What Diligence Misses When the Team Can't Name How the Business Works
When the Operating System Lives in the Founder's Head
Andrew Matney breaks down what curated data rooms hide, why founder gravity disappears after close, and how decision rights create the real friction in M&A integration.
Andrew Matney is a finance, strategy, and M&A operator who has seen transactions from nearly every angle — lender, advisor, investor, and operator. In this episode of Herding Squirrels, he shares what gets missed when everyone is on their best behavior before the close, and why the real operating system of a founder-led business lives in decisions, not documents. If you're navigating a post-close integration or thinking about how to prep a company for acquisition, this conversation will change what you look for.
Guest Bio
Andrew Matney is a founding team member, Chief of Staff, and Head of M&A at America's Innovation Corporation, where he works at the intersection of acquisitions, operations, and the U.S. manufacturing base supporting robotics and physical AI. He has worked every side of the deal table — banking, lending, sell-side M&A, and private equity — and brings an unusually human lens to a very numbers-driven world. He trained as an actor, which turns out to be excellent preparation for reading a deal room.
Find Andrew online: LinkedIn
Episode Highlights
[00:00:47] Reading people under pressure: what acting, banking, and PE teach you that the other two don't
[00:02:05] What curated data rooms and management presentations can't tell you
[00:04:06] Where the operating system lives in a founder-led business vs. a carve-out or PE add-on
[00:07:43] The risk of professionalizing away exactly what made the business worth buying
[00:10:33] The three questions that reveal whether a founder truly has a number two
[00:15:33] What post-close cracks actually look like and why diligence doesn't catch them
[00:17:46] Why the hardest thing to align on isn't purchase price — it's decision rights
[00:21:17] One piece of advice for founders preparing to sell: start the people conversation before the deal forces it
Key Insights
Curated packages lie by omission. Everything in a VDR and management presentation was put there on purpose. Reading a team means getting past the curated version and into what actually motivates, scares, and excites the people running the business. That's the signal that predicts how a transition will land. (00:02:05)
The operating system lives in the founder's head. In founder-led lower middle market companies, a lot of institutional knowledge is not codified. Which customer pays slowly but is worth keeping. Which supplier needs a call, not an email. Which margin issue is real versus noise. Integration can't start with a playbook. It has to start with: show me how this place actually works. (00:04:06)
Professionalizing too fast destroys value. Move too quickly and you run the risk of standardizing away the exact thing that made the business valuable. The goal isn't to flatten a company into a corporate template — it's to preserve what works and make it teachable. (00:07:43)
Founder gravity is not a process. Post-close, you discover what was real process versus what happened because the founder was in the room. That distinction matters enormously for who owns daily decisions once the founder steps back. (00:15:50)
Decision rights cause more friction than purchase price. Everyone can agree in principle that the founder will keep running things. The collision happens the first time a real decision has to be made — who approves a key hire, who talks to the biggest customer, who owns pricing. A working agreement before close that names those moments explicitly prevents a lot of post-close pain. (00:17:46)
Most tension is ambiguity, not bad intention. The friction that shows up at month three or four is usually not because someone is acting in bad faith. It's because both sides thought the agreement meant something slightly different. The antidote is specificity before the decision arrives. (00:19:09)
Prepare the team before the deal forces the conversation. Founders spend enormous energy cleaning financials and telling the growth story. The team is what carries the business after close. If the first time key employees understand the founder's thinking is the day the deal is announced, you've already created unnecessary anxiety. (00:21:17)
Key Quotes
"In a deal room, everyone has a role. The founder wants certainty and respect. The buyer wants truth and downside protection. The banker wants momentum. The management team may be wondering whether they still have jobs." — Andrew
"Integration can't start with 'here's our playbook.' It has to start with 'show me how this place actually works.'" — Andrew
"The red flag is not a founder who's tired. Most founders are tired by the time they sell. The red flag is a founder who wants the authority of staying without the responsibility of changing how the company makes decisions." — Andrew
"A lot of what diligence misses is not because people are hiding things. It's because they don't really have language for how the business works." — Andrew
Resources Mentioned
America's Innovation Corporation — Andrew's current company, focused on acquisitions in U.S. manufacturing, robotics, and physical AI
Andrew Matney on LinkedIn
Concepts discussed: decision rights frameworks, working agreements pre-close, key man risk, founder gravity, institutional knowledge transfer
About Herding Squirrels
Herding Squirrels is a podcast about modern teams and change, where we uncover the nuts and bolts of what makes teams actually work.. Subscribe wherever you listen, and leave a review if this conversation was useful.
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Herding Squirrels Ep 14 w Adam Tal
Herding Squirrels Ep 13 w Oliver Gray
Herding Squirrels Ep 12 w Louie Celiberti
Herding Squirrels Ep 11 w Nicole Tibaldi
