M&A Has a Transparency Problem

Two Ways a Deal Starts

There are two ways a deal starts. Through a broker, or direct.

In a brokered deal, here is how it works. A broker builds a CIM. It is a starting point. Adjusted EBITDA. Growth narrative. Revenue highlights. It gives the buyer enough to decide whether to lean in. The buyer signs an LOI based on that document. Then the data room opens. Bank statements. General ledger. Tax returns. The real numbers.

That sequence makes sense. Sellers cannot open their books to fifty tire kickers. Brokers need to filter serious buyers from curious ones. The LOI is the commitment that earns access to the truth.

But it created a side effect. The buyer commits before they fully understand what they are buying. Not because anyone is hiding something. Because the system does not have a mechanism for deep analysis at the speed deals require.

That is not a people problem. That is an infrastructure problem.

Direct Deals and Real Numbers

Direct deals work differently. You reach out to a seller. There is no CIM. No marketing narrative. You ask for the last three years of audited statements and the current internals. You are working with real information from day one.

I did this at Tyco. Forty four deals in under four years. Most of them direct. I would ask for the financials, get the actual numbers, and start the analysis immediately. No narrative to decode. No adjusted EBITDA to reverse engineer. Just the truth, from the beginning. It made the deals cleaner. Faster. More honest on both sides.

But whether the deal is brokered or direct, the problem is the same. The analysis still takes time. The rigor still requires expertise. And the infrastructure to do it at speed has never existed.

The Approval Bottleneck

At Tyco Fire and Security, the highest volume M&A division in the company, deal velocity kept accelerating. Every year the operating businesses needed more acquisitions in their budgets. The approval pipeline could not keep up. Not because the people were slow. Because every deal required the same manual work. Tear apart the financials. Find the risks. Build the narrative. Get corporate comfortable.

So I built a deal model. Line by line through the P&L. Not looking for upside. Looking for negative synergies. Integration costs. Benefit plan upgrades. Payroll normalization. What it would actually cost to bring this company into the Tyco system.

Counterintuitive. But it changed everything.

When corporate saw that we were documenting the downside, structured, quantified, nothing hidden, they started approving faster. Not because the deals were better. Because the packaging proved the work had been done. The format itself was the signal.

Transparency Has Never Scaled

That experience taught me something simple. M&A is not that hard. It never was. Find a business. Understand it fully. Decide yes or no. Structure it. Close. The hard part was always getting the truth fast enough to act on it.

The problem is that transparency has never scaled. It required analysts, time, judgment, and pattern recognition that most buyers simply do not have access to. At Tyco we had the infrastructure. A solo buyer doing their first acquisition does not.

The Grey Tsunami

Now consider what is coming.

10,000 boomers retiring every day. Trillions in small business assets about to change hands. Not enough qualified buyers. Not enough advisors. And the system that exists was built for a world where information took weeks to assemble and months to verify.

That world is over.

I spent 25 years doing deals, operating the businesses after close, learning what actually gets a deal approved and what kills one. Accounting. Finance. Six Sigma process discipline. Pattern recognition from doing it over and over again.

Then we built the system I wish I had had.

Three Intelligence Layers

In a brokered deal, upload the CIM. The system does not summarize it. It interrogates it. Revenue concentration. Owner dependency. Margin composition. The dimensions that tell you whether this business can survive a transition.

In a direct deal, upload the financials. Skip the narrative entirely. The system works with the real numbers from the start. The same way I did at Tyco.

Either way, bankability runs instantly. DSCR. Cash flow waterfall. Covenant analysis. You know what the lender will say before you pick up the phone.

In the background it searches the entire public domain. Litigation. Regulatory filings. Employer reviews. Key personnel. Competitive landscape. All connected to the analysis automatically.

One upload. Three intelligence layers. Before your first management meeting.

Then as diligence deepens, bank statements hit the system. Every line gets cross referenced against what was claimed, whether that was a CIM narrative or the seller's own financials. Contradictions surface automatically. The GL does not negotiate.

Infrastructure, Not Replacement

This is not about replacing brokers or advisors. The good ones make deals happen. This is about giving every buyer the infrastructure to match the rigor that used to require a Fortune 500 approval process and a team of analysts.

The system that exists today was not built to be opaque. It just never had the tools to be transparent at speed. Now it does.

You hear skepticism about AI in diligence. And honestly, most of it is earned. A generic summary of a CIM is not diligence. A prompt that rewrites a document is not analysis. The industry is right to push back on that.

But the answer is not to defend the old process. It is to build the infrastructure that makes transparency possible at the speed deals actually move.

The most acquisitive company since Standard Oil needed this machine and did not have it. Now a first time buyer does.