Investors Reveal Insights on Early-Stage Investments to Extending the M&A Reach [Video]
In our panel discussion “Using Early-Stage Investments to Advance the M&A Strategy” panelists weigh in on governance and the importance of building the right team.
7 April 2021
At our recent M&A Summit, SS&C Intralinks presented a panel of experts to give their views and best practices on early-stage investing and how it complements their M&A practice.
Andrea Basham, of Freshfields, moderated the panel. Joining her was Saswat Bohidar, associate general counsel, M&A and ventures with Hewlett Packard Enterprise; Auria Styles, associate director, M&A legal, Intel; Corbin Walburger, vice president, corporate business development, Stanley Black & Decker; and David Le, vice president and associate general counsel, Lyft.
Fostering innovation and growth
The first topic the panelists explored was their rationale for making early investments. What is most important — financial returns, commercial interest…or both? Le’s firm is rooted in the strategic side, staying close to disruptive technologies and tangential areas to bolster Lyft’s business. Although Intel’s interest is focused on financial returns, Styles described how early-stage is a way to see how entrepreneurs are applying new technologies. A financial return on an equity investment, Bohidar added, can be a good indication that the target company’s portfolio strategy is working.
Early-stage investments can also help investors get a foothold on a future acquisition right. Several of the panelists saw it as a sort of due diligence — being able to become familiar with a growing company or promising sector for future reference, or just to build the right relationships and validate an emerging technology.
Governance, trust and expertise count
Confidentiality and integrity were the common themes on the topic of governance rights, as were the benefits of board observers versus board directors. All emphasized the importance of confidentiality and conflict issues, while Bohidar pointed out that a board observer doesn’t have the complicating fiduciary duties as a director. Since his firm is smaller, he’s found the former to be a more prudent choice.
For corporate investors getting started in smaller early-stage investments, the panel echoed one theme: the importance of personnel. It’s key to not only deploy experienced venture capital (VC) professionals but also people who understand emerging technologies. Experts in artificial intelligence, 5G and cloud computing were some examples provided by Styles. Avoid the trap of having just bankers and VC people on your side – and not people who know the technology or business. Hire someone who’s done this type of investment before, advised Walburger.
Styles closed with some altruistic advice: Giving back and sharing your learnings from the investments you’ve made creates a virtuous cycle. Once you’ve made that commitment to the entrepreneurial ecosystem, there are benefits all around.
Watch the full discussion below.
Andrea Basham, Corporate and M&A Practice • Freshfields
- Saswat Bohidar, Associate General Counsel, M&A and Ventures • Hewlett Packard Enterprise
- Auria Styles, Associate Director, M&A Legal • Intel
- Corbin Walburger, Vice President, Corporate Business Development • Stanley Black & Decker
- David Le, Vice President and Associate General Counsel • Lyft
Duration: 1 hour