M&A Master Class: Chris Petrovic Teaches Acquiring Great Gaming Companies

welcome welcome welcome everybody to the deconstructor of fun podcast I'm your host Mish katkov and we have an honored guest Mr Chris Petrovic Chief business officer and board member at fun plus talking about merges and Acquisitions not talking about giving a master class about merges and acquisition Chris welcome to the podcast welcome back to the podcast thank you thank you I'm honored to be here all right um Let me give an proper ENT of you cuz I know you're uh you're a modest person a humble person you live in the uh in the uh the mountains of Switzerland so so you don't want to talk too much about yourself can I introduce you please please all right so uh Chris petrovich you before joining fun plus as Chief business officer and a board member uh you were a senior vice president and head of corporate strategy m& and business development at Zinga and this was the time when Frank shibo and the crew took over and Zinga went from about what like a little bit under $2 to I

think $10 ending up with an acquisition of take two and I think you had uh not I think objectively you had a big role to play in this transformation with an acquisition of gram games small giant Peak games and roic so quite the ride several big deals we're going to talk about those uh a little bit later on uh before Zinga you were a senior vice president head of corporate strategy and development at Kabam uh working with with my adopted Uncle Eric cres angry Uncle everybody's angry Uncle that's right uh before before Kabam you worked at GameStop as a vice president and general manager of digital adventures and uh I mean you have a story career you're a mentor advisor board member of such many companies but one stands out because I'm a little bit of an older gentleman over here uh you're a VP of digital at Playboy so we can talk about that during this podcast like the full podcast or just move on to talk about

m&a but I think we're gon I think most of the audience is is mostly interested in m&a absolutely agreed agreed right uh all right and um and Bob uh so your um your colleague Bob uh was here in in Helsinki last night because we're recording after the Pocket game Connect he told a little bit of a rumor so he said that when you're walking when you're walking the mountains of of you you like hiking so when you're hiking the uh the mountains of Switzerland uh you listen to to something and and I thought that when you're walking posting those nice pictures and you're walking them I thought that you must be listening to country music that's the only thing that you would be listening right no actually no if what he says is true then then you will be flattered to hear that I I do my catch-ups on the weekend of the deconstructor fun podcasts yeah this is this is this is funny and the the funny part is too is I I I end up rage texting Crest while I'm listening it and I'm always on the verge of throwing my my phone off the mountain for some of the commentary that I hear here so so so we're ruining those

beautiful hikes around the the Swiss Alps by makes me go faster got it by this nonsense podcast I mean not not twig is maybe nonsense but this one is pure gold so without further further Ado uh let's start talking about merges and acquisition and I think the most basic first question is like why do companies engage in mergers and acquisition especially since we know that the number of of deals that are successful over time is uh between 10 to 30% so very high risk um Endeavor so so Chris why do why do companies do this or especially gaming companies yeah it's a great question I think if you look at the history of our industry um not just in Mobile but but beyond um you know the history of of our industry is built on the foundation of bringing in uh you know new and new blood and and Innovative uh businesses through m&a um and I think that's a theme that that permeates not only in

our industry but in other I would call Creative Endeavors or R&D uh heavy industry so you know use as a proxy the entertainment industry um a lot of investment a lot of mergers and Acquisitions of Studios of of you know developers Etc same thing in the in the medical mettech field like a lot of R&D based uh Acquisitions and a lot of similar deal structures so I think whenever you're dealing with R&D intensive environments um where there's just a natural towards smaller more Nimble companies that are creating Innovative products and services and and and able to do so in a way that larger companies can't um it's attracted to larger companies and then on the flip side the smaller companies get the perceived benefit of the 1 plus one equals 3 calculus that you hear about which is being able to benefit from the scale The Experience uh whatever other the financial might of of the acquire that can help you accelerate your vision even more so that's in theory what drives a lot of the m&a logic in our industry and in others so so there's the

theory and and U actually it was we had an event yesterday um uh a happy hour event and there were of course a lot of Founders asking like how do I get acquired like I would know uh so so uh so correct me if I correct well you went through a process so I think it's valid to people ask you yeah well okay yeah maybe but U but correct me if I'm wrong I if I if I did the uh the right um right answer to them so I said there's five reasons why why a company would acquire another in gaming uh the the first one would be that you're buying Revenue so you have a nice Topline Revenue you're putting into this other company and if the bigger company has a good profit margin then maybe those two together uh you know can look even as a as a as a much stronger uh entity even if the other one has scaling maybe not so profitably or even unprofitably the other part the the second reason would have been profit so you're buying a company that is just very profitable and you might be the one whose profit margins are not that high

and together it kind of uh looks very nice or you're just buying a cash cow uh like Peak games and um the third one would be an audience so you're buying a specific audience it might be uh an affiliate audience that fits really well with your core games and you maybe you're using already uh or running a lot of ads in their game so let's say you have a puzzle game company and they have a word game and you're seeing a lot of affinity of the audience so you're making an audience Buy uh the fourth one was acquiring expertise so let's say you're a casino company and you want to go into a casual gaming company then you're into casual games and you're acquiring uh a developer that has an proven expertise in a specific genre and then the last one is you're placing an early bet so it's a startup it's it's something that they have a cool Tech they have an interesting team something uh something small but but that those were basically the five reasons and of course they're not mutually

um um distinctive I mean they're distinctive they're not mutually uh they're not mutually exclusive of each other exclusive exactly I was saying inclusive mutually exclusive uh but there's only there's kind of like one thing that is that is driving it so as a as a Sensei of merges and Acquisitions what do you think about my answer no I think that was a great answer I think that covers most uh potential scenarios individually um for why somebody would uh transact um I think just taking a step up from that I think you you have to acknowledge then and understand that any one or more all of those things could come into the could come into the consideration when when an acquirer is is looking to deploy capital in that way um and I think that's where it has to start and for us uh you know when I was part of the fortunately part of the the team at Zinga um you know we started with a high level strategy uh that really didn't get down into that level of detail um but ultimately that strategy drove which of those boxes were checked um and and as as you all may

remember from the Zinga times you know Frank laid out a really clear strategy about the importance of forever franchises right and and that was the North Star for the business both uh in terms of resuscitating the organic growth through the existing products and also by finding additional growth through m&a and that's why we focused on companies that created either games that were already forever franchises by zinga's definition or were clearly on their way to becoming forever franchises based on the metrics that we were seeing and and you know comping those metrics against our Treasure Trove of data that we had from over 10 years of operating games ourselves so uh whether those those were category adjacencies whether those were capabilities whether it was Talent um whether it was Financial uh ACC creativeness you know those things came second um and and had varying levels of importance but but the the main box to check was the overarching Str strategic you know fit um of the target to what Zinga was was pursuing on

its own and so that's where the 1 plus one equals 3 calculus always comes in that I talk about um you know in this forum and also talk about with potential targets is that it has to be that in order for it to to to make sense for both sides you want to create long-term sustaining value um for your your employees your new employees for existing employees for shareholders and most importantly for players and that's the other kind of driving force that's more philosophical But ultimately is the overarching theme that should permeate um all conversations because if you're not talking about those things and you're not true to your corporate strategy and you're just doing for example Financial engineering is the is the North Star then that increases the likelihood that it's destined to fail because you're not starting from in my opinion the right the right starting point um for creating that long-term sustaining lasting value creation for all the all the constituents involved that's a that's a really great great point when you you know when you talk

about the forever franchisees because it's something that is easily communicated outside the company but it's also easily communicated inside the company and you said that there were clear kpis that were set that would define what is a forever franchise and it probably is is a is a really good thing for a corporate development an m&a team because they are literally executing against the only strategy that the company has and not kind of boiling the ocean and trying to find something and then bringing back like does this make sense does this you couldn't be more correct I think for us it it created discipline and rigor around the kinds of opportunities that we filtered through the team meaning the the Corp Dev team before it even got to uh the the this committee the you know the decision-making committee which was just you know a couple other people in addition to my team so that discipline and rigor and focus was uh what allowed us to move quickly to be decisive because if it checked those that that main box and if the the the poti potential new addition to to the team or

to the organization felt the same way about the opportunity those conversations could move very quickly uh I I can't tell you that you know when I first joined Zinga I along with my team did the exercise of postmortem all the prior Acquisitions that the company had did and it wasn't wasn't great it wasn't a great outcome it was that 10 20% uh you know uh uh value or or sorry 10 10 to 20% of the Acquisitions drove the majority of the value and in fact the company had not recouped the money that had spent historically in m&a between the time that it went public and the time that I got there so it still had not realized that value um and you know I spent a lot of time uh when I first joined the company going around apologizing for the you know the behaviors of the you know the past um you know uh Corp Dev uh regimes um and really had to build up that that trust and credibility and reputation and being honest being forthright being transparent about our strategy and our view and our desires uh went a long way um I think the other thing that just to

share a quick anecdote when you talked about where we started as a team and where we ended up you know one of the most memorable discussions or interviews that I had um with Frank when I was considering joining Zinga um he told me this made this quote that I'll never ever forget which he said look Chris you should join here if if nothing else we can't fall off the floor and and like that stuck with me because at the time as your point like the stock was at such a low Point um that there was no to go but up if we just halfway we're halfway decent at execution and thankfully Frank and the rest of the team um that joined after I did um for you know uh from his his prior employer um we were all very clear we were all on the same page it was it was really really well understood um and we were able to execute and so that was a really interesting ride one that I think is worthy of business school case studies to be honest because for all of the great work that my team uh did on on the m&a side to bring value there's also a lot of great work that

was done in other parts of the company that really really may not have been as front and center publicly but deserves equal if not more credit yeah 100% I was there kind of before that and and during my two and some years at Zinga I had I think three different CEOs and um eight different managers and three different division heads so it was a a lot of changes were happening at a very fast pace seems like I foll in a lot of your footsteps when it comes to places work true that's true that's true maybe you'll be podcasting one day you never know never know so uh uh yeah it was there was a lot of things and this is like really important notion is that the company had a very strong North Star that was Foundation of all the strategy which is the forever franchises and that seed throughout the organization no matter what the uh what the faction or the division or the the line line of work whether it's probably HR whether it's legal whether it's the corporate development everybody was was really gunning for this one thing and

and it kind of speaks volumes of of Frank's leadership in the way that he's able to set that one North Star and not deviate to all the possibilities and opportunities that are spawning left and right and that kind of leads to my question of of lots of Founders lots of Founders are listening to this and trying to collect nuggets like Chris just tell us how do we sell our company and and so so in this case would you sort of recommend them to follow the news and kind of understand the strategies of acquirers so that they can position themselves against those strategies yeah that's a great question I think I'll refer back to a really old adage which you know could sound corny but it it does hold true and they say that great companies are bought not sold um and and really what that means is that um you should try whenever possible um obviously subject to the specific circumstances of your company but that adage refers to the fact fact that you shouldn't be running a business with um

you know being top of mind about how do I exit and how do I sell th those kinds of opportunities and avenues become byproducts of great execution great vision great team and in our case great products and services um having said that I know that's that's you know refers to kind of a perfect world where everybody is firing on all cylinders that there's unlimited you know access to Capital that you know there aren't existential issues in our industry so understand understand that there are situations where companies feel like they need to sell um it doesn't take away from the fact that there continues to need to be a focus on execution and running the business and and I advocate quite heavily to anybody that ask that question um to bring in trusted advisers around you whether it's board members investors or or you know strategic advisors like investment banks that specialize in helping companies do the things that they need to do in order to get them ready for a process um because again the more you as a Founder in

michig I know you you probably experienced this you know the more time you spend in the in the weeds of dealing with the back and forth of a potential choir the less time you spend by definition uh managing your people running the business being responsive to your customers and so bringing in advisors in exchange for the you know the the the small fee relatively speaking that they get at the end of a successful process is well worth the investment because it allows them to be the buffer it allows them to be the liaison it allows them to give you the blueprint on best practices about how to get a data room ready what information to provide what not to provide what to put in your presentation and they also provide those resources as well um and so ultimately the decision for when a company needs to be sold is is a related question that we we need to talk about because that gets to this master class uh topic that that we're here for and again another corny analogy but I I I like to use the the alphabet as kind of a frame of reference for folks that want nuggets so um the ABCs we'll start with

the ABCs so for me um uh alignment through bilateral consensus ABC alignment through bilateral consensus so what do I mean by that I mean that it is absolutely essential for there to be alignment on a bilateral basis now that can be across many Vector so let's start within a company there needs to be complete alignment about the go to market strategy for a company as between Founders uh and also as between investors shareholders if there are any and you need to have all the cards on the table you need to have all the discussions you need to talk about all the uncomfortable topics that may come up so that there is not a a you reduce the likelihood of confusion and and and disalignment in the future as the process moves on and also there needs to be bilateral consensus as between the seller and the buyer which is super important I think you know as I alluded to earlier in my in my comments you know

during my time at Zinga we were extremely transparent with the founders and it wasn't only myself and my team that they heard from they heard from Frank they heard from the rest of the SE suite and Senior leadership and they were very uh consistent we were all very consistent separately in our messaging about why we were engaging what our intentions were what our goals are what what success looked like so that they could understand our desire and our vision and our strategy and we also asked them the same question which is what you know what do you want what does great look like for you from an outcome perspective are you committed to being with this business for a long period of time um you know what are your goals how can we help you know all of those things that you want to ask when you're in that dating phase right so that you get to know the other party as as much as possible so alignment through bilateral consensus super super important that's uh those are really great points I'm going to jump into the uh before the Str before alignment through bilateral consensus you were talking about uh the the role of advisers which are incredibly important

so advisers or Bankers uh as we usually call them now this is not a paid ad for Aram but I think you work that those are at least one of the uh one of the advisor I think you worked with them for on all four types of deals so can you talk a little bit about how it is working with um AR is a bank right they they they bank is an investment Investment Bank and advisory firm um that represents companies on both the buy and the sell side I was fortunate enough to work with Aon and his team on many of our transactions not all of them um at Zinga but on many of the transactions where they were the the representative for the sellers got it and and so that helps significantly the acquirer because usually the seller is much smaller and if you're an acquirer and then the seller has a very professional advisor then that makes the process much uh much smoother and at the same time takes away all the headache because the seller needs to focus on as you said like if you're a small giant if you're Peak if you're GR if you're roic you're focusing on shipping games you're

focusing on maximizing profit you're focusing on maximizing Revenue you're talking probably to several uh companies at the same time and that's where a company like a comes to play yes and AR is one of many that I've had the pleasure of working with and we can feel free to list others over the course of this podcast if we' like but yeah I mean that is the role that they played and that is the the important role that a firm in that position plays which is being that buffer that liaison that that um that conveyor of information back and forth and again to your point you know you as the buyer may think that you're the only you know the only date on the dance floor but in fact you know Banks also get their you know or earn their keep by virtue of making you available to other potential suitors as well so if you imagine you know multiply the the inflow of requests from one company times three or five or 10 and that becomes a lot yeah um especially when you're talking about dealing with smaller organizations that have 50 or less people right and most most often it's much less than 50 um and those

people you know need to focus on running the business obviously they're going to get pulled in at the appropriate time to do things like unlock access to data unlock access to financials set a data room but again a lot of that heavy lifting and grunt work um and collaboration is managed by and is participated in by these Investment Bank advisors um because that's that's how they earn their keep is is you know getting you ready uh presenting you to a bunch of suitors and then being that buffer um so that they can control the narrative the messaging and the flow of information and ndas and you know data rooms you know there's a lot of a lot of logistics that go along with this process that are super important but also very timec consuming yes very timec consuming uh so what are some key challenges that you've encoun encountered in the m&a transactions and and most importantly how did you overcome them from the buyer side yeah I think uh I think some of the key challenges um early on are getting that consensus that I talked about and it's not so much from our side but obviously

you know the the the seller needing to get consensus and uh you know from its constituents and that is you know shareholders employees Executives investors Etc and the more of them that there are the more that you have to get consensus for and and in some cases many of those folks wanted to speak directly to us as well which is fine um but that ends up that ends up making the process a little bit longer but it's obviously you know the cost of doing business um I think the other challenges are um the Readiness of uh companies especially early stage companies to engage in a process I've I've come across many companies that did not start from the beginning of professionalizing their back office right and I think that's a really important point to make to entrepreneurs and startups is that you know you can't run a business with you know Google Sheets and you know and and and kind of more analog stuff that you need to you know be very diligent about how you store contracts about how you know how you store your data about

how you keep your financials and there are tools out there that are not expensive or difficult to learn it's just a matter of you know startups that are moving fast that are Nimble that are just kind of at break neck speed making product they sometimes you know neglect the the plumbing so to speak right the the inner workings of the company and it manifests itself quite a bit when you get into a data room uh situation with potential seller and you're getting stuff that is you know kind of garbage in garbage out right if they're not very sophisticated in the way that they keep their books and Records it shows quite clearly and that actually ends up being a consideration as part of your diligence process when when you look at that and you say wow the company is this unprepared and disorganized uh and maybe disorganized is better than unprepared because maybe they have not been preparing for very long to to engage in a process but you know disorganized not professionalized you know not buttoned up in terms of their back office that lead gives you pause at least to think about what does that mean in terms of how they're going to run the business especially with with being part of my organization where

there's a a higher threshold of of competence that's required um either because we're larger or because we're public or whatever the case may be so those were the big um issues um that I've encountered and and one that I speak to Founders about all the time about the importance of professionalizing your back office from day one yeah really great points and that's that's I mean the professionalism is uh is easy to execute to be honest as you said multiple different tools it just needs somebody to be in control with the admin so to all the founders that are listening uh if if you're back office and by back office like where do you keep your contracts who's your accountant all these law exactly all these things all the documents have them clearly in one place just be professional about it because when the opportunity comes that will take so much time and you need people to resign different types of papers and uh can't say that I've been there but I've heard about these things that that uh that Prof professionalism pays dividends over long term ter and then the first part that you said consensus I actually

wrote about this some time ago I I I talked about as an exit strategy meaning that you are aligned in what is the exit strategy and the exit strategy changes at different points as the market changes as uh as the funding changes as as everything changes but this is something that you can uh quarterly or by yearly go with with the board and this allows you to say no to multiple different um engagements because over the time m&a teams engage with you they just want to have a chat and then you know exactly like what are you chatting about and you can be clear because you have a strategy and this is the strategy at this moment so you're not going to waste time and especially go deeper with uh with you know maybe more junior m&a team members and and start dating them without without proper you know proper uh exit strategy let's put it this way so so I absolutely agree on those those two things really really great points and Founders should should keep that in mind um one of the things like when I was reading about like why m&a deals fail across the board uh it's been mainly due to the post merger post

merger integration and cultural fit between the two companies now when looking at your Acquisitions um you acquired three Turkish companies and one Finnish companies and when you think about the Californian company when you talk about cultures like I couldn't find more distinctive cultures than Turks and fins so can you can you please talk about like how did you assess the cultural fit because it's clear that the culture fit is there since the companies have been so successful post acquisition yeah it's a great question let me let me get back to some first principles and then I'll talk specifically about those examples I I again I I will say to anybody that is willing to listen uh on this topic that I believe that um within the m&a process that the easier part of the process is the deal itself the more difficult part of the process is the implementation of the integration framework uh and the administration of that going forward and that is where the majority of those deals fail when we

talk about you know um 80% of value being driven by 20% of of Acquisitions you know it should be 100% of value being driven by 100% of the Acquisitions I if you're doing it right or even 150% value if they're outperforming and the reason is that integration is something that often gets overlooked and ignored as an important piece in fact when I came to Zinga um I was somewhat surprised to realize that there was not an actual I was not inheriting any kind of an integration work or process that had been put in place um by by prior groups and prior regimes and so I fortunately came came to the table with one that I had built up over my my career previously to Zinga um and and I also had the good fortune and and you know Frank and the rest of the senior leadership that came from EA are also you know will also tell you that they learned a lot from the dos and don'ts of of m&a uh from their time at EA and so they came to the table as we came together as a group with their own views about what they had learned uh and their own observations about what could have

gone better and fortunately for us a lot of that uh uh you know kind of coalesced around the topic of the importance of integration um and for me integration is not a you know a kind of single monolith that gets applied the same way every time uh integration depends on the the the specifics of each deal and more specifically than that um if you take the kinds of deals that I did at Zinga that are that are pretty normal um in our industry there are two types one is where you uh just buy something outright um for you know for consideration upfront either cash or Equity or some mix and it's basically an asset purchase right where you buy a studio you buy a company and then you put that in as you know as a as an entity within your organization that has been fully compensated um o over you know on day one for the value of that the second is obviously um more performance-based which we call earn outs right and earn outs come with them and we'll get into this in more detail hopefully but earn

outs come with it a lot more um detail some guard rails around uh the performance of that acquired business over over a fixed period of time and the associated rules um for that performance now um you know for earn outs integration is much different than when you're acquiring an asset and and we experience both uh and we fortunately were able to do both really well the reason why earnout uh integration is different is because it it by definition requires a lighter touch uh and the reason why it requires a lighter touch is because you have contracted with the seller on terms that basically say you the seller will get an additional payout over the course of a period fixed period of time if you hit benchmarks a b and c right and the reason why earn outs come to come to bear in the first place which which I forgot to mention is you know in many cases when you're talking about a company that is on a growth trajectory um you know they they have a certain perceived value of themselves right which they have a right to and some of

that perceived value comes in the form of their belief in the likelihood of future success right as a as a buyer I only can ascribe value by definition to what I see in the market that's generating data uh because as we know you know um you know current uh you know current success does not necessarily translate into future success so if I want to buy your company michiga you say wow you know we made $100 million this year on this one game and we have two in the pipeline and we're going double the revenue for each of those two games successively on top of the first one because we learned here and now we're going to apply these learnings and it'll be a home run plus two so that's what you should pay us and I would say in return respectfully Mishka um I'm willing to pay you for what is currently in the market today but I'm also willing to compensate you through an earnout of what you believe you're going to achieve over the course of that period of time that these next games come out and so for us it was actually a great starting point because as you know when you engage in the these kinds of processes the seller provides their projections

and the buyer looks at those projections and the way that you that you create your you know um uh uh connect that Delta inv valuation is that you say great if you believe your projections I will pay you based on you hitting those projections because if you hit them you'll be happy if if you and if you hit them I'll be happy because I know that it's going to create X additional value for for for my company and so the the the challenge with earn outs is that it creates guard rails by which you need to manage that business between the time that you get bought and the time that your earnout period is over uh and the last thing that you want to do is be in a position where you feel that the acquirer is impacting your ability to deliver and execute against that earnout strategy or just the you know how you believe is the best way to run your business so by definition um you as the buyer want to be as hands off as possible and we we we took that approach for us at Zinga for earnout based deals

it was do less to do more that was the Mantra and the way we approached it was that we provided each acquisition with the menu of services that Zinga could provide and we did it for free by the way I know some other companies do like inad departmental reimbursements and things like that we offered it all for free no strings attached and we said here are all the things that you could benefit from if you would like uh we started with a very small requirement because Zinga as you guys may remember was a public company uh independent on its own and there's certain reporting requirements that you need from a financial and audience perspective we required those two things to be man you know mandatory delivered to us so that we can roll those up but beyond that everything else that we had in those menu of options and services were opt in and that's the key part is that we gave Graham we gave small giant we gave Peak we gave rolic the same list the same menu and said here's what we can offer you pick some none or all of them it's it's it's up to you and we wanted to

make it their choice and during the course of us getting to know each other we would constantly show the value of how these Services manifested themselves in other parts of the business as a way to say in case you were wondering you know our data science team was able to accomplish XYZ our Central product management team was able to accomplish ABC our accounting Finance HR legal was able to do XYZ and it provided a benefit and a value to Zinga and if you want to Avail yourself of the same thing you know let us know and we're happy to help so the first thing obviously a lot of these companies do is they raise their hand and they say I want to take I want to offload all of my back office stuff because I wanted to focus on making product I don't want to hire legal I don't want to hire HR I don't want to hire tax Financial Accounting I want you guys to do that great uh and then at some point as you know each company that making new product or running live live product runs to do an issue and we were always there to uh answer any questions that they had and if the questions got ser serious enough we would offer up resources to go in and help triage the

situation provide learnings do a postmortem and then and then leave so the reason why I bring this up is because we have too many examples in our industry and others where you know where acquired entities are asked to be absorbed into the Borg uh in a way that is uh counter to their culture counter to their own brand identity counter to the way that they've built their business and not actually additive to the 1+ 1 equals 3 uh calculus so um integration is very important that requires fine tooth comb uh uh execution on a deal by deal basis based on the circumstances of each uh of each deal and what has been agreed to between the parties that's really interesting I've never actually heard about uh this type of a thinking where you have two different types of post merger acquisition processes and really based on the deal structure and I assume that with an asset purchase you just basically absorb the asset and it functions just like all the other assets inside the uh inside the corporation yeah so great example going back to Peak

you know we acquired two two parts of peak we acquired Peak two parts should one was the board and card Studio that became Zinga turkey and that was an asset purchase from Peak to us um because they had deemed that that studio was no longer strategic to what they were doing and for us we wanted to be a leader in the board in card game business based on Words With Friends and Zinga poker and we wanted to double down on these Evergreen products again based on a corporate strategy uh we loved the team we we loved where they were based we love the products that they made and we love their potential to be able to create new products and they were an asset purchase they got rebranded to Zinga turkey the GM of the Turkish Studio became the head of that studio he became part of our inner inner um kind of communications and phone calls and it was all Zinga email addresses and and you know all the access through the you know through the internet and all those kinds of things was availed to them early whereas when we acquired Peak the second half of peak the main part of the business they stayed and independent they still are under the peak brand they opt in or out to whatever they want from

the Zinga uh uh you know menu and that's treated even though by the way that was not an earnout based deal but still they they were they earned their way to independence by virtue of how how big they had gotten in the scale that they had achieved and so we treated that also quite lightly because they they demonstrated that they were able to generate success without us and we didn't want to actually hinder that in any way we only wanted to be able to provide incremental value where they saw fit that that's really cool um I mean I mean yeah like like going through all the Acquisitions like that that was the type of a thing that we're always talking about even on the podcast how they stayed autonomous and how Zinga is doing it right and some other companies were doing it wrong according to Crest but um but uh talking about like going back to the original question like how do you assess the cultural fit between the companies yeah I think the cultural fit is something that you spend a lot of time on the front end uh and I alluded to it earlier about we spent top to top time between the founders RC RC Suite um very early once we got the internal consensus that this was an

asset that was of strategic interest to us and and good fit on paper then the next important part and the most important part was making sure that the people um that we were going to be partnering with were like-minded uh that they believed what we were saying and that we could also tell them that we were going to um deliver on what we said and so spending a lot of interpersonal time and I was fortunate enough in that most all of these deals um I think up to when we were closing Peak were're done postco so we were able to more freely travel spend time we were in Istanbul we were in London when Graham moved to London we were in Helsinki with small giant quite a little bit and we actually also would fly them out so they could see the broader organization um and again not to the detriment of running the business we're very selective about how many people we sent when we sent them if it was around a conference when they were already traveling so be it but we were very Nimble and agile and getting on planes um to to go spend time up front because again the dating analogy you know works here you got to put in the work on the front end in order to feel like it's a great match

because this is meant to be a long-term relationship that hopefully will generate value over time and you want both parties to be happy so that they're invested engaged and retained um and so really it's just asking all the questions providing all the information just like you would on a date so that you make sure you know that person or that entity as much as you can um going into the process as opposed to just thinking that it it's all just on paper and and and the interpersonal stuff doesn't matter because I contend that that matters much more it it matters a lot like of course human connection when you're making a deal in any deal matters a lot and the second part that matters a lot is the reputation of the of the acquire like we had the situation where where Peak was contesting for roio and of course that's a public company acquiring other public company so everything was public and there was a lot of negative consent in in the media and and inside the company of not wanting to be acquired by Peak because of their two other Acquisitions in the country that that didn't go as planned

you mean plka I think you mean sorry sorry sorry plka what did I say Peak Peak Peak on the brain yeah yeah no peak yeah I have Peak on my brain all the time no no sorry I was talking about plka yeah so plti is our acquisition attempt of roio and and they had acquired previously uh reworks and and uh seriously seriously lug yeah and buffalo Studios and yeah but there's a long history there of but but specifically the two Studios that were in Finland and due to that they had a little bit of a negative consent because they closed one of them and the other one is kind of a not not in in such a growth mode that it was before the acquisition so so the reputation of the company as well as the uh you know how nice the uh the people in the m&a team matters a lot and that leads to my question of like what is a work week of an m&a team like like when when I don't think you have typical because you have to travel so much yeah but what do you guys do what do we do yeah so we we spend a lot of time in the data um you know we were fortunate enough at Zinga and everywhere that I've been one of the

the base requirements is to make sure that we have uh solid data flow of information of of what's coming from industry that is everything from um how games are performing which ones are moving up the charts um you know looking at the the top download list top grossing lists you know globally across platform Etc um uh also just playing a lot of games um you know you know I I gave each of my team members at Zinga a $100 stien per month to be able to spend an ingame currency across any games that they wanted so that they didn't feel constrained by that output of cash um so that they could actually get into the games and understand what the monetization looks like what the community feels like what the game play looks like um and and provide their own feedback you know that was one of the things that always was uh top of um the list of things that needed to be brought to the table whenever we were doing these consensus-based discussions about whether to pursue a Target was that that there need to be multiple people in the room that played the game that could give a consumer perspective as well as a

product you know feedback perspective to the team obviously we didn't expect Frank to play every game although surprisingly he played more than you would think um but we had you know myself Bernard Scott Scotty kinberg um the rest of my team there was a whole bunch of people that were you know Avid game players and and came to the table with a lot of opinions so that's super important um and and uh you know and I think also just Fielding gosh the number of I think on an annual basis the number of uh companies that were part of our database was probably 3 to 500 a year um which was either us outreaching uh getting Outreach from these companies or their advisers or just meeting them in the course of travel um and we added every one of those to our database uh and track them accordingly so that we can make sure that as team members interacted with these companies that we had a record of who spoke to whom and when and about what and obviously if we added or subtracted team members over time that they could also look at that and get up to speed you know because to me the worst thing that can happen is is when

you have a company speaking to each other through multiple channels but they never make the connection that they were prior conversations it just makes it look quite unprofessional so we prided ourselves on having good tracking systems make sure that we we we did that as uh as much as possible and then just a lot of analysis a lot of Market data analysis a lot of company analysis when we got their information and a lot of a lot of decks man a lot of a lot of PowerPoints that we put together um for internal consumption um board decks uh committee decks um all that kind of good stuff so it was uh you know quite labor intensive both from a travel perspective as well from a you know interpersonal perspective but also from a from a data and work product perspective and we were only at my largest the team was uh four people like that was that including myself so it was quite a small team how did you end up making so many deals in Turkey like was it just like the appetite grew as as you came to Istanbul and or like was it same invest yeah I don't think we had turkey uh specifically on our radar until we

started seeing the data from from various game companies and there was a couple things that happened at around the same time you know when I joined uh Zinga I had the Good Fortune of having a long-standing previous relationship with sadar the founder and CEO of Peak from before my time at Zinga so we were always keeping in touch I was always keeping tabs about how his company was doing and it was obviously quite known um that they were one of the few companies that made the successful pivot from web gaming to to Mobile gaming and and then how they were able to build two amazing franchises with a hundred or less people was quite inspiring and so that was known um so through that kind of known filter then you start you know peeling the onion back and looking at that market and seeing other signals of success coming from that market and Graham was one of those games if you may remember the first incarnation of Graham was actually making kind of the switcher puzzle games right like the 2047 like the more kind of you know casual what we now maybe call hyper casual games or H you know casual puzzle games and they were all in Turkey um and we had said at the time that they were they started a

process with with arim uh during kind of version one of their company and we respectfully declined and said hey look we we we love you guys we like the direction that you're going but we want to see a little bit more uh of this manifest because at the time we talked to them they were transitioning from making these casual games in Turkey to moving to London moving from ad based to I based with their merge mechanic and so this was before they EX uted and thankfully we did not pursue it because I think we would not have gram would not have become what it did if we would have got intervened earlier on so better lucky than good sometimes in our decision- making but we told them we'd love to stay in touch we'd love to give you three to six months to get yourself settled on this new business model this new genre Focus getting settled in London making sure that we see how you interact with your team back in Turkey how that works and six months later we kept playing their games we couldn't stop talking about about uh you know about their merge game um we got really excited we met their lead designer who happened to be based in the Bay Area um

and then we really quickly because we had built that Rapport over the last six to nine months previously when we came back to them we were very clear about how we felt about their business about where we thought we could help about what we wanted to provide them in terms of a long-term opportunity so that was very very quick uh and then over time through through my relationship with sadar the broader zingo organization got to know him and the team quite well um through our travels there for for Graham and and elsewhere and otherwise when they came to the Bay Area and again there were some really um unique circumstances surrounding peak's business that I'll defer to sadar and his team to talk about uh because those are that's for them to discuss but um basically there were a set of circumstances that necessitated them to make a decision about um selling when they did um and fortunately for us because we had built up such a rapport in relationship sadar and team did not were not interested in engaging with anybody else besides us which actually was kind of a de facto exclusive

environment that was organic it wasn't something that we mandated in writing he basically just told whoever would listen on his side that yes we will sell but we will only engage with Zinga uh and if it works it works if it doesn't it doesn't and so we were a very lucky beneficiary of putting in that relationship work in the months and years preceding that deal that allowed us to consummate that relationship um you know quite quickly um and and in terms that both both parties we're more than happy with all right I wrote some some pieces for for those aspiring to be great m& team members one day maybe uh maybe Heading an m&a team so as a person you need to understand the market that means you know using your data AIS using whatever you can read and listen to Twig maybe sometimes to hear about how the market is going different opinions different views and that helps you with uh with the communication of of to to the the higher ups and setting up your strategy as well the second part is play a lot of games this is super important because

those allow you to have the the right type of conversations with the uh with the teams you're meeting they will respect you more because they are game makers and you are in the business side but if you come in and you you can speak the same language you've played all these games you progressed so far because your boss has been giving you 100 bucks every every month uh the the level of conversation is going to be totally different and they're going to like you and that leads to the the networking part so you have to network a lot and and network in a in a right way where you set up not a lot of like meetings where you meet a lot of people but when you when you understand who are the people you want to set up a great relationships with who are going to peel the onion for you as he said uh allow you to connect to others and uh somebody who doesn't maybe need your help right now and and and and so like you have a you might have a very sort of a mutually beneficial relationship and that that will lead to a lot of a great cooperation over time and possibly even a deal with that person has happened with with Peak and then the final part as as was with the uh for the founders is professionalism so um you know the

the companies you connect Will Will just like you connect with the with the companies and you think they're unprofessional when they don't have their back end together the companies will think exactly the same way about you as an aqu choire if a third person from your company sends a an email like hey we should meet up at this thing it's really cool we've been playing it's like I I just talked to two others like like what is going on over there like do you guys even have a conversation so so those are the kind of like the four four factors that I picked up yeah I I would say those are spoton and I also think we benefited a lot from actually um living up to our word when we did some of our early deals and and the founders of those deals like in Graham and small giant actually became advocates for us uh and and spoke uh from the perspective of Founders to the community I think they actually did some some interviews with uh with folks like games be and others where they actually talked about their experiences and they were not shy about holding back about places where they felt we can improve and we took that feedback and applied it in the future but I do think that when you have the advocacy of Founders who can say yes

you know everything that they told me they delivered and it's been true and there's been no tricks there's been no hidden agendas there's been no bait and switch um you know that goes a long way to fellow Founders hearing from them versus hearing from me right and obviously you know the proof has been in the pudding in terms of how these these you know games and these deals uh delivered um but ultimately you know for us the beneficiaries we were the beneficiaries of these Founders being advocates for us and it actually just organically increased inbound deal flow so we actually ended up having to travel less um in the first instance because we became known as a fast-moving honest organization um that that could make decisions quickly that paid fairly and that provided the latitude for Founders and Studios and companies to maintain their own culture their own identity but benefit from the the the perceived synergies that a larger company could provide yeah it's it's the same thing as with with almost with high ing strategies like when you hire a really good director somewhere that director

will bring in other people who he worked with or she worked with and who's known in that uh cluster of of uh whether it's the U the craft or whether it's the the location uh the same thing with these Acquisitions when you make a good acquisition might not be the biggest one but you're executing well against it the the people who joint your organization like it they talk positively about it and suddenly uh they will introduce others who they think are also great to you and and um and that kind of pays off so so do your do every acquisition properly yeah look I our deal with Ric was directly uh uh uh benefited by virtue of the positive experience that Graham and Peak had with us um and they asked a lot of questions outside of us they they did a lot of diligence they spoke to a lot of their colleagues in Turkey as they should um and I think it gave them a lot of comfort um in knowing that they were going to be going to a place that had their best interest that could provide them with growth opportunities and and be able to support

their vision and I think the you've seen a lot of that with Ric Ric has grown into one of the largest hyper casual Publishers they've made Acquisitions of Studios with with Zinga and take2 support which is was always part of the vision and plan um and so to be able to provide that as a platform for them to execute on their Vision uh you know was was just a another great uh outcome of just a diligent approach to to how this partnership uh would would work yeah 100% um before I jump in into the fan questions we have a few of those uh I wanted to like end this part of the uh of of the master class in in the most open-ended question which is like what are the trends you're seeing in the current m&a landscape in our industry and how do you think those Trends impact the deal strategies and the structures going forward yeah I think it's been interesting to see the way in which the m&a landscape has evolved especially post idfa you know I think think um you know there were uh there was a much larger uh a higher velocity of large

scale deals right that happened post idfa and maybe even bleeding into idfa with with take two and Zinga but um you know uh EA did a bunch of Acquisitions um on the mobile side um obviously you know Microsoft um with Activision that kicked off if I believe that that they started talking with each other well before idfa um you know King is always like one of the OG you know of crossplatform Acquisitions um that has withstood the test of time um and there was always this talk about consolidation at the top right and I think that the Microsoft and take two deals were the culmination of that and uh interestingly enough but maybe not surprisingly we haven't seen a lot of that kind of top down m&a where there's been consolidation at the top with large scale companies merging uh or or or you know merging into each other or becoming Partners um and that's obviously been because of the uncertainty in the mobile space because of valuations because of um you know access to Capital or lack thereof

because of the cost of capital there's just been a lot of factors that have impacted the velocity and the size of m&a deals I mean I think for any of us that get the reports that we get from investment Banks or from you know game invest you know you see the velocity and the dollar numbers are much lower than they used to be right you used to see like 20 deal3 billion doar and now it's like five deals aund million dollar or something like that you know and and you're just seeing it not happen as much because buyers are in capital preservation mode and sellers are not necessarily in a position of strength either from a valuation perspective or from a portfolio performance perspective to be able to to to command the highest outcome that they desire for themselves so I think we're at a little bit of a limbo stage right now uh until those kind of factors get closer to each other until the recession is fully at at our back um until the markets calm down a little bit cost of capital goes down valuations maybe go go up or normalize depending on who you ask uh what the right term is um and I think outside of

gaming you're going to see you know consumer internet IPOs uh e-commerce IPOs Etc um you know coming to Market here in the next couple months and I think that'll be a telling sign for the broader consumer tech industry about how the market views um views these sectors I think we all can agree because we're in the business and even though we may be inherently biased I think we firmly believe that the medium to long-term viability of gaming is there's no question about it it's always going to be the largest sector of entertainment Mobile gaming is always going to be the largest sector uh of gaming um and that there's still tremendous growth opportunities either in audience and geographies and platforms um that is still to come in front of us relative to other being in other entertainment categories I think is a lot harder of a cell these days than being in gaming so I think the m&a webs and flows with the macro um and I think we'll you know my My Hope and prediction is that starting in the first half of 24 that we'll see some return turn to normal see maybe what we'll see though is aqua hires maybe rollups um of a smaller scale so

people starting to get back into it starting to dip their toe in the water but doing it at a smaller from a smaller risk profile perspective and then once we have like complete um or near complete kind of stasis or security or stability in in our markets um pretty predictably then you'll see the big guys start coming in a little bit more because they'll they'll be bolstered by that predictability and stability um but in the meantime I I do think that we're going to see a lot smaller scale uh a lot more velocity on the smaller smaller end of the scale clear so less m&a smaller size uh reason being the capital preservation despite the fact that you could now get a lot of good deals compared to the crazy years of 20 2020 2021 you know early parts of 2022 uh there's there's a lot of companies doing you know start of doing down rounds so that helps you with uh with any kind of Aqua hires there's uh there's just companies whose valuation just has decreased because they might be mobile first and mobile is not that hot anymore uh and then you can make a good

good acquisition there and but I understand from from the uh from the corporation side they don't want to make any mistakes and so they're just going to rather sit on there cash and it's not even sitting on the cash because the high interest rates that cash is actually generating Revenue so uh so that that also uh pushes company to preserve Capital because it's producing yes agreed okay all right well fan questions then so all right number one beyond the obvious Financial metrics in kpis what are some less tangible factors that Zinga considered when evaluating the long-term value of an acquisition yeah I think it really came down to what we were talking about earlier which is the people and you know what is the quality of the team that had that that was operating at the time had they worked together before did they have success and failure together have they applied those successes and failures to their future business um and do we see them being uh a natural fit within our organization because

again we we we we lifted the kimono enough for them to be able to see the inner workings of the company so that they could feel comfortable that this is a place that they could call home so it really is the the interpersonal relationships and going back to that corny dating you know analogy is that you know the the the dating part we put in a lot of leg work because we wanted this to be a long-term relationship and so really that you know making sure that it's a fit that people are not just in it for the the payout that that should just be a natural outcome of great execution and great partnership especially on the earnout side um but we've also seen that you know even with the best intentions that money can change people's perspective about how incentivized and and invested they are in continuing to put in the hours and the work to to grow and maintain a business so these are things that you can never really completely control but you can do your best to get a good gut reaction based on your interpersonal experiences with those folks over time about what kind of people they are uh and whether you see that they have the

ability to lead uh regardless of the conditions um and that they are invested in making making great games for a global audience at the end of the day and not just in it for the payday and then leaving so in a way you have to be a little bit of a people you know a people p not in a little bit you have to be a total people person if you're working in m&a completely yeah which is ironic because the the the the core engine of m&a is analytics right and numbers based uh you know analytics and and you know financial analysis but ultimately the the the people aspect of it is is supremely important yeah yes um well uh then two questions from I'm going to mention who who posted this so Lou deara he's roio VP of marketing I know he he loves the the shout outs so shout out for for uh for long ended because Louis is from Spain I mean half half Spanish half American longwinded questions let me let me read the first one where do you see the endgame for consolidation in gaming will we look like the auto Auto industry or beer

industry where there are a handful of conglomerates each with various Brands under their roof if so how quickly will the market look like that if not what will the market look like in a few years time from consolidation standpoint great question wow that's a great question so I guess it depends on the way in which you define consolidation because if you look at it by sector or by platform you can argue that the console PC space has been Consolidated for quite a long time right you have these conglomerates or large companies that have been traditionally AAA focused or AAA first EA Ubisoft take two um Activision um you know and those are kind of like the ones Square Enix those are the ones that just come to mind that are public and large there used to be a lot more um and and now there are less and I think that took you know what is it 30 plus years to get to the stages where there were the there was kind of a small group of of consolidators and Market leaders uh if you look at it from a mobile perspective you know the consolidation has already

started as it relates to these incumbents buying into Mobile right so they've Consolidated a lot but in terms of those of us like like my company that are independent you know I think that um we will look there's a possibility that we will look like the AAA space but I actually think that what's going to happen more likely is that because the way that the market is going is such that platforms matter less right as we're getting into this a of anytime anywhere any device expectation of consumers for games it's not going to be Mobile versus PC console it's going to be about who owns the best IP who makes the best games that that can be played across a myriad of devices and platforms and what does that IP portfolio look like so I think our industry ends up looking a lot like the entertainment industry which is the big studios you know the Disney the Sony Etc um that own a lot of different subsidiaries that have complimentary or unique skill sets or value propositions but ultimately drive to a singular strategy which is to provide the best interactive entertainment experiences to

Consumers around the world so I think uh and we can talk about this more at a later dat I do think that that the emerging conglomerate game companies that get it right will will basically be the next Generation entertainment companies because I happen to believe that the next Marvel and Star Wars will come from a game company um because that is just where the digital native generation is starting to First interact with and and and get for IP they're doing it through games they're not doing it through going to movie theaters they're not doing it through watching linear television so I do think that there's going to be a conglomeration of game Centric entertainment companies that will take their place in the kind of Pantheon of the entertainment landscape and it will look our industry will look a lot like the entertainment industry with you know kind of the big corporate uh you know structure but then discrete studio uh uh um portfolio underneath that that are very focused on certain genres or different audiences or different platforms But ultimately the IP and the content and the consumer is what matters the most fantastic vision and do you think that the uh the

production will also remind a little bit of that that is happening in Hollywood where you have a multi- studio approach and everything is much more flexible where you have those IP holders the big studios and then they just leverage different professional Studios to uh to help them to deliver those entertainment products yeah I think that's part of it I also think that because we're so Diversified in our industry in terms of the the the genres the platforms the business models that consumers expect and demand that there'll be a lot more variance uh in in in that approach and have that expertise will be really distinct um and there'll be hopefully synerg synergistic you know interworkings that happen within a conglomerate where Studios and organizations will help each other out based on what their area of focus and expertise is like for example to use a Hollywood analogy if you're a big big entertainment company and you own a a studio that you know specializes in horror films that studio is not going to be helpful when you're creating you know romantic comedies yeah right um uh maybe not so much on the output but maybe in

the process of you know leveraging Technologies or you know how you work with audio or how you work with you know with um um you know cinematography those kinds of things I can see also applying in in Next Generation game companies as well awesome uh second question from Louis when you look back at the various deals you made and how they have evolved since then which do you feel over time has proven to be the biggest success and which do you feel has proven to be the biggest failure with hindsight why do you think that is and how does that compared to your thinking at the time that's a great question so I would say you know the answer depends on the time frame that you're looking at it um and you know we when you do deal models generally as an m& team you're you're forecasting out two maybe three years at the most and your forecasting gets a little bit iffy you know and less precise you know anything outside of the next calendar year um um because you really just especially when it comes to new products right and and again going back to one of the things I said earlier in our chat is that I never ascribed any

value in my deal modeling to future products never put any kind of handicap on it never gave it any chance of success it was always a zero for me and again it wasn't personal it was just I can't ascribe value to something that doesn't exist uh other than just as an idea and a PowerPoint I just can't that would be irresponsible financially to do um and so all of our deal structures valuations were based on what we paid on day one for the current trajectory of the business and then what we gave as an incentive to pay out over time should these products new products get released and achieve the level of success that were in the the sellers you know forecast in the beginning so I think all of the deals that we that my team and I did during my time at Zinga had had tremendously outperformed the deal models within a relatively short period of time well before the three-year period so I think from that perspective they were uh regarded in my mind as as is quite successful I think obviously the one thing that you as an m&a team or as a leadership team can't control is

whether future products are successful and now you know we've seen that Graham and small Giant and and Peak and others have had you know uh not as much ease of getting new products to Market as their predecessors and that's not unique in our industry but it also goes back to what I said earlier about the risk mitigation by virtue of not giving them value for that unless it's actually been earned so from my perspective you know nothing lost in terms of anial you know return by by these games not being as successful because they were also running successful franchises forever franchises as they turned out right that are great annuities um and then all all you can do is just hope that they learn from that and their next products end up being more successful than than the previous efforts uh and and that's just the nature of our business so uh I don't see any of them as having been failures I think the one that I would say believe it or not the ones that we didn't talk about which were the first two that I did um you know one was H we acquired a company called puzzle social that did a daily crossword game um that was my first deal and then we also did we

acquired a solitire game um that was an asset purchase um and those were like you know below $50 million so quite inexpensive in the in the scheme of you know the three billion dollar plus that that we spent over my time there but those ended up being not as great performing because we those were the first ones that we did as a team and as a leadership team together thankfully we started on the smaller end um of of cost scale but we learned quite a bit from those smaller deals that helped inform us on the larger deals that everything from Graham through wallik ended up being quite successful because of those learnings so I would say those failed for a number of reasons I think number one was you know the the uh the original thesis may not have uh may not have been um spoton uh or in some in one case with the with the solitary game the team that took over that asset tried to tried to innovate too much on a very simple game and really kind of you know uh innovative its way out of uh out of kind of being an evergreen product and and and trying to put too much into it um so

we learned a lot from those um obviously the the people that sold those businesses still got paid and and we absorbed you know some of the employees in in many of those cases but those are the ones puzzle social and then the the solitary game um while they returned you know didn't return nearly to the scale that the larger deals did but oh well then I wanted to kind of Zoom back to I understand those failures but I want to kind of Zoom back on everything you've told you're so professional with this you have such a great Insight um you know I'm learning a lot how did you learn all these things is it through failures is it through looking through other people's failures is it by just like because usually you you either win or you learn that's what I've noticed yeah right so where did you learn all these things why are you so good at m&a I I I think you know sometimes it's luck I mean sometimes you're surrounded by great people and you're put in a great circumstance where you have a platform for executing against what you feel is the vision and I think specifically at at Zinga at the time that I came in uh and the the the faith that Frank had in

myself and in the process of actually generating in organic growth for the company through m&a because we were blessed with having a strong balance sheet and we were a public company that could use equity uh as consideration like we had tools at our disposal that allowed us to deploy those tools in a way that uh was unique to other people or maybe advantageous relative to other companies in our space I think many of myself included came from prior experiences I I alluded to the EA experiences that my colleagues had before they joined Zinga my experiences um at cabam and at GameStop before that and even at Playboy of doing m&a a lot of learnings there including like we talked about a little bit about the integration framework that I created over just time and experience of doing deals and seeing where things went right where things went wrong and then creating a playbook for myself that I could use going forward so like you said you're you're you you learn a lot uh especially in Failure but you also learn a lot in success and and you try and double down on that success so it really just is the benefit of experience going

through the bumps uh taking your licks and and your bruises and just getting up and and trying to do it again and always being honest always being transparent and and and and always being um perceived as a partner yeah and humble because that that's the the key of learning but but yeah you like that's important also to understand that you're you have a quite the history before Zinga cabam uh GameStop so forth so it wasn't like coincidence that that that's where everything culminated and and you able to make such a a three billion doll streak or four billion dollar streak yeah yeah so it's like uh it's it's definitely a not not that your current role is not a culmination of everything prior but but that was kind of like the the culmination of of m&a m&a work um last one yeah this is uh the spiciest one so I'm gonna end on this zinga's acquisition by take two would he or would Chris agree with Eric cres meaning that um Eric cres has said that

uh zinga's acquisition by take two I'm paraphrasing Zing's acquisition by take two is the worst acquisition in gaming history yeah I remember that that was one of the podcasts I was listening to on my hike and I wanted to throw my phone off the off the mountain um so look I uh you know Eric and I work together at cabam uh I love I love our our angry Uncle here of of instructor of fun I think everybody it and and you know this is the kind of stuff that actually creates great conversation um you know look I think that that observation can be had uh at any moment in time for any kind of deal um I think Zinga was a recipient of um or or I guess take two perhaps was the recipient of ill you know unfortunate timing of their deal relative to the early stages of idfa and and the industry not really knowing what the full effects uh were going to be and maybe not taking that risk into account as much um and I don't know that anybody outside of Take 2 would have known any

better or different including any of us in the in the in the doof Community would have been able to handicap what that really would have meant um the ironic thing is that all of the impact that Zinga had on idfa was was born out of two things number one was the fact that it was the first public company that was honest about the impacts of idfa I think as you remember like many other public companies were were punting on that topic and not wanting to talk about it where Zinga did and I think Zinga was unique because it had so much exposure and access to the impacts of idfa on both the positive and the negative side by virtue of being a a a spender of UA dollars a recipient of marketing dollars in its ad-based businesses and also owning an ad Network right so they saw it from so many different angles that I think in the near term that may have disproportionately impacted them negatively I think ultimately that's going to be a strength because they'll be able to diversify their risk across all these different touch points as we get more clarity around what it means to operate in a post idfa post privacy manifest post Google privacy world I

think the companies that have these multi multifaceted entry points into the marketing landscape will ultimately you know Thrive and and be fine and I think look you know this is not an asset that that take to bought that was meant to be disposable and have a shelf like like Mo you know mobile is supremely important to take to the mobile business generates what close to half of of the revenue of Take 2 and creates the potential for steadiness in a business that's otherwise quite up and down and lumpy right with its long cycles of its Temple franchises so I think that provides really great Hedge for somebody like take2 and I think if you were to look at the more optimistic side uh of this that having a leading mobile company uh in its inside of its four walls that can help deliver on new products especially when it comes to opening up the coffers of the take two uh IP portfolio um that is something that can create tremendous value and and obviously if I'm Zinga I'm clamoring for all of the IP and if I'm take two I'm going to say well okay

before you get to the ground Jewels you got to prove yourself on these other IPS that we have in our in our portfolio but I think if I'm a company that has unfettered access uh to a portfolio IP portfolio that's the the size and scale of take twos and I get it for free that is tremendously valuable to me and I think that they have the opportunity to create that value there's always the question about whether Zinga is the right company for that and I keep reminding people that a company is never static with the current capabilities and people that you inherit that that amorphs over time and molds itself to the needs of the company right so if they don't feel like they have the capability to make a Red Dead Redemption crossplatform game and be the mobile component to that they'll go get it I have no doubt about that and I think that you know the company is filled with great leaders whether it's on the zingga side whether it's you know on the nordia side um whether it's any of the other Studios you know they are leaders and they have Prov proven to be leaders category leaders uh across multiple genres and hopefully now across multiple platforms with take tw's partnership so

I don't think that over time that that crest's comment will withstand but I think at a moment in time when he made it relative to idfa and relative to the performance the near-term performance of some of zinga's uh uh portfolios I think it you know he was right to be critical of it but again I take a long-term view um this to me is not a disposable you know product that you buy and then it expires this is something that has Perpetual value that you keep trying to unlock over time yeah and Zinga has proven to make that difficult transformation going from web business to mobile business and not just transforming but becoming one of the largest Publishers on mobile uh so and and when you think about their games yeah exactly and when we think about m& right most of it by m&a exactly to bring it back full circle exactly exactly and there's everything from natural emotion to uh to Peak and and roic so all kinds of different games to small giant so so there's there's definitely uh yeah I I would agree on the on the long-term View and I thought I think Eric would agree as well we have the rule of like now

saying this is not going to work in five years like let's let's put a cap on AR and VR and Cloud let's just talk in in five years ex sentiments rather than the uh forever but um PA listen thank you so much for for sharing all this this knowledge it was uh I think thanks for having me I think this will be very well received uh and so if you have any questions us about uh m&a just listen to this podcast and if you still have questions about m&a you can probably find him on deconstructor fund slack Channel you can try LinkedIn uh or you can try some of the events and especially the events hosted by AR that's that's where you can definitely find Chris if they keep having me yeah yeah yeah well after this I'm sure they will so uh so uh yeah shout out to arene uh good good advisers among many let's put it this way right um thank you again thousand thanks and uh thank you everybody for listening um till next episode