Capturing Revenue Synergies

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If you're interested in keeping up with the latest and greatest from M and a science, visit mascience.com and subscribe to our free newsletter. Every Monday we share highlights for our interviews and invitations to events as we build the greatest community of forward thinking M and A practitioners. Again, that's mascience.com I'm your host Kisan Patel, CEO and founder of M&A Science. This episode is from our last M and A Science Spring Summit. I had the chance to sit down with Joe Heal, Chief Revenue Officer at Zebra Technologies. Zebra Technologies is a mobile computing company specializing in technology used to sense, analyze and act in real time. They trade on NASDAQ under zbra. Joe spoke in length about capturing revenue synergies.

Joe, can we kick things off with a little bit about your background?

I was born in Germany, but I've lived in the US for most of my life. I first came when I was two years old, but then came back after my family returned to Germany to study at MIT, so studied computer science there. Decided to join McKinsey after graduating from MIT where I did quite a bit of work in different M and A situations. I worked on IBM's acquisition of Lotus, for example, EMC's acquisition of VMware, Siemens acquisition of Westinghouse. I also worked for two companies afterwards were reasonably prolific acquirers. One of them was Avaya that acquired Nortel. The other was actually sun which was acquired. So I have the opposite experience of being acquired by Oracle. And and then seven years ago I joined Zebra. I joined at a very interesting point in the company's history, which is probably the most prominent Example we will be discussing here today, which is Zebra, a relatively small company of about a billion dollars in revenue, acquiring a significant portion of Motorola Solutions Enterprise. We as Zebra have made about eight acquisitions since then, only one of which was really related to our core business. The others were acquiring into expansion areas, which I think will also be an interesting discussion for us to have here. And we're right in the middle of closing another acquisition. We announced our intent to acquire Matrox, which is a machine vision company, just recently and is expected to close within a month or so. So that's a little bit of my background but some relevant experience points.

You're beyond a beginner M and a practitioner.

I have a few scars on my back.

Let's say just some really interesting deals that you've worked on. Some microsystems being on the sell side of that. The Simmons acquisition. These are really interesting.

Definitely a lot of different elements, right? Seeing different types of acquisitions, international versus domestic ones. Large buys, small buys, large. These are all different environments and each one brought its own learning with it. Happy to talk about those.

I want to get into one of my favorite all time deals and there's a lot of noise. This was when Google did acquisition of Motorola and here along the side was a big part of their business. Their Motorola Solutions enterprise that quietly didn't get all that press coverage, got acquired by Zebra. This is definitely David acquiring Goliath and I was really fascinated by that transaction. That's why reaching out to your team, like hey, let's talk about this. Can you walk me through that? Can you even give me a depiction of the entity sizes and how that deal went down?

It might be helpful. I'm not sure if everybody knows who Zebra is. Zebra is one of those companies that nobody knows but is everywhere, specifically Zebra. But simplification does everything that has something to do with barcodes today. So that means Zebra, when I joined in 2014, made barcode printers, over half of the barcode printers in the world, which are different from the printers that you use for office purposes. Those thermal printers, over half of them in the world, were made by Zebra. It was a billion dollar company and set out on a bold vision to acquire the other parts of the barcode ecosystem. If I can say it in that simple way. And the two big parts of that are scanners that read barcodes. Think about a handheld scanner that you might see. And the other part would be rugged mobile computers, which is in the hands of a delivery worker or a retail worker, which typically has a barcode scanner built into IT and then processes that information to do things like proof of delivery or taking inventory. So in 2014, Zebra, the printer company, a billion dollar 1.2 billion, acquired a part of Motorola. As you said, Motorola was in the process of transforming itself, spinning certain pieces out and sol off a two and a half billion dollar piece. So one that was more than twice the size of the acquiring entity to Zebra Technologies. Zebra made that acquisition with a significant amount of debt. So it was close to a leveraged buyout, but it was done by a public company. And the two things that made this unusual, I think is number one that it was small, acquiring large. But the other one was that the acquired entity was a carve out. And as I'm sure your listeners have experienced in many situations, when you're carving something out of an existing entity brings with it a whole lot of complications which are both operational in nature, your functions are integrated like finance or it, but also cultural in nature where you're transitioning from one culture, a relatively big and mature culture, to a different one. Those were the big changes that needed to occur as we were making this acquisition and all of those we wrestled with.

There's a lot going on there.

Indeed. We had a lot on our hands. Took us about three years, I would say, to effectively complete that integration. So it was a big task.

I know we wanted to focus our conversation around CO to market integration. And I wanted a little bit of context of how you came from this pretty unique comprehensive M and a background into the CRO role you currently have, because it brings pretty unique position. A lot of times when I talk to CROs of publicly traded companies, it's a big challenge for the go to market integration. They're trying to learn as quick as they can. And how do you even speed that stuff up, which you have the reverse experience that positions you pretty well to have a sense of how this should work.

When I came into Zebra functionally, my responsibility was sales. That was my responsibility. I drove the integration from that angle. I had obviously many peers and collaborators that drove the integration on other fronts, which I heavily depended on. For example, the IT front, which is a big challenge to integrate or transition the IT systems out of Motorola and establish our own, which we did, or things like the operations where we get our product from where we source it and manufacture it. So I wasn't alone in this and I wasn't leading the integration, but I led the part that had to and did move the fastest, which was how do we integrate the go to market portion of the organization and in particular, being at that avant garde, if I could say it that way, of the integration movement. We also bore the brunt of what was the big challenge here, which was the cultural integration. And as everybody knows who's working in sales, sales is heavily about culture. It's heavily about how people feel, how they act, what values they have, and bringing those together in the sales organization certainly did a lot to set the tone.

Culture is a big risk for any acquisition. You hear the cliche, big company buys a startup, then wants to make all these pragmatic changes and throws culture out the window. And then you hear the other side. I always think of the Daimler Chrysler deal where obviously big shifts in the culture that caused some friction with the deal. How did you prevent culture clash in this situation? When you're buying a company that's roughly two and a half times your size.

First it's important to sort of disaggregate and understand what is culture clash? What are people really concerned about when they're coming in? I would perhaps break it into three pieces. The biggest concern that we always hear, and we're hearing it again in the other acquisitions that we're making now, is will they take us over and they squash us. We're being acquired. Are we just going to be squashed by whoever we acquire? And this is usually a concern for the acquired company, right? The one that is being acquired in this case because of this David and Goliath situation. It actually was a concern that existed on both sides. You had twice as many people from Motorola running around in the entity, the combined entity, than you had from the traditional zebra. And the traditional zebras ended up being more concerned than the Motorola people as to whether or not they would just be squashed in this process. What approach did we take? I made it a big priority to run an objective and transparent process for how we do the integration. So this involved both frequent communication and clear methodologies and structures for integrating. For example, relatively quickly. We announced that there was going to be a cascading organization selection process which said, I'm going to pick my direct reports within a period of two weeks and I'm going to announce who they are and then they are going to do the same thing in the next two weeks and so forth. And we also publish the criteria by which we would be making those decisions. Having that goes a long way to saying there's no back room discussions going on. That will cut us out. Which is what people mean when they say, will they squash us? A second big concern is clearly both organizations. And I think this is hopefully true for every acquisition. Both organizations bring strengths to the table. And will we be losing those strengths over time? Will they fade away because we're not paying attention to them? In the case of Zebra and Motorola, those strengths were very, in the go to market, very visible in that Zebra was excellent and is excellent today at going to market through channels. Whereas Motorola really was very strong at building direct relationships, in particular with large customers. And we wanted both of those capabilities. We decided that we would need to do some things to preserve those strengths and those capabilities. And we did that by creating centers of excellence that were really there to preserve the knowledge. For a long time we had printer specialists capability, people who knew how to sell printers and helped others to sell printers. This notion of specialized teams with a clear path to transition out of those, that's also important because that's what it means to integrate over time. But preserving those for a set period of time was an important way to preserve our strengths. The last piece I would highlight that comes under this culture clash is will the differences between our organizations end up tearing us apart? That was a big concern. And people, for example, in Motorola had a culture that was very direct and relatively hierarchical, whereas Zebra had a very consensus oriented culture and one that would spend much longer in discussing problems before making decisions. How do you bring those two together? We decided that the answer was to build our own culture. We actually worked with a third party firm that broke the whole business up into small groups and each group got together in workshops. So the entire population went through these workshops and started by establishing basic principles of culture. For example, one of the culture principles we put on the table, which you might take for granted, but was very important in the situation, was assume a positive intent. You might not know the other people, they might be coming from a different area, but assume that they have a positive intent. So when you bring it back to these sort of first principles is something that everyone can agree on, then you have a chance of building a culture on top of that. And that's what we did to ensure that the two very strong polar cultures would then be constituted, if you will, on a common base going forward.

This is interesting. Transparency around decision making is essentially what you created. And use that cascading model as example. Preserving strengths and really identifying what that is. And that shaped your integration. Planning to make sure that you're playing off the strengths and then being conscious about what could be the big threats and what could destroy the culture. Consultant's Interesting, because some of that stuff gets brushed off or whatnot. But did you really think that made a big difference and how that really made a bottom line impact on the deal?

I'll tell you, I was skeptical at first. Even though I'd been a consultant, I'd been with McKinsey. But I was perhaps more a believer in the. More say, traditional consulting, problem solving around business problems. And the idea of consulting around culture was certainly not something I'd experienced before, but it did work remarkably well. And I can say that most importantly because if you look at Zebra today and you ask people, which we regularly do, both internally and externally, how they feel about the company, the strength of the culture is one of the things that attracts people. We've been named several times as one of the more attractive places to work, both in the region that we operate in as well as in the technology industry. And more important, where the proof is in the pudding is what I always say is values. And culture is what people do when no one is looking. And we just are coming through a period of time where we were not looking because we couldn't look. We were in a pandemic. And people were on their own in many cases for long periods of time, couldn't meet with their team, couldn't meet with their managers, and they had to do things on their own in many cases. Sort of reinventing how the whole process. We had entire quarters where we sold billions of dollars of revenue without visiting a single customer. We'd never done that before. Where did that come from? It came from the culture. Nobody told people how to do this and our people did it. That's what a strong culture can do. People have this internal guideline that they follow as to what's the right thing and the best thing to do. Even though nobody's looking and telling me what to do. That's a strong culture. And so I think we feel very good about what we did there at the integration. And I can only recommend for anyone that is doing an integration is having a work stream around culture is important. Some cases that may be overkill. But if there's any indication that the cultures that you're bringing together are meaningfully different and those are strong forces that will pull on your population, it's worth having a work stream that thinks about that and includes that in the planning and in fact in what you do.

Every day, what kind of tasks would you see in that work stream?

I think a first piece is to get an understanding of what's the difference in the cultures. How do people really feel? It sounds easy, but people are not likely to tell you that immediately. So getting a good understanding of how people really feel and what is important to them, what differentiates their current culture is a difficult thing to get to understand. And then I think you have to make a hard decision at some point once you have that understanding. One is, do you say, I'm going to use one of the cultures that exists? Am I going to impose one of those cultures? Which might be an acceptable answer. It might be that you feel you have a very good and strong culture and you want others to benefit from that. We would probably say we feel that way today. But if you don't, then building a new culture is certainly not something I've seen a lot of. We did one of the few experiments on this front that was successful. So if you do that, I think it is well worthwhile sort of understanding how to do that. Who else has done something like that and maybe getting some help.

Do you do that now on your acquisitions put that much of an emphasis on culture? Or is it sort of case by case?

We do, but it is differentiated by case. We've acquired companies with 12 employees who were basically driving an engineering solution for a particular technology we wanted and needed. In those cases, clearly the emphasis on culture is less than, for example, now that we're at least hoping or expecting to acquire a company in Canada that has a substantial number of employees and substantial revenues as well, that we need and we hope to integrate in a much more, let's say, balanced way into Zebra than maybe a very small company.

We took this big example, Motorola Solutions, being large and well established. How are we taking the other side? What are some of the other companies you acquired probably more recently startups or just generally a lot less mature? What's your approach for go to market integration, then?

That's important because while the Motorola acquisition had big complexities with it, ostensibly we were having two similar companies coming together when it comes to the level of maturity. And so that left us to focus on the items that I mentioned earlier. But we didn't have to worry so much about differing levels of maturity when we're buying smaller companies. As I said before, we've acquired eight companies since 2014. We have another one underway, all of which were less than 100 million in revenue. And Zebra, just for reference, is likely to be about $6 billion in revenue this year. And many of those companies were less than $10 million in revenue. The size of these other acquisitions was significantly different than Motorola and brought a significantly different set of challenges with it. I would also Say right up front that we've experimented with a number of different approaches to doing these integrations and some were more successful than others. And we're still learning a lot on this front. So I'll be very upfront with that. But I think the most important thing that we've learned from all of this is the number one thing you should try to do up front is understand what is the source of value creation. How will this acquisition create value? And I'm not just talking about how do I physically bring the companies together, but how am I going to create more value than the sum of these two parts? You need to have a very clear understanding of that. In our case, most of the acquisitions had a source of value creation that was go to market leverage. By which I would mean we had a large sales and you think about large company buying a small company. Right. So the idea is that we take the solution that the small company has and sell it through the very large go to market machine. We have about 1700 salespeople. We have over 10,000 channel partners around the world. So putting that capability through this sales machine was the biggest source of value in most of the acquisitions. But we also had a few that were basically technology tuck ins, like the small one that I mentioned earlier, where we had a dozen or so engineers come and join us and add a technology capability to our engineering team. Once you've determined that, it will be a good guide for you, presumably as to where the integration should fit organizationally. Since it's a small organization, you're probably going to want to put it within one of your existing organizations. And if I just take the two different types of acquisitions I mentioned earlier, go to market leverage versus technology tuck in. There are certainly others, but if I take those two as examples, in one case you might say, I want this to be relatively integrated into the sales organization, so I get that leverage. The existing salespeople will pay attention to this product and sell it. If it's an engineering company, I might say I'll just put it into one of my engineering groups. Or we might say, let's keep it as a standalone entity for some period of time. Making this decision was surprisingly difficult for us. And that had to do with the fact that we underestimated the difficulty of having a less mature business inside a more mature business. How does a less mature business manifest itself? One good example would be that it's difficult to, and this is one that we've certainly encountered, it's difficult to scale the product. You might have a product like A software product that's been sold to a dozen customers, maybe three dozen customers, and each customer is very happy and has been very excited about it. But the way that you got there is that product was customized heavily for that particular customer, and that's what makes them very happy. If you now take such a product and you give it to tens of thousands of customers and put it through a go to market machine that has 1700 salespeople, that approach no longer works. Because you can't go customize it thousands of times. You can customize it dozens of times. Maybe. We've found ourselves on several occasions looking at great products that were very successful or are very successful with certain customers and saying, we can't drive this into the broad market that we have, which is the intended source of value creation. That's how we wanted to create value. But we find it difficult because the value proposition isn't scalable to that extent yet. So we found ourselves in those cases retrenching and saying, okay, first we have to make the value proposition more scalable. And if you now think about what that means for an integration approach, it means that where initially you might have thought, let's take all these people that we've acquired, and in particular the salespeople and the go to market people, the marketing people, the channel people, and put them as close as possible to the existing sales organization so they can sell this wonderfully successful product into this vast opportunity that you now have access to. But if the product isn't scalable, that doesn't do very much for you. You can create a lot of demand and interest, but you won't be able to fulfill it, or at least you won't be able to fulfill it to the satisfaction of the customers. In that case, what you need is much more of an ability to collaboratively between the sales organization that is seeing the activity out in the marketplace and the product organization that is developing and evolving the value proposition. They now have to be able to work together in an integrated way to make this solution scalable. And that's something that calls much more for a standalone entity, let me call it maybe an incubation approach, until the business has reached a certain level of maturity. And so that is an important learning that we've had with smaller companies is that especially for go to market driven acquisitions, you have to gauge the maturity of the solution, can it be sold through the larger go to market machine, and if not, choose an organizational structure approach for integration that allows you to achieve that before you let it loose on the Big go to market machine.

There could be a big overhead to do before. And you got to factor that in all your assumptions ahead of time. What about the other side, Joe, in your organization, where you're bringing on this new capability product to the portfolio, how do you really keep up with that speed of acquiring those new capabilities and then being able to enable your team to cross sell that solution and part of their go to market flow?

This is a challenge that I've seen many of the companies, certainly that I've worked in, wrestle with, especially as they got larger and they expanded their portfolio to include much broader range of value propositions and capabilities. For example, at IBM, IBM had a phenomenal breadth of value propositions has it to this day, even though they've paired it to a certain extent not too long ago, there's still a set of value propositions that far exceeds the ability for an individual salesperson to sell everything. There's no way one salesperson can know and understand all of the capabilities that IBM has. You quickly are faced with a challenge as a sales leader of how do I present that complexity into the marketplace? And that isn't a complexity which is driven by M and A, but it is one that occurs every time you add in another piece into your portfolio. You make that problem worse. You're faced with the question of how do you deal with that problem. This will go into many questions of corporate strategy, which is, should I have separate business units or divisions that have separate sales forces? So I don't want to get into that. But let me instead describe the situation that we're still in and how we are making that decision, which is we are still in a situation where we believe we should have one sales organization, that we are solving holistically problems for our customers, and we want to bring the different value propositions all together to solve those problems for customers. In doing so, what we are needing to do is to find a way to have one interaction point with a customer so we can address their problems holistically, but yet be able to represent that complexity of many different technologies, products and capabilities to that customer, which before we said a single person cannot do. This has led us to an approach which many sales organizations have embraced elsewhere as well, which is you have an account manager or a client executive, or however you call your representative into the customer. His or her job is to maintain the relationship with that customer and ensure that we solve that customer's problems overall and achieve the outcomes that they want. They rely in turn on a set of specialists, and those specialists Are grouped around the types of solutions your trying to deliver into the customers. And those in our case, for example, might be specialists and people that know something about robotics, which is one of the areas that we're bringing to our customers. People that know something about workflow software, how workflows are organized in organizations like in a warehouse or in a retail store or. Our latest acquisition that we're making now is around machine vision. Inspecting and monitoring activity in a warehouse or manufacturing facility. These are capabilities that are represented now through specialist salesforces and very often such as, for example, is our plan. With the machine vision acquisition that I was speaking of earlier. The kernel or the core of that go to market capability comes from the acquired company. They have a sales team. They've been doing this for a long time. We are going to leverage their expertise and augment it and make that a specialist capability. Anytime we have something to do with machine vision, these specialists will be the ones that go and talk to the customer. But at the same time, machine vision is only one part of the solution that we plan to bring to our overall customer. And that's the account manager's job. So you have the specialist and the account manager that now need to work together in order to drive those solutions. And every time so far we have acquired companies that have this pattern for their go to market. That's what we've done is we've created another specialist team that represents that capability and allows us to bring the complexity, yet still deliver an integrated solution for the customer.

Makes a lot of sense. You're essentially creating a layer of concierge that can then tap into these groups that become very focused and specific solutions can see it making it easier when you do acquire another sales team, allow them to continue as a specialized resource in that solution. But then you would just map it into this account management concierge that would then connect the dots and be able to really attach it. So then you'd really just focusing on briefing them, which is enough to have that conversation or be able to ask a question that prompts I can then know to pull in my specialist to discuss that. I just want to make sure I get the gist of it.

The gist of it is exactly as you say. Yes.

Is it the hardest part coming up.

The strategy and getting everybody aligned? Or is it the actual execution of training these reps and having them able to execute the plan?

Let's say you use the word hard.

Right.

Intellectually, I think the most difficult one is making the right decision upfront. And we've certainly had our share of instances. I can give you some examples where we didn't make the right decision upfront, and then it took us a long time to recover. It was not hard to make that decision upfront, but it was easy to make a mistake. Where you need to do the most work is then in executing. So if it's a matter of work, executing is definitely the challenge that has to do with primarily. I'll give you an example. One of our businesses, it had $12 million in revenue, but we think it could be a billion dollar business. You have these folks over here who are retiring quotas. The average quota for the person over here is half or a third of this company's revenue. So how do you get this salesperson with that level of a quota and say you have a $6 million quota and they have a product over here that is sold for $200,000. How do you get such a salesperson to pay attention to selling this? And even giving that specialist any amount of their scarce time? That is what I would call hard. It's hard to do those things. And so it's a combination. What does it then consist of? What do you do in order to accomplish that? There's obviously a lot of communication, communicating over and over again. There is of course, some amount of incentives. You have to have some clever incentive structures that draw attention to this strategically important offering while still achieving your overall dollar objectives for the company. You just have to deliver the quarterly revenues and then of course, things like training. And the other one that often gets underestimated is sales management. What does the sales manager do? Does the sales manager sit down with the salesperson every week and say, did you have a conversation with the customer about robotics? I know it's only a $200,000 opportunity, but did you have the conversation or not? And do you need help having that conversation? And here's who's here to help. And in my weekly management meeting, I'm going to bring the robotics specialist in to that meeting to introduce him or her and say, this is the person you should be working with. I'd like you all to set up one meeting with Jane or John. Those are sales management activities that need to occur. And I think we sometimes underestimate those because those aren't necessarily as easy to track and put a check mark against in a project management chart.

That makes sense. It's not easy. I wanted to touch on maybe the broader strategy of go to market integration, because when you look at the strategy behind it could be varyingly different. From what you currently have and do you just cancel it out or how do you manage that part when you're working with your counterparts that control their go to market?

How do we do the overall integration and how does go to market fit into the overall integration from the strategy side? Yeah, hopefully. And ideally, the strategy for the acquisition should be done in advance of actual closing. Where you decide in particular on which space you want to occupy, strategically, where you want to be, what the acquisition adds, and how are you going to create value? How is one plus one going to be more than two? Hopefully that's been decided and that needs to be decided by the senior leadership of the company in a relatively small circle that's probably common to everyone.

So there's a view of a combined go to market.

That's the foundation. Once you have that foundation, and again before, ideally you close on the deal or you even sign the deal, you would have an understanding and agreement on how the acquisition will be integrated. And we've generally been able to do that. Which means, remember before I suggested sort of three simple models. There's obviously others as well. But do I integrate it into the product engineering organization? Do I integrate it into the go to market organization because it's primarily about sales, or do I keep it as a standalone entity for some time to incubate it and allow it to mature? Those aren't the only choices, but those choices, among others, are ones that should be decided before you actually sign a deal. Because once you sign the deal, the clock is ticking. Everybody knows, in particular, the employees of the acquired company will know that they're now being acquired. And they're waiting. They're waiting for you to tell them what you're going to do. And if you're spending that time after the signing figuring out what you want to do, you're wasting precious time and you're losing people, at least in the technology space. The minute you announce the intent to acquire, search firms are going to be calling the best salespeople, the best engineers in your company and saying, you don't know what's going to happen to you going forward. I have a sure thing over here. Come join me. And you want to head that off. So you want to be there on day one with a very clear message about what you're going to do and on what timeline you're going to do it. You don't have to announce the comp plan yet or for the sales team, but you have to tell them we're going to have one salesforce where it's going to be a separate salesforce. It's going to be an integrated salesforce and you will have your position and your comp plan on this day. That is important to be able to say because otherwise you're going to lose people and then to spend whatever time you have between the signing and the closing to make very clear and definitive plans that you can put into motion on day one. Speed is always of the essence in and you want to be in a position to have as many of the operational decisions ready to go on day one even if that means I'm keeping this separate and they're going to keep their own compensation system or they're going to keep their own ordering system. Even being able to say that is critical so that you get the continuity and you don't lose to people.

That's the operational details. But it sounds like getting everyone aligned on the strategy. You're really transparent. You thought this through with other executives. What does go to market, what the value is going to be to the customer and you're basically communicating it to their team just to allow them to have a clear picture of here's the deal and this is why it's going on.

That's the most important foundation. So that's really the job of management is to do that in advance and every time that we weren't either quick or complete in doing that, it cost us something afterwards.

The strategy is easy to mess up and execution is hard, period.

That's right.

I'm going to get to Chris's question here. It looks interesting in the case here with Joe Zebra where they have the one account manager plus one SME specialist model. When evaluating M and A would you have went in for them to know that there is a customer demand for the acquired product? B the salespeople would be able to sell the acquired product C the acquired company would easily fit into that model of account manager plus bench of specialists. Is Zebra Corp. Dev's team surveying the sales leaders and marketing leaders? What is their process to map the targets to their go to market needs?

Chris, I'd say all of the steps that you described take place there. But from my reading of your question I would say that they occur in a slightly different sequence than the way you are describing it here. Your questions imply and I think that may be the way to answer your question. I would think about three different steps separately. The first is the strategy decision to determine how does this company fit into what we do and how will we create value in making this acquisition. That has to be done well before signing, the differentiate between the signing and the closing. Well before signing, you have to have your management team on the same plate, pulling on the same rope to say this is what we're planning to do with this. That then informs the second piece, which is how do you plan to integrate this organizationally? I offered three simple choices there, but that's something that again I would suggest you need to do before signing and you need to decide how you at that stage, you should not delegate the decision making process or even the process of acquiring that information to a corporate development or a consultant team or a third party. You need to involve your own people, meaning salespeople when it comes to go to market or marketing people in the process of understanding that with the acquired companies, the questions you ask here around is there customer demand for the acquired product and will the salespeople be able to sell the acquired product? To answer that, you have to send your people into the acquired company. And typically acquisition processes allow for this would be called due diligence that you would do. But we found that the simplistic due diligence where you basically go and you have a data room and you get a bunch of data and then you may be able to interview a bunch of the people within the company is not sufficient. You also need to do work in the market, for example, interviewing customers or partners of the company you're looking to acquire or customers or partners that you're looking to reach once you've acquired the company. Maybe they aren't customers yet, but you're thinking of going to them. That played a big role for us, right? Because remember we wanted to take this company to all of our customers. So spending time with our customers and saying, hey, if we had this capability, would you buy it and how would you like to buy it? Who would be the people that you would want to see show up and sell you this? Those are all questions you can ask of your customers, but you have to do that before signing. I call this sort of due diligence plus. Right. You really need to have a functionally driven due diligence plus and you cannot. And we don't delegate this to a corporate development function. You have to do that. I have people on my staff who run that process. But we then also recruit people ad hoc from practitioners, salespeople. We tell them you're going to take the next four weeks. You need to spend two days a week going out to interview these customers or going out to meet the people in this company under NDA, of course, to have preparatory Discussions for acquisition. And then you enlarge that process and involve, to the extent you possibly can, the company that you're inquiring between signing and closing. So many people say, oh, between signing and closing, we're still separate companies, but there's anti competitive restrictions. We can't do anything with them. And that's false. That's not the case. There are restrictions of what you can do with a company that's not a part of your entity. You can't remove competitive restraints, you can't share pricing. There are certain things you can't do. And you should definitely have your lawyers instruct all of those involved very carefully on what they can and cannot do, which we do regularly. But there's a lot that you can do and for example, you can plan pretty much everything. You can plan what you will do after closing. So we now have intensive workshops between the acquired company and the acquiring company where we sit down and we talk about which customers are we going to sell, which product should we offer, when if we have a product and the acquired company has a product, which one do we sell? In which case we have those plans already being worked on together. Both companies come together to do that. And again, that has to be done by the practitioners in the functions, not by corporate development can facilitate that process. And they do right run integration office of some sort. But the practitioners have to be front and center. And as a functional leader, you have to be intimately involved. I spend a lot of time on these things making sure that we think through all of these topics.

Such great tips on doing diligence to prepare for that part of integration. Joe, before you we wrap things up here, what's the craziest thing you've seen in M and A?

You told me to be prepared for this question and I'm not sure I have anything super crazy. But I'll tell you one thing that I think is very memorable insight for me, which is I've worked for a number of companies that are acquisition machines. IBM is an acquisition machine, Oracle is an acquisition machine. And that means that they've made a lot of acquisitions. They've made them very fast in many cases, and they've also been quite successful at making many of those acquisitions. The acquisition machine though, usually comes with the idea that I have a particular path and a direction that I'm going and I'm going to pull these acquisitions in to follow me along this path. So I am folding them in to my strategy, my process, my culture. And that, as I said, that's worked and has been successful for many large companies who have done that. But it also comes at a price. When you do that, and I experienced this because I was acquired. When you do that, you often or you run the risk of losing the momentum and the innovativeness, the creativity of the company that you're buying. By definition, you're telling them, I'm on a very successful path. I'm out to conquer that hill over there. Fall in line and help me and we'll conquer that hill together. And you will. But you might miss the fact that there's another hill next to it that's even better that that company was running for previously. In my mind, the acquisition machines aren't necessarily the best approach. The acquisition mach miss. The important part that I think will be increasingly more important of leveraging the momentum and creativity of the people that you're acquiring. That at the end of the day is how you can get more out of an acquisition than more one plus one equals two. Finding a way to do that is the real art here in acquisitions, and one that we've certainly struggled with and we continue to learn a lot about.

So don't make destroying culture part of your acquisition strategy.

The culture is one important part of that. Yes. It can also be giving the people that you're acquiring an opportunity to play out their innovation, to play out the momentum that they have and take you in a different direction. You may not have the monopoly on the perfect direction. How can you make sure that you get that value out of your acquisition? That's what will make you better and stronger.

That's a lot of times tough for a large organization to adapt to a whole new way of thinking and doing. Joe, this is a great conversation. Thank you so much for spending the time with me. I learned from a lot. You're billing me hourly. You well deserve this hour. So thank you again for taking the time.

It's my pleasure. I'm glad to have shared some of these experiences. These are things that you have to experience, but you can hopefully experience them in a better way if you know what to look out for. If I've accomplished any of that today, then I feel I might have succeeded. So thank you for giving me that opportunity myself.

The M and A science community, thank you for sharing your experience. Till next time. Here's to the deal.

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