Why an organised data room protects the price in a fundraise or sale

• Fairpo says first-time companies underestimate the work in due diligence and get defensive about questions that are asked for a good reason.
• He separates who runs the deal from who runs the business, because a distracted business underperforms and the price drops.
• He builds the data room alongside the information memorandum or the updated projections, stages access, and checks every document for signatures before it goes up.
• Known problems should be disclosed early with a plan to fix them, since diligence teams will find the hole and warranties and indemnities would cover it anyway.
• His tests for a data room: intuitive to use, tight control with watermarking and an access record, easy bulk upload and full export, and built-in Q&A.
• In his experience fundraising diligence is more collaborative and slower, while M&A diligence is more compressed, more confrontational and partly about chipping the price.

Lawyers on the other side of a deal once told Henry Fairpo they had not made much progress. He pointed out that the data room had been open to them for 10 days and they had signed in for the first time the day before (around 17:57). He knew because the room records who has been in and when. Fairpo is a British accountant who started out as a musician, worked at two of the Big Four, and was finance partner at a top-10 firm. He now works with growth-stage tech businesses on fundraisings, company sales and acquisitions.

“The key thing to remember is a data room is going to contain the crown jewels of the company information. You want to have control over that.”

Henry Fairpo, accountant and deal adviser, The Castaing Group

The interview is run by Firmex, a data room vendor, and Fairpo has been a Firmex client since about 2009; his praise for the product is left out here. The common mistake, he says, is companies thinking diligence will be very lightweight. They underestimate the sheer amount of effort and then get really defensive about the questions. To reset expectations he hands clients his favourite due diligence questionnaire, 25 pages from a very big international firm. Founders who have only raised money look at it, he says, and point out they only ever had a page and a half from a funder.

“I hate to say it, but people doing due diligence are going to find that hole if it's there, so don't hope that they don't.”

Henry Fairpo, accountant and deal adviser, The Castaing Group

His second piece of preparation is deciding who runs the business and who runs the deal. Fairpo has seen too many businesses seriously disrupted by transactions: performance drops, and in an acquisition so does the price. On one of his best deals the CFO worked hand in glove with the chairman on the transaction, while the CEO and chief commercial officer ran the business day to day. That buyer arrived early, in month two of an 18-month exit plan, and part of his job was asking for time. Going in rushed, he says, comes back to bite you later.

“If you go in and they look organised, you get comfortable. If they look disorganised, you start questioning everything.”

Henry Fairpo, accountant and deal adviser, The Castaing Group

Fairpo starts the data room early: alongside the information memorandum in a sale, or alongside updated projections and the business plan in a fundraise. It doubles as a check on how ready you are. He likes to build it internally first; when time is short he collects files in Dropbox, reviews them, signs them off with everybody, then uploads. Access comes in stages, a first level of core information for the counterparty, then the due diligence material, then each buyer's quirky requests. That staging is where Dropbox fails, he says: once you're into Dropbox, you're into Dropbox.

“It isn't dead data just because the deal is done. It's live data, and it will actually live with you long after that transaction.”

Henry Fairpo, accountant and deal adviser, The Castaing Group

Expect more of everything. Fairpo says UK tax records need six or seven years of information, and on one recent deal 35 people on the other side, about 15 of them lawyers, meant 55 or 60 people in the data room at its height. Check every document as it goes up. Missing signed copies are the everyday things that trip deals up; he recalls two law firms whose merger stopped for six weeks because one had no signed partnership agreement. He also checks paperwork from previous funding rounds, tax clearances, the rules on UK share option tax breaks, and R&D grants and tax claims.

When something is wrong, disclose it early with a plan. Fairpo's example is a founding CEO with no service contract: ask the buyer what they will want and have a version ready for completion. Putting a list of all the failings in the business on the table is the worst approach. Saying you know about it and here is what you are doing about it works. Organisation shapes perception too. Fairpo has done diligence as well as being on the receiving end, and he says a disorganised business extends the process and risks chipping on price.

Choosing a data room, Fairpo's first rule is to go with somebody who does this for a living and do your infosec checks. Then come four tests. It must be intuitive, for him and for the advisers on the other side. It must give control: who sees which documents, watermarking, download rights per document, and a record of who has accessed what. It must be easy to get files in through bulk upload, and out again as a full download. And it should have Q&A built in, so the same question from the accountant, the lawyer and the CFO gets one answer. He is wary of seat-based pricing, which he says looks cheap but in the end isn't.

Fundraising and M&A diligence look the same on the surface, Fairpo says, and turn out to be quite different. Both ask what the counterparty is getting into. A funder has already been through investment committee, so diligence leans towards where the business needs support; on one raise the investors offered to put more in, and the deal swapped a secondary sale for more money into the company. In M&A the buyer's advisers act as a gatekeeper and counterweight to the client's enthusiasm, looking at integration, reporting timetables and what can chip away at the price. In his experience M&A is getting more compressed, while funding takes longer.

The room matters after completion as well. Fairpo says it is usually a requirement of the investment or sale agreement that disclosed information stays available, and investors and buyers refer back to it during integration. For one client bought by a Californian company eight hours behind, the buyer's legal team can dip straight into the data room instead of waiting for the next morning. Over the past decade, he says, diligence has become way more remote, the data room has become the centre of the transaction, and rooms have grown with new sections on ESG, Covid and compliance.

If you are preparing a company for a raise or a sale, build the data room early, stage access and check signatures before anyone outside sees it. When choosing a provider, test permissions, watermarking, the access record, bulk upload, full export and built-in Q&A.

0:00 [Music] welcome Henry I really appreciate you taking the time to speak with us today to get things started just tell us quickly about yourself and your background yeah so I'm a Brit as you can probably hear from the accent started my life actually as a musician ended up as an accountant since then we've qualified and worked with two of the big four been a partner in one of the top 10 of firms as a finance partner these days I work with growth stage Tech businesses generally and so my life is largely taking that we're doing fundraisings doing company sales bits of acquisition and pre and post deal support so that's me I guess when you're when you're working with tech companies what are some of the common or with with new companies what are some of the common mistakes or misconceptions they

1:02 have about a diligence process firstly they have this tendency to think it's going to be very lightweight and so they underestimate the sheer amount of effort that's going to be involved in the process and associated with that is they can get really defensive about the questions that are being asked and I think in combination those are the two key things that I spend a lot of my time trying to prepare companies for is there's a lot of work in this and it's lots lots of it is disruptive to the business but also there is a good reason why we're being asked the questions we're being asked yep I guess for all the advisors out there do you have some techniques or or procedures or ways that you you prep clients I think the best one is I have my favorite due diligence questionnaire ever which was from a very very big International firm it runs to 25 pages of questions and I have a tendency to provide that and

2:06 say look this is a bit outdated so there'll be extra ones to add these days but just to give you an idea of what's coming this is what it is and I the other bit is really just thanks people as part of the preparation think really hard about who is running the business and who's running the transaction who's running the deal because I've seen way too many businesses seriously disrupted by transactions and you you get partly through if it's an acquisition and if the business has been distracted by it you end up with a price dropping because your performance drops so having that preparation in place working with them thinking about what you're going to need and to be honest getting your data room up to speed as early as you can other key things from my perspective lots of things to touch on there I guess like when you think about companies that do this really well are there any like are there any divisions of labor that you see that work well so like the CEOs

3:08 responsible for the deal hands it off to somebody else it really depends on the personalities that you've got in that team but yeah you're right I mean probably one of the best ones I've ever done is CFO was working handling glove with the chairman and he and I basically did the deal we left the CEO the CEO and the chief commercial officer to get on with running the business day-to-day and that worked really well from that perspective and yeah you have to drag people in for bits you're going to need bits of information along the way but it did allow us to actually try and ring fence the business from the transaction so it's really smart and do you mentioned preparing for the deal and deal staging how quickly do you get get your clients into into staging the deal again that depends on how the deals come about in part and if if you're doing a sale process then I'd be doing it alongside preparing the information memorandum sales

4:10 memorandum I do that really early you don't always get that chance if you're doing a fundraise similarly start building the data room alongside doing things like updating the projections updating the business plan all of those things doing the preparation collect what you need at the same time it's a good double check it's a great check for how prepared you are to go into pitch at the same time it gets you ready and take some of the pressure off during due diligence the exception to the rule of course is somebody approaches you when you're not ready for it not expecting it and those are the situations where for me doing that separation is really important and that particular one that went really smoothly was exactly that we had we were in about month two of an 18 month plan to get ready for exit at the point at which we were approached by the eventual purchaser and so that's one where we absolutely had to do it we then had to stop put a bit of a team together make sure we have the resources to get on with it and again manage the

5:14 situation with the Thunder with the purchaser as part of that that was part of what I was doing was actually saying look you're gonna have to give us some time to create this because we're not there and the worst thing that you can do is go into it rushed go into it too early or not manage those expectations it comes back to bite you later in the transaction I guess in terms of like opening up the data room how like in an ideal situation how early would you open it up or would you start staging on a data room yeah that's that's a really good one I mean opening up internally it depends if possible I love to do it internally first and get all of those things up and ready in place sometimes you don't quite have the time for that so in those cases I'll probably use as we're an off deck solution so I might use you know Dropbox to collect stuff make sure I've got it reviewed sign it off with everybody internally then upload it but quite often what I'm finding these days is actually as part of the initial

6:19 interaction you're starting to populate a data room so it starts quite naturally and quite early it's one of those things around making sure the data room you go with has that ability to allow you to sort of ring fence access and that's really important it's where Dropbox fails because once you're into Dropbox you're into Dropbox yeah and there are a whole loads of reasons why Dropbox isn't the right answer but it is that it's much more stages now about there's a first initial stage put that first level of information in there that allows your counterparty whether it's a thunder whether it's potential purchaser to see the core things you want them to see and then have a second round that involves getting that DD information up there and to be fair you're always going to need to update that DD information for extra bits of requests all purchases have their own slightly quirky requests as to what's of interest to them so I find it's those stages the other bit that people often forget is the data room is

7:24 actually vital post deal as well as pre-deal so actually making sure you've got it and you've got it ready and that you can get it downloaded easily is one of the key aspects from my perspective what is the data room typically or the information in the data room typically used or post deal like why why is that important nine times out of ten it will be a requirement of the agreement that's an investment agreement or whether that's a sale and purchase agreement for that information that has been disclosed even if it's not being disclosed as it were formally through a disclosure process to be available the other point is you you're in a situation where somebody's either investing and will become a significant investor in your business or is acquiring they're going to need those records going forward so those elements are important the other bit that I find more and more often is actually in post-acquisition integration or in post funding support giving you reference back to that information that

8:27 was there at that date and it's it's not a question of well we told you about that it's not that sort of approach it's the right when we were going through DD we looked at these bits we know we need to either address this or this is really good can you tell us more about this because we'd like to do this within our organization so it's those sort of things where it isn't dead data just because the deal is done it's live data and it will actually live with you long after that transaction are there any scenarios where the the acquirer will just keep the data room open and keep keep it updated yeah and it's a really interesting one I'm beginning to see businesses using what you would traditionally have thought of as data in providers like thermax almost as a corporate repository so absolutely they do that just because it's easier to keep control it's the same reasons you have the data room in the first place you've got control over who has access you've got control over the docks that are in there and it's just you I I've been working with the business for example

9:31 that was acquired by a Californian company so we have the joys of eight hour time difference that data room is really important it means their legal team if ever a question comes up they don't have to wait for the following morning they can dip straight in take a look they know what that documentation is and they can get to it easily as well because the indexing and all of the search capabilities that are there are still available to them you mentioned earlier you that that you can't like the downfalls of using Dropbox as part of a diligence process what do you do when a client comes to you and maybe they're a cost sensitive or they're like just like especially if they've never done a deal before they might not know what a data room is how do you sort of walk them through and say like this is this value in this two levels to that one is your right you walk them through and you explain and you explain the challenges of trying to use Dropbox and keep control I the key thing to remember is a data room is going to contain the crown jewels of the company information

10:36 you want to have control over that you want to know who has access to it who's downloaded what you want to be able to do things like watermarking those documents I mean those things are really important and also in all honesty I can give them real anecdotes of where trying to work through a Dropbox system simply doesn't work not least because the users don't necessarily get updated properly on the updates there's no q a capability there are all of those extra added value things around the data room these and we don't get my next stage in all honesty is generally to get them to talk to thermex in particular and just say look this is the actual cost because they look at it and they say it's going to be massively expensive well no actually it's really good value if you do it properly and also make sure you talk to people and do it the right way companies will generally massively underestimate the amount of information that needs to go in there the number of

11:38 people are going to have access so a model that works for that as the thermex model does is great there are other models out there that I don't like because they're seat models and it looks cheap but in the end it isn't and it's those sort of things I think that I tend to go through just to help people understand you need to be in control and actually these guys do it day to day rather than us trying to Cobble something together and there's nothing wrong with Dropbox Dropbox is brilliant similarly you know the the Microsoft the Google Alternatives out there are fantastic for what they do but they're not designed to cover off the sorts of things that you're going to need to have in a fundraiser or an M A type situation if you're a a business owner who's looking at doing a fundraise or an m a transaction for the first time maybe they're they're selling their business to retire what resources like what what can they do to get prepared outside of obviously talking to a

12:40 good advisor is there anything else they can do to kind of get their head start like I've been in and around a few transactions myself and it's always even for experienced people it's shocking how much work and distracted you can get it really comes back to that preparation point it's start early in fact it's not earlier than that would be the best thing you know where all your documentation is and bear in mind just because something happened five years ago doesn't mean it's not going to be of interest and I I mean here in the UK tax information we need to write at least six seven years worth of information so you're gonna have to have that people are going to want to crawl all over those bits so collect it make sure you've got it I mean I I'm with you I always think it's going to be way way more of everything way more detail way more time to manage go back to who's doing the deal who's running the business way more people wanting access than you expect and I I did a transaction not that long back where

13:44 there were 35 people on the other side of whom probably 15 were lawyers and that's on top of our side our lawyers our guys there will have been 55 60 people in that data room at its height to go through and I think you the other point is make sure that you've thought through anything that while you're putting it up that you need to address take that time is the other benefit when you see something and you think hold on a minute that's not signed right let's sort that out and that's the point take the time to do it but it's pretty much if you start from the worst case of every document with a third party and every internal document you've ever shared with an employee you may need to use then it's up it's all good news from there on really so check every document I'd be amazed the little things that come out and the things where you discover that you all of a sudden you

14:48 discover you don't have a signed copy there's a wonderful story from a few years back of two law firms merging and the entire process stopping for six weeks while one of them realized it didn't actually have a signed partnership agreement okay it's just those things because it it's the everyday bits that you're gonna get tripped up on not in a bad way but just a sort of right we need to deal with this and they can string out the transaction so do it early do it earlier and check it in detail is there added risks or what that when things like that happen and I've seen a few as well like we're small details at like we'll we'll be overlooked and it's like a pens down moment is there does that increase in your mind or you're like is does a transaction get riskier as the time goes on so like if there's more delay it's less likely the transaction will go through I I suppose so I think I I tend to try and say to every client there will be a bump in the road in this

15:50 process and yeah do I get more nervous the closer we get to completion yes if it hasn't happened if it does happen does that mean I relax no because it could still be something else but it it does to a certain extent but I think again if you're prepared if you know what you have and you know whether a holes or any skeletons then you can address those early and that avoids that problem so it that's always what I'm looking out for when I'm working with companies is I want to understand what there is we should be sorting or alternatively what there is we should be disclosing early rather than hiding it because I hate to say it but people doing due diligence are going to find that hole if it's there so don't hope that they don't and if they don't for some obscure reason it's going to be covered by the warranties and the indemnities anyway so there's no point you're going to get caught at some point so let's actually sit down and deal with it and deal with

16:52 those bits but some of this again is about there's a perception piece around this dead that's really important that perception of going in and looking at the business and I've done due diligence as well as being dd'd if you go in and they look organized you get comfortable if they look disorganized you start questioning everything it extends the process it risks chipping on price it risks or you know just extending everything whereas if you've got it organized you've got it in a nice place you've got it in a proper data room so that people feel you're on top of it it just makes the whole process run that much better that makes a lot of sense it's almost like basic human psychology it's that classic statement is it perception becomes reality yeah and it's that point about if I go in and everything's under control up to a point then I'm looking at it and going actually this lot probably know what they're doing if I go in and it's a sort of I've Been Told oh yeah the data room's ready but

17:57 there are three items in it it's a sort of well done what's going on here and then stuff appears and every time it appears you're looking at it going is this actually what I asked for and it's just human nature as you say whereas if it's there you can look at it and you can go okay I might need to ask an extra or can I just have a bit more over here that's fine does that perception expand extend to the speed at which the the seller will get back so if someone asks for that little extra piece and they're able to respond in a in a timely clear fashion it can do as long as the seller and their advices are organized that's the other Joy of a proper data room I remember years ago doing a doing a transaction and at one point the lawyers on from the other side came back and said well we haven't really made much process progress on this and I said well the data room has been available for you for 10 days and you only sign in for the first time yesterday so I'm not entirely surprised you do and it's that sort of yeah whatever you do you have to work with

19:00 your counterparty to actually make sure their advisors are keeping up to speed just because you are you can't assume they will be yeah yeah generally if it's well organized if it's well set out if it's easy and intuitive for them to find their way around they're likely to find the bits they want to ask about earlier and so they can come back and you can keep the momentum rolling you don't end up with that hideous sort of walking around the table period while you're waiting for the questions to land I think we've tested a little bit about this but there are there any other risks that can come up during the diligence process so like as you're as you're prepping a seller what are some of the core risks you're trying to mitigate they tend to be industry and Company specific but they're generally those things around the paperwork's not complete even on things like previous funding rounds it can be you know are we sure we've got the right paperwork we've got the tax clearance if we needed tax clearance in there the other bits can be country specific over here in the UK we

20:06 have some very generous tax breaks around share option schemes but there are strong rules about when those tax breaks can and can't apply those are things where you want to go back and make sure you're comfortable make sure that actually similarly if you've claimed either grants or tax breaks for research and developments or things of that sort but that paperwork is in place and you're comfortable with what's in there those sort of things are important because they are things that will be picked up and I guess because people like me are doing things regularly we get to know both what the core things people are looking at and what is the flavor of the moment in terms of right now everybody's looking at x as being you know a key thing because there's been a big case around it or because the tax authorities have issued a statement about how they want to treat it or whatever it is those things are the things I tend to focus in on because you just know what it's going to be otherwise with a with a purchase

21:09 or a funder you've generally learned during your initial conversations what are the bits that interest them so then you can go back make sure you've got those bits really polished really ready for them that makes sense and I think like that you've alluded to that several times but the approach is if there's any like if there's any anything of concern share it early and clearly and talk about it early in the process exactly and preferably flag it with a this is what we're doing or this is our proposal to deal with it type approach you know for example the classic ones of yeah CEO the founding CEO doesn't have a service contract now we can put one in place if you want but we know you're going to want to so why don't we just can you send us what you're going to think about and we might as well put a version of that in place or at least have it ready so that we can do it at completion sorted it's that sort of thing where you've got a plan the worst thing you can do is almost put a list of you know hear all the failings in this business on the table for people

22:11 but it's a sort of look you're going to find these bits this is what we're doing about it or alternatively this isn't an issue because so you can address them from that perspective in terms of flavors of I don't always say those flavors of the moment but things things that are trending it's definitely not a flavor for the moment but have you noticed ESG concerns coming into diligence at all yeah and I think they've grown over the years it started out as being sort of peripheral it's becoming more and more important again tends to be quite industry specific and the questions that come out there thought can be industry specific as well sometimes it's just strange because you're looking at them and you're thinking actually that doesn't come anywhere near what we do but that's fine and that's one of those things when you get into due diligence you'll always go through the list and you'll say there's 10 to 15 of these questions simply don't apply to us so there are things around those ESG areas they're quite hard for early stage for growth companies because they've generally not got into that

23:15 space unless for some reason they're core to their business so there anything is part of ESG that touch all companies that that even like smaller companies should be thinking about I think it's showing that you've thought about them it tends these days to be the size of an acquirer is important in this because they will be looking for what they have and matching up but clearly all the diversity pieces are really important in there the sustainability aspects those vary if you're a pure software company they tend to be less important than if you're involved in manufacturing or actually running your kit in any great degree so they do vary but I think the diversity piece isn't I'm seeing more and more information around employees and from the HR perspective around those areas coming up to change gears a little bit we've talked about we've talked about data room and getting the right tool for the job

24:18 for people who've never used the data room or clients that have never used the data room before what kind of like what would how would you advise them to evaluate a data room what would you look what would you tell them to look for it goes back to what we talked about earlier it's going to have the crown jewels in it so yeah item number one before you've even got anywhere is go with somebody who does this for a living because they're going to have the security in place but ask the questions around that do your infosec checks you know all of those things which we've done with you guys I've been with you guys multiple times over the years from there I guess for me there are four bits that are really important I want it to be intuitive to use and find a way around so have a demo if you can get the opportunity to have a play first the important thing there being I don't want it to take me lots of time to work out how to put things into it or how to set people up on it similarly I don't want to be spending half my life answering questions from lawyers accountants whoever who's doing

25:23 the DD on the other side about how do I find this so I want it to be intuitive I wanted to be really clear that we have control and that by which I mean on that one that we can control the people accessing the data on the documents in the first instance and that we have control over where the documents are going so things like watermarking of documents is really important for me if you're going to allow download and that ability actually to say some things you can download some things you can't but actually have that flexibility built in there I have the recording around that as well so you know who's downloaded what who's had access when they've had access that example of a lawyer is not going in was brilliant because I could go in on the back end look at it and say well yeah I know why you've not made any progress because again started fundamentally the other bit for me is it wants to be really easy to get information in so bulk up loads is an important part of that process and equally as we talked

26:26 about earlier it needs to be easy to get it out afterwards and that's not just an index but it's the whole lot it's that package of download it's important and for me the fourth aspect is just if at all possible I'd go for the Q a built in it just makes it easier to link things across than having to work outside with a great big spreadsheet and try and manage the questions from that perspective and you avoid answering the questions several times on the accountant as to the lawyer asks it and the guide in the commercial DD asks it and then the CFO on the other side after it so why don't we just have one set of questions yeah that makes a lot of sense and this we've touched again I'm kind of going all over the place but we touched about this a little bit but we've talked about both like diligence as part of an MMA transaction and diligence is part of like financing or fundraising how do those differ it's a really interesting one because superficially they look as if they're going to be the same but actually they're quite different and you're right anybody who's been

27:29 through a fundraising thinks they know what's coming when they get to the m a when they get to that exit point and then they sit back and look at my 25 page questionnaire and go all of it I've only ever had a page and a half from a thunder before what's going on I think for me three key things to think about the first one is the same across the two and I guess it's the the counterparty effectively saying what are we getting ourselves into here in other words let's actually understand what's in there what's in your business what's in your companies and also out of that what needs to be covered in the agreement and that fundamentally is the same across both from there it sort of slightly changes if you think about it a funder is sort of brought into a transaction already at the point of which you've got to do the DD because they've been through they've been through their investment committee first round type processes actually they're quite brought into wanting to do this so for them the other elements are actually quite positive bits they're

28:33 about which areas are going to need support which areas are going to need real investment just so we understand that are there bits we're going to need for our final investment paper around those and actually quite often there's a bit that's just a risk assessment in terms of what's the funding that's really needed here I did I did a fundraise last year where the investors came in they were quite happy with the amount we were talking about and they said look we actually think you can accelerate a bit more if we put more in let's come back and talk about how that might work and what we actually did was that we swapped from doing a bit of secondary in other words some of the existing shareholders selling shares to that investor putting more directly into the company to allow us to accelerate the business so that was a really positive all of those are positive collaborative forward moving MMA is slightly strange because MMA you've got your purchaser who's clearly keen on doing a transaction but at the same time they have advisors who are almost acting as a gatekeeper as a you a

29:38 counterweight to the client's enthusiasm and what they're looking at is instead of support areas they're thinking about what's an integration plan what are we going to need to do here what are we going to have to change to get this to fit together where are things like where are the cultures where's the information piece you know it may be if you're going to be acquired by you know NASDAQ listed business can these guys meet the timetables for doing quarterly reporting do we have the level of detail that's needed all of those things are important and I hate to put it this way but part of an m a due diligence is about is the pricing right or more to the point what can I do to try and chip away at the price of it so unless you've gone very clearly up front you've got a really strong position that says there will be no chipping and both sides are agreed on that you're gonna find particularly the finance guys are looking through going hold on a minute that's bigger than we expected it to be there's a bit over here that might cause us an issue on all of those things you don't really get that as much on the funding side you will get a bit around

30:41 what's the pricing look like can we support it but it tends to be more supportive and in the m a it can feel a bit more confrontational from that perspective and it's particularly because you've got that extra a set of people who don't really have an interest in the future but are there to try and protect their client at the same time as you've got the client looking to do a transaction and you've probably got CFO also going how do I show my shield as I get best value so there are subtleties of difference the other point is n a can be really quick funding can be but funding can be a slightly longer process M A can be depending on what people want to do but M A it can get really very compressed to try and get it done for its timetable so funding takes longer than M A typically in general that's my experience because you're going through rounds and unless you are in a fire sale investment type situation you know with a very short cash Runway

31:43 you as the the company being invested in don't yeah you want to get it over with you don't want to push too quickly because it will make the other side come back and say well if you need it quicker and that means we change the pricing so you move that piece with the m a both sides want to get it done because they want to get on with life so I'm actually finding that M A seems to be being more compressed than I said it I think it would have been two or three years back but again depends on the purchaser listed public company purchases probably take that bit longer because they're thinking about what am I going to have to do in terms of my disclosures now and can you meet my disclosure requirements going forward if you're being bought by a bigger private company backed by private Equity they may be saying right this is strategic let's get it done we can do some tidying up afterwards my DD is about understanding what I'm going to have to tidy up and actually I can see the value that's fine I'll go for the value and I'll worry about it later in transparency you've been a firmax client since

32:45 2009 2010 somewhere in there yeah absolutely I'm I'm a repeat offender on that score I have used others because clients have chosen to go with other people on the way but yeah absolutely I I am a as you probably picked up I'm a firm believer in what thermax has to offer well we appreciate that over your time I guess with firmex there's been a lot of changes in the diligence process are there anything that comes to mind and how deals are done now maybe even in the last three years like I know covet's been a massive disrupter have you noticed any changes in in how diligence is conducted yeah absolutely over those 10 years it's now way more remote in fact you rarely if ever get to meet with people doing the DD other than on exact conversation we're having now across the screen so I guess there's there's that piece the fact that actually more and more the data room has become the center of a transaction and it used to be here's the repository of the date the detail but actually there's a whole load of

33:47 conversation and other bits going on outside it now everything is channeled through that data room for it to happen and those I guess are sort of the big pieces I guess the other point is the scale of data rooms has just got bigger because as you say you've got the ESG type questions coming out there's been clearly a whole new section around covid over the last couple of years in terms of what's the impact being and and even you know what have you done in terms of government programs around covet and things of that sort so I've got new areas from that perspective and I guess just generally more emphasis on compliance is another area even in Fairly in non-regulated businesses non-public non-regulated businesses that seems to be more focused on those compliance aspects than maybe there was three five years ago do you have a sense of why that is I think it's all to do with the way that people are looking at risk and actually the fact that over that period governments generally have been trying

34:52 to make sure that they're clamping down more you there are governments around the world where you could say you know they've been taking the cushions off the sofa to see what's down the back so there's more emphasis from that point of view but if there's more activity from tax authorities in terms of doing investigations there's more press coverage of things there are more people out there finding bits of information about companies and therefore other companies become more concerned about it whether that's around things like how does your supply chain work are you comfortable that your supply chain is working ethically because there's that danger that the Wall Street Journal may run an expose a on you if you're a big company at some point so every acquisition you do now Matters from that perspective so I think there's a lot around those areas that's driving that behavior and a lot of it is simply because more stuff is available digitally there's more scrutiny and if you look again where I am in the UK we now do our sales tax reporting digitally every

35:55 company has to do it digitally and it has to be linked directly into an accounting system you can't do it on a spreadsheet and submit it that means there's more information available to governments that piece I think is driving the compliance which is driving the risk which is driving that easy seems like there's a connection between ESG and compliance I think we're too overlap for me compliance is broader way broader than that but there is an interesting point that ESG has brought a real Focus onto corporate ethics in its broadest sense of which esta is one bit but there's a whole load of other pieces as well around how close to the line do you work walk on certain things you know if if you're banging up against a regulated activity then something that's actually for example regulated by Financial Services regulation do you walk right up to the line and put your feet against the threshold or do you stay on that little bit further back

36:58 and it's those sort of pieces where I think there's more Focus than they used to be around yeah are we behaving with Integrity are we behaving with ethics that actually match what we're talking to our customers and the public about is there anything else you'd like to add about your business about firmex I think from my point of view you know what I what I do is work with companies and fundamentally I describe myself as a special project Maestro because that's what I spend my life doing working on Special Projects I think over the years I've built up a really good relationship with thermex I know I can rely on the product I know that there's an ongoing development plan there which brings new things in you're responsive to inputs so for me it's great and it's just it's good to know I can introduce clients and I know they'll be well looked after because that's important for me if I recommend somebody it's my reputation on the line for recommending so that's why I come back

38:00 time and again oh we appreciate that that's very kind and we've got a lot to continue working with you along into the future absolutely well we we've got at least one transaction coming up very shortly amazing oh that's great I guess I'll end it there thank you for taking the time to speak with us today [Music]