This is the first episode of From Boots to Boardroom with two guests — and for good reason. Selling a business is the most consequential financial event in most entrepreneurs' lives, and getting it right requires two people working in lockstep: your investment banker and your M&A attorney.
Scott Craig is a partner at Latham & Watkins, the second highest-grossing law firm in the world. He focuses on helping emerging companies grow, raise capital, and ultimately exit — whether through M&A or other liquidity events. Stephen Day is the co-founder and managing director of Navidar, an investment banking firm and trusted advisor for M&A and capital raises in the middle market.
I've worked with both of them. Scott was my attorney and Stephen was my banker on the Think Power Solutions transaction. I can tell you without reservation that they are the best at what they do, and the reason I wanted them on the show together is because the interplay between the banker and the lawyer is where deals are won or lost — and most entrepreneurs don't understand that until it's too late.
This episode is a masterclass in how to prepare for, structure, and execute a transaction. If you're an entrepreneur who might sell your business someday — and you should assume that day will come — this is the most important episode you'll listen to.
I opened the episode with a story that still makes me wince. During the Think Power deal, there was a $5 million discrepancy in EBITDA. Five million dollars just missing from the numbers. Stephen's first instinct, trained as an auditor, was to pull on the thread and see if the entire sweater would unravel. The first question in any situation like that is whether there's fraud — someone taking money and covering it up.
Fortunately, that wasn't our situation. It was simply a poor accounting leader with poor processes and controls. We got to the bottom of it relatively quickly. But that experience crystallized something for me that became the genesis of KYRO AI: entrepreneurs need better financial infrastructure from day one.
And it's the perfect illustration of why you need great advisors before you need them — not when the crisis hits.
This was one of the most emphatic points both Scott and Stephen made, and I want every entrepreneur reading this to absorb it.
Scott's perspective from the legal side: if you're going to hire employees, raise capital, build technology, or handle customer data, you need legal help. And the earlier you engage, the cheaper it is to do things right. He gave two examples that I've personally lived through. First, hiring contractors on 1099s who are really full-time employees — a classification issue that becomes a massive liability in due diligence. Second, copying a competitor's terms of service and privacy policy and posting it on your website. Terms of service can be somewhat templated, but privacy policies are bespoke. Getting these wrong creates risk that a buyer will discover and use against you.
Stephen framed it even more directly: engaging advisors early makes you more money when you sell and reduces the risk of losing money after the sale closes. Poor customer contracts reduce your purchase price. Poor accounting information reduces your purchase price. And after closing, if you don't have well-worded contracts, you could end up giving money back through escrow claims or indemnification.
Navidar has three non-negotiable requirements for every client engagement: accept their engagement letter on their terms (they treat all clients the same), get an audit, and hire a top-tier law firm. Most small companies push back on that third one. But Stephen has learned over 15 years that you never know when an IP issue, a tax issue, an HR issue, or a cross-border restructuring will crop up in a deal. You don't want to be spooling up a new law firm mid-transaction, and you don't want a firm that's never seen these issues before.
Scott walked through the entity formation decision that every entrepreneur faces. If you're building a venture-backed company that will run at a loss while growing, a corporation typically makes more sense. If you're building a company that will be profitable quickly and may not need outside capital, an LLC has tax advantages as a pass-through entity.
But regardless of entity type, the critical thing for multi-founder companies is planning for what happens when someone leaves. Scott recommends founder vesting over four years — if someone departs early, a proportional amount of equity returns to the company. In LLCs, it might be a buy-sell arrangement at a nominal price. The point is the same: you cannot have dead equity on your cap table. It makes it hard to raise money and creates perverse incentives at exit.
I know founders who went into business as friends, didn't set up proper operating agreements, and are no longer friends. They're still friends with me, but not with each other. Plan for the uncomfortable scenario when everyone is still getting along. That's when you have the clarity and goodwill to do it right.
Scott also addressed the Texas versus Delaware incorporation question that's become a hot topic since Elon Musk's compensation fight. Texas has codified the business judgment rule and created a new Texas Business Court designed to be business-friendly. For founders who want to maintain control of their company, Texas may offer more protection than Delaware's increasingly unpredictable case law. That said, Delaware is still easier from a practical standpoint — faster Secretary of State filings, established form documents, and most investors still expect it. Scott's view: for early-stage private companies, Delaware is still simpler, but the momentum toward Texas is real and worth watching over the next five to ten years.
This is where the conversation got deeply practical and where I think every entrepreneur needs to pay the closest attention.
Stephen was emphatic: there is a methodology that works, and it starts with extreme preparation. Some companies need one month of preparation before going to market. Others need nine. Navidar has seen the full range. My deal took a full year — we started on June 9, 2021 and closed on June 9, 2022. I remember the dates because it's my grandfather's birthday.
The preparation covers legal, financial, and operational readiness. And the payoff is enormous. Stephen shared a case study where a serial acquirer that had purchased 22 companies asked for 90 days of exclusivity — they'd never closed a deal in less than 75. Navidar negotiated 45 days with an automatic extension only if they missed deadlines. They didn't miss a single one. The deal closed in 45 days, a first in that buyer's history. That's the power of preparation.
Stephen also had strong words for bankers who tell clients not to get an audit and instead do a sell-side quality of earnings. His view: there is no substitute for an audit. There's no substitute for GAAP financials built correctly from the ground up. The buyer's private equity firm will always do their own Q of E — they're not going to accept yours. But if you've done the financial preparation properly, nothing in their Q of E report will surprise you.
Navidar's two guiding principles in every deal: first, they don't want a buyer to discover anything about the company that they don't already know. No surprises. Second, they want every piece of information — good, bad, and ugly — priced into the bid. Most bankers, Stephen argued, either don't know what they don't know because they haven't prepped properly, or they decide to deal with problems in due diligence rather than disclosing them upfront. That approach erodes trust, and trust is the currency of deal-making.
Stephen used an analogy that stuck with me: when you enter exclusivity with a buyer, you start with a jar full of trust. Every time you fail to disclose something, every time they discover something you should have told them, you take from that jar. At some point, the trust drops low enough that they walk away.
Both Scott and Stephen had passionate perspectives on earnouts, and this section alone could be its own episode.
Scott's advice to sellers is simple and sobering: if there's an earnout, you need to be comfortable that you're not going to get it. If you're not comfortable with that possibility, you should consider not doing the deal. Most buyers play fair — if the earnout targets are hit, everyone wins and they're happy to pay. But there are buyers and circumstances where they'll find ways to avoid payment.
Earnouts are extremely hard to negotiate. Every potential loophole has to be identified upfront. Sellers typically want language preventing the buyer from doing anything that harms their ability to earn the earnout. Buyers push back, arguing they can't constrain their decision-making for all stockholders just to protect one seller's earnout. It's a tense negotiation, and Scott emphasized that more often than not, earnouts are not fully achieved.
Stephen offered an even more provocative take: when an earnout isn't earned, the fault usually lies with the banker or the seller, not the buyer. Most buyers are highly motivated to see earnout targets hit. The problem often starts with the banker preparing unrealistic projections to inflate valuation. By the time you get to the earnout negotiation, you're stuck with those projections, and they may be unachievable.
He shared a powerful case study. A deal had about 35% of consideration in an earnout based on revenue growth and EBITDA. The founder was convinced his business would achieve a 19% EBITDA margin. Navidar pushed back hard, arguing the business wouldn't get past 12%. It was a confrontational fight — the founder accused them of costing him money.
Navidar held firm. The earnout was set at the lower threshold. Two years later, the founder received 100% of his earnout. His actual EBITDA margin? 11.95%. Google's algorithm changes had prevented him from achieving the returns he'd projected. Had they set the earnout at 19%, he would have gotten nothing. By holding the line on realistic projections, Navidar put more money in his pocket than the aggressive approach ever would have.
The lesson: the banker and the entrepreneur must have a trusting, honest relationship. Ego has no place in setting projections. The foundation you lay at the beginning of the deal determines the earnout outcome at the end.
Stephen called working capital the biggest boogie man in any deal, and Scott agreed it's one of the most heavily negotiated elements.
Here's how it works in simple terms. Most deals are structured on a cash-free, debt-free basis. Enterprise value plus cash minus debt equals equity value — that's what shareholders receive. Working capital is essentially current assets minus current liabilities, excluding cash and debt. The buyer sets a working capital target based on historical levels. At closing, if actual working capital is below the target, the purchase price is reduced. If it's above, it increases.
The negotiation centers on two things: what goes into working capital versus what gets treated as debt (which comes off dollar-for-dollar), and how the target is calculated.
Scott explained that items like deferred revenue, deferred purchase price, and deposits can be heavily contested. Buyers want to treat anything that looks like a liability as debt rather than working capital. For SaaS companies, deferred revenue can be enormous — Stephen noted situations where small SaaS companies have $5 million in deferred revenue on their balance sheet that they didn't even know about because they weren't on GAAP. When a buyer tries to treat that as a debt-like item, it's a $5 million hit to the purchase price.
Navidar tries to negotiate deferred revenue into working capital rather than debt, and argues it shouldn't be a one-for-one reduction since 100% of the deferred revenue isn't required to support those accounts. They also try to flush these issues out at the LOI stage — much earlier than most bankers would address them.
As Stephen put it: "We like to joke that we're fighting for the beach house for you." Working capital adjustments typically aren't deal-breakers, but the difference can easily be a million dollars or more. That's worth fighting for.
For entrepreneurs selling to private equity, rollover equity is almost always part of the conversation. Stephen explained the mechanics: you're selling 100% of your company, but at closing you take a portion of your proceeds and buy back into the company at the sale price.
If you're the platform investment for a PE firm, they typically want you to roll 30-45% and stay involved. The minimum is usually 10-20%. Stephen's general guidance: if you believe in the plan and the PE partner, rolling 40-45% can be enormously lucrative because many clients make more money on the second transaction than the first, even owning a smaller percentage of a much larger company.
If you're ready to retire, burned out, or uncertain about the competitive landscape, roll 10%. If rolling zero is important to you, understand it will reduce your buyer pool, reduce competitiveness, and potentially reduce your purchase price.
Scott added critical legal protections that sellers should negotiate for rolled equity. First, you should receive the same class of equity as the PE fund — not a subordinate class. We evaluated multiple PE partners during the Think Power process and eliminated some specifically because they wanted to issue me a different class of stock while asking for a 30-40% rollover. That's a deal-breaker.
Second, your rolled equity should remain fully vested. You already earned it. Private equity firms will often try to impose clawback provisions — if you leave, they buy your equity back at cost or below fair market value. Scott's advice: push back hard on clawbacks for rolled equity. Bad actor provisions are market and understandable, but broad clawbacks on equity you've already earned should be resisted.
Third, if you're rolling a significant percentage, demand governance protections: blocking rights on related-party transactions, on management fee increases, and on anything that constitutes self-dealing between the PE fund and the portfolio company. If you own 40% of the company and the PE fund increases its management fees, that's your money flowing upward.
Scott compared disclosure schedules to the seller's disclosure when you sell a house — it's a list of everything that might be wrong with your business. The purchase agreement contains representations and warranties, and the disclosure schedules are where you list the exceptions: material contracts, ongoing litigation, known risks.
The critical principle: don't hide anything. If something gets discovered in due diligence that wasn't disclosed, the buyer's first assumption is fraud. It's almost never actually fraud — it's usually something that got missed or forgotten. But the damage to trust is the same.
Stephen reinforced this with Navidar's philosophy: no new information should surface during due diligence. Everything — good, bad, and ugly — should already be known and priced into the bid.
Scott recommends starting disclosure schedules as early as possible, even before a buyer is in the door if you're running a sell-side process. It involves intensive calls with management to flush out every potential issue. The more complete your schedules are at the start, the smoother the diligence process will be.
Both Scott and Stephen see AI creating significant efficiencies in their work, though with important caveats.
Scott compared AI to an earnest junior associate — really smart, really good, but still needs supervision. It's excellent at producing first drafts of documents, conducting research, and processing diligence materials. What used to take days now takes minutes. But verification remains essential.
Stephen highlighted AI's value in processing large volumes of contracts — scanning 700 client agreements to identify change-of-control provisions or assignment requirements. It's also useful for valuation work and comp analysis, though not for formal fairness opinions. For Navidar's core work of crafting investment stories, AI can't do the creative work from scratch, but it can help with graphics and refinement once the framework is set.
Scott raised one additional point that entrepreneurs should be aware of: private equity firms are now using AI to identify acquisition targets in ways they couldn't before. Cold outreach to companies that aren't even considering a sale is increasing dramatically. Having a banker relationship in place before that call comes means you're prepared to evaluate whether it's a real opportunity or noise.
If there's one message that ran through the entire conversation, it's this: preparation is everything, and the right advisors pay for themselves many times over.
The entrepreneurs who get the best outcomes are the ones who engage their banker and attorney early, maintain clean financials on a GAAP basis, set up their entities and contracts properly from the start, and approach the transaction with honesty, realistic expectations, and zero ego about their projections.
The entrepreneurs who get burned are the ones who wing it — no audit, no process, no top-tier counsel, no banker, or a banker who disappears after the pitch book goes out. They leave millions of dollars on the table in purchase price, working capital adjustments, poorly structured earnouts, and rollover equity with subordinate terms.
Scott and Stephen, thank you for your expertise, your partnership, and for being the kind of advisors who genuinely care about outcomes. Every entrepreneur deserves to have people like you in their corner.
On a personal note, I want to close by saying that the Think Power Solutions transaction would not have been the success it was without these two. Stephen and Navidar ran a process that was thorough, creative, and relentlessly focused on getting me the best possible outcome — from building the investment story to managing a competitive process to negotiating terms that protected my family's interests long after the deal closed. Scott and Latham & Watkins went toe-to-toe with some of the best buy-side counsel in the country and never blinked — whether it was structuring rollover equity on equal terms, negotiating disclosure schedules, or simply being available at all hours when it mattered most. The fact that I'm still close friends with both of them tells you everything about how they operate. They didn't just execute a transaction — they earned my trust, protected my interests, and delivered a life-changing outcome. I'll be forever grateful for that, and I look forward to doing the next one together.
Catch the full episode here.
For more such podcasts, visit From Boots to Boardroom.
From Boots to Boardroom is presented by KYRO AI — Digitize work and maximize profits.
This is the first episode of From Boots to Boardroom with two guests — and for good reason. Selling a business is the most consequential financial event in most entrepreneurs' lives, and getting it right requires two people working in lockstep: your investment banker and your M&A attorney.
Scott Craig is a partner at Latham & Watkins, the second highest-grossing law firm in the world. He focuses on helping emerging companies grow, raise capital, and ultimately exit — whether through M&A or other liquidity events. Stephen Day is the co-founder and managing director of Navidar, an investment banking firm and trusted advisor for M&A and capital raises in the middle market.
I've worked with both of them. Scott was my attorney and Stephen was my banker on the Think Power Solutions transaction. I can tell you without reservation that they are the best at what they do, and the reason I wanted them on the show together is because the interplay between the banker and the lawyer is where deals are won or lost — and most entrepreneurs don't understand that until it's too late.
This episode is a masterclass in how to prepare for, structure, and execute a transaction. If you're an entrepreneur who might sell your business someday — and you should assume that day will come — this is the most important episode you'll listen to.
I opened the episode with a story that still makes me wince. During the Think Power deal, there was a $5 million discrepancy in EBITDA. Five million dollars just missing from the numbers. Stephen's first instinct, trained as an auditor, was to pull on the thread and see if the entire sweater would unravel. The first question in any situation like that is whether there's fraud — someone taking money and covering it up.
Fortunately, that wasn't our situation. It was simply a poor accounting leader with poor processes and controls. We got to the bottom of it relatively quickly. But that experience crystallized something for me that became the genesis of KYRO AI: entrepreneurs need better financial infrastructure from day one.
And it's the perfect illustration of why you need great advisors before you need them — not when the crisis hits.
This was one of the most emphatic points both Scott and Stephen made, and I want every entrepreneur reading this to absorb it.
Scott's perspective from the legal side: if you're going to hire employees, raise capital, build technology, or handle customer data, you need legal help. And the earlier you engage, the cheaper it is to do things right. He gave two examples that I've personally lived through. First, hiring contractors on 1099s who are really full-time employees — a classification issue that becomes a massive liability in due diligence. Second, copying a competitor's terms of service and privacy policy and posting it on your website. Terms of service can be somewhat templated, but privacy policies are bespoke. Getting these wrong creates risk that a buyer will discover and use against you.
Stephen framed it even more directly: engaging advisors early makes you more money when you sell and reduces the risk of losing money after the sale closes. Poor customer contracts reduce your purchase price. Poor accounting information reduces your purchase price. And after closing, if you don't have well-worded contracts, you could end up giving money back through escrow claims or indemnification.
Navidar has three non-negotiable requirements for every client engagement: accept their engagement letter on their terms (they treat all clients the same), get an audit, and hire a top-tier law firm. Most small companies push back on that third one. But Stephen has learned over 15 years that you never know when an IP issue, a tax issue, an HR issue, or a cross-border restructuring will crop up in a deal. You don't want to be spooling up a new law firm mid-transaction, and you don't want a firm that's never seen these issues before.
Scott walked through the entity formation decision that every entrepreneur faces. If you're building a venture-backed company that will run at a loss while growing, a corporation typically makes more sense. If you're building a company that will be profitable quickly and may not need outside capital, an LLC has tax advantages as a pass-through entity.
But regardless of entity type, the critical thing for multi-founder companies is planning for what happens when someone leaves. Scott recommends founder vesting over four years — if someone departs early, a proportional amount of equity returns to the company. In LLCs, it might be a buy-sell arrangement at a nominal price. The point is the same: you cannot have dead equity on your cap table. It makes it hard to raise money and creates perverse incentives at exit.
I know founders who went into business as friends, didn't set up proper operating agreements, and are no longer friends. They're still friends with me, but not with each other. Plan for the uncomfortable scenario when everyone is still getting along. That's when you have the clarity and goodwill to do it right.
Scott also addressed the Texas versus Delaware incorporation question that's become a hot topic since Elon Musk's compensation fight. Texas has codified the business judgment rule and created a new Texas Business Court designed to be business-friendly. For founders who want to maintain control of their company, Texas may offer more protection than Delaware's increasingly unpredictable case law. That said, Delaware is still easier from a practical standpoint — faster Secretary of State filings, established form documents, and most investors still expect it. Scott's view: for early-stage private companies, Delaware is still simpler, but the momentum toward Texas is real and worth watching over the next five to ten years.
This is where the conversation got deeply practical and where I think every entrepreneur needs to pay the closest attention.
Stephen was emphatic: there is a methodology that works, and it starts with extreme preparation. Some companies need one month of preparation before going to market. Others need nine. Navidar has seen the full range. My deal took a full year — we started on June 9, 2021 and closed on June 9, 2022. I remember the dates because it's my grandfather's birthday.
The preparation covers legal, financial, and operational readiness. And the payoff is enormous. Stephen shared a case study where a serial acquirer that had purchased 22 companies asked for 90 days of exclusivity — they'd never closed a deal in less than 75. Navidar negotiated 45 days with an automatic extension only if they missed deadlines. They didn't miss a single one. The deal closed in 45 days, a first in that buyer's history. That's the power of preparation.
Stephen also had strong words for bankers who tell clients not to get an audit and instead do a sell-side quality of earnings. His view: there is no substitute for an audit. There's no substitute for GAAP financials built correctly from the ground up. The buyer's private equity firm will always do their own Q of E — they're not going to accept yours. But if you've done the financial preparation properly, nothing in their Q of E report will surprise you.
Navidar's two guiding principles in every deal: first, they don't want a buyer to discover anything about the company that they don't already know. No surprises. Second, they want every piece of information — good, bad, and ugly — priced into the bid. Most bankers, Stephen argued, either don't know what they don't know because they haven't prepped properly, or they decide to deal with problems in due diligence rather than disclosing them upfront. That approach erodes trust, and trust is the currency of deal-making.
Stephen used an analogy that stuck with me: when you enter exclusivity with a buyer, you start with a jar full of trust. Every time you fail to disclose something, every time they discover something you should have told them, you take from that jar. At some point, the trust drops low enough that they walk away.
Both Scott and Stephen had passionate perspectives on earnouts, and this section alone could be its own episode.
Scott's advice to sellers is simple and sobering: if there's an earnout, you need to be comfortable that you're not going to get it. If you're not comfortable with that possibility, you should consider not doing the deal. Most buyers play fair — if the earnout targets are hit, everyone wins and they're happy to pay. But there are buyers and circumstances where they'll find ways to avoid payment.
Earnouts are extremely hard to negotiate. Every potential loophole has to be identified upfront. Sellers typically want language preventing the buyer from doing anything that harms their ability to earn the earnout. Buyers push back, arguing they can't constrain their decision-making for all stockholders just to protect one seller's earnout. It's a tense negotiation, and Scott emphasized that more often than not, earnouts are not fully achieved.
Stephen offered an even more provocative take: when an earnout isn't earned, the fault usually lies with the banker or the seller, not the buyer. Most buyers are highly motivated to see earnout targets hit. The problem often starts with the banker preparing unrealistic projections to inflate valuation. By the time you get to the earnout negotiation, you're stuck with those projections, and they may be unachievable.
He shared a powerful case study. A deal had about 35% of consideration in an earnout based on revenue growth and EBITDA. The founder was convinced his business would achieve a 19% EBITDA margin. Navidar pushed back hard, arguing the business wouldn't get past 12%. It was a confrontational fight — the founder accused them of costing him money.
Navidar held firm. The earnout was set at the lower threshold. Two years later, the founder received 100% of his earnout. His actual EBITDA margin? 11.95%. Google's algorithm changes had prevented him from achieving the returns he'd projected. Had they set the earnout at 19%, he would have gotten nothing. By holding the line on realistic projections, Navidar put more money in his pocket than the aggressive approach ever would have.
The lesson: the banker and the entrepreneur must have a trusting, honest relationship. Ego has no place in setting projections. The foundation you lay at the beginning of the deal determines the earnout outcome at the end.
Stephen called working capital the biggest boogie man in any deal, and Scott agreed it's one of the most heavily negotiated elements.
Here's how it works in simple terms. Most deals are structured on a cash-free, debt-free basis. Enterprise value plus cash minus debt equals equity value — that's what shareholders receive. Working capital is essentially current assets minus current liabilities, excluding cash and debt. The buyer sets a working capital target based on historical levels. At closing, if actual working capital is below the target, the purchase price is reduced. If it's above, it increases.
The negotiation centers on two things: what goes into working capital versus what gets treated as debt (which comes off dollar-for-dollar), and how the target is calculated.
Scott explained that items like deferred revenue, deferred purchase price, and deposits can be heavily contested. Buyers want to treat anything that looks like a liability as debt rather than working capital. For SaaS companies, deferred revenue can be enormous — Stephen noted situations where small SaaS companies have $5 million in deferred revenue on their balance sheet that they didn't even know about because they weren't on GAAP. When a buyer tries to treat that as a debt-like item, it's a $5 million hit to the purchase price.
Navidar tries to negotiate deferred revenue into working capital rather than debt, and argues it shouldn't be a one-for-one reduction since 100% of the deferred revenue isn't required to support those accounts. They also try to flush these issues out at the LOI stage — much earlier than most bankers would address them.
As Stephen put it: "We like to joke that we're fighting for the beach house for you." Working capital adjustments typically aren't deal-breakers, but the difference can easily be a million dollars or more. That's worth fighting for.
For entrepreneurs selling to private equity, rollover equity is almost always part of the conversation. Stephen explained the mechanics: you're selling 100% of your company, but at closing you take a portion of your proceeds and buy back into the company at the sale price.
If you're the platform investment for a PE firm, they typically want you to roll 30-45% and stay involved. The minimum is usually 10-20%. Stephen's general guidance: if you believe in the plan and the PE partner, rolling 40-45% can be enormously lucrative because many clients make more money on the second transaction than the first, even owning a smaller percentage of a much larger company.
If you're ready to retire, burned out, or uncertain about the competitive landscape, roll 10%. If rolling zero is important to you, understand it will reduce your buyer pool, reduce competitiveness, and potentially reduce your purchase price.
Scott added critical legal protections that sellers should negotiate for rolled equity. First, you should receive the same class of equity as the PE fund — not a subordinate class. We evaluated multiple PE partners during the Think Power process and eliminated some specifically because they wanted to issue me a different class of stock while asking for a 30-40% rollover. That's a deal-breaker.
Second, your rolled equity should remain fully vested. You already earned it. Private equity firms will often try to impose clawback provisions — if you leave, they buy your equity back at cost or below fair market value. Scott's advice: push back hard on clawbacks for rolled equity. Bad actor provisions are market and understandable, but broad clawbacks on equity you've already earned should be resisted.
Third, if you're rolling a significant percentage, demand governance protections: blocking rights on related-party transactions, on management fee increases, and on anything that constitutes self-dealing between the PE fund and the portfolio company. If you own 40% of the company and the PE fund increases its management fees, that's your money flowing upward.
Scott compared disclosure schedules to the seller's disclosure when you sell a house — it's a list of everything that might be wrong with your business. The purchase agreement contains representations and warranties, and the disclosure schedules are where you list the exceptions: material contracts, ongoing litigation, known risks.
The critical principle: don't hide anything. If something gets discovered in due diligence that wasn't disclosed, the buyer's first assumption is fraud. It's almost never actually fraud — it's usually something that got missed or forgotten. But the damage to trust is the same.
Stephen reinforced this with Navidar's philosophy: no new information should surface during due diligence. Everything — good, bad, and ugly — should already be known and priced into the bid.
Scott recommends starting disclosure schedules as early as possible, even before a buyer is in the door if you're running a sell-side process. It involves intensive calls with management to flush out every potential issue. The more complete your schedules are at the start, the smoother the diligence process will be.
Both Scott and Stephen see AI creating significant efficiencies in their work, though with important caveats.
Scott compared AI to an earnest junior associate — really smart, really good, but still needs supervision. It's excellent at producing first drafts of documents, conducting research, and processing diligence materials. What used to take days now takes minutes. But verification remains essential.
Stephen highlighted AI's value in processing large volumes of contracts — scanning 700 client agreements to identify change-of-control provisions or assignment requirements. It's also useful for valuation work and comp analysis, though not for formal fairness opinions. For Navidar's core work of crafting investment stories, AI can't do the creative work from scratch, but it can help with graphics and refinement once the framework is set.
Scott raised one additional point that entrepreneurs should be aware of: private equity firms are now using AI to identify acquisition targets in ways they couldn't before. Cold outreach to companies that aren't even considering a sale is increasing dramatically. Having a banker relationship in place before that call comes means you're prepared to evaluate whether it's a real opportunity or noise.
If there's one message that ran through the entire conversation, it's this: preparation is everything, and the right advisors pay for themselves many times over.
The entrepreneurs who get the best outcomes are the ones who engage their banker and attorney early, maintain clean financials on a GAAP basis, set up their entities and contracts properly from the start, and approach the transaction with honesty, realistic expectations, and zero ego about their projections.
The entrepreneurs who get burned are the ones who wing it — no audit, no process, no top-tier counsel, no banker, or a banker who disappears after the pitch book goes out. They leave millions of dollars on the table in purchase price, working capital adjustments, poorly structured earnouts, and rollover equity with subordinate terms.
Scott and Stephen, thank you for your expertise, your partnership, and for being the kind of advisors who genuinely care about outcomes. Every entrepreneur deserves to have people like you in their corner.
On a personal note, I want to close by saying that the Think Power Solutions transaction would not have been the success it was without these two. Stephen and Navidar ran a process that was thorough, creative, and relentlessly focused on getting me the best possible outcome — from building the investment story to managing a competitive process to negotiating terms that protected my family's interests long after the deal closed. Scott and Latham & Watkins went toe-to-toe with some of the best buy-side counsel in the country and never blinked — whether it was structuring rollover equity on equal terms, negotiating disclosure schedules, or simply being available at all hours when it mattered most. The fact that I'm still close friends with both of them tells you everything about how they operate. They didn't just execute a transaction — they earned my trust, protected my interests, and delivered a life-changing outcome. I'll be forever grateful for that, and I look forward to doing the next one together.
Catch the full episode here.
For more such podcasts, visit From Boots to Boardroom.
From Boots to Boardroom is presented by KYRO AI — Digitize work and maximize profits.
Hari Vasudevan, PE, is a serial entrepreneur and engineer focused on AI-driven solutions for utilities, construction, and storm response. As Founder and CEO of KYRO AI, he leads the development of AI-powered software that helps utility, vegetation, and field service teams digitize operations, improve storm response and restoration, and reduce operational risk. He also serves as Vice Chair and Strategic Advisor for the Edison Electric Institute’s Transmission Subject Area Committee and holds bachelor’s and master’s degrees in civil engineering with professional engineering licensure in multiple states.
