How AI and Blockchain Are Changing M&A Strategy for Executives

0:00

My guest today is Craig Kredupill, one of Midwest’s most influential deal makers at the intersection of law, technology, and investment. Craig is the Kansas City co-off managing partner at Postnelli, one of the largest and fastest growing full service law firms in the country. He is also the chair of their technology transactions and data privacy practice and has guided companies through mergers, acquisitions, and venture financing from early stage startups to Fortune 500 giants.

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He’s helped structure deals that fuel innovation, advised on transformative projects like Google Fiverr’s launch in Kansas City, and continues to shape how entrepreneurs attract capital while navigating complex issues like AI, data privacy, and cyber security. Today we’ll dig into how companies can prepare for investment, the impact AI is having in technology startups and M&A, and why building trust is the foundation of any great deal.

1:03

Craig, it is a special privilege to have you on. We have known each other for a long time. Excited to have you on as our guest and for everybody to learn from your knowledge over the years and kind of navigate some of these complex deals.

1:18

It is my pleasure to be here. We have known each other for a long time. I had something pop up the other day where, I mean, it was probably 20 years ago at an event or something that I remember we were. So, thank you. Thank you for having me. I always kind of see I have a face for radio for sure. So you’re putting that to the test with this podcast, but it’s my pleasure to be here and to talk with you.

1:44

Thank you, Greg. Well, I think just to lay some groundwork, you know, if we look at your career in this journey into technology and law and early stage companies and just structuring companies for capital. I feel like especially now that’s still such a coveted area of business. So many businesses need to be structured correctly to attract investments and this is your niche. This is what you really drive the deals. Can you kind of speak to how you got to this point in your career and then even some of the big catalysts for change over the years?

2:25

I mean, I’ve been doing it 27 years. So I’ve been here at Pson 27 years. Started in ’98 at the firm. So if you remember, you probably weren’t old enough, but I was old enough. It was the dot-com boom, exciting time to be doing things, but technology as legal wasn’t really there.

2:45

You’d approach technology from two different ways. You’d either have an intellectual property attorney who understood the technology but didn’t understand contracts, drafting, and a lot of the more corporate stuff, or you’d have a corporate lawyer who understood how to do contract work in that but didn’t understand the technology.

3:06

And so technology law itself 27 years ago was really trying to take some folks that would kind of blend both an understanding of what technology was and what was happening and what was going on with good corporate principles, good contracting principles and things, and putting those things kind of together.

3:26

I think the two greatest things that ever happened to me from a career perspective was one, coming to Psonelli, but two was just getting into technology law because talk about an area that just continues to evolve and reinvent itself from the internet to mobile to blockchain to AI. Now, I mean, it’s just never without the next greatest thing or the next thing that’s really moving and moving our entire world.

3:56

Fast forward to now, it’s all this AI and, as you said, tech never stops. That’s the beauty of it. Everybody’s always learning, they’re changing, they’re all navigating, but it does shake up the legal side of things. It’s like how do you…

4:16

It really has. Having been around long enough, what you realize is that it’s a little bit about the sliver of time that you look at things. And so, you could say the same thing about kind of where we are with AI that we saw a little bit about mobile and that we saw even really with the internet.

4:35

If you compress that time that you’re looking at, you could say, “Well, I could see how it may affect things. I could see how it will, but I’m not going to, you know, I don’t see how it’s going to change or dramatically change the industry area.”

4:50

And when I look at those other two, both the internet itself, I mean, when I clerked here, nobody had a computer on their desktop. I came back the next summer, there’s five computers hooked into the internet up in the library, and then I come back to start, everybody’s got a desktop on their desk and stuff, and then we’re off and running.

5:08

And, you know, same with mobile. I mean, when mobile phones started coming out, people were that way. I’m not going to let that change me. I’m not going to be available 24/7. I’m going to keep doing it. But when you look at it in slices like that, you could see it. But once you look at it with a wider view, you can see how it completely changed and evolved how we do business.

5:29

AI is at that same place right now. I mean, it’s still early. It’s certainly a lot different than it was two years ago, but there are still a number of people who haven’t embraced it, not sure how to embrace it, and are curious or wondering, is it really going to change how we practice or is it really going to change things?

5:47

And then I think as you widen out your view and start looking over a large period of time, we are definitely seeing it have an impact. I mean, we’re in the process right now of doing an enterprise ChatGPT rollout with the firm. The firm does OpenAI’s patent work, and so we’ve got a very good relationship with them, but CoCounsel and Jigsaw, we’ve got a number of different AI tools that we’ve been rolling out and using internally.

6:14

But it’s still an early time and period with which we’re seeing engagement on that that’s very progressive for a law firm. Usually law firms are slower to adopt.

6:27

Yeah, definitely, definitely. Well, let’s kind of pivot and talk a little bit about M&A. You know for sure that you have seen all types of companies, big and small, and some try to sell and maybe sell successfully.

6:47

I think a lot of business owners always plan or try to plan their exit, or they maybe are forced to sell at some point because of retirement or whatever. But for a lot of companies, it’s about attracting capital and growing. And a lot of companies do need critical capital to scale, either because of overhead costs or just because of the nature of their business.

7:09

Can you kind of give us the inside scoop on what do you look for in a business? Maybe take a scenario and walk us through a company that is trying to grow, trying to scale. Like, what makes them attractive? What do they need to do? What steps do they need to have in place to set themselves up for that kind of success?

7:30

Yeah, I mean the best time to do something is two years ago, right? I mean, and that’s always the challenge. But no, I think, you know, over the years that I’ve seen some that are kind of maybe successful despite themselves, you know, but that is often not the norm, right?

7:47

The ones that have been consistently successful or you’ve seen serial success out of them really do kind of follow a little bit of a model, both in just how they set themselves up at the beginning, the planning and things that they do at the very beginning that makes it easier for an exit transaction.

8:08

For example, when we set up a new company, right out of the very beginning, at the absolute start, we’ll set up a virtual data room for them. We’ll load in a due diligence checklist for an exit transaction or investment transaction and have those startups at the very beginning load that information in and keep track of that.

8:30

So that we’re not in the context of an M&A deal or something later on down the road, diving in file cabinets and trying to find things and where are stuff and, “I don’t know,” and I think it adds stress to the founder and the entrepreneur as they’re working through that deal.

8:48

Because in addition to running the business, which was already taking 110% of their time, they’re now into this M&A transaction or investment transaction and that’s taking up a lot of time.

9:00

And then I also think it just has an impact on value and what a purchaser or an investor comes in and sees. If you’re organized and you’ve got everything where it needs to be right out of the gate, I think you can also see that turn into real dollars too for them from purchase price and in other ways as well.

9:21

So I would think when we look at those early stage companies and ones that are looking at M&A, things like a clean cap table. We can talk about, but the ones that really start that at the very beginning and start as soon as you can at the beginning thinking about how to organize yourself for that M&A transaction, you’re going to be glad you did when that comes, whether it’s forced upon you or it’s just part of your exit strategy.

9:48

So of course startups, it’s almost like they need to start with the lawyer.

9:55

Yeah. I mean, it starts with the idea, right? It starts with the innovation. I could set you up a hundred companies today, and you don’t have 100 of anything, right? I mean, it’s the what’s the problem that we’re solving? How are we going to solve it? The experience, the management team, all the different things that kind of go into it, the legal structure and that is a part of that.

10:18

And it’s important to get that done and to do that right. And it’s always better and easier and cheaper to do that earlier, right? And so, but if you haven’t, or if you’re now kind of like, gosh, we’ve been just operating, we’re all going 90 miles a minute and we don’t know exactly what we need to do, but at some point we see ourselves thinking we’re going to do some kind of exit transaction.

10:38

I was just talking with somebody yesterday about building into their flow the things that they can do over the course of the next six months to kind of catch themselves up on some of that so that they’re in a ready position.

10:50

So, it’s not a rush at the end, but it’s also not an overwhelming list of things you have to do right now. AI can build you a perfect little calendar for that to help you kind of clean up the things that you need to clean up to get ready for when you need it.

11:07

Right now is the market hot for mergers and acquisitions or raising capital? Our market’s been a little up and down, so what’s that climate like right now for people?

11:19

And certainly the last, say, six months, M&A hasn’t been as active. I mean, it’s just a little bit of uncertainty in the marketplace around tariffs. For a while there, taxes were an issue. Some of the things have been removed. Some of them are still kind of out there.

11:37

I would say that we’re starting to feel like we’re starting to see things open up and unlock a little bit. We’re getting a little bit more certainty with things. There’s a lot of capital on the sideline that needs to get deployed.

11:52

But for a while, I’d say M&A was a little bit slower, but now it’s starting to pick up. And early stage tech investing, there’s always capital for good deals. But I’d certainly say these last six months AI has been kind of running the ship.

12:08

There’s just been a lot of variations of AI-related startups that are either being able to raise funds, and I’m not just talking about the large, you know, the large billions of dollars on billions of dollars, but I’m just talking about even really seed stage and Series A stage capital going into different AI.