Alternative Strategies to Accelerate Growth

We recently launched a new book titled how to Stand up an M and A Function. Even if you're an experienced M and A practitioner, standing up an M and A function is a challenge of its own. That's why my colleague John Moretta and I compiled a series of templates, perspectives and Excerpts from over 50 interviews to help you build your M and A team from scratch. Topics include the order of hiring, establishing your operating model, developing your organization's integration muscle, and more. Find it on Amazon under How to Stand up an M and A Function link is in the show Notes.

I'm Kisam Patel and you're listening to M and A Science where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during M and A deals. Foreign A Science where we curate knowledge from the best in M and A to continuously improve. If you're interested in keeping up the latest from M and A Science, subscribe to our free newsletter@mascience.com Every week we share highlights from our interviews, invitations to events, M and A role openings and other resources as we build the greatest community of forward thinking MA practitioners. Again, that's mascience.com I'm your host Kisan Patel, CEO and founder of M&A Science. Joining me today is Ivana Perez Morel, Senior Director of Corporate Development at Ulta Beauty, in addition Managing Director at Prisma Ventures. Ulta Beauty is an American chain of beauty stores that carries both high end and low end cosmetics, fragrances, nail products, bath and beauty products, beauty tools and hair care products. Each store also has a beauty salon trade on NASDAQ under Ulta. Today we're going to talk about how to initiate partnerships to accelerate growth. Ivana, how are you doing today?

Doing great. How about you?

I'm hanging out. Hanging out in lovely Manhattan over here.

That's wonderful. Well, Chicago's pretty sunny today, can complain.

Hey, that's always good. Can we kick things off by learning a little bit about your background?

I'm originally from the Dominican Republic, very different weather than Chicago if you ask me, and have worked in finance and investing for over 15 years with a focus on the consumer and retail sectors. I've worked and studied in New York, London, Chicago and several Latin American countries, which I believe has only strengthened a little bit my perspectives on daily operations. I started my career in investment banking back in my home country where I had the chance to work in many, many clients across the board, multiple industries, but always had that focus on consumer and retail. After completing my international MBA at Chicago Booth and London Business School. I continued my investment banking journey, if you will, at bank of America Maryland in Manhattan. In the consumer and retail space. There I participated in many deals across M and A equity debt financing, including things like Hudson's space acquisition of Saks Fifth Avenue, Carlisle's investment in supreme, the streetwear brand. From there I worked at Estee Lauder, I worked in their finance and strategy division. Organizationally I reported to the CFO of Tom Ford. But it was honestly a great experience and I enjoyed supporting the brand as it grew. And I remember like one of the things I enjoyed the most was actually taking the brand international. Not that the brand wasn't internationally, but taking the brand to Timo, so to China, which was something that was new during the time that I was there. Since joining Ulta Beauty, which is probably most relevant to this conversation, which happened about four years ago, I've created and implemented many processes to support the corporate development function, led multiple investments and partnerships including Ulta Beauty at Target and even more recently I co led Prisma Ventures which is our new digital innovation fund. Today the corporate development function at Ulta Beauty really works towards two very different objectives. One of them is a more traditional corp dev hat if you will. So those are focused more on enterprise wide priorities. And the other one is Prisma Ventures which focuses on emerging technology. Emerging technology startups that stick to shape the future of retail which typically implies accelerating discovery, personalization and convenience.

For our guest, that's like the fun emerging technology right now. We get to have a camera virtually put on clothes for you and all that kind of cool stuff.

Exactly. We'll put makeup, put eyeshadows. Anyways, I love it.

It's personally been great to watch Ulta Beauty grow as a Chicago company. That was always cool to see this company pop up location after location. In fact, I'm actually a customer of Ulta Beauty. My first question is what would be the best men's facial scrub that you'd recommend?

You can never go wrong with the classic like a cleaning for men face scrub. Those are always great products to try.

It's a great product. I've actually tried it before and bought it at Ulta because I think that's like the most important cosmetic that all men should use.

I don't disagree.

Can we kick things off? When should corporate development start thinking about partnerships?

It's interesting because I feel like we are always, always thinking about partnerships and we're always thinking about how can we amplify our long term strategy or help us to Continue to grow our business to the very topic of this podcast. I would bucket opportunities if I needed to classify them, I would bucket of other overall opportunities as inbounds, where we typically are reviewing pitches or outbounds or proactive engagements or of new prospects, I would say so in either instance. The very, very first thing we do when we are going to evaluate a company is ask ourselves, could a partnership with an investment in or an acquisition of this company help accelerate or address our strategic priorities? If the answer is yes, it's simple. We engage further to discuss in more detail and potentially move into next steps. What happens on the other side of the house when we proactively engage? Our approach typically tends to be very systematic. Everything starts with the enterprise focus as defining our strategy. Those priorities, right, like those in a way come as a given. They come from the strategy team, the board, the long term planning process. So we think about, okay, this is a priority where we could potentially accelerate the strategy and we map what is the landscape and how exactly could we potentially partner with someone. So, so my team then partners with that very same team, so the enterprise strategy team to consider building, buying or partnering in order to achieve a specific objective, a specific corporate objective. So if we think about a partnership or a position as the ultimate way to achieve that goal, engaging a potential partner is key, even when it's just to discuss an idea or multiple ideas in some cases about a path forward. But it's interesting because sometimes you come up with an idea and then you engage that partner and then they have experience doing that, so they ultimately, ultimately make it better and you ultimately make it better together.

Can you help me understand partnership within corporate development versus I don't know, do you have like a partnership function? Because a lot of enterprise sales will have that. The reason what I'm trying to get to is partnerships part of a step in the process to get an acquisition or are we really looking at partnerships in general and then that may get progressed into an acquisition?

This particular point is very much common for the corporate development function and the PRISMA Ventures function. And I would say in general it is not the ultimate goal for us, but it often happens. It's interesting, but I'm actually working on one of those cases right now.

Can you tell me how that happens? Like we're not naming any names or anything here, but I'm just curious because I like the idea of this. The reason I like the idea of partnerships in general, even though they can be tricky, it sort of tests investment thesis in a lot of ways. If it's around a go to market. Together, you very well can get a lot of good feedback and insight into how well an actual combined entity would work. So how does that end up turning into an acquisition?

Yeah. In our Prisma Ventures team, we have a track that it's called Own Differentiated. What this really means is these are technologies that are typically in our roadmap. Today we are actively working and co developing and collaborating with a specific stakeholder start. We're working day in and day out with a portfolio company, co creating with them. And let's say we're doing that very well and it's working very well to fuel part of our virtual. Try on that. We were joking at the beginning where we can get makeup put in our face or skin analysis and then it seems to be the right moment for both of us. It seems to match the journey for both them and ourselves. And both teams seems to work very well together. So we absolutely consider it if that is the case.

So it's like things are working out so well. Why not put something together on the table?

It's funny, but it's happening right now. And it happens back in 2018 when we acquired Glam street, which is part of our virtual tryout experience, which is why I came back to that example.

It's something you conclude too. After a while. You have your review. Think about it and does that come up through the business or through corporate development? Through C Suite typically not.

C Suite typically comes from the business. Again, they're like collaborating, working every day, day in and day out. They work very well together. They know as part of that very good working relationship that there is something that's happening at the startup. We know that's something that we would be interested in bringing in house potentially. And then it typically raises a flag, hey look, I heard this from the startup that we are partnering in. It raises a flag to the corporate development. So ultimately to my team, we're hearing this from the startup. It's really a great relationship. Do we want to consider potentially building a business case to bring that startup in house? So if that is something that ties directly into the digital innovation roadmap, which ultimately ties to our strategy, the answer is absolutely yes. Let's evaluate it, let's do a business case, let's do the proper diligence and let's analyze whether that makes sense for us to bring it in house.

Is that business case usually around? We can do more together or this makes financial sense.

I love that question. Really depends by company. For us, it's all about the strategy. Of course, the price needs to be within market needs to make sense. But it's not about the financial sense at all. It's really about the strategic rationale, it's about the strategic fit of the teams and it's ultimately whether we think it's capability that we need for the company.

A lot of it's about relationships, it's.

About growth through partnerships.

You've worked on deals as in house corporate development. That's just purely an acquisition play from the beginning.

I have, but not as part of ultim.

Yeah, I'm just curious about. Because with a partner you just already have things established because of that. It just makes the whole acquisition process go, I guess to the point if you were doing something to specifically buy. I'm trying to get a sense of the timeline because it takes a while to mature a relationship even for an acquisition.

In terms of timing, you're spot on in that it takes a lot of time to create relationships. And sometimes we have been in deals that have taken over a year. Whether it's a partnership, it doesn't matter in a way if it's a partnership, an investment or an acquisition. But what does matter is the overall objective and sometimes even to create a partnership it takes time because people think, oh no, you're ulta beauty, you can, you're a corporation, you can do this, you can agree to this set of terms. And it's yes, but it's beyond that. It's let's work together. What is the common goal? What are we trying to achieve? So regardless, I do think it does take time. It can be over a year, could be longer.

Let's get the tactical stuff out of the way. What does governance look like when it comes to partnerships?

If you think about governance, our governance structure is really rooted in best practices and as such is really, I would call it bespoke to each one of our TUI objectives that I mentioned earlier. So Prisma Ventures and the corporate development functions have completely different visions, missions and processes. For example, so with Prisma, we have allocated $20 million to invest in early stage startups which we're defining as like Serious Seed, A and pre seed and as aligned to a specific focus areas within the digital innovation roadmap, which again ties to the overall corporation. Afterwards, for approval, we have an investment committee that reviews and approves investment proposals from the Prisma Ventures team who are responsible for building the business case and showing the link to a focus area. So a roadmap and maybe more importantly that the startup team is the right team and is the right fit for our company and our brand. Conversely, on the corporate development side, the approval process really depends on investment thresholds. Very similar to the way that it happens in most corporations. I would say at specific dollar amounts our executive team can review and can approve investment decisions or acquisition decisions. But at larger amounts, oftentimes it requires us to engage a board of directors. Again, quite standard.

Any of the smaller deals, pretty straightforward to get through. But then you do something bigger, it's going to go up to the board. On the venture side, you have an investment committee. Who's on the investment committee.

It's a combination of the strategy, the corp dev function and also the business ultimately the business leaders on the digital innovation or their digital broadly space.

Are they all in this committee or do you put it together based on the deal?

They're all in this committee. They said permanently.

How many people are in the committee?

It's not that many. It's not that many. I would say it is the people. People we need in order to make the right decision fair enough and then.

Everybody has equal votes and they make a go, no go decision. When opportunities come up, something like that.

It is important that it is the right fit. So if we feel like there is pushback, we typically spend quite a bit of time just understanding why there is pushback and really resolving the issue until it's solved. It's not as easy as like saying, oh, we have 50% of the votes and it goes. It's more about getting to a collaborative decision and making sure that everyone is on the journey.

So let's break down the whole process of building a partnership. We talked a little bit about the strategy component so we get a sense and something comes up. Hey, this might be an opportunity. You've built enough confidence to engage. Walk me through that. How do you approach a target company?

No two opportunities are really alike and as such, our approaches are really tailored to the opportunity and can really use a range of ways in which we can initially reach out to a target company, whether it's a phone call, an email, personal networking, you name it. But let me share an example that I think illustrates how the conversation typically looks like for us. So the example is about conscious beauty at Ulta Beauty and I'm not sure if you're super familiar with the program because it's very specific. So I would say it's our way to empower guests to make choices based on their values, such as clean beauty, cruelty free, vegan, sustainably packaged, et cetera. So, so in practice, what that really means is you can go to ulta Beauty or Ulta.com and you can search for your favorite products. Let's say I'm talking about Tarte's Shape Tape Concealer, which, true story, I wear every day. It hides things very well. And I can easily see that it's formulated with clean ingredients, which matters a ton to me. I almost exclusively purchase products that are formulated with clean ingredients, and that's something that I actively look for. So we were about to launch Conscious Beauty. We leveraged the expertise of others who were established leaders in the space. So my team did some desktop research, understood what was the landscape, and selected a few companies that we wanted to engage in, and that included Credo and Credo, it's a clean beauty retailer based in San Francisco. Coincidentally, I was attending a beauty conference in la and their main investor, nextworld, was talking about clean beauty and the role that Credo has played in space and all of that. So after the session, I just approached them and I was like, hey, can we connect upline and learn more about your company, your goals, and how Next World is thinking about the investment? We had several conversations, including others in the team, whether it was internal business partners and strategy, merchandising. But long story short, sometime later, together we shaped the partnership that we have today. And it really includes multiple components, but it also includes what we call the Credo Collection. So you can go into our website or you can go into some of our stores, and you'll see a space that it highlights.

The Credo Collection you originated through the investors. Yeah, they basically connect you with the company then.

Yeah, because they had a very strong investor. We were always talking to both the investor and the management team.

I like the idea of that because sometimes we forget to do that. We get so fixated on going to the company directly. That makes sense. And you got them at a trade show. It wasn't through typical cold outreach.

You can analyze this from two ways. How we approach it from their perspective or how we approach it from our perspective. But if you think about it and you pause for a second and you take a step back, there were many different components that I think are common threats. One, there is a clear link to this, to a strategic priority, which is Clean Beauty, and our goal to leverage partnerships to gain expertise in that space. Second, there was an interest and admiration for a specific set of companies that we had researched and knew were strong players in the space. Third, there was an initial approach that included a few players and did not focus on partnerships. But rather on an interest in learning more about a company and building a relationship and ultimately understand if it could be a fit. And last, there was a joint effort to shape the partnership over time to ensure that it was a win win for both sides. If you take it back to your other point about the time, it does take time to build a relationship, but sometimes that time works in the benefit of everyone involved.

The strategy is what guided a lot of this. And you had that narrative as you reached out to the investors, shared your vision and what you were interested in. And I like the line that you used about wanting to understand their investment. Cause they obviously have an investment thesis in the company and for them it's always, hey, let's get together and compare some industry notes. Those are always fun conversations. And then get together and then this makes a lot of sense. Let's make that introduction happen.

And honestly, at the time we didn't have a specific. We want to have a shopping shop in our stores and have a shopping shop in our website. We had a goal and we had a couple of ideas, but it was together that we developed what the relationship became. It could have been something else. It could have been, could have been anything in the spectrum actually.

What are other approaches you've done to reach out? Because you don't always get this benefit, sometimes you have to find other avenues. What do those look like?

We have many different ways in which we can approach that. We can get our investment banking. We keep relationship with investment bankers with VCs that sometimes either have these portfolio companies or know of these portfolio companies. This is a very small industry. It's funny because it feels like it's a big one, but it's really not. Like at the end of the day, you always know someone who knows someone. Sometimes we just tap into existing relationships. And lastly, sometimes we just email the founders directly and we say like, hey, would you be interested in a conversation? It's not like we tell them day one, we want to necessarily acquire you. We may not be thinking that we want to. We may be. Most of the times we are open to considering different ways and we just have an objective that we want to achieve.

What does that email read like? They say, I got a company, I got the new hottest skincare product. You're interested in it. I got a little startup and I'm anti corporate and that's like part of my branding. But I got this big growing following. And how would you reach out whatever the email read?

Like, it really depends. But it would be something like, hey, we are interested in understanding better your technology. Would you be open to having a 30 minute call with us and just showing us what your technology does? We're just curious. We just want to learn more. Another thing that is very distinct to Prisma Ventures in particular, which is typically that focus for startups, is that our team also includes founders. So for example, Augustina Sartori, who's my co lead of the fund, is a founder herself. So she was the founder of Glam street, which we acquired in 2018. So she has that perspective of okay, when I was a founder and I was talking to whether it was Ulta Beauty, but she was talking to other companies as well and other VCs and others in the space. Here was my perspective and here's how I reacted to some of these things. I think that's unique. I don't think that all corporations have someone in such a direct position that just understands the founders.

We got the partnerships, we had this first date conversation, get to know you and I want to learn more. And they said, all right, we'll open a conversation. What does that look like? Do you have an outline for it? Is there some framework you follow and how do you structure that?

First, meeting every single approach, I would say it's quite unique and it's quite tailored to a specific situation. The approach changes materially from company to company. It really reflects the way in which we do business because we don't want something that is only good for us. It has to ultimately work for both sides and no two deals are ultimately the same. So as looking to form those mutually beneficial long term relationships, we take a truly holistic approach. Let's say we're considering multiple structures. We typically don't even know whether we want an acquisition or whether we want an investment from day one. For Prisma Ventures, yes, we have a process, so to speak, like a little bit more standard I would say. But for Curve Def, not at all.

This is like going on a date. You're not going to plan that much details, have a location, a time.

I love that analogy, that customization. Ultimately, whether it's on a date or whether it's on a deal, it's key for multiple reasons. Let's consider the variety of partners we engage with. We have early stage startups like QM Scientific, also acquired in 2018 and we have established corporations like Target, where we created that shopping shop. It's really tough to take the same approach when you have such wide range of potential targets. Second, every company is unique. Just culturally and financially. They're facing different challenges. And third, and perhaps most importantly, each deal really aims to accomplish a different goal.

Going back to the corp dev position, obviously you're working with companies of varying sizes, but specifically startups that don't have a very mature partner model or even experience with partnerships. How do you approach that?

Yeah, so if they don't have that, then that's something that we can certainly guide them and help them along that journey. Part of our job, it's the education component, both externally and internally. Processes in place is something that we do have, even though we don't necessarily necessarily have a structured way, which we approach every partnership after we know that we are going to do something and we know that more or less how. Meaning is it going to be a partnership, an acquisition or investment or what? Then we have a very specific process that we can follow and we can be very efficient. It's cross functional. It just helps us get things to the finish line in a way that everybody comes along the journey. So whatever that partnership is, it has to tie directly to the enterprise. It has to achieve the goal of aligning to the prospective partners values and making sure that those align with those of Ulta Beauty. And it does leverage a cross functional diligence process which we clearly outline and we can educate externally and internally to.

Achieve align on goals, talk through the how, run through the process. You're making this sound way too easy. What's the hard part?

It sounds easier than it is. I really enjoy my job, so I love doing this. But honestly, ultimately you're solving for so many, many goals and so many aspirations and objectives, both from internally from the business teams to externally from the founders. Sometimes the hardest thing is just getting everyone on the same page and making sure that everybody understands that we have a common goal together and that we can flex on the issues that are not key to you personally. And we are going to flex on the things that are not key to us as a corporation and we can get to a place where one plus one may equal three.

Are there any nuances that you pick up on to get a sense if that's a good working relationship? Have you ever had it where I like the company and their product and where they're going, but I really just don't like these people and don't think we're going to be able to work well together?

Yeah, that happens all the time. You would be surprised.

How do you pick that up? Is it a pure gut feel then? Is it how do you know it's not a bias with just. You do you bring other colleagues in, try to cross check that. What does that look like?

The main things that we want to review in a deal. I mean the large majority of deals fail because of that lack of. If the culture is not a match, it can be really challenging to integrate and really make the deal work. When do we realize it to your question? Sometimes it is the very first meeting I am there with my business partners. I'm typically there with my business partners. I'm never there alone and we just sit around the table or sit around a couple of conference calls and it's very obvious we just don't work in the same way. We just don't approach things in the same way. We're just not looking for the same things. And sometimes it takes a couple of iterations, sometimes it takes all the way to working together. In some of these co creation examples that I was providing earlier, we are co creating with a company, we are working together, our teams are working together day to day and then we realize that it just doesn't work and that we cannot work together day in and day out. Or we have different approaches and it doesn't mean that their approach is better or their approach is worse, it just means that it's different. Maybe they would be very successful with a different team, but it might not be the right fit for our company.

Are there any like clear, tactical things that you're looking for? I'm thinking of all these conversations where people try to make the culture assessment into a very pragmatic thing. Are there any key things like that or is it more like dating? And you take up all these variables that make your conclusion pretty quick about people.

It's a combination and I would say most of the times the dating component and the deal is what gives you the right answer. Most of the times we do have a couple of pieces where as part of diligence we evaluate the harder components of the deal. And depending on what type of deal we may be doing some surveys. It really depends on the type of deal that we want to do. But we do evaluate that people component. We take it very seriously.

I heard they have AI tech that can actually like read sentiments of companies emails and then spit out what the culture is like and tell you, I don't know.

I would love to see that though.

Anybody knows somebody at a big consulting firm listening to this and send them my way. I'd love to talk to them about that. I'd be really interested to see how that works. We talk through just the culture fit part of it. If you think of the timeline of an M and A deal, we got the sourcing component of it. And then you get up to IOI unless you're better enough to go right directly to the company and go straight to loi and then you move right into your confirmatory diligence and close and then you got a whole integration. What does that timeline look like when it comes to partnerships?

It's typically very similar. So you have some sort of agreement where you can call it a IOI LOI or you can call it just an agreement, but you have some set of like high level terms that you're discussing and that you're working towards. And then you have some, what do you call, confirmatory diligence. You have some sort of diligence where you're just talking through, okay, so what example, and it's a different approach. You're not looking into, are the financials of the company what you thought? Or like this is different. You're looking at, okay, so the devil's in the details. How exactly will this work? Take the target example. Which stores are we going to be in? How are the employees going to interact with the guest? How is the loyalty program going to be structured? How are we going to give access to Ulta Beauty's loyalty program? Or is it only going to be targeted? It's really a lot of different components that you are really vetting. So think about that as the pre LOI IOI or pre high level agreements phase. As like high level, we want to do this. These are the set of terms that we think we can make this work at. And then you go through, okay, the devil's in the details. Let's understand that better. What does that mean for 1, 2, 3 and then all the processes that are in the background that need to move in order for that to happen. Then of course there is a legal component that is happening in parallel, if you will. So, so there is drafting of contracts and understanding how exactly is that relationship going to be governed as well as the governance piece, which is can both sides approve those set of terms that the business teams are aligning towards. And then you get to the signing of the deal or the conclusion of the deal or closing of the deal. And then it's hard to say that it's the most important, but it's a key component is the integration. And that's where it really, even though you're not integrating two companies in a way, even if it's a partnership, you're integrating two teams. Like you have two teams that Are talking basically every day to make this happen and to make this successful.

How do you keep that from getting screwed up? I feel like that's the thing I make a mistake on is I make the deal for a partnership, but then the execution fails. For the diligence of a partnership, how much diligence actually happens? M and A we do tons and tons of diligence. Do you set up a process and put up a data room and all that stuff?

Data room? Not necessarily. Not for partnership. But you do set up. You have set up processes, you have cross functional teams. You also bring in. At least that's the way that we've done it in the past in multiple ways, both in the we have the partnership with Target, the partnership with CREDO and others internally like we. The way that you set up these processes is that you also bring in the team that will ultimately be responsible for executing it, not an integration in traditional sense, but will be responsible for delivering it. So they come along the journey somewhat early on that they are part of the whole conversation. They understand how are we designing the deal, why they can provide some insights. Those are typically senior teams, so they have an idea of how other partnerships and what are some of the things that we care about as a company. We need to just make sure that we hold hands as a team and that the things that we ultimately agree on can be delivered from both sides.

When you talk about integration then, is that our pretty static process that there's a template follow or is there a lot of integration planning that goes, does it happen during diligence afterwards? When does that occur?

Yeah, it happens just before the closing. The devil's in the details. Let's talk about it in a little bit more detail. Just before the closing. That's where you spend a lot of time thinking, okay, how do you take this from a very detailed plan to an execution plan? And that conversion is so important and that's where you just need to make sure that it can really be actionable and it can really be done. If I agree that I will share some insights with your team about what's happening in our store, for example, or what's happening with the consumer. And I will do it every other day, but I don't have the systems to even generate the data promptly for me, then that is an issue. So we need to just make sure that whatever I am telling you that I can give you, I can actually produce it and I can deliver on.

That promise before close. We're going to double check that we got a clear Game plan on how we're going to execute this, which is basically our integration plan. After close, how do you make sure things are successful? The interesting thing is you got teams in lines, they know what's happening and what they're accountable for doing. And I like how you contrast this with M and A because now it makes a lot more sense. You've gotten me a lot smarter about thinking through partnerships and then ensuring the success. Are there certain metrics that you're setting up to measure that success or how does that work?

Yes, I would say absolutely yes. In every partnership the metrics are different, but there are always metrics. Whether the metrics are a set number of sales, whether the metrics are a set number of engagements of of some guests, it really depends on each partnership. But there is always a set of KPIs that are tracked over time that we need to deliver on as a partnership team. And honestly, they typically do benefit both sides. They're typically not a one sided. Oh, I want this to hit this. Clearly, if the partnership is successful, that's where you see hitting and exceeding hopefully all those KPIs.

I like it. You mentioned earlier you have a VC fund that you also run in parallel to all this. Differences between your approaches on forming those opportunities versus partnerships.

Yes, we do have corporate venture capital. Our Prisma Ventures just launched this summer, so August of 2022. So it's out of the breast as the fund really marries like our digital innovation and our corporate development team. So our goal is in a way a little bit different in that it looks to accelerate innovation by nurturing partnerships with startups, pairing Ulta beauty, size and scale with the agility of tech startups and in a way of like agility and singular focus of those tech startups. So as a fund we're looking to partner with earlier stage tech companies, primarily those series C, series A3C and focus on a very specific set of verticals that we have defined and they tie to our digital innovation roadmap. To date, we've invested in a variety of startups and they've already enabled greater personalization diagnosis within Ulta Beauty, skin and care experiences.

This is pretty cool. You're leveraging this vehicle, venture vehicle to get access to innovation, new technologies faster. Instead of going on a massive buying spree and having your investor analysts out there question every move and tackle you on earning calls, you run this where you're making a lot of probably smaller bets, I assume. How does that work? Is it similar to the partnership? Is it different in that the way you get access to the technology.

I know you're going to kill me for this, but it really does depend on each investment.

That's the lesson from all this. You can't create a checklist to do M and a deals, period.

Right. You can create a checklist for processes, and you should, because otherwise you'll spend forever trying to set up every individual process. But it's impossible.

It's the strategy. It's like there's all these strategic decisions that need to make and you can't. You best is get cleared on the thinking first and then figure it out from there. And it's got to be case by case.

That's exactly right. So it's very similar processes, I would say, for both.

Okay, Any dating tips? Because it is fun. It's just like all about this relationship that you curate and how that evolves and shapes into a real business partnership. The thing I struggle with, Ivana, is the keeping up the relationship, the nurturing it. I screw that up because I'll meet a founder CEO and it's like more than a year goes by and not really good at keeping up with that. And the worst is I've actually lost a couple of really good opportunities because of that. They either sold their business or something, and I would have jumped all over that. And that's the worst. Even for a corporate person, nobody wants to see one of their pipeline companies in the press release with a competitor. They don't want to see that. So how do you keep that from happening?

It's important, and it's so important to keep those relationships alive. And sometimes you. You can't avoid it. Where you want to be is in a situation where you choose whether you avoid it or not. But it happens sometimes that we are in a process, in an M and A process, and we have an idea of who else is in the M and A process or who else is in the partnership process or the investment process. And sometimes we choose not to move forward because it's not the right opportunity. It's not the right strategy for us as Ulta Beauty, even though we know that some of our competitors are also looking at the same deal. And that's okay, but you want to be in the situation where you choose to say no and not. We're in a situation where you see it in the front or second or third or whatever page of the Wall Street Journal after it has happened. But back to your question on the relationships. It's tricky, but it's so important. Like, we do try to keep Those relationships alive, like especially the relationships with key advisors and key players and key measures in the space. And it doesn't have to be every day, but we make sure to like touch base whether it's every six months or every four months or depending on who it is and how many things we have in common. It's really important to just make sure that we continue to iterate and we hey, we wanted to check in how is the process that we were talking about? And sometimes I have gotten calls from whether it's advisors or founders, hey look, my company is really the situation or I'm about to post a deal with so and so are you guys still interested? And that's exactly where you want to be. If you want to be. You want to be in a situation where there is an open dialogue and you can potentially even make something happen with that startup and potentially with someone else. It could be a three party deal. It really depends.

How do you remember to follow up with people? I feel like that's the fundamental problem there. Do you set reminders you put in your calendar? How do you do that?

A combination of everything. We do leverage a software for that but also a lot of good old outlook reminders to make sure that we have this conversation. I tell you, oh, it would be great. Just stay in touch and just connect maybe the next year or maybe towards the beginning of next year and then just put a reminder and maybe I'll be reaching out to you in January to say hey, how was your holiday?

Yeah, I was going to ask what the re engagement content looks like. Is it something like that or you don't want to be generic like hey, thought it's time to go to touch base. Nobody's got time to take those calls. So how do you put a little weight on it to get the next conversation going?

Typically when those oh, it would be great to catch up and follow up or stay in touch. Typically there's a mutual interest for that and typically there's a reason whether it's we share an industry, we share a set of there's something that is driving that and it's all about going back to that. And I would say the hardest times to do that are the very first couple of times that you connect with whatever individual or person organization, then it becomes easier. Then you know exactly what they're focused on. They typically know what you're focused on and if there's a specific opportunity that they think it's a fit for us or that we think it's a fit for them. Then it becomes quite natural to be like, hey, I heard about this. This seems to be something that you would be interested in looking at.

Cool. That makes sense. Ivana, what's the craziest thing you've seen in M and A?

It's funny, but I continue to be surprised by how small the world of M and A is, particularly within the beauty industry. I love re engaging people I worked with during my time in banking, to your point, some of whom are actually my peers now. So it's always great to people that are in similar positions at other companies. It is a small world and you should always just treat others with respect and professionalism. Sometimes negotiations get tough, but it's important to just keep it up. So over and over again I find investors and the leadership teams I interact with become future advocates and in some cases they become friends. One example I really sharing is that the CEO of one company we partner with unexpectedly referred me to this program called Chief. I'm not sure if you're familiar with.

It, but yeah, we've had a few other members on the podcast.

Yeah, exactly. So it's a great program. So it's.

It's a private network, as Christina Ungaro and Carrie Perez.

Exactly. It's a private network basically designed to support women and reaching high responsibility positions. That was unexpected to me. I just received a call one day like, hey, this person referred you to this program and that's great. Some other counterparts have become professional friends and I really just appreciate being able to we just build that network which is like personal but also professional and just being able to bounce ideas in some cases. These are the same people I had some very heated discussions with when we were on opposite sides of the table. We were like, this is a deal breaker. I hope this is a deal breaker for me too. But then getting to that, let's break bread together. Like that whole transition, it's really, I think what has driven that mutual professional admiration for a lot of them was.

That in the same deal or in the different role?

Different deals, yes.

After that you broke bread and. Okay, I'm wondering if you can introduce that during a deal because that would help a lot of deals out.

Yes, it could get tough, but it's okay. It might be okay at the end.

I guess it is part of negotiations. They my team knows I gotta go fly and get em drunk. I'll be book a flight. Let's get it done.

It's all about people. At the end of the day it is.

At the end of the day, it is all about the relationships you create to get things done and having aligned strategy and goals.

There you go.

Thank you so much for this conversation. I enjoyed a lot. I appreciate you helping me become a better M and A scientist and do partnerships better now.

Thank you for inviting me.

My pleasure. To those of you still with us, here's to the deal.

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