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M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science · Apr 9, 2026

Zayo founder Dan Caruso shares his M&A playbook, from unique negotiation tactics to replacing budgets with a powerful equity value creation model.

Create FOMO in Negotiations by Inventing a Competing Deal

To create urgency, Zayo's deal team would discuss a (sometimes fictional) competing deal that was picking up momentum. This tactic made the seller fear losing the buyer's attention, motivating them to close the current deal quickly.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago

Regain Negotiation Control by Lowering Your Offer Mid-Discussion

Zayo CEO Dan Caruso would sometimes counter a seller's offer with a lower number than his previous bid. This unorthodox move was designed to create emotional distress, reframe control, and break a negotiation stalemate.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago

Zayo Prioritized Speed by Imposing Its Culture on Acquired Companies

Zayo skipped the 'best of both' cultural integration model. They were upfront that acquired teams had to conform to Zayo's way of doing things, believing a single, imposed culture was faster and necessary for their roll-up strategy.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago

Divide a Seller's Team by Introducing a 'Curveball' to Their Investor

When meeting a target company's investor alongside their CEO, Zayo's CEO would mention a new 'fact' the CEO hadn't heard. This sowed distrust between the seller's CEO and investor, creating a negotiation advantage.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago

An IPO Can Trigger a Talent Drain as Early Employees Cash Out

Zayo's IPO, while successful, led to a talent drain. Key entrepreneurial employees gained significant liquidity, cashed out, and left to pursue new ventures, making it harder for the company to maintain its aggressive pace.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago

Zayo Replaced Budgets With a Continuous 'Equity Value Creation' IRR Model

Zayo eschewed annual budgets, instead using an 'Equity Value Creation' model. This framework continuously calculated the company's IRR based on EBITDA multiples and capital invested, aligning the entire organization on the true metric of value.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago

Zayo's Integration Edge Came from Centralizing All Operations into Salesforce

Zayo gained a significant M&A integration advantage by building its entire operational stack—from sales to billing and provisioning—within a single Salesforce instance. This eliminated complex system migrations and streamlined data consolidation for acquired companies.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago

Activist Investors Often Profit from Manufactured Volatility, Not Value Creation

Zayo CEO Dan Caruso learned that activist investors often create value for themselves, not shareholders, by manufacturing stock volatility. They can create negative sentiment, buy low, then reverse their stance to sell high, profiting from the swings.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago

Maintain Focus by Carving Out and Selling Acquired Non-Core Business Units

To maintain its strict focus on bandwidth infrastructure, Zayo would isolate non-core businesses from its acquisitions (e.g., a voice service), run them as separate entities with their own P&Ls, and then divest them.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago

Zayo's CEO Engineered a Competing Bid When Buyers Cornered Financing

When a buyer consortium tried to force a lower price by locking up all available debt financing sources, Zayo's CEO regained leverage by personally orchestrating an alternative bid, convincing two smaller, reluctant firms to partner up.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago

Deter Activist Investors Post-IPO with Super-Voting Insider Shares

Reflecting on his public company experience, Zayo's CEO advises creating super-voting shares for insiders during an IPO. This concentrates control and makes the company a much less appealing target for activist investors who can't easily gain influence.

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2) thumbnail

M&A Roll-Up Playbook: The IRR Framework That Replaced Budgets at Zayo | Dan Caruso (Part 2)

M&A Science·2 months ago