In a non-control deal, an investor cannot fire management. Therefore, the primary diligence focus must shift from the business itself to the founder's character and the potential for a strong partnership, as this relationship is the ultimate determinant of success.

The Paramount bid for Warner Bros. was backstopped by Larry Ellison's revocable trust, not him personally. This created a scenario where Ellison could theoretically withdraw all assets post-agreement, leaving Warner with no recourse and highlighting a critical, yet often overlooked, due diligence check in mega-deals.

In the Paramount/Warner bid, Larry Ellison's financial backstop used a revocable trust. This created a major risk for Warner, as the assets could be withdrawn at any time, potentially leaving them without recourse if the deal soured. This highlights a critical due diligence point in high-stakes M&A.

A personal guarantee exposes you to unlimited liability and is a common path to financial ruin, even for sophisticated individuals. As demonstrated by Larry Ellison's refusal in the Warner Bros. Discovery bid, avoiding this commitment is a critical principle for preserving wealth, regardless of the deal's perceived security.

Musk's performance-based compensation sets a precedent for other CEOs to approach their boards with ambitious growth targets in exchange for significant equity increases. This challenges the traditional one-way dilution model for founders and executives.

When founders invest their own money, it signals an unparalleled level of commitment and belief. This act serves as a powerful 'magnetic pull,' de-risking the opportunity in the eyes of external investors and making them significantly more likely to commit their own capital.

Investors like Reid Hoffman see the fundraising negotiation not as a zero-sum game, but as a crucial test of a founder's character, realism, and suitability as a long-term partner. Unreasonable or unrealistic demands, even in a hot deal, are a negative signal that can kill an investment.

A founder's credibility acts as a multiplier on the perceived value of their narrative. An entrepreneur like Elon Musk, with a track record of success, receives a "multiple expansion on trust," allowing their futuristic stories to attract capital at valuations and scales that a first-time founder could not achieve.

In high-stakes acquisitions, the emotional desire to "win" and achieve kingmaker status often overrides financial discipline. Acquirers, driven by ego, blow past their own price limits, leading to massive overpayment and a high likelihood of the merger failing to create shareholder value.