Being an immigrant myself, I would like to see the world having more open borders and being more accepting of refugees and displaced people.
I had the pleasure of interviewing Craig Mullett, President of Branison Group, an M&A advisory firm based near New York City. Craig was previously Director of Corporate Development for Amphenol Corporation (at the time a KKR portfolio company) and following this he was a non-executive director of Volex Group. In South Africa, Craig founded and sold HomeWorths and qualified as a Chartered Accountant with Deloitte. Craig is also an active angel investor as a Director of the Angel Investor Forum, part of the Angel Capital Association. Craig is a founder of AngelHub, Africa’s first angel group and helped in establishing SA Business Angels Network as well as Trident Angels, the first Caribbean angel group. He has many active seed stage investments that include artificial intelligence, cloud computing software, mobile digital security, consumer goods and medical devices. Craig has been interviewed on startup investing by the New York Times, Forbes, Financial Mail and Inc. He is a start-up mentor at the Center for Innovative Thinking at Yale University and has an MBA from Nyenrode (Netherlands), a BCom(Hons) from the University of Cape Town (South Africa) and is a graduate of the International Leadership Academy of the United Nations (Jordan).
Thank you so much for joining us! What is your “backstory”?
AAA and AAA — a global background of being an Anglo American African who is now an Angel (investor) Advisor (on M&A) Activist (on social issues).
Can you share a story of your most successful Angel or VC investment? What was its lesson?
I recently had a very successful exit from a software startup, Device42. The lesson was the importance of using a framework (I use the 5T’s) to evaluate deals and they scored high in each category.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
I backed an early stage Youtube business called tooble that had an excellent desktop product, but failed to transition to mobile in time. They also lacked enough funding to pivot.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn?
I opted not to invest in Tutum, a cloud service used by developers to deploy and manage Docker. I thought they were too dependent on Docker and had a virtual team that was spread out around the world. Just over a year later, Docker acquired them — so I guess platform dependence is OK if they buy you and virtual workforces don’t always scare away acquirers.
How have you used your success to bring goodness to the world?
I have used my insights to help angel groups fund startups in regions that need innovation and job growth — Africa and the Caribbean. I’m very active in my community on various social issues and also involved as a board member in the University of Cape Town Fund to grow Africa’s leading university.
What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.
I use a 5T approach for evaluating startups — with examples from businesses I have backed :
1. Target market : create or lead a niche and then be able to expand (Q Drinks started with ginger beer, then extended to other sodas).
2. Technology/product : unique and defensible (ideally with some intellectual property and patents) that is designed to scale (the value of Spotfront’s PromoteIQ platform increases with additional customers and brands)
3. Team : great founding team with a mix of innovative thinking, selling skills and execution focus (Device42 had a mix of tech, sales and business skills)
4. Traction : proof that customers want and will pay for the product (Cherre had revenue from customers willing to pay for its data platform).
5. Terms : reasonable valuation that compensates investors for the high risks of startups. I use a guide of a probable 10x upside if the business executes according to their plans and a possible 100x if a “dream outcome” occurs.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.
Being an immigrant myself, I would like to see the world having more open borders and being more accepting of refugees and displaced people.
Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this.
Roelof Botha — a fellow South African and the Sequoia partner who suggested they make a seed investment in Youtube. I’d be interested in his thought process on startup investing and also how to change the world.
It takes a lot more than charm, a fancy lunch, a great product and the right price to make deals happen, particularly for newer businesses that can't point to their endless list of big "name" customers. Discussing the issue with a career M&A pro whose work has spanned 16 countries and hundreds of negotiations, Craig Mullett told me of his system for getting deals done. It offers a great primer of the homework every CEO and sales rep should complete long before entering the conference room, lunchroom, or fancy restaurant.
Personally, I've always preferred having a great product and letting my belief in its value carry the day--along with my charisma, passion, and American Express card. But Mullett proposes a more succinct, repeatable system he's come to call the "Five P's:" prepare, probe, possibilities, propose and partner. It's worked well for him in two completely different lives as the M&A leader for a major corporation, and in the buying and selling of smaller and mid-size firms leading Branison Group.
Here they are, in brief:
1. Prepare
The power of information can surpass many other competing power sources when you are evaluating your negotiating counter-parties. Spending time researching the other party's interests and possible positions, as well as accurately understanding your own, is the first key part of preparation. Craig compiles detailed information on the seller's needs and timeline, the buyer's strategic/financial options and possible negotiation outcomes. He then visualizes all these factors in a deal diagram and assigns roles to help his team rapidly respond in the next phases.
2. Probe
Asking for clarity to confirm any assumptions is beneficial to both sides and can be done both before and during the negotiation. Use e-mail to get some key questions answered in writing before the meeting and then ask follow-up questions face-to-face. Send a draft agenda and ask for comments, knowing that the buyer's changes to the discussion points highlight issues of key importance to them. Being able to understand the mindset of the other party provides valuable indicators on what will lead to the most successful deal.
3. Possibilities
Expanding the range of possible deal outcomes increases both the likelihood and robustness of any deal. While price is of paramount importance to both sides, money was not the only interest each side has in developing a deal. Map out the various non-monetary issues, such as certainty of the timeline to closing, payment options and management retention and then frame these as differentiated bundles for a potential deal.
As a buyer, you can use this information to reconfirm what had been learned from preparation and probing in terms of what is important to the seller. This also enables the seller to expand the bundled options and feel like they are contributing meaningfully to the final proposal.
4. Propose
Once the possibilities have been ranked and contrasted to get agreement from all sides, a proposal can be crafted that reflects the best possible outcome. Try to do this visually (on a whiteboard) focused on the solution space. Seeing the proposal come together jointly,then translating the agreed concepts into a final detailed proposal, sets a positive momentum between the parties towards partnering.
5. Partner
Implementing any agreement relies on the parties' actions post-deal. For example, a buyer needs to have the management team of the seller committed to the business after acquiring it, while the selling owner needs to be committed to getting the deal done and not fighting over post-closing issues afterwards. Using the negotiation process to build rapport and develop contract mechanisms to encourage alignment helps achieve both objectives.
This negotiating framework can be adapted and used for personal negotiations (such as your salary package) or large-scale multi-party negotiations (such as trade treaties). Although the preparation stage can be hard work, it should allow the other stages to flow easier until you reach the successful partnering stage.
Even though distractions and deadlines may create stress, achieving a great deal for everyone is always much more fun.