RLXDatix CEO Jeff Surges says the question is always are you a buyer or a seller.
"And today, the answer is yes," he says. "You don't know what side you're on. But there's going to continue to be value gained through inorganic or M&A."
From the company perspective of long-term growth and its long-term, there could be 10 or 20 percent growth coming from M&A versus what typically would have been coming first through organic growth.
"Eventually, though, it has to all come back to, can you execute your plan?" he says. "Can you integrate and gain the efficiencies? And does the solution make you stickier and create more value for your customers? Because the denominator here is customer value."
He says business leaders should be careful not to put so much into their M&A pursuits that their core business suffers because of it.
"You got to go back to running your companies and keeping your teams aligned," Surges says. "And while it is an accelerant, you got to make sure you can still answer the core values of your company — your mission, your vision, your values — and don't lose sight of who you are."
Even through growth or acceleration might be the goal, any move still has to come back and meet the threshold of: what are you paying for it, what value can you get from it, and in the end state, whenever that is, do your investors, do your shareholders, do your customers, do your employees all stay aligned on that lasting value.
As long as there continues to be an overwhelming amount of capital that is cheap, the M&A environment should remain frothy.
Entrinsic Bioscience Chairman & CEO Stephen Gatto says when it comes to M&A, there should be an emphasis on accretive transactions that can drive and demonstrate driving top-line growth while creating breadth within an organization.
"It's not rocket science," he says. "Good companies, good foundation, good businesses, good teams, that's what people invest in today and yesterday and a year before and in years to come."
The dynamic of looking at cash flows and revenues obviously is an important attribute of M&A, but today, Gatto says, some of the best best-built companies all over the globe are companies that, when they were starting out, were tough to value their revenue base.
"What you were looking at is the impact of their IP," he says. "And so by being able to really leverage the significance of that IP in the marketplace today, and fundamentally bring that together with existing funding sources — debt, equity and so forth — means companies like ours, where you have an extreme amount of IP-rich assets sitting on the table, now can be monetized and allow you to bridge the gap between value creation and cash flow creation."
Surges and Gatto, along with Aon's Nick Surges, spoke at last year's Milwaukee Smart Business Dealmakers Conference about leveraging M&A in a hot deal market. Hit play on the video above to catch the full panel discussion.