Every time the group looked seriously at buying a business, the same thing happened.
The attorneys started.
And the bill came to about $50,000.
The order of things
The investment group bought companies.
Before buying one, it did what responsible buyers do. It sent the business to due diligence attorneys, who went through the books, the legal history and everything else that might be hiding.
That part made sense.
The problem was when it happened.
The group was paying for that review on every business it needed to evaluate, whether or not it ended up buying.
And some of the problems the attorneys found weren’t subtle. Books that didn’t add up. Lawsuits. Legal history the owners hadn’t mentioned.
The kind of thing you’d want to know before you’d spent $50,000 finding it.
Think about that from the inside.
Most of the businesses you look at, you won’t buy. That’s how buying companies works. But each one that gets far enough costs you a full review to find out.
So the most expensive question in the process, should we buy this?, was being asked before a much cheaper one.
Is there anything obviously wrong here?
The outsider
Andrew had never worked in private equity.
Not a day.
What he did have was a reputation for one thing. The group’s leader put it plainly.
"Andrew’s the monstrosity here on AI by leaps and bounds."
Andrew flew out and spent several days in the office with the leader and his team.
Not to replace the attorneys.
To build the foundations of something that could go first.
What goes first
The idea was simple to say and hard to do.
Before anyone spent a dollar on lawyers, AI would do the first pass.
Read the financials and look for negative patterns. Spot accounting errors. Catch financial indicators that looked manufactured.
Run background checks and public data searches on the company and on everyone attached to it. Founders, employees, partners. Turn up lawsuits and legal records.
Most of what a $50,000 review would eventually find, surfaced before the money was spent, in minutes or hours instead of days or weeks.
Then the group could make a much better decision about which businesses deserved the full review at all.
The attorneys would still do their work.
They’d just be doing it on the businesses the group was actually serious about buying.
Maybe your business has its own version of this.
A step that’s expensive, slow and necessary, sitting at the front of the process because that’s where it’s always been. And a cheaper question that could have come first and saved you from most of the trips through it.
What the leader said
Andrew learned the domain by sitting with the people who do the work, and building alongside them.
The relationship that came out of it went well beyond one project.
"It changes the trajectory of everything."
And then something more concrete.
"Andrew’s a partner in some of our companies now, because of the level of efficiency and the lack of people that are necessary, because we have one person that knows how to talk to infinite outsourcers, if you think of it. So he’s managing a team of infinite outsourcing because he knows how to speak to that."
And finally:
"I don’t think there’s many people that can even touch Andrew when it comes to AI."
What this story is really about
Andrew didn’t know how private equity worked when he walked into that office.
He didn’t need to know how to do an attorney’s job.
He needed to see where the money was going, and notice that the most expensive step was standing at the front of the line.
That’s a pattern you can find in almost any business, once someone from outside asks why things happen in the order they do.
The group already knew how to evaluate a company.
Andrew helped them ask the cheap question first.