Relationships matter A LOT

Ian Bednowitz
A free video tutorial from Ian Bednowitz
Former Head of Mergers & Acqusitions, eBay; Bain consultant
4.3 instructor rating • 7 courses • 13,227 students

Lecture description

In this lecture I will share the incredible importance of relationships with Fortune 500 companies in making deals happen. 60-70% of the companies I acquired came to my desk because someone within eBay was championing that company or I knew the CEO myself.  Aspiring M&A professionals will learn how to use these relationships in your company to find attractive companies to invest in and buy.  Entrepreneurs will learn multiple approaches for building these relationships effectively. 

Learn more from the full course

Get Acquired: Learn From The Head Of Acquisitions For eBay

The insider secrets to sell your startup to a Fortune 500 buyer from eBay's former head of M&A

02:18:38 of on-demand video • Updated May 2016

  • Understand how Fortune 500 companies look at startups
  • Understand how Heads of M&A, business development and CEOs consider when buying a company
  • Pitch your company effectively to a Fortune 500 company
  • Understand how you’ll be evaluated when walking into a boardroom
  • Build relationships with Fortune 500 companies
  • Recognize the key things that will separate you from other entrepreneurs
  • Understand how your mission can help other companies
  • Network effectively and get a foot in the door at Fortune 500 companies
  • Create a custom presentation that will communicate that you’ve spent days thinking about how you can work with the other company
  • Incorporate an exit strategy in your business plan from day 0
  • Feel more motivated working on your business now that you understand how to sell it
English [Auto] A question I get all that time is where do I find the startups that I invest in and buy. It's almost as if people think I have some magical list of all the startups in the world that I would refer to and say. Ooh let's look at that one and that one and that one. Of course I do monitor startups right. When I do have some with. But that's not where most deals come 60 to 70 percent of the deals that I did of the over 1 billion dollars in capital that I invested in startups or spent buying startups went towards companies where there was an existing relationship with E-bay. So this is critical relationships are so important. Let me give you a couple of examples to illustrate the point and then I'll tell you how you create these relationships or if you work in M&A how you leverage these relationships. The first example about a company called W.H. hai. Now most of you out there unless you are a big fan of repairing your car probably have never heard of WHCA even if you repair your car you may not but they are in the parts and accessories space car and truck. And eBay has a big business in selling those parts online. Now I heard about this company from the parts and accessories team the team that ran that category for e-bay. He said this is something that we want to buy that we have such a good relationship with. And heres what had happened. E-bay had been working with W.H. high for a number of years not to go into the details of WHCA business thats not relevant. What you do need to know the key data that they had that they were partnering with E-Bay for ways that meant data. So which part is that which cars and interchange data. So if one cart could be in exchange with a another car if they were equivalent. Why is this important. Well people came on the e-bay looking for a specific part for a specific car. They dont see the car there is no one there to help them make the sale. And so if theyre not confident that the park can fit their car they cant make that transaction on ebay that to go into a local store. So this Pittman data was critical and the interchange data opened up the number of cars a particular part or because if a part or a Toyota Corolla would also fit on a Pontiac Vibe then there are many more customers that would buy that heart. So that's where the value was for this deal. And eBay had been licensing that data. But the team that there are so much more debt if we actually own the company. So there is clearly a strategic fit. We already knew the CEO and you were a very passionate leader and there was this relationship. And so this is one of the smoothest deals that I did was quite a large deal but it was very smooth because of that existing relationship we had so much information to be able to say that the synergies are there to justify a valuation that made sense for both parties. Everyone was comfortable and that transaction happened because of that relationship through partnership now partnerships those dont happen that much those type of deals because those type of the partnerships are not that common. So here is another example thats a little more common. So a company named hunch now talk more about hunch later in this interview section. For now I'll just tell you it's a company with technology that would help me with recommendation but it's a company that wasn't very large and not one that was on my radar screen. But how did I hear about it. Well within a few weeks I heard about hunch three different ways from someone on my team from my CTO and my CEO and I hear about a company from one of those sources of pay attention to it. I hear about it from all three or you better believe that I'm going to give it a nice hard look. How did that happen. Well the VCS the investors in this startup had relationships with both John the CEO and mark the CTO that allows them to get the door they also had great press the investors help with the press that was how the individual or my team heard about it. So I was hearing about this company in all these different ways now because of a partnership because of their investors and the relationships that those investors had. Now there were also I think some direct relationships within the company with some people at E-Bay. So I wound up looking at that company and it was a relatively smooth deal not just with his W.H.. There were little more hiccups because we hadn't been working at the company and we had to develop more of that but it was a deal that went through relatively straightforward. So what are the lessons for you. So for you the entrepreneur you want to build these relationships to be able to get in the boardroom the first way to build those relationships is if you have them yourself. In your network if you know people at Fortune 500 companies and you should leverage those connections and get introduce and build those connect. Second Wave investors value add and investors are so important to get. Were trading off a lower valuation selling more of your company not having the same rights in order to get investor and will help get you relationships and connection because those relationships and connections are going to help your business a lot more down the road and create a lot more value than an extra percent or half percent of your company. A few million dollars here and there on your valuation sounds like a lot of money now but that will multiply if you have Value-Added investors. But not everyone can get Value-Added investors especially early on. If your smart company unproven maybe you can attract that then you can hire the town can hire someone that will be your lead in DD to create those relationships. Ive seen so many startups make the mistake of only investing in technical talent technical talent is critical if you're building a technology startup business talent is awesome. Where your head of the green in partnerships and revenue and potential deals and money all of that so it is worth investing in someone who had those connections to bring them on board. And if you cant find someone like that or can afford or someone like that your last option you can hire people from those companies hire people have those relationships from Fortune 500 companies where you want to build those relationships. That's the hardest thing to do. The other three ways are easier now if you're on the other side of table if you're working in M&A and leverage this. Well number one you'll look for deals on Google. You don't look for deals in the headlines way that you look for deals is to build relationships through the organization. I would regularly meet with the heads of different business units to find out who their partnerships were with if they had new partnerships with any of those companies look interesting for M&A. I would also build relationships with VCs. These are great sources of companies as well for partnership or for investment or for acquisition leverage those relationships of course ask your executives if they have any connection to any companies that they're interested in but that should be the focus of where we're look for potential deals not looking outside and just cold Reise.