Michael Pratt

💥 this one's for the operators.. special edition of the ai market memo just dropped PE or VC, which actually creates more wealth for operators? this one’s special because I’m in these conversations weekly with GTM execs, VC partners, and PE sponsors. and most operators are making a huge financial decision of their career using wrong napkin math. It’s cap table math. and the math decides whether “0.2% equity” becomes $0 or millions. so in this special edition, we broke it down in parts: 1. the real equation wrong napkin math and the actual payout formula that determines outcomes. 2. the two wealth engines broke down the two operator wealth models: - VC = power law (home run derby outcomes) - PE = manufacturing (timelines + transaction probability)  Milad Alucozai gave some great advice on participating preferred. 3. cap table terms before we touched the math, we got the vocabulary straight: common vs preferred, pref stack, dilution, vesting, acceleration, Polina Karachentseva explains single-trigger vs. double-trigger acceleration really well using the windsurf deal as an example.  4. the ‘right’ math. why pressure-testing these four variables: dilution, preference stack, timing and eligibility / acceleration are critical. 5. scenarios then we ran real scenarios both VC and PE including the good and the brutal: - the home run - the “decent exit” - common gets smoked - the acqui-hire trap (headline exit, $0 payout) - the PE leaver clause haircut 6. due diligence checklist finally, the questions operators should take note on. and some wise words from Colin Lernell's stuff. link in the comments.

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You can turn $100,000 into a $50 million business through acquisitions. This is closer to capital allocation than traditional entrepreneurship. Here's the deal structure. First, the capital stack. You buy a business the same way you buy a house. Equity in, bank covers the rest. With SBA loans: 90% loan, 10% equity. A million dollar business might require $100K to $200K down. Target companies with $1 to $3 million in earnings. Go to sellers that are NOT at market. Brokered deals are competitive and sellers want cash at close. This only works off-market. Here's what you propose: Seller keeps 20% equity in a new entity. Asset sale, their company moves into newco, they keep running it at fair market salary. You write them a check for 60% via bank loan. Remaining 20% is a seller's note: 10% straight note, 10% performance earnout. From the bank's perspective, you created 40% equity. The truth? It's really only 20%, and it's the seller's. Your money in? Approaching zero. But you own 80% of Enterprise Value. Why would a seller agree? Tell them: my goal is to make your 20% as valuable as the 80% we're giving you today. What are the odds you double the value on your own in 3 to 5 years? Now stack earnings. $2 million average per company. Buy 10 just like this. $20 million combined earnings under one entity. Centralize marketing, accounting, HR, governance at HQ. You bought each at 4 to 4.5x. A $20 million earnings business sells for 7 to 7.5x or more. That's multiple expansion, just by combining them. Close the first one. Negotiate the next $100K for the next business. Then newco sells to PE for 7, 8, 9x your $20 million in earnings. That's the path from $100K to $50 million. If you're considering buying a business in the next 12 to 24 months, we built Acquisition Lab for exactly this. walkerdeibel.com

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10 Questions Before AI Speaks for Your Brand Houston, we have a problem. The business world is drowning in automation—emails, posts, and messages optimized for speed, not judgment. Much of it is now powered by AI. The issue isn’t the technology. It’s that many of the people running it lack real marketing and storytelling experience—experimenting with tools they don’t fully understand and steering brands with prompts instead of strategy. AI alone isn’t the answer. The advantage appears only when AI is paired with human experience, judgment, and intent. I’ve seen this before. Earlier in my career, a major shift promised efficiency and scale. It delivered—but only for leaders who understood where to apply the technology and where human judgment still mattered. Those who chased tools blindly lost ground. Those who redesigned the system won. Watching companies adopt AI today feels like history repeating itself. Before letting AI speak for your company, leaders should pause and ask the questions that protect brand, credibility, and long-term trust: 1. Strategy & Purpose Are we solving real business problems—or chasing a shiny object? 2. Governance & Accountability Who owns the results when AI gets it wrong? 3. Workflow Design Are we augmenting skilled people—or trying to replace them? 4. Quality Control How do we prevent errors, hallucinations, and cleanup costs? 5. Brand Voice & Messaging Can automation truly represent who we are? 6. Training & Skills Are our teams equipped—or are we guessing? 7. Cost vs. ROI Do we understand the true cost of AI, including rework and risk? 8. Risk & Reputation How do we prevent copyright, compliance, or reputational fallout? 9. Innovation vs. Automation Are we building something distinct—or just producing more noise? 10. Leadership & Vision Are we steering the technology—or letting it steer us? Final Thoughts AI has incredible potential to accelerate growth and innovation— but only when it’s applied with intention. Without direction, AI doesn’t serve. It leads. That’s why so much AI-generated content now sounds the same. Tools don’t create voice. They don’t create positioning. And they don’t create trust. You don’t hire a ghostwriter because you don’t know how to use AI. You hire one because AI can’t sound like you. Voice comes from seasoned creative direction—knowing what to say, what not to say, and how a narrative compounds over time. Executive storytelling is a discipline. Positioning, tone, and narrative consistency matter most at the CEO and founder level. The companies winning today aren’t replacing humans with machines. They’re combining AI’s speed and scale with human judgment and creativity. At WordPeople, that difference is the Frager Factor: seasoned creative direction, premium ghostwriting, and brand control at scale—so AI amplifies your voice instead of flattening it. If this question is already on your mind, we’re probably thinking about the same problem.

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Interesting insights about AI (you never learn enough) by Blair Garrou of Mercury Fund at the Plug and Play Tech Center Fall Expo 2025 here in Sugarland Texas Key Insights: 1) B2B over a 10 year span was more favorable towards middle market and SMBs. AI However, is now all in on enterprise 2) Revolutionizing/Modernizing older industries is where AI will be seamless (in construction, certain types of engineering and older processes in energy) 3) It's better to invest in AI that equips workers with another skillset than ones that result in layoffs #startups #venturecapital #ai #emergingtech

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Agency M&A is on fire. 🔥 At Merge, we’re seeing more activity than ever, especially for agencies valued under $20M. Buyers are coming from every direction: PE-backed platforms, strategic acquirers, and first-time entrepreneurial buyers. It’s simple economics: demand is outpacing supply. Here’s what’s happening in the market 👇 1️⃣ The sub-$20M sweet spot This is where the action is, and it’s all about the size of the buyer pool. At this level, agencies attract interest from every buyer type: strategic acquirers, PE groups, entrepreneurs, and even financial or silent investors. The moment you move above $20M, that pool narrows fast, leaving mostly private equity. Under $20M, the field is wide open, and that competition is driving pricing and velocity. 2️⃣ The rise of the entrepreneurial buyer A few years ago, agency M&A was dominated by PE firms and large strategics. Not anymore. Now everyone wants to be an entrepreneur, and agencies have become one of the most accessible, profitable entry points. Today’s market is full of independent entrepreneurs, many using SBA financing to buy their first agency. This new wave of buyers is keeping demand hot and competition fierce. 3️⃣ The AI effect (and reality check) Last year, everyone was nervous about AI. Now buyers are confident. AI is reshaping (not replacing) the landscape. Brands still need to drive growth, visibility, and revenue. The agencies leveraging AI intelligently, not fearing it, are the ones commanding premium multiples. 4️⃣ Story clarity wins every time If a buyer can instantly understand what you do and who you serve, you’re already ahead. The agencies getting the most attention have a crystal-clear story, whether that’s a defined vertical or a sharp capability focus. You might alienate some buyers, but for the right one, you’re a perfect fit. ❤️ 5️⃣ Down year? Still sellable. Revenue dips aren’t deal killers. Buyers care about normalized profitability and strategic fit. If you’ve right-sized your team and tightened margins, we can adjust the expense base in modeling, and buyers will still line up if the fundamentals are strong. What we’re seeing on multiples 💰 • Agencies under $2M in adjusted EBITDA: 3–6× • Agencies over $2M: 5–8× Where you fall within that range depends on what you do, how well you do it, and the risks buyers perceive about your agency. Typical structure: 💵 Majority cash at close 📈 Performance-based earnouts 🤝 Rollover equity when there’s a platform angle Bottom line: The agency M&A market is booming. Smart founders are taking advantage of it. The “wait and see” crowd is missing the moment. 💬 Send me a message to talk about what your agency is worth in today’s market!

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NOW LIVE: Episode 26 of Open Residency with Matt Gray 🎙️ Matt Gray has helped thousands of founders turn content into profitable audiences. In this episode we go deep on audience building, lead magnets, and the systems required to turn attention into revenue. Enjoy 🧠 Full episode with Matt Gray here: https://lnkd.in/g8SF-CkU 


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The future of local SEO is here, and it's exciting! For businesses in competitive markets, like Dallas law firms, it's time to think beyond Google Maps. Consider these strategies: → Use AI to interpret user intent and provide relevant content. → Build a comprehensive digital footprint across multiple platforms. → Engage with local communities through events and partnerships. These tactics can enhance your local presence and drive qualified leads. What strategies have worked for you? #LocalSEO #BusinessGrowth

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Cvent just acquired Goldcast for $300M. All cash deal that shows the massive bet on AI-led event marketing👇 For context: Cvent is a major B2B platform for events, meetings, and hospitality. B2B buying is seeing a change... It's now video-first and digital-led. And events are slowly turning into always-on content engines. So what's in it for Cvent? Simple: the best way to capture and grow their webinar arm. This is why the Goldcast deal comes in. An AI-first webinars and event platform that turns recordings into usable video content across marketing, sales, and social channels. This strategic acquisition is Cvent's clear bet on AI-led growth. > Cvent brings scale: ~30,000 customers and deep enterprise relationships. > Goldcast brings speed: AI that turns live events into clips, summaries & recaps. And the video/audio industry is moving in the same direction: - Hume AI raised $50M for developing AI podcasting tools - Riverside.fm is investing in AI for short form video + podcasting - Synthesia raised $200M to build AI-native video creation infrastructure Even Oscar Hamilton Podcasting (acquired via FE International) grew 45% before its acquisition. The data is clear. AI-powered podcasting, webinars, and video content are growing fast. Events are shifting from single experiences to reusable media assets that support websites, email, social, and sales without adding manual work or new tools. The future of events is still human connection delivered at AI scale. News source: Cvent Press Release

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Did he just say Hermès? In a story about Koenigsegg possibly weighing an IPO, one line that stood out was the suggestion that investors might view the company as something closer to a mix of a tech startup and Hermès. Hermès is not just a luxury brand. It represents scarcity, pricing power, and a level of exclusivity that often supports a very different valuation than a traditional manufacturer receives. That framing suggests Koenigsegg wants investors thinking about the company through that lens rather than the one normally applied to automakers. The way a company is framed can shape how investors categorize it, which public companies they compare it to, and how they think about value.

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“Hey DC — I’m raising a pre-seed at a $50M cap. Interested???” I ought to ignore the cold outreach like everyone else, but I can't help myself from replying, “Not at a $50M valuation!” “But we did a discounted cash flow analysis and calculated the valuation at $50,874,392.66.” DCF is the perfect answer to the question: tell me you know nothing about startups without telling me how you’re going to fail. But how should this founder determine the valuation of his startup? There’s a lot of methods to value startups. DCF. Berkus Method. Discount off next round. Cost to duplicate. Scorecard. Comparable transactions. Blah blah blah. None of them work. Valuation is not a calculation. It’s a negotiation. The only method that works is what I'll call the Palter Valuation Process. It's a process rather than a formula, with the following simple steps: 1. Determine your stage. Honestly. Based on customer traction rather than wishful thinking. Is this raise a friends & family & network (no traction yet), pre-seed (initial sales), seed ($100K+ ARR), or Series A ($4M+ ARR)? 2. Find typical valuations for your stage, sector, and geography. Look at both the median and ranges. Use the incredibly helpful data from Carta (thank you Peter Walker and Carta) plus whatever you can find from Pitchbook, Crunchbase, investment banks, and VCs that follow your sector. 3. Adjust within the ranges based on your traction and risk factors. 4. Check with a few trusted advisors who invest regularly at your stage to see if they think your proposed valuation will be attractive to investors in their network. 5. Begin pitching to potential lead investors. Negotiate the valuation and other investment terms. 6. See if the valuation attracts follow-on investors to fill the round. If not, renegotiate with the lead investor and other investors to set the final valuation. Keep in mind that valuation is just one piece the investment puzzle. Liquidation preference frequently determines how much (if anything) founders and employees get in an exit and is arguably more important than valuation. Investment vehicle (preferred shares, common shares, SAFE, convertible note) make a big difference to investors and will affect the valuation we find attractive. Full details on the Palter Valuation Process in the following article: http://bit.ly/3UAIwMw

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