Pankaj Raval (00:03)
All right, welcome back to Letters of Intent. I am Pankaj Raval, founder of Carbon Law Group.

Sahil (00:07)
And I am Sahil Chaudry corporate attorney here at Carbon Law. And this week we’re introducing a brand new series. That series is called the Weekly Roundup. So we’re going to break down deals that are shaping the market week to week, not just what happened, but why it happened and what it tells us about where capital regulation and risk is headed.

Pankaj Raval (00:27)
And with that, this is our weekly roundup. Three deals that look completely different on the surface.

Sahil (00:31)
But underneath, they’re all responding to the same question. Where does opportunity live right now? Now, how do you address the inherent risks when unlocking these opportunities?

Pankaj Raval (00:41)
Let’s start with the loudest one. Trump Media and yes, this is the loudest one. This is 100 % the loudest one.

Sahil (00:43)
You are not kidding, Pankaj. He is the le- this is the loudest one.

So Trump Media and Technology Group is at its core a social media company. It operates Truth Social. This is the best. You know what? At some point, it’s going to be hard to argue with what’s going on here because Trump has his hands in everything. Not only

Pankaj Raval (00:58)
The best, the best out there ever existed. ⁓

Sahil (01:10)
he have his hands in social media? He’s about to get his hands in the energy game. So Truth Social is a platform built around political speech, identity. It’s built around having a highly loyal user base. Pankaj, what does this have to do with nuclear energy?

Pankaj Raval (01:26)
Well let’s just say you know we knew Trump always loved power and now literally he loves power is going after power with with this acquisition he’s going after this nuclear fusion company so nuclear fusion you know if people have really heard much about it is actually a pretty interesting technology really essentially they figured out a way to create nuclear energy with fraction of the footprint that was previously

Sahil (01:30)
That’s right. That’s right. That’s right.

Pankaj Raval (01:49)
required. So now there’s a lot of companies investing in this. It really should be the game-changing technology in the next decade for addressing some of our energy challenges and could really make energy extremely cheap, still in its early stages. So an interesting opportunity also for people looking for sectors that are going to be growing. And so not a traditional tech company. So the merger is actually something of an oddity because

when you think about a media company, why would they be merging with an energy company? But I think there is some overlap here that I think we have to kind look at.

Sahil (02:21)
I mean, it’s so unusual. You’ve got, on one hand, this media company that monetizes through brand, influence, audience. not talking about software margins. We’re not talking about infrastructure. And then you’ve got TAE Technologies. couldn’t be more different. It’s a deep tech energy company trying to commercialize nuclear fusion, one of the most difficult and complex scientific problems on the planet.

Pankaj Raval (02:46)
Right, right. It is interesting, know, and it’s not a five-year story, it’s not even a ten-year story, it’s really we’re talking about a 20, 30-year bet. This is the future of energy, and it looks like this is Truth Social is saying, this is where we want this is where we want to collaborate and I think that’s what this deal is about.

Sahil (03:05)
Yeah, and I think this reminds me of the Trojan horse. I mean, really, this isn’t about operational synergy. This is about capital structure. This is about capital access. So we’ve got ⁓ basically this nuclear energy company that’s going to be in a social media Trump wrapper, essentially, going to give them access to the public markets.

Pankaj Raval (03:20)
Hmm

The thing here is have to think about generally want to see returns, right? And this is a long play. So it’s about longevity here. So this is kind of why this deal makes sense energy company is that venture capital, they want exits. They want to see seven to 10 year liquidity events. Private equity wants cash flow. But this fusion company is neither one of those. So this is where this

longer-term play merging into a public company really makes most sense for them.

Sahil (03:54)
That’s

exactly right. mean, Trump Media as a public company has a highly engaged investor base. It offers something that no one else can, which is permanent capital and liquidity.

Pankaj Raval (04:05)
Yeah.

And these SPACs are an interesting financing tool that lot of larger companies really should look at as a way to go public without having to do the road show list the IPO, which would be very expensive. It’s a much cheaper way and much more efficient way of going public getting access to the public markets as opposed to an IPO. Not as flashy, which is surprising knowing Trump, but I think

it seems to be something of interest for them in their longer-term play.

Sahil (04:33)
Yeah, and legally there are some issues I think we can anticipate. I this deal is gonna be all about disclosure discipline. When your valuation is driven by future science, future regulation, and future infrastructure, every forward-looking statement matters. They’re gonna have to be very careful in terms of what is expressed as a forward-looking statement.

Pankaj Raval (04:50)
And it’s all interesting also, Sahil, because this is a social media platform, right? So you would think that they’re probably using the platform to promote this deal, to pump up the deal, to pump up the share price because of this acquisition. So how does that play into securities disclosures and securities filings? It’s a whole other element here that you don’t normally see in deals because you don’t normally see social media companies doing these kind of acquisitions. But here we are.

You know, seeing a social media company that’s able to kind of insights, consumer confidence, acquire ⁓ this energy company.

Sahil (05:22)
That is, that’s actually a very good point. mean, here you have a very high risk of this energy company’s story being projected by truth media, for example, and there is some risk that, you know, how much is the story about

why investors initially invest going to change. We don’t know. mean, it’s an industry that does have a certain level of volatility in terms of regulation. So we don’t know in terms of regulation, in terms of raw material, in terms of the science. There’s a lot that can change. And so I agree. think that’s certainly a risk. And then add to that the political visibility. You’ve got the president of the United States connected here. You get heightened scrutiny around governance related party optics,

regulatory approvals. I mean, every time you’re going through the regulatory process, some eyebrows are going to be raised. Hey, are you getting this treatment because you’re connected to the president of United States?

Pankaj Raval (06:12)
Hmm

Absolutely. Yeah. I mean, it’s really interesting to see what will happen, you know, from a small business perspective, too. Looking at, you know, if your value depends on future milestones, your contracts, marketing, and investor communications, you need to tell a story. And that’s exactly what they’re doing here with this acquisition. You know, they’re telling a story that is going ideally play favorably to investors. The difference here is that, you know, when you have the president involved and the president can actually

make it difficult or make it harder for your deal to go through, that creates a whole other element of analysis when investors are thinking about whether to put money into a company or or not. And it’s a big question of the checks and balances. Will the president be checked? Will they not? There’s still a lot of uncertainty here. Even though you would think, okay, having the president attached is good, there are still checks and balances that people have to be aware of, and it may not just be as sure of a thing as people think.

Sahil (07:06)
I agree. And I think the if we were to boil down what’s happening here for our listeners, I would say it’s this is a useful example where you don’t have to go public to go public. You can merge with a public shell. Well, in this case, it’s not a shell.

But you can merge with a public entity and that gives you access to capital markets. And that’s a strategy that people use. So you might be a small to mid-sized business owner thinking about, one day it might be my dream to go public. Okay, well, there are multiple options. And I think this is a good example to speak of a deal that can give you a roadmap.

Pankaj Raval (07:37)
Okay.

Absolutely. So, Sal, let’s move on to the next deal, which is an interesting one as well in a different space. It’s IBM acquiring Confluent, an AI company. Tell us about what this is about and why is this such a big deal right now.

Sahil (07:53)
Yeah, this is really about owning the live flow of data, the pipes behind AI. So IBM is a legacy enterprise technology company that we all know. It spent the last decade though reinventing itself, moving away from hardware and toward hybrid cloud AI and enterprise services.

Pankaj Raval (08:11)
Interesting. So, Confluent is a data infrastructure company, I understand, that has commercialized Apache Kafka and open source technology that allows systems to exchange data in real

Sahil (08:20)
Think of Kafka as the plumbing. It’s not glamorous, but without it, nothing flows. And that’s what they really want. Confluent gives IBM the real time data layer that makes generative and agentic AI actually usable inside large enterprises.

Pankaj Raval (08:32)
Interesting. I guess, I mean, this really does.

constitute the missing piece for IBM. Because IBM has been a big player in AI for long time. Before we even heard of ChatGPT, there was Watson who, remember on Jeopardy, these Jeopardy players, and that was AI 10 years ago, right? So now look at what we’ve seen today in terms of consumer-grade AI, but IBM’s been really one of the pioneers in AI for many years, but they didn’t have a good infrastructure for building it out and using live data. So now this is what this does.

for businesses, but now this gives them that piece of infrastructure, automation, and now data where they can now, you know, probably enhance AI offerings.

Sahil (09:09)
That’s exactly

right. And I think there are three legal issues that stand out that we can anticipate. One is the open source compliance. When your core product is built on open source, license discipline matters at scale. And the second one is going to be enterprise contracts.

you’re gonna see a lot of change of control provisions that are in play, data use restrictions and customer consent that can materially affect post-deal economics. I for example, every time you click a button on accepting the terms of a software license, that’s something that if you were a confluent customer, that’s going to be transferred to IBM. So that’s something that they’re gonna have to think about. And third is antitrust.

Pankaj Raval (09:44)
Absolutely.

Sahil (09:48)
are new issues. Regulators are now looking at control over data flows and not just pricing power. So I think for attorneys in the space, whether you’re an M &A attorney or an IP attorney or a corporate attorney, you’re going to want to look at how the courts are handling these transactions. Are they able to pass muster when it comes to antitrust or not?

Pankaj Raval (10:09)
Absolutely, and another interesting component of this too is I think data, right? Data, we know the value of data. Social media companies, these software companies have been mining data for years, and now all of a sudden we’re seeing, okay, it’s so much more valuable, and opens up concerns, privacy concerns, and privacy considerations for consumers, but on the business side, okay, is no longer abstract. You’ve got…

to clearly define who owns the data, how you can use it, how you can monetize it, because in every deal, small or big, for small businesses, businesses are doing one or two million dollars in finance or in other areas, it’s also, you gotta really pay attention to data. How is the data used, and what happens to those data rights if the deal falls apart, right? Like let’s say you’re in a JV, and now you’re sharing data. Who gets to use that data? What happens to that data if that JV dissolves? These are all interesting IP issues.

that are rather nuanced and complex that business owners need to be aware of.

Sahil (11:05)
That’s so true. And it feels like something you don’t need to think about until much later. But in order to lock down the value that comes from data, you need to have rock solid contracts in order to lock down the value that comes from IP. You’ve got to have perfect workmen for higher assignment agreements. mean, these issues, all of these deals are highlighting the massive value that now lives in these ⁓ data systems and in your contracts. So.

We really want to encourage all of our listeners to make sure as you’re building your business, handle these things early because they’re going to be the most profitable, most lucrative elements of any kind of transaction.

Pankaj Raval (11:43)
Absolutely. So now we’ve talked about power, the many forms of power. We’ve talked about infrastructure. Now we’re talking about health care. And the last deal is about trust and why boring is back. Tell us more.

Sahil (11:45)
Yes.

Boring

is back. Medline, Medline is a healthcare supply company. Think gloves, gowns, medical equipment, the stuff hospitals literally cannot operate without.

Pankaj Raval (12:04)
Interesting. so it’s not sexy. It’s just something that everyone needs, but it seems like it’s essential materials that every hospital needs. And why is this IPO important right now?

Sahil (12:14)
Yes.

Right now, the public markets are responding to stability. They’re responding to recurring demand, long-term contracts, and operational discipline. And that’s something that Medline is offering.

Pankaj Raval (12:29)
Interesting. so, Bedlight looked like a public company before it even rang the bell. Why is that?

Sahil (12:35)
Exactly.

Exactly. You’re talking about corporate governance. You’re talking about long term contracts. You’re talking about a company that has run well. And right now, the market is seeking stability. The market is seeking companies that, especially the public markets, are seeking companies that can give a reasonable and regular rate of return and a company that has true prospects for growth. Now,

Pankaj Raval (12:50)
Hmm

Sahil (13:00)
this kind of an industry, this is a place where investors feel comfortable right now.

Pankaj Raval (13:04)
Absolutely, interesting. with regard to what some key features that I think apply to both Medline and maybe smaller companies as they are looking to grow and maybe get financing?

Sahil (13:15)
So the most important elements, which we bring up all the time, clean books, standardized contracts, compliance discipline, all of those elements increase valuation optionality at every level. your company is a mess when it comes to corporate governance, it’s going to decrease your attractiveness to any potential investor. And when it comes to financing, you’re just gonna get stuck.

you know, in a bottleneck where you’re going to find yourself not able to secure the financing that your company may deserve based on its prospects because you have corporate governance holes that a bank is not willing to trust. mean, you know, we don’t think of it like this usually, but the elements of your company operate in a very similar way to when you’re buying a house. There’s a chain of title. And in that same way, there’s a source of authority. So let’s say you’re making decisions for your company.

Some of your matters require stockholder consent. Some of your matters require director consent. Some of your matters have change of control provisions in your contracts. There’s IP concerns. There are equity concerns. Who has what ownership? All of these issues need to be hammered out from the start. And if you don’t do it, you’re going to put yourself at risk. And if you do it correctly, you’re going to be able to have a successful IPO like Medline.

Pankaj Raval (14:20)
slips.

Absolutely. essentially, wrapping it up, we got three different deals we talked about today. the theme between them all is power, we’ve got infrastructure, and we’ve got trust. from these these different insights, what is one takeaway that our listeners can take from these deals?

Sahil (14:45)
I would say that in all of these deals, it’s very important for our listeners to understand capital and corporate governance. We have so many founders who they know, they filed their articles for their company, but they never drafted bylaws. Or they filed their articles and they wrote emails promising people equity and they don’t really know what kind of equity they gave them. Do they have voting rights? Do they not? This kind of stuff can really hold you up when it comes time to sell.

And

here’s the important lesson is that in the course of building your business, you don’t want to shut yourself out of opportunities. And when you handle your corporate governance well, there are a lot of creative opportunities. I mean, who could have imagined that a social media company could merge with an energy company?

The fact that that is possible means you need to have legal agility and you need to have your governance straight so that you can get into those kinds of opportunities. And you need to be aware that these things are possible. Sometimes just by scanning what’s going on in the deal landscape, you can get an idea that can unlock a huge amount of capital.

Pankaj Raval (15:51)
Absolutely, Sahil, so this is super helpful, super insightful. I appreciate you taking the time to kind of look into these deals as well and guide us through some of the unique characteristics that could be helpful to all businesses of all sizes. That’s our weekly roundup, our new series on Letters of Intent, where we’re gonna go over the three best deals, three most interesting deals each week.

why they’re relevant to small to medium-sized businesses and how you can look to them your business and make better strategic decisions in the year ahead. My name is Pankaj Raval, founder of Carbon Law Group, and thank you Sahil, my co-host, for helping us understand these deals. And until next time, this is Letters of Intent.