionate about that. And sometimes, it's not about your passion, it's about what makes makes the math work. And as you know, you need an intermediary who can be dispassionate about it, and that these guys serve the same role for their organizations.

Chris Cleary  23:37  

Yeah, you, you have to share your problems. And you have to listen to the other side's problems. And you have to, you know, you, you've got to tell the truth, right, you don't have you're not obliged to, like, tell people everything, but what you tell them has to be true. And you've got to earn credibility over the course of a relationship in it, sometimes you have to spend it with the other side, much more often as a strategic you have to spend it internally. And you've got to be able to, you know, because I'm, more often than not, in sympathetic, I sympathize with problems that the sellers have, that we can't reconcile internally. So I find myself having to like deal with a functional viewpoint that is at odds with what we've seen in diligence or at odds with what, you know, we hear from either a law firm or, you know, consultant or something like that. And you've you've got to go through that up and pounded down and you can't get a deal done.

Rakesh Mehta  24:37  

I'll give you a concrete example. Like we sold a company to Medtronic Hill Avenue, and we had a very candid back and forth about how we saw value versus how they saw value. And there was a component of the business that they just looked at it and said, Look, if you want us to we'll attach a milestone to it, but we're really not going to invest that much behind it. We just we're just telling you, we don't want to create false expectations. And that candor was really important, because then it allowed me to go back to my board and say, hey, look, you know, we could sugar, you know, we could put a milestone on, it will make us all feel better, but what's the value of it if they're really not going to invest behind it, and our board said, Well, then let's pull it out. And we managed it. And these guys were fully supportive, we managed to pull a piece of the business out, they actually were really constructive, they actually ended up investing in the company as well. And you know, at some point that might create another innovation engine for them. But you know, it was because we had this very candid discussion about what they valued versus what we valued that made the deal happen.

Brent Reinke  25:38  

Well, that's the other thing I've seen too. And maybe it's in smaller deals than that some of the deals you're talking about. But when you have that intermediary, where it's an investment bank, or somebody else that puts themselves in between the business executives, maybe the owners of the companies that have a real passion about what they do, and it starts to get personal. And yet we know that most of these deals, once they close, those are going to be an ongoing relationship. And you really don't want to damage the personal relationship, those two are going to need on a go forward basis, before they've even done a deal. And so I see that a real value in putting that person in between them kind of to take the heat and be whether it's the lawyer or the investment banker, whoever it might be to try to address what otherwise could get become a kind of a dicey situation

Erich Wolff  26:24  

in that it's also the job of corporate development, right. So within large strategic requires, there's business development in the businesses who are spending time with targets, they're looking at, you know, the capabilities of the leadership team, they're looking at the pipeline. And so, you know, not every deal that we work on has a banker necessarily involved. And so that is part of the job of corporate development, where we are the broker, if you will, between the business unit, who cares very, very deeply about the relationship on a go forward basis. And obviously, the targeted company. So it's a good, it's a good analogy,

Rakesh Mehta  27:01  

I think the one thing you guys as CEOs and founders should remember is that these guys are getting bombarded day and night by people calling them and saying you should buy us because we're the best thing since sliced bread. And so they have to bring a level of skepticism to the discussion. And, you know, you have to keep that in mind, because they're always getting pitch stuff that may or may not be real. And so they have to go through their own process to develop confidence in the idea and confidence in the market, and that there's no substitute for that other than execution and time. And so I would, you know, they want to listen, they want I mean, they want to create value for their companies, and it's there, it's in their interest to engage with you and learn more about you. But they also want to see execution over time. And, you know, you have developed that relationship, because deals don't happen, like, you know, like that you have to foster those discussions.

Brent Reinke  28:07  

Well, it's certainly better to have that vetting process happen, and bring out maybe some critical points that maybe the company the selling company has even thought about or hasn't addressed, then do the deal, and then have that come up later, because then you've got a problem, you know, particularly if you've got earnouts, or other things that are involved in that kind of transaction. So I you know, I I'm a big believer, as a lawyer of setting expectations with companies both buy and sell side about what the process is, and making sure people understand because it's, it's not easy to do you know, when especially when you're talking say lower middle market, you know, billion dollars in the last and revenue of running companies and trying to sell them at the same time, when you don't have people like this, you know, that are helping lead that kind of effort. It is not an easy process. And it's really critical. I've seen as an m&a lawyer to really make sure people understand what they're about to get themselves into. But I think it's important to bring up those issues. I mean, as a lawyer, I try to get our clients to rectify those issues before they go into a process. Because the process either gets slowed down, or it doesn't happen at all, if they start being brought up by the investment bankers or others, it's just a reason to renegotiate a deal. So we try to address them upfront, but I'm just evade, I think it's you guys are a great example of, of how relationships can help a process, you know, and you're, you're you're all doing your job. I mean, I think it's a, you know, it's something that is really a compliment when we represent a company. And after the deal closes. Let's say the the companies from out of the state of California deal out west coast transactions, and that that company that has done the acquisition doesn't have a law firm on the West Coast and they come back to us say, hey, we really respect what you did in the deal. You guys excuse Is the language are enough of an asshole in the process. But when it also showed us that you were going to vigorously represent your clients interest, and we respect that, and we respect what you did on the deal, and then you get engaged by basically the buyer to start representing the company they just acquired or any operations they have in the west coast. So, you know, I think it's, it's, it's, you know, relationships are key. And figuring out, the best way to build those relationships is is critical. And, and transactions like you guys are a great example of that,

Rakesh Mehta  30:32  

Chris, and Eric, what's what's the biggest misconception people have when they come talk to you guys about your organization's?

Chris Cleary  30:41  

Look, I think Medtronic is a pretty broad company, right? So you look at something you've developed that, you know, is overlapping a call point that Medtronic has in your like, you know, this is a better mousetrap, you should want to own it. And you know, that that's not the unfortunately, that's not the mission for Medtronic, right? The mission for Medtronic is we've got to provide a suitable shareholder return, to have the wherewithal to be able to be this big conglomerate holding company. And that means we need an optimal mix of, you know, like startup money that we spend, and then have to develop it on our p&l, or organic r&d development that's on our p&l in the use of our balance sheet for things that are closer to coming to market that can contribute to the p&l, right, we're managing a growth rate. And we've got to be able to grow at or above the market, at a level of profitability that doesn't make people sell our stock. And you got to think like that, right? So it's not you're managing when different when you see a promising technology, you don't automatically go, I want it, you have to appreciate it. And then you have to fit it into a capital allocation mindset. And it makes you way more deliberate than people would prefer that someone in my role be, you know, but you have to be because that's just the reality of it. I, you know, we we have to say yes, really deliberately in the context of the overall enterprise.

Rakesh Mehta  32:12  

Yeah, people come and tell me all the time, like Medtronic has to buy us a BD has to buy us and I'm telling them, No, they don't. There's nothing. There's nothing that they have to do. There's nothing, there's no sort of, they're a diversified portfolio that play in lots of different markets. And there's not one, you know, killer app that if they don't get is going to kill the company. And so you have to keep that even though you might have the best thing since sliced bread, you really have to convince the buyer universe, that you bring a value proposition that's additive to what the audience that they're playing to, which is their shareholders. And that how you tell that story? And how you convince people and the time that it takes I think that's the investment that you need to make.

Chris Cleary  32:57  

I'm calling the lightning round. Okay, two minutes, max. Best funniest deal story. No one cares about substance here. Make stuff up, Rak go. Cheese. Two minutes, there's been no preparation for this panel.

Rakesh Mehta  33:14  

Fun is still still on?

Erich Wolff  33:16  

Ticktick? I'll go first. Yeah. All right. So these are one of the biggest and most important aspects of our job. Is it naming the project name for the deal? All right, so good, what is the internal codename for the deal so that you can talk openly about the deal, but nobody around you knows what it is there's a lot of fights over the Advil adds a level of mystery to the deal. So there was a European based company that that we had been just pounding our head against the wall trying to acquire, we've tried stock deals, acid deals, structured deals, I mean, kind of you you name, you name it, we, we tried, we have this long history and cadence with the bankers on the other side, providing us guidance on valuation, then changing it guidance on transaction structure, then changing it. So I get to a frustration threshold that was off the charts and I went back through easily a year and a half of emails and meticulously crafted the timeline of all of the all of the lies essentially that I've been told over the past year and a half. And, and so then I invite Chris to this call, so he can firsthand experience the insanity of dealing with these parties. So we get on the call. And I begin I just lay in like listen guys, this has been a year and a half of ups and downs and sideways and left and right. And you know, back in April, you said this in May so that in June, you said that and all of a sudden the banker This is pre COVID So nobody was on video. You know, we're all huddled around you know, the tuck boxes, and he starts screaming at me at the top of his lungs, you, you who? You who, Eric, we don't do deals like this in Europe, yelling, interrupting me screaming yoo hoo. So we're literally just like, like, ball and mute, dying, laughing but also a little bit sober like this one, this guy's really upset. And so they ended up firing that bank because they obviously, you know, offended us and we're and in the deal was completely sideways hired another bank and to this day that deal will be project YooHoo

Chris Cleary  35:43  

alright, I know you need more time because you're processing Yeah, I'll go I'll go back to GE Capital. My favorite deal story is I'm buying Deutsche financial services on my own at closing. And it's a $6 billion deal. You know, the they own Bankers Trust in New York, we're meeting there. And they were literally like, we're done. Everything's done except the money hasn't hit the bank yet. And they've taken the Deutsche financial service signs down, they put up the GE Capital signs, they've had an open townhall, there's no turning back, except somebody in our Treasury Department thought they were sending $2 billion to Bankers Trust, but they pulled it out. So we're 4 billion short on the close, and I'm sitting there and there's no way that's like six o'clock, wires are shut down. There's no way to get the money there. And the guys kind of looking at me goes, you know, this is not acceptable. You can't do something like this. And you know, I'm a little younger, at the time, maybe a little more facile. I said, Look, you're a bank, right? Don't you guys lend money. So I wound up borrowing $4 billion from them at the Fed overnight fundraiser to close my own deal. And he's like, I can't believe I'm doing this. So you know, I drive home. It's Halloween. I drive home, I have a pretty nice Halloween, I wake up the next morning, Dennis cameraman, the CFO of GE Capital calls me up, he goes, Hey, did you just borrow $4 billion from beggars trust? He goes alright.

Rakesh Mehta  37:08  

all right, mines, mines, fewer dollars involved. So it's all related to a company that we sold to these guys called 12. Chris has alluded to it. Two things about that 12 was bought when they had six patients, and two of them were dead. And a number of people after that would call me and remind me of that and say, Hey, you sold that for half a billion. And I've got six patients, can you sell me for half a billion It's like, that's not what it was 400 million. But the during that deal. You know, I, you know, one of the nice things and the bad things about my job is that I can do it from anywhere, and we happen to be in Hawaii. And we were you know, it's they get started a little later than we do. So I would wake up really early in the morning at like four or five in the morning. And to not wake my family up, I just, you know, put on my headphones and go for a walk and do conference calls while I was walking. And I'm on the board call for that deal. And I just, you know, board calls at 5am. In the morning, I throw my headphones, and I start walking down the street. And I'm like, you know, I'm just gonna go walk, sit on the beach and do this call. And as I'm walking on the beach, all of a sudden, the stray dog starts chasing me. And so I'm on the board call and I'm sprinting as fast as I can down the street. And I get to the beach. And Andrew goes, rock when was that? There was a dog chasing me. He's like, are you serious? I'm like, yeah, like, okay, so then we The Board approved the deal?

Brent Reinke  39:00  

Well, well, I had a lot of dogs, a very limited number of responsibilities and trying to moderate this, this panel, but one of them. I was supposed to make sure we finished on time. So I'm looking at the clock and it's winding down. Do you guys have any last tidbits or insight?

Erich Wolff  39:16  

No, I just don't when we kick this off. Brent gets the three of us on the call. And he's walking through he takes charge and he walks us through. He's walking us through how he wants this session to go. So guys, you know, be really good to get insights from strategics trends you're seeing in the market. You know, we walked through this whole laundry list of you know, I've done this a lot of times moderated these panels. And he gets to the end of his list and goes are you guys comfortable with that? And Chris says no, no. In fact, I'm not gonna do any of that. We're not doing any of that. I'm very very uncomfortable with the list you just walked us through. This is how we're going to spend the time so the four of us this has been a real a real transcend

Rakesh Mehta  39:56  

despite me casting stones at these guys, they're complete pros and they're wonderful to work with and you can take anything they say to the bank so

Brent Reinke  40:08  

in this panel we kind of like

Erich Wolff  40:10  

we do we do thanks everybody All

Brent Reinke  40:12  

right thanks everyone guys