YouSaid · the spoken record

Frank Quattrone

lines on the record: 49
first: 2024-03-01
most recent: 2024-03-01
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“You're welcome. It's my pleasure and thank you. It was a fun experience for me and looking forward to seeing how it turns out.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“That you could have called artificial intelligence, but artificial intelligence needed its killer app, and it didn't have one for 50 years or 60 years. All of a sudden, we have generative AI. That was what opened up my eyes. And a lot of times you don't have a killer app. And then you have a killer app and you have a product leader. And sometimes that product leader becomes the leader and sometimes it never gets there. When I saw”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“We are going to try to continue to understand what are the themes that are driving change. So if you keep looking at the world the way you did five or ten years ago, you're going to fall behind. Our first lesson in that was cloud and mobile, where we didn't do some of the first cloud software M&A deals, but we did the next three that were the most important. And all of a sudden now we're the banker of choice in cloud. Same way with mobile when we did Motorola Mobility. And now it's like, you have to recognize which trends are fake trends and which trends are real trends. Because as a small firm like Catalyst, we have less than 100 people. I don't think we're ever going to be a lot larger than that. And so you have to organize the world in a way that makes sense. And so now we're grappling with artificial intelligence. Now, some people might think artificial intelligence, that's really new. Artificial intelligence was coined as a phrase the year I was born, 1955, and there was some work done before that, eight, ten years before.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Ah, he is brilliant, he's hard headed, hard nosed. He's visionary. I mean, I loved meeting Bill for the first time. He was still a research analyst for First Boston at the time, and he had a newsletter called Above the Crowd, which is so funny because he's six feet nine and he can see above any crowd. Literally.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Really exciting to get the old gang back together. It'd be really fun to work with you again, Frank. Let me just check in with my wife. And this must have been like April of 2008. At that point, he had all his net worth tied up in Lehman stock. And he came back to me and said, I'm sorry, so sorry, Frank. You know, we've got kids, we've got tuition bills. My wife just doesn't think it's time for us to take a risk with an unproven company. And so he didn't join Catalyst, which would have been a pretty good deal for him to do that just three or four months later, Lehman Wenbrank, and he lost all his net worth. That was a crazy time because as I said before, that was a bargain basement hunting time for the big corporations who had a lot of cash, but no one could pull the trigger. And by the way, that first year, I didn't know if we could make payroll until our very first deal closed literally on December 25th. We got our first fee, so we were able to make payroll.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Being involved in the credit crisis. Yeah. I mean, we started our firm and it was two days after Bear Stearns was sold in a forced sale for $2 a share to JP Morgan. Bear Stearns had been trading at $150 a share a year earlier. And then Lehman went bankrupt six months into our launch. And deals just basically dried up. And then Morgan Stanley and Goldman Sachs came this close, like I'm holding my inch and my finger an inch apart from going bankrupt. Then Paulson had to save Goldman because that's where he was from. He couldn't save a Goldman without saving Morgan. But deals really dried up during that time. The beginning days of Catalyst, we found it a little bit hard to attract bankers from big public bulge bracket firms, but I remember one of my former colleagues from Credit Suisse, who had run a sector for us, had gone to Lehman. He was running all their technology practice. So when he started catalyst, I asked him to come back and be one of our first partners. He said, oh, that would be good.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Most all cash deals have a single closing and all the money gets transferred on that day. Now, there's also other ways that founders can benefit. They often get tension. They get new stock options and the like. Sometimes, you know, there's a mix of stock in the deal and founders get stock that may be locked up for a while. But most cash deals, yes, the money crosses the wire at the very beginning.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“A deal among PEs, there are normally three or five PE firms that all look at it and say, yeah, I want that. And it's just kind of a question of price. In many strategic situations, there might only be one buyer. And your job is to make sure that you can do a one-off negotiation with that buyer if there's not other buyer interest. And it's more rare, but not uncommon for there to be multiple buyers.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“It really depends on the situation. Private equity buyers are not looking for the highest growth names. And so they're looking for moderate growth. They used to be looking for very low growth and just do turnarounds. Then they started looking at moderate growth. And I think that the insight that they have was that tech companies pay an awful lot of marketing and sales money for the last few points of growth. So if we could subtract a lot of that SG&A and maybe lose a point or two of growth but convert margins from 10% to 40% or 50% will create a much more valuable company. And it was rare that they would pay 10 times EBITDA for a company. It was more like five or six times EBITDA. And now they're getting much more imaginative about the price of prices that they're willing to pay, but they won't pay 20 times revenue or 30 times revenue or 40 times revenue like a strategic will.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Honestly, I don't think it's going to impact it much because as we talked about earlier, Trump is not a classic free markets Republican. He's a populist. He has personal vendettas. He doesn't like big tech because he uses them as all run by a bunch of liberal people who hate Trump. So I don't think we're going to see much of a difference in the antitrust environment if some of his economic policies result in some of the economic growth and stock market conditions that we saw in the first few years before COVID. I mean, you think about it. Trump's policies had the economy in a pretty good place. It was only really a pandemic that could have cost him probably to lose the second election. So if he comes back, I think it might be viewed positively for economic conditions. But I don't think antitrust will change very much, if at all.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Where things look like they're stabilizing. Of course, we have the U.S. election coming up. That's another unknown. No one really knows who the candidates are going to be, even though they appear almost certain to be Trump and Biden. But that could create a little bit of a crazy time later in this year if things get volatile.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, by the way, I agree with you. I think there's a lot of optimistic people that believe that rate cuts are going to happen much earlier. And I think the central banks were fooled, especially the U.S. Fed. And they came out with this temporary inflation business. And, you know, it was shame on them. And they're not going to let something like that happen again. And by the way, 5%, like we had 5% Treasuries right before the credit crisis. We had 7% in 1999. These are not unusually high rates for someone who started his career when treasuries were 16%. And so 5% is pretty still, you know, I think attractive. But I think you hit the nail on the head when you said what you really need is a period of stability when either valuations are coming down rapidly, going up rapidly, when interest rates are going up rapidly and valuations are coming down because the markets are just wrapped with this new environment where there's actually a cost of capital. That's when things freeze up. We've now, I think, had several quarters.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Strategic say they have to recognize that sometimes it's better to buy a private company before it gets public and has a big aftermarket premium. Even if you're paying a higher multiple when it's private, you're paying a lower price. I don't think that buyers view this as either a bargain phase or a crazy phase like 2021. I think that we're in a phase where things”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“If you compare this market to twenty twenty one, there are a lot more bargains. I mean, a lot of the indices have come back too close to their all-time highs, but it's been concentrated and now it's the magnificent seven because NVIDIA is part of that. And Tesla, and a lot of the comeback has been in those stocks. But if you look at the average cloud software play, which is where a lot of the activities happen in M&A, we're kind of back to that six to eight times revenue area that it's traded at for most of its existence. And so there are relative bargains, but the financing environment's harder, the regulatory environment is harder. Strategic companies. A lot of the activity and buying public companies are private equity. A substantial percentage of the public deals have been private equity. I've seen numbers like 67 to 80, maybe even 90% in recent years of public companies been bought by private equity firms. And I think with”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“More challenging one and to have to think through what constraints you're willing to put on your business to be willing to endure that kind of regulatory period is very, very challenging. And the buyer, most of the times buyers paying cash, and then the seller also has to realize, well, okay, if it's going to be 18 months and I'm accepting a fixed price, in 18 or 24 months is my own stock going to be much higher than that? Is it going to be much lower than that? Where evaluation multiple is going to go? You know, a lot of boards are saying like, look, if valuations are 50 times EBITDA, you know, I want a little cash in that deal because if we're going to be in regulatory limbo for 18 to 24 months, that downside protection can really help us in that environment.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“In the career of George and myself, we almost had intuit sold to Microsoft. It would have been a great deal for both sides. Intuit with their checkbook software had beaten Microsoft in a category for almost the first time. And very few people had heard of Intuit at the time. And Microsoft kind of, they admitted defeat in this category and they had to sell off their own product in order for the deal to happen. That deal was under intense regulatory scrutiny. That was right around the time that Microsoft was being investigated for broader antitrust issues. And so they reached the conclusion that the deal wasn't going to happen. And you'd think, oh, pour into it. They've just been dragged through the ringer here. And what's going to happen to them? Absolutely. It was the best thing that ever happened to them because the fact that Microsoft endorsed their product and everyone now knew that they were the chosen ones, it just enabled them to take off. But yes, mostly the regulatory environment is a”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Some sellers also have the opposite of that, where they agree to a price when the buyer's stock is at an all-time high, and then there's a valuation correction, and all of a sudden it's worth maybe 40% of what it was worth at the time of signing. And then it creates some very, very tough dynamics. So, yes, one of the biggest challenges now is how do you deal with an uncertain regulatory environment? And before it was almost unheard of for deals to take more than six, nine months. Now it's 12 months. Now it's 18 months. And now sometimes, you know, it's 24 months, you know, to predict what's going to happen. And if you're a seller thinking, well, I'm really going to be bound by some covenants for a really long period of time. If you think it's going to take two years to get a deal closed, what are you willing to give up about the stewardship of your company for almost two years? If the deal doesn't happen, where are you going to be? You know, there was a deal.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“This integration to work. And the seller said, I think probably at least two years. And the buyer said, thanks very much for telling me that there's no way this deal is going to happen. And that would have been maybe one of the largest deals in the history of the industry. It's really mostly valuation and cultural fit that present the barriers.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Honestly, the answer is probably a lot higher than people think, but 90% of deals probably die once they get started. It's hard to get a deal done. A lot of times it's really valuation. Sellers have a very, very high view of themselves and are very optimistic about the future. And buyers are worried about precedent because if they pay 50 times revenues for a company, all of a sudden that will become the floor instead of the ceiling. But companies will say, but if I wait two years, I can go public at a lot more than 50 times the current revenues. And so mostly it's valuation, but sometimes it's cultural fit. Two companies get to the point where they think it's good on paper and strategically. It fits like a glove, but they just can't stand each other. And one that I have in mind is where the deal was literally on the goal line. And a CEO asked the seller, how long do you think you're going to have to stick around for”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Drive the highest price. Yeah, all right. Well, all these details have become public. And so with LinkedIn, we had interest from several parties, but it really kind of came down to Microsoft and Salesforce. And I've never seen companies bid privately and come up with such close price.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“finalized. So I come back and all of a sudden they're smiling and happy and joking. And I said, what did you guys do? And they hand me this cocktail napkin and they have the price. They have the retention. They have a few key terms written on a cocktail napkin. Now I had heard stories for 30 years about deals being written down on a cocktail napkin, but I had never had one happen to me. And so there it was. But that was an example of having to try to develop demand for a company that didn't have it because too few people knew what they were all about and why they were strategic. Maybe I don't know, 70%, 75% of the time we react to a client who said we've just gotten an offer from so-and-so. We think others may be interested. We'd like you to run a process. Those are a little easier. They take a little less time.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“And suddenly I get a text from Ryan. He says, we've just gone to the coffee shop a few yards away. I said, well, you want me to come down there? He said, yeah, why don't you come down? So I see Bill and Ryan, and they're at this little coffee shop at Spanish Bay. And they look like two teenagers who know what they want, but they don't have the words to consummate the deal, you know what I mean? And so there was still a gap in what they were looking for. And I basically went up to him and I said, you know, Bill, I know you're interested in Ryan's company. Why don't you tell him the three reasons why you want him to join forces with you and tell him what you need from him in order to bring you guys together and get across the finishing line? I said, Ryan, I know you're interested in Bill and SAP. Why don't you tell him the three reasons of why you would be excited to join forces with them and what you need from Bill? And now I'm going to go away for an hour and then I'm going to come back and you guys better have this deal.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“and as I start to light up because he thought SAP, big company, Germany, why should I be interested in that? And the way he saw Bill bring SAP to life and show off his culture and his personality, I saw Ryan leaning in. And then the very next speaker was Ryan. And Ryan's also, of course, brilliant. And he can tell a great story too. And the way he started to explain experience management and how it was going to just basically change how any corporation gathers sentiment about its employees and customers and how that factors in to daily decisions on who to pay more attention to and how to save customers, how to save employees from leaving. All of a sudden you could see now out of the corner of my eye, saw a bill and he was leaning in and his eyes were lighting up. And I said, okay, this is pretty interesting. So I had to take a break before the third speaker. And I was looking around and I couldn't find Bill or Ryan.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Way that you could best achieve that objective. That's when it started to click. But Qualtrics had already by that time started its plans for the IPO. It got to the point where it was really very, very close to the pricing of the IPO. And we had our CEO conference in Pebble Beach. It's called our Catalyst Pebble Beach retreat. It was in October. And Qualtrics was just about to start its roadshow. And we normally invite six speakers, three on Friday morning, three on Saturday morning. So on Friday morning, I had arranged for Ryan to be one of our speakers and for Bill, who had really wasn't well known at Silicon Valley, even though he was the CEO of SAP, to be the speaker. They were right next to each other. And I think first it was Bill, and he's so energetic and visionary. And he tells such a great story that I'm looking and I'm interviewing him, right? Like you're going to read me. And I'm looking out of the corner of my eye and I see Ryan in the front seat and I see him starting to lean in.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Educate these buyers what experienced management is, and so we introduced them to a whole bunch of different cereal buyers of cloud software companies. And it was interesting who sort of bit on it and who did it. And then all of a sudden, you know, Salesforce has been just killing it in cloud and Oracle and SAP has been trying to catch up with them. And then Bill McDermott makes this announcement at Sapphire. Experience management is the next cloud. It's going to replace CRM and we are going to lead in experience management. I had tried to get Bill to Byte on Qualtrics for a couple of times, but that announcement was too much for me to bear. So I called them. And, you know, we've become really good friends over the years. And I said, Bill, you've just taken the biggest naked short in the history of software by announcing that you're going to win experience management. And you have no way of fulfilling that. And so let me try one more time to explain to you why Qualtrics is the way.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Through merchants. Why don't private companies spend the same amount of time creating that option and perfecting it, even if you never sell? Why don't you go through the same hygiene? And so that hygiene is, you know, working with an advisor who can help you understand the ecosystem of who the potential buyers are. And it's not always obvious because strategies are always shifting. So knowing who the buyers are, building trust with the people who are going to make the decisions outside the context of a transaction meet with the Googles and Amazon's and Microsoft's and ServiceNows and whoever Oracles and SAPs, let's get them to know who you are because they probably think that you're a survey software company. But no, you're an experienced management company. And when Ryan came out with that positioning of experience management being like the next great cloud potentially, that was a game changer. And you have to”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“For the most part, it's much, much easier to advise a company where there's buying interest on the table. But sometimes we actually have to create the buying interest. Ryan Smith, Qualtrics, right? Great company in Utah. It's not part of the Silicon Valley fabric. Yes, they have a few Silicon Valley VCs, but not a whole lot of people know who they are. And so what we tell our companies who are in that situation is, you know, you spend so much time and effort getting ready for the IPO, right? You hire a CFO, you get a great auditing firm, you start building a board with people who have public board experience, you start practicing, you know, getting quarterly revenues to meet and meet expectations. But only 10% of companies go public. Like back in the 80s and 90s, it was a 50%. But since 2000, 90% of companies get liquidity.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“You're right. You're right. The trend since the end of the credit crisis, it was that even since the end actually of the internet bubble is that companies waited a lot longer to go public and investors demanded that they wait longer to go public. But you remember during the time of Facebook and LinkedIn, these companies would be waiting until there were several billion dollars of revenue before they would go public. Some of the IPOs over the last few months that we've seen are companies with like two billion of revenue or more. And so, yes, they wanted to wait longer, but employees need liquidity. Yes, you can get it through privately held deals. And also they need a currency for acquisitions. That's a lot of times what really drives the company to ultimately face the test and go public. And also some of the times their evaluations or their options, they just have to get to the point where they offer investors the public.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Put their money in. They don't know where the rise in interest rate is going to stop. And if you buy fixed income while interest rates are rising, you could really get burnt. If you go back to 1981, when interest rates were 16%, you can draw a line almost straight down to zero from there over the next 30, 40 years. And then we had zero interest rates for almost 14 years from the great credit crash to 2021. And so all of a sudden when interest rates are rising, all of those trends start unwinding. A larger cost of capital, higher interest rates, lower valuations, and all of a sudden people freeze. I just think it's a matter of time. And IPOs historically have the windows really are not shut the way they were in the 80s and early 90s. It's more of a granule of filter. And what you need are great companies to come public. And you need them to be willing to come public at reasonable prices.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Sponsor deals and sponsors benefit from the fact that we had zero interest rates, which meant high yield bonds were very cheap to issue, plentiful because investors were looking for a way to get something other than zero from their bank accounts and high yield bonds were like, you know, they inched out on the risk reward spectrum to buy high yield bonds at 5 or 6 percent. Well, I think everybody knew that interest rates were going to go up, but no one figured that they were going to go to 5% from zero. And when that happens, all of a sudden corporate buyers have a cost of capital that's not 5%, it's 10% or 11%. All of a sudden, financial sponsors are borrowing at 11% or 12% instead of 5%. That drives down the prices and it narrows the base of investors and the availability of funds because all of a sudden high yield is more risky and people are more reluctant to.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, well, what are the things that caused it to freeze? I don't think it's so much regulation. We've had tough regulation for a long time. We had the Obama administration. They were tough. And then Trump comes along. You think that a Republican would be a little softer on regulation, but honestly, he was not a traditional conservative Republican free market. He was a populist. And he hated the big tech companies because they were so critical of him. And they almost steered the election to his competitor. So he clamped down even harder on big tech because he hated them personally. And now we've got another Democrat regulatory regime. And some of the leaders of that are taking more imaginative approaches. But, you know, a company like Microsoft, it took a long time. It took 18 to 24 months, but they got Activision done. And so we're not having trouble getting 80% or 90% of our deals done. It's really only 10%. But a big factor in M&A in tech over the years has been”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“To some of the best times that you could buy companies were right after the great credit crisis. I think companies like Cisco and IBM and the ones that all had 200 billion dollars of cash, they could have scooped up every great emerging growth company in the world at that time. But A, those companies weren't really anxious to sell at the lower prices. And B, the big buyers just were like deers in the headlight and they just didn't pull the trigger because they were really worried about their own businesses and visibility. And so whether you're a momentum investor or a corporate buyer, like sometimes those are the best times to buy, but you're kind of frozen because you're worried about your own outlook and visibility.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I don't think it's killed it, but you know, last year and the year before were certainly not as good as 2021. It's not necessarily regulation that's killing it. The worst M&A years we've had, ironically, are when there's been a market crash. And you'd think that that would be the time that buyers really step up and go in a bargain basement hunting expedition. But it's similarly a time when sellers still think that they're worth what they were worth last year. And it's hard for them to imagine that they're not worth 20 times revenues. They're really worth eight. And it takes a while for that to sink in. And so it's really kind of sellers not being willing to come to grips with the new reality. And during steep market drops, buyers, they're shell shocked as well. And it turns out that buyers really are their most bold and imaginative during times when their own visibility and predictability is at their best. And I think back.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“So again, it was like all of a sudden companies that help you do things from home became the new platform. Zoom has always been a great company, right? But all of a sudden Zoom's evaluation seems like it has no end. And it was insane because you know, like, ultimately it's going to come back to the norm. But the best year we've ever had in any of my businesses in M&A was 2021, where, by the way, not a single one of us saw any of our colleagues face to face or a single client face to face was our single best year in history. The valuations were very, very high, but there was a new type of buyer who had even higher valuations. And so you saw a lot of stock for stock deals, which, by the way, we hadn't really seen since 99 and 2000.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Of course, well, it kind of oozes. It doesn't just jump, right? So it's like a spectrum. It gets to the point where you say this just isn't sustainable. Read more recently when cloud software companies were trading at 30, 40 times revenue some of the deals we did. We're at 30 or 40 times revenues. Like you know.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Literally, we're pairing bankers and analysts together to develop more niche and niche and niche sectors. The normal valuation for a technology company was like maybe 10 to 20 times trailing earnings and then it got to 30 to 40 times this year's earnings and then maybe 50 to 60 times two-year-old earnings. And all of a sudden there weren't any earnings. There were revenues, but there was not profit because people were stepping on the gas and trying to grow. And then it kind of left to 10 times revenues. And then concept companies started to come out. They didn't have any revenues, so how can we value those? Well, let's do valuation per eyeball or, you know, per audience or, you know, the number of users. And it became, I don't know, like 100 times the number of eyeballs. And before they had much of an audience, well, how about a million times the number of engineers they have?”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Almost no matter what they did was so insatiable that they would pop on the first day one hundred percent, two hundred percent, five hundred percent. Now before that time, if you had a successful IPO was defined as one that didn't go down, might have gone up maybe 10, 15, 20 percent. But the underwrite reviewed as irresponsible if they left 30 or 40 or 50 percent on the table. During the internet boom, if you didn't go up 100%, you were viewed as an unsuccessful company and people started to dump the stock. And by the year nineteen ninety nine and two thousand at Deutsche Bank and then later at Credit Suisse, we had 16 separate groups following different sectors of the internet. Literally every industry was going online. I never had more than 28 people in the tech group at Morgan Stanley. Deutsche Bank, we're only there for two years. We grew that to 170 people. Credit Suisse hired all of those 170 people and we grew it to 50.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Morgan Stanley telecom system almost got broken. They had to add a new PBX to handle all the incoming calls of all the people that wanted to buy Netscape. And it was at the point where if you got in a taxi in New York, the taxi driver was asking, you know, how can I get a little Netscape? And they're all starting to talk about the internet. But then the internet went through kind of a swoon and it became out of favor. By that time, I had moved from Morgan Stanley to Deutsche Bank. And one of the very first companies that kind of came out of that, it was a tough time for internet stocks in 97. But at Deutsche Bank, we were fortunate enough to lead Amazon's IPO. And, you know, there were a lot of already sick bodies, maybe not too many dead bodies in the internet, but Bezos kind of brought it back. And 1998 was when it really started taking off when some companies that you'd never heard of with very little in the way of revenues, maybe sometimes no revenues, you know, were testing the waters. And the demand for these offerings, no matter.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know it's interesting because a lot of investors kind of missed out on PCs and PC software. They thought Microsoft was too expensive because it was at 25 times earnings. A bunch of them had bought Apple, but they really weren't too sure about this PC industry because the big computer companies were calling it toys and everybody figured IBM would ultimately win this game. These startups didn't have a chance. And they all really got burned by not being part of Microsoft literally all the way up to $10 billion everybody thought it was way too expensive. And so when Netscape came along, they thought this was the next platform. The internet was the next platform and no one wanted to miss it. It was the most serious case of FOMO that you have ever seen in your life. And there were a couple of phases to this. You know, Netscape came public in 1995, and it was literally the most popular IPO at Morgan Stanley since Apple in 1980. And when we took Nesque Public,”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Took longer. I was like the weatherman predicting rain for the first five or ten years, but then the rain really started to happen. And so my first year back at Morgan Stanley, but in San Francisco was 1981. And back then, the Dow was at 700. Interest rates were at 16%. They were very, very few technology companies with more than a few hundred million of market cap. So yeah, it took a much longer time.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“Computer started. Then the really interesting part happened. He said, personal computers are not just going to revolutionize the computing industry, but how we communicate, how we shop, how we entertain ourselves, and how we live. And I said, wow, I don't know what that guy's smoking, but I really want some of it. And the even more interesting part is that Morgan Stanley, the blue chip firm that I had worked on, worked at Wall Street had never really done a high-tech IPO before, but they were the lead manager of Apple's IPO. They had also just opened up a San Francisco office. One of the great things my dear old dad Resoul told me, because he had failed to follow his advice. He said, son, if you ever did a chance to get on the ground floor of something.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“And right around that time, Apple had filed for its initial public offering, but it hadn't yet priced it. Jack gave us the job our classroom of pricing Apple's IPO before the underwriters did, and as an added inducement, he brought in the twenty five year old Steve Jobs into our classroom. I was twenty five, I thought I was kind of a hot shot, you know, after all, Wharton and undergrad and Morgan Stanley. Now I'm about to get my Stanford NBA. And I meet another 25-year-old guy who really has a tiger by the tail. And he tells us the story of how he and his partner Wasniak had come up with the idea for a single board computer that could be on everybody's desktop in everybody's home and how they had no idea how to do a business around it, but they tried to take it to Hewlett-Packard, to digital equipment, to tectonics. No one was interested. So he told us that day. He finally had to sell his Volkswagen van for $800 for working capital to get Apple.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“And beards, and it didn't look like a traditional company, but you could feel the energy. You know, so I grabbed the computer, I brought it back. When I opened up the box, it had a tiny minute, or a very large Manila colored keyboard in which the single circuit board of the computer's intelligence was embedded. And it had a tiny little terminal. And when you turned it on, it was a green screen with a C prompt, just like a mini computer or a mainframe. And then it had a user's manual. That's it. It had three pieces. The keyboard, the terminal, and the user manual, there were no applications available for it yet, although some were on the horizon. So if you wanted this hunk of iron to do something useful, you actually had to program it. So I had to learn basic for the microcomputer, and I did the port, and it turned out successfully. And I figured, ah, it's just a small mini computer, no big deal. So roll the clock forward a year later. I'm in the same professor's class investments with Jack McDonald.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“If you wanted to continue with the firm. So I enjoyed the work, but I didn't really find any passion. So I get to Stanford. And luckily I got a job as a teaching assistant to Jack literally the most revered professor. The first thing was he said, Frank, welcome to Stanford. This is 1979. Your first job is I want you to go down to this little privately held computer company in Cupertino called Apple. You probably never heard of it. They make personal computers. I hadn't heard of what those were. And he said, I've just bought an Apple II. Could you go down to Apple, pick it up, bring it back here to Stanford. And I want you to transport the software program that does investment analysis that's currently working on the minicomputer in our labs to work on this new personal computer. I had done a little bit of computer programming work at Wharton. So I went down there and I saw this group of young people. I didn't see any offices. I saw a lot of jeans.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“I am so excited for this. When I was thinking of this topic, there was no one that I would rather have do this. And then so many mutual friends I've heard so many good things about. So thank you so much for joining me today. It's a great pleasure. I've heard wonderful things about your podcast, and I'm really looking forward to our conversation, Harry. Well, I pay a lot of money for such good reviews, but I do want to start way back because I heard that meeting Steve Jobs at a Stanford investment class was the inspiration for your career in investment banking. Can you just take me to that and what that was? Sure. I'll go back just a little bit in time before that, but I'm from a blue-collar neighborhood of Philadelphia, South Philly. My dad worked in a clothing factory, and I was very fortunate to get a scholarship to attend the University of Pennsylvania's Wharton School. And after Wharton, I joined a privately held company that I'd never heard of before called Morgan Stanley in New York. They had a two-year program for people like me who wanted to work for two years, and then they kicked this out and you had to get an MBA.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
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2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
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2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“of over a trillion dollars he's become the OG of the space leading IPOs for Amazon, Intuit and Netscape to name a few. With that I'm so thrilled to welcome Frank Quatrone, co founder and executive chairman at Catalyst to the show today. But before we dive into the show state, Merge is the leading product integration platform offering a suite of unified APIs across key software categories from HRIS to CRM. That allows organizations to offer hundreds of customer facing integrations. Merge also handles the full integration lifecycle from an easy initial build to handheld end user onboarding to maintenance support and management tooling for all your integrations. Thousands of customers like RAM, Gong, Sam Grab and Sendoso use merge to power their integrations. Check it out now by visiting merge dot dev forward slash two VC to receive five thousand dollars off your annual plan. That's merged.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not necessarily regulation that's killing it. The worst M&A years we've had, ironically, are when there's been a market crash. Sellers still think that they're worth what they were worth last year, and it's hard for them to imagine that they're not worth 20 times revenues. They're really worth eight. And it takes a while for that to sink in. Trump is not a classic free markets Republican. He doesn't like big tech. So I don't think we're going to see much of a difference in the antitrust environment. This is 20 VC with me, Harry Stebbings. Now, I've been very vocal about my concerns surrounding the closed IPO markets and the regulatory barriers that are really preventing a lot of acquisitions from taking place. And I wanted to really focus on this today and invite an OG of the acquisition space onto the show. With that in mind, it was very clear who I wanted to invite. He's advised on more than six hundred transactions over four decades with an aggregate transaction value.”
2024-03-01 · The Twenty Minute VC · 20VC: Are IPO Windows Shut? Has Regulation Killed the M&A Market? M&A OG Frank Quattrone on Lessons from 650 M&A Deals Worth Over $1TRN and Taking Amazon, Cisco and Netscape Public · IDENTIFIED FROM THE TRANSCRIPT · source