M&A Science
M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)
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Dan Caruso, Managing Director, Caruso Ventures; Founding CEO of Zayo Group
Zayo never had budgets. For 14 years, Dan Caruso ran the company on a question most management teams can't answer: how much value did we actually create this quarter?
In Part 2, Dan explains his equity value creation model. He takes the math PE firms use to value portfolio companies, adjusts for debt and new capital, and tracks the result as a live IRR. That number replaced negotiated budgets and drove bonuses and promotions. It compounded value at roughly 40% a year, taking Zayo from $1 billion to $8.5 billion. It also told him when to sell. Once 40% slid toward single digits, he became a seller.
Dan also covers why he'd come back with a lower offer in a negotiation, why Zayo held every acquisition to one culture, the IPO equity mistake that cost him his core team, and how he built a competing bid when the buyer group tried to retrade.
Dan's other edge was data. Zayo ran sales, provisioning and billing in one system, so work moved to the next stage instead of being handed between tools, and that gave Zayo its edge in synergies. DealRoom brings the same idea to M&A, with pipeline, diligence and integration planning on one platform and a 50% reduction in people-hours per deal. See how it works: click here.