Brad Jacobs

There is no company that's all good or all bad, at least that I've come across.

So the due diligence process in M&A is to try to figure out both of those things.

What are the things that make it a strong investment case?

And what are the things that these are risks?

These are downsides.

This is hair on the deal.

Is this hair we can take off?

Is this a risk that we can live with?

What do we think the chances of this happening?

And if the risk does happen, is it fatal?

Does it destroy the whole investment thesis?

So you really got to get both of those things.

And I write in the book about a friend of mine who's done a lot of M&A once showed me a four quadrant chart of M&A.

And the top two quadrants were large, easy deals with no hair on them, which don't exist.

Below that, on the bottom part of the four quadrants, are small, hairy deals.

Nobody should do a small, hairy deal.

First of all, it's small.

So how are you going to create a lot of money doing a small deal?

And it's hairy.

So if you take the hair off, it's a small deal.