Connecting Diligence and Integration in M&A

People are asking for more M and A Science. We're giving it to you. We're increasing our production from once a week to twice a week. Look out for more M and A Science interviews. This is a conversation with Amy Weck, VP, M&A and integrations at the Liberty Company Insurance Brokers. She started on the deal side and saw the need to connect diligence and integration together for a smoother transfer of knowledge between the two departments. In this interview we talked about merging separate integration departments, how to connect diligence and integration, fostering a one team mindset, maintaining team rhythm and high volume acquisitions this episode is brought to you by firm room. Over 1200 organizations have experienced the simplicity of Firm Room, the world's most intuitive virtual data room. Top players like JP Morgan, Morgan Stanley and Pfizer have chosen Firm Room as their data room solution. Convenient at every stage. Firm Room keeps things simple with scalable storage, unlimited users and industry leading security features. Elevate your deal management with Firm Room. Modern pricing. None of that per page crap. No hidden fees. Take advantage of the 14 day free trial when you're ready. Sign up for unlimited users and 10 gigs of storage starting at 4. 95amonth. Learn more@firmroom.com Again that's firmroom.com 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. Hello M and A Scientists. Welcome to the M and A Science Podcast where we learn from the best in M and A to uncover proven techniques for enterprise value creation. If you're interested in learning more about the products and services we develop to support world class M and A teams or want to get involved with a community of forward thinking M and a practitioners, visit mascience.com you can get started by subscribing to our free weekly newsletter the latest insights and events. Again, that's mascience.com I'm your host Kisan Patel, CEO and founder of M and A Science. Joining me today is Amy Weck, Vice President, M and A and Integrations at the Liberty Company Insurance Brokers. Today we're going to talk about connecting diligence and integration in M and A. Amy, how are you doing?

I'm doing well. Thanks for having me.

Thanks for hosting. We're here live at St. Edwards University which you're an alum board member.

Yes, on the Alumni Board. I love this university. We're here in Austin, Texas we're overlooking the city right now.

It's beautiful campus.

Thank you.

Thanks for putting this together.

I'm very proud of this campus. I'm glad I could host you.

Can we kick things off with a little bit about your background?

I've only been in M and A for a couple of years. I have an insurance background so started over 10 years ago and most recently I worked for one of the largest brokers in the world. I recently moved over to the Liberty Company about two and a half years ago to work more in an operations role. It was a new opportunity, new challenge for me. It's something I knew I had wanted. I very much have a project management mindset so it definitely fit what I needed and what my highest and best use is. So moved over here and with all of my background in insurance on the carrier side, the broker side, retail agency side, it really helped me create the role that I'm in now. So after about a couple months I was hired on at a different position. Couple months later I was tagged to come into the M and A side of things and manage the transaction of the deal. So loi to signing funding and so that's what I did. At the time we didn't have any dedicated M and A staff, so I was the first one. It was the executives running with it when you can. And we were doing a significant number of deals at the time. So you can imagine how that was going. High level executives trying to do their job and a half plus run some M and A and transactions and then manage through integrations and everything else. So that's how I got started here.

You guys are basically a roll up. You're rolling up a pretty high volume of insurance brokers.

We do so last couple of years we did between 22 and 25 deals of just acquisitions. So. So some of them we consider partnerships that are a little bit larger standalone offices, but they're still more in the roll up, tuck in the general space. But then we also do the small, what we call fold ins as well. So it might be a book of business or one employee merging them into the same office. Share leadership, those kinds of things.

Then how about within your M and A experience, how did that progress? Because it sounds like you fell into it like a lot of people do where hey, we need some help. We have to integrate this company. Was that in and then did you get moving further along in the deal in terms of getting all the diligence and things that happened earlier or how that happened?

As soon as I moved over, I Saw the need for some processes and policies and procedures to be put in place. And so funny enough, when I first moved into M and A, what I did was Google best M and A books and Agile M and A came up your book. So it was the first M and A book I read.

Flattered.

It taught me a lot. It taught me exactly what I needed to kick things off and get things started. And so, like I said, I managed the transaction. So as soon as the LOI was signed, I would manage due diligence, whether it be with internal firm or internal teams or external firms. I would manage, help manage the funding with the bank, the legal, the contracts. I would be that go between that person for the seller and for the company. Once we got through funding and closing, we would move them into integrations. And at that time it was a separate team.

Oh, so you started on the deal team?

I did.

It's funny, a lot of folks that come up through operations will start off on integration and then end up getting part of the actual.

I went roundabout way.

Okay, so you got involved with the deal side doing diligence, funding, coordinating that whole process. How did you move into the integration side?

I like to say I was gifted the department earlier this year, but because they called me on my birthday to talk about it. So it was my birthday present. It was one of the best presents, actually. It was one of those things where we had had some turnover in leadership in the integration side. Anyways, it was one of those opportunities. I was getting more involved post close anyways, because you have to transfer that knowledge. And that was one of our biggest challenges was having that smooth transfer of knowledge when you have two separate departments. So it made sense to bring them together and run them together as a lot of larger companies do. So therefore me taking that over was just that natural choice and that natural progression. And so what we were able to do was then bridge the two. It was open communication, transparency, trying to break down those silos that we had in place at the time. And that's something that we've really worked on this year and really tried to push through.

So you saw a lot of opportunities to improve.

There always isn't integrations as you know, whether you're a big company or a small company.

That's the scary part of the deal.

It is because you're bringing two companies together into one that have created their own environments, their own culture, their own leadership teams, and then you're trying to bridge them together. So you have to have the right team in place. You have to Trust your team. You have to communicate what the expectations are. Because if you don't communicate that, then expectations are never gonna be met. And so that communication and transparency is absolutely key.

Talk me through that whole transition of taking on cause you still run end of the deal process and now you have ownership of the integration. What's that like? I'm just curious for other practitioners that are going to go through the same thing at some point because we're seeing more and more companies that are bringing together diligence integration into one team.

So for us, what it's like, as I know several of your other speakers have talked on, it's involving them from the beginning. So involving the integrations lead, the integrations manager. So I have someone on the team that is our integrations manager. And so she works hand in hand with the seller post close. What we do is we involve her earlier. As soon as the LOI is signed, we start having meetings, we start discussing. We have weekly integration meetings as a whole, so we can talk about these things. And then as we run through diligence as well, we're bringing our subject matter experts, our different departments. You have finance, accounting, legal, we have our data team, we have it hr. We're bringing all of them into work on creating that integrations led due diligence. And so that's really the push right now is getting them more involved to take ownership of actually reviewing that data. Because who better to review and analyze it than the subject matter experts who are handling the integrations on the backside. They know what they're looking for, they know what questions to ask, they know if we need a pivot. And having them find those risks, those opportunities, any kind of threat, threats or red flags as you want to call them, really helps us on the front end of the deal. Because then if we have to renegotiate or we have to pivot in a different direction or look at a different structure, we can do that earlier rather than later.

Is there anything free loi that you're starting to contemplate integration wise? And I know it's a tricky stage. You're not trying to bring everybody involved.

It is very tricky. We're very selective with who we're works with, the prospect pre loi or even like right at loi. It's an overwhelming thing for a seller, especially a lot of the sellers that we have that are small, one or two man agencies that have run their agencies for 20, 30 years. So it's a very delicate situation. But what we'll do is we'll Gather some initial data, almost like a preliminary diligence, and then we'll just have our internal teams look at it and then we can still run it through our corp dev. So our sales guys on the corp dev side, they will be that main point of contact pre loi and so we can have those discussions with them, but then also work with our teams of hey, is this going to fit? Look at the timeframe, this is what they need, this is what's expected. And we can figure out if that's going to fit in our playbook for the next three months, six months, 12 months.

If there are some key things, you've probably built that into your playbook and know to ask for that pretty early. The pre loi, you basically have some key things that, you know, integration folks we want to know about built that in to the process, whatever it is, what CRM they're using, things like that. Kind of want to get this before State and after State of when you had a real separate department for integration and bringing the two together, how do they come together as a process itself?

A lot of the challenge before was it was a mindset issue and the leaders we had in place, it was very siloed in the sense of, oh, here's one side of the fence, here's the other side of the fence. So breaking down those barriers and changing that mindset with your team definitely helped and made a huge impact on how we then operated. So we could start that open collaboration, really work with each other and support each other. Because somebody in accounting may notice something that's going to affect somebody in data conversions for us or IT and legal and those sorts of items. So really kicking that mindset of you're on this side, we're on this side. It's no, we are one team and we are going to work together and we are going to take ownership and you're going to be held accountable. And so it was really that shift in our teams and their mindset, so.

That was the starting place, is just literally getting everybody thinking that on the same page.

So one of the things that I like to do in the meetings is when we're talking about new deals coming in is always start with that why are we doing this deal? And fortunately for us, we actually ended up pausing M and A earlier this year that helped us recalibrate and get on that same page and really bring in that why to what we're doing. So then it empowers your people to then take more accountability and take ownership of what they're Doing so. Therefore, as we bring in a deal, I ask the questions, what are the goals of the partnership? What are the goals of the deal? What are our goals? What are the sellers goals? What are they looking for in this and what they're wanting out of it? But they. But then also communicating that to every single department because then they know how to think and how to work with the seller as well. So it really just bridges that gap of just going through the motions and going down a checklist. You can then put some creativity into it and adjust your processes, if needed, based on this particular seller, because no two sellers are the same and they never will be and their needs are not the same. So what you may need from them can be very similar, but you're always going to have to stay on your toes. I love Simon Sinek's book, Start with why. And that's just what I brought into here, because you got to know why you're doing it.

That's a really good point. And I hear that time after time, either it's not clear from the beginning or it gets lost in translation. And especially what you described before, if you got these two teams that act very distinctly in their own ways from each other, you're going to lose that.

Yeah, you definitely will. And so fostering that collaborative nature and working together and encouraging that, it makes a huge difference.

When you mentioned, like, just getting the whole thinking around we're one team, is that what really enabled getting more of that proactive or getting the integration leads involved earlier in the process? It's like the mindset shift, but then there's all the actions that go about it. What led what into what?

Basically, it definitely did make a huge difference. But what we did and what I started with whenever I took the role was asking each individual team lead, what do you need? What works for you and what do you need to then be successful from us? And so I think being able to, again, shift it to not us just telling them what to do. Whereas a lot of the times it's your integrations team is dictating, all right, you do this, you do this, you do this, you do this. But it's like, no, how about you tell me what you need and how we can support you? And so that's what we did. It opened up a lot of windows for us in the sense of, like, really understanding of, oh, this team needs to understand this, like at this stage, this team needs to understand this at this stage. And every team is different in their needs. That's how we were Able to rebuild our integration timeline and plug them in pre close at different times that they need and then doing their conducting their analysis and finding those items that they're looking for specifically so therefore they're not blindsided or starting behind the timeline. Post close.

It's funny how far just asking people what do you need can go.

It's amazing. It's amazing because sometimes they just want to be heard.

I totally agree. I think I've talked to you about this on the side. But even my own role in our company, M and A Science has changed. Where I hit 50 people now we have a professional management team. I'm out of internal operations and had to recharter my own role. I've had the time to just ask different team members what do they need to be successful and it's just resulting in so much interesting insights and how we can improve and optimize.

Yeah. Because what one person needs, another person on another team might be able to give to them. It really brings them together now even without you being the middle person.

Yeah. You don't have to do a lot of thinking, you just got to do a lot more listening is what I want.

Exactly.

We talked about some of this stuff in terms of how did you start connecting the two functions? Getting the why, getting to know the team members and what they voice and what they need. Was there anything else that you did to connect the two functions together?

Well, we went through a couple of different iterations of connecting the two. So we started with this idea with previous leaders of free integrations and having them look. But the issue with a lot of companies and a lot of teams is the people doing the integrations, they have full time or time and a half jobs. So therefore they're part time M and A or part time integrations. And that is exactly what we were dealing with primarily back then. When we have some more dedicated staff now, having them be part time resources. What we were trying to do was this idea of pre integrations where okay, we'll just look at the data. But then it wasn't. We needed to set them up with what their expectations were, what they needed to look for. And so we've gone through a few different iterations of this and then I had transitioned to more of a pre close analysis and build out. So we're a deal room customer. And so we built out a section for their assessments to go in. That worked a little bit. But still a lot of teams were voicing that they needed to still know things earlier instead of waiting till the last 30 days or so, two weeks to 30 days before the deal closes for them to look at it, it's okay. Now let's stop and let's move it all up to the front. If that's what you need. You can do whatever you need on internal side. And then you can have your deal lead, which is me, during the transaction. I can communicate that to the seller or whomever you have can communicate that so they're not inundated with person after person coming at them with 30 different things. Because again, when you're dealing with smaller sellers, they can get overwhelmed very easily. And that's the last thing you want to do when this is already the biggest decision that they've ever made in their life. We're always trying to make it easier for them. So if we can go through, figure it out, bring it all together and connect it and be like, okay, we need to pivot on these two or three things. That deal lead can then communicate that and figure out exactly what they need.

I like the emphasis on essentially the target company is your customer. Both keeping customer experience or the incoming employees top of mind.

Absolutely. Their employees are going to go through a shock of a lifetime if they don't know already, even the seller, the owner, if they're going to stay on, there's going to be a lot of transitions. Like integrations is not easy. It doesn't happen at a flip of a switch. It happens over days, weeks, months, and sometimes year, depending on what kind of industry you're in and how much you want to integrate. That's where your company has to define autonomy versus integration. And we recently redefined that. So it also makes that vision a lot more clear as we start to go through more integrations.

The process part you talked about how when you put a disclaimer out there that you are a Deal Room customer.

I am.

And not paying you to say anything positive here about Deal Room. You can say negative things about Deal Room. Totally feel comfortable, but I wanted to bring that up too. So that is out there. You are a customer Deal Room. There's biases on my part because I'm a founder and owner of Deal Room, but there's a whole new product team. I'm not involved with product development. And it's amazing they are coming up with all this creative stuff that I can't keep up with. But the party I wanted to mention was I think there is a component of the process piece, and I'll probably get back into it too, of how do you keep all these folks aligned because you mentioned an example of making a change into the workflow, essentially. Or you're able to sequence that in that centralized platform that you're using.

Yeah, and that's what DRM definitely helps with. We break our entire M and A function in different phases, and so different teams are tagged in at different times. We also have parallel work streams at the same time, especially when that integrations and diligence is starting to combine. What we're able to do is when we set the integration strategy based on diligence findings from these teams, we will collaborate with them to set that strategy and that timeline for post close. And so our integrations manager, she sets that primarily and then we discuss it as a whole, as a group, because we have weekly group meetings. So we're always communicating, we're always working together. And so therefore if it says, you know what, no, I can't hit this target because of xyz, we can then shift the rest of the timeline down and then that's what Deal Room helps us do because we have it all laid out in there. So clearly that's one thing we've really worked hard on, is getting that template set. But then we can adjust the due dates, adjust the start dates, adjust the dependencies if something's going to be thrown in that's not in a normal deal. And so that keeps us on track. So therefore each team can then follow along and at any given point I can easily go in and look, or an executive can easily go in and look and be like, okay, cool, they've made it this far and that's exactly what they said they were going to do because of their timeline, their strategy, that's what they communicated. And then we can talk about the details, how it's going with the acquired team and those kinds of stuff. And we're able to put all of those notes in there and then chat back and forth basically in the comments section if we need to, or tag another team or make somebody a reviewer. And so it's helped us stay organized, not only having all of the data in one place, since we use it for due diligence as well, which has just been phenomenal for us. But we have everything right there at our fingertips. So someone in IT can go see where somebody in accounting is at any given point on any given deal, and vice versa, and then other teams as well.

This part about Parallel Workstream, can you explain that?

It's bridging that diligence and integration. So therefore we're working parallel. So therefore I'm managing The transaction still. And we're still going through the deal, but they're starting their own work stream as well. And so we are working side by side together as well, but still side by side as we go through the deal and get closer to close.

Okay, so in the product you have a work stream for diligence, which that's your typical deal team, running diligence counterparties there, uploading, answering diligence requests, clarification questions. And then there's another work stream, which is why this is a parallel. And that's your integration stuff.

Our integration team, yeah.

Now they're not executing integration because you haven't closed the deal yet. They're planning, basically, they're strategizing. And this is where you mentioned that, hey, if there's something here or you get feedback from somebody on the integration plan, you're adjusting those timelines accordingly. But that way by the time you close.

Yeah, so we always have a target close date. So if there's a finding that they uncover and it's going to delay everything, we adjust our close date, which then adjusts all of their dates as well. So therefore we can work it that way and still keep it moving, even if things just move down the timeline a little bit.

Cool. It's helpful that you clarified that because getting a sense of like essentially using technology to give like accessibility to the information that, hey, you're gathering all this information and diligence through increments. But then those team members you brought in early for integration are able to get visibility into it and act on it as they get this new information coming in. So they're not just doing it as a big lump sum or doing it late in the process where they're basically rediligencing the deal.

Again, knowledge is power. I use that more than I should probably, but knowledge is power.

Yeah, it is. And just making sure the right people get that knowledge.

As I mentioned before, people with full time jobs and their part time M and A or part time integrations, our teams are much more robust than they were a year ago, which has been hugely phenomenal for us. But still, sometimes they have full time jobs and hitting those deadlines can be challenging.

Well, let's break that one down. How do you manage that? Because it is, it's a common thing. This isn't the first time it's come up on this podcast. How do you do it? How do you. Because sometimes people don't know the importance of M and A, that there's a lot of capital being allocated towards these deals and where do they prioritize it? Among their typical day to day activity or internal goals.

Fortunately for us, the importance of M and A is clearly communicated from the top and it's part of our company vision and our company strategy. So that definitely helps. But really when it comes to the teams and the timelines and the deadlines, it's having that open communication. And we have weekly meetings with our teams and there's a solid 15 people, 15 leads on there and having that open communication. So then we can re emphasize what is needed by when we also have separate one on one meetings with some of the departments as well, pending whatever deals we have or if we have an influx or something of the sort, those are more helpful as well because then we can focus on more of the nitty gritty what is needed and when. But it's all about communication and I can't stress that enough. Like communication and transparency and just being open with those expectations and sometimes you are going to have to follow up 2, 3, 4, 5 times. But if you emphasize the why it's needed and by this date it comes across a lot clearer than trying to force somebody to do something or dictate them to do something.

Why is really important. And then those check ins is a really good way to hold people accountable.

Absolutely.

How do you get people to change in general? Because I feel like every company struggles with change management in general.

It's hard. I'm just going to be honest. It's hard because especially when people are stuck on the mindset of that's not how we always did it and now you want to throw something new in. But one thing that really helped us is when there is a big change coming, having that champion, which I feel like is general change management, having that person be that champion or spearhead that initiative. For us, one of the biggest changes was implementing the Deal Room software. One thing that I've spoken on before to several other people in the industry is you have to have that champion, you have to have that resource, that person that knows it, that's going to be there for your people when they have questions. If you're just telling people to change without the how it's going to make an impact, what it's going to benefit, you're not going to get the result that you want. Because people need to feel empowered, they need to feel some ownership in it. We need to listen more, we need to explain what the impact is. And something that I like to ask my team every week is what impact have you had on a partner? This Week. You or your team, that's what we call a lot of our deals are partners because some of them are partnerships. And it's really fascinating and encouraging to hear what they say and what they've done or what their team has done. You have to capitalize on that excitement because that will take you so much farther than anything else is when somebody feels that they are making an impact.

Were you the change champion?

I was the change champion, in case you can't tell.

That's a really good point. Time after time, I feel like that's the. Especially the bigger the company, the harder it is to drive change.

Yeah. You get new employees in all the time and people change positions. It's part of it. And so if they know they're coming into a solid team and they're going to have that impact because that's what's already lived and breathed. It's culture, and that's your culture that you foster and you live by, then it makes things a lot easier.

I was always curious about that. When you get new people in a role, it's, are they going to try to act on some real changes and demonstrate value creation, or do they try not to and just come along with what's already there?

It could go either way.

It does, because I've noticed that it.

Can go either way. But I like to empower people to have the opportunity they need, every opportunity to instill change or try to create value. And if they don't take it, if that's not their. What they like to do and they want to go through a checklist, then you know what? More power to them if they know that. But I think we should give people that opportunity because, my gosh, I don't see everything. I don't know everything. I will be the first to admit that. And there are people on these teams that know more about certain topics. You know what? Let's bring it to the table.

You're saying, I was thinking of, like, this such a cliche thing that's so true in our industry. Why fix it if it's not broken? Mentality runs rampant. I can't tell you how many companies I come across of it. I've been doing this for 20 years, and why should we change?

Oh, my gosh. Yeah. When I first started, it was, that's not how we've done it. And I'm like, we're not the company of yesterday anymore. When we're doing 20 deals a year, you have to have your ducks in a row and have those foundational building Blocks in place. And that's one thing that I always stress to other people as well, is take time to create that foundation. If you do not, your cracks are only going to get bigger as you start to do more deals over and over. You have to create that solid foundation first.

With that. And now that you're managing the end to end process of M and A your company, what advice can you give to people? Have the same role as you, what.

I just mentioned with building that foundation, if you have to take a small pause to create that and to start from the beginning, then do that. Your policies and procedures have to fit the company's strategy and the vision. So especially for smaller companies, like, you really need to have that communication open. But build those foundational blocks, instill transparency and communication. Because if you're not on the same page, you're never going to get through to the end. And then it's only going to cause frustration on every end internally. And with the acquired team, you definitely don't want that. And you want to just be as open as you can, but also be realistic in the sense of you are going to have to pivot, you are going to have to stay agile. It's not going to be the same for every deal. So even though you have your template and you have your playbook, it's going to have to change. And that's okay. Every deal is different. You adjust and you keep moving forward.

I want to give like our theme because we kind of have this, why we have one team. The communication for accountability. We have the parallel process. I feel like that should be part of it. Yeah, maybe just bring in the integration in early or maybe it's just part of one team. I don't know.

You can frame that under the one team umbrella because you're under one team. You can run those parallel work streams and support each other as you move through the process. Let's be honest, there are integration teams and individuals and team members that will come to me and be like, okay, during the deal, did you ever discuss this during the deal? Was this expected during the deal? Was this learned those kinds of items?

So I want to recap on what we covered so far. I want to make sure we're getting the right steps in. This is for teams out there that may have a disconnected process or just want to optimize and connect their diligence integration together. First of that, clarity on why I think that's so important. It's really why we're doing the deal. And that's something that can Be effectively communicated across to everybody that's involved with the deal. This one team, not only the mindset, but structuring so that the team is acting and operating as a single team. And within that, because you've got the one team structure, this is when you're enabling much better communication, having these meetings or informations distributed amongst the parties involved and having that accountability. We also talked about parallel work streams. So now we're getting better transparency, access to information for those that need it, when they need it and not too late. And then we talked about also just recalibrating that. Hey, if you need to take a break to recalibrate your whole process, one of the things I really liked is that you emphasize of just talking to your team members of what do you need really taking that break to be able to do that. That gives you a lot of insights and how you can optimize your process accordingly. Was that everything?

That was everything. That was everything. That was a beautiful summary.

I got to ask you, being a newer practitioner in the field, one thing I love is that there's something to learn from everybody. And in some ways I feel like you can actually learn more from those newer in the industry because it's so fresh in mind that they actually know the order in which to explain things and so forth. What's helped you? I know you mentioned reading the book and stuff like that, but I think there's only so much you can learn from a book. What's helped you to get to the level you are so fast?

Networking, talking to people, asking how they do things. Because while we may not do things anywhere remotely the same as a large software company because they've been doing it for so long and they have their processes and playbooks down to a T, but then they also have some of the similar challenges is learning from others. Even in different industries, you can take what worked best and start to build upon those best practices. But not just that, but doing your homework, doing your research, really starting to understand the different perspectives and different sides so you can build like those best practices in that playbook for yourself and what fits best for your company.

I want to talk about the networking part. I'm big about the networking piece. I wish I focused on it more earlier in my career. And in fact, any opportunity I get to speak to undergrad and grad students, that's my number one biggest emphasis, is networking. I still think every school lacks teaching that as well. What was your journey like and how did you start approaching it? What got you to do it?

It's my desire for learning. If I could be a full time student I would, but I can't. For me it was a lot easier. But it wasn't just M and A networking. It was different business groups or then insurance specific. But it's really just getting out there more and more. Because in the insurance industry and sector, like I mentioned before, every medium to large size broker does M and A. So you're going to run into somebody. One of my good friends works for another brokerage and she just did her first deal and she just happened to be thrown into it. I got to coach her through some of it and then she also got to teach me some things on how it worked. But then my husband just went through a deal as well. His company got purchased. I was then learning from his new company how they did certain things, but then also with his team as well. And so it's really just finding that knowledge in every place that you can. And it's not just gonna be from a book or it's not gonna be just from a newsletter or what your company tells you of. This is how it needs to be. Go do your research, explore, explore. And then bring it back and shape it and mold it to what your company needs to fit that vision and that strategy that your company holds.

You had it beforehand, just generally coming up through the insurance industry. But now in M and A, you even take the same networking approach with other practitioners.

Absolutely.

Why? I saw you at the M and A Science fair. Are you part of the M and A Science Women in M and A roundtable?

I am.

It is by invitation because we want to keep it a peer group.

Yeah.

One of the things I'm working on is a talk track I'm going to do early next year with our friends at GRADA around optimizing roll ups. And I want to come up with a variety of different approaches to help these earlier stage roll ups mature their M and A function faster. We always see that an early stage roll up starts emerging, they pick up and sometimes they don't even have a formalized deal team. Then later on another PE firm buys them. Then they start building a small M and A team, increase the volume of acquisitions. Then down the road they get acquired by another PE firm and then they're making even bigger, putting some more processes, software in place and things of that sort. But looking to create a talk track to accelerate maturing an M and A function for a rollup. I think the opportunity in the market is can we bring just a playbook really focused on Maturing that M and a function, a rollup specifically, because it's unique. It's a unique scale. We working with one of our clients that's doing about 3, 400 acquisitions a year globally. And it's really interesting, right? Cause you can work with these large strategics, but now you're working with these very large scale rollups. I want to learn from you. Like, what do you think are ways that you can optimize that? Cause you've already seen a level of that maturity.

One thing that's been significant to see with our maturity is how we've changed our M and a strategy based on like our company goals and vision. So those two pieces have to align.

Well, we don't have to pick that one specifically. We can always pick up diligence in terms of specific improvements there or opportunities if you want to optimize diligence.

The way we optimize diligence is learning from the past. And that's one thing that we really try to focus on and grow as we do each deal. What did work, what didn't work? Did we maybe miss something or did we do too much of something, or was this exactly what we needed? We go into the deal knowing why we want to do the deal. So diligence is, in a sense, try to find a reason why we shouldn't. And if we don't find a reason, beautiful. That's the goal. We don't want to find a reason. But sometimes, since I mentioned, every seller is different and every deal is different. But you have to learn from the past. Because 10 deals ago, which maybe it was two months ago for us, we had this particular similar situation. We can learn from that and grow on that and build that. But you also have to engage the right teams. Even if it's an external team doing your financial due diligence or a bank or somebody of the sort. Like, you have to engage the right teams that understand your vision, your strategy, your company. So they then can also mature their due diligence function and their requests and how they're going to handle things as well.

On the buyer side.

On the buyer side.

And like, when you think of like learning from the past, I feel like that's a nice theme. But then how do you actually do it? Because a lot of people do these meetings, they'll do a retrospective, they take a bunch of scrupulous notes, and that's the end of it.

I'm going to go back to my theme of communication and hearing the teams. When it comes to how we learn from the past, you have to bring that in as well. Because what may have felt broken to one team may not have been felt to other teams. But in reality, it does impact everybody, especially on the integration side. So therefore, you have to learn from the past of what caused that breakage. You have to listen to your team so then you can reformulate and mature your due diligence process or your corp dev team and what they're sourcing and how they're sourcing. So you have to keep that communication open and really start to look at those lessons of why this didn't work or why this did work. But I guarantee you, in a lot of these industries and a lot of these companies who have challenges with integrations, there's a lot of what did not work. And you can't just fix it within integrations, it has to be brought into the deal team. It has to be brought into the corp dev team. And sometimes if you're a smaller company, it has to be brought to the executive's attention as well, because that's sometimes who's sourcing the deal. You may not have a corp dev function, so you have to be open and transparent with the entire process, not just one. I really try to focus on teaching our corp dev team what integrations is and how it works. So then not only can they have knowledgeable conversations and answer questions, but then they can help set the seller up for more success by setting those expectations early.

I like it. You know, I can almost reframe that again. We have a learning lesson from the past and then you got the theme of like basically listening. Learn the lesson, echo it. So all the teams learn it.

Yeah. Can't stay siloed.

One of the things I was always curious about is like, you build a process out. Cause the unique thing with rollups is you're doing a high volume of acquisitions. Keeping your team, is it purely muscle memory? And if it's muscle memory, you have people move on to different roles or different companies, how do you sort of not lose your rhythm?

That can definitely be a challenge. And when you're doing 20 plus deals a year with a relatively small team, yeah, sometimes you have to put that muscle memory in place. But I always encourage the teams to really, especially post close, really get to know the seller and really get to know that owner of that agency. So therefore it brings a different side and a different perspective into things as well. So it's not just, oh my gosh, okay, here, Mr. Smith, I need to go through a checklist of 10 items. It's let's learn, let's analyze, let's try to find those synergies. Let's dig deep. And each team is going to find different synergies. Each team is going to have different topics they want to talk about. And again, empowering your team to look beyond the checklist or look beyond the template is what really helps keep them engaged.

Yeah, that's a really good point. Teaching them, like, the real heart of diligence, the out of the box thinking.

Yeah, every deal is different and every deal is going to be different. So a checklist isn't necessarily going to work. It may work for some items of let's order computers or let's do this or let's do that. Yeah, there are some of those items. But again, you have to really dig deep sometimes and that spurs my excitement. The deeper I dig and the more we can learn about efficiencies. Our integrations manager has an incredible background in agency operations and so she can see, like, where there's inefficiencies like no other and she can call them out before anybody. And so that enables her to then set up the teams of, hey, we're going to need to focus on this and this. Just Based on this 10 minute conversation I had, I could tell you all these things. Really utilizing those team members that you have in a different capacity sometimes than what they're used to really helps keep things interesting as well.

Yeah, I like that. And you got any other tips and tricks for me? How do I not screw up my integrations?

You're going to, and that's fine. It's teaching your team to stop and recalibrate if they need to. Because if something starts going off the rails, that's going to happen. And that's okay if it does, in the sense of don't let it keep going, know when to stop. Okay, let's get together collectively. This is what happened. This is how we need to pivot. This is how we need to change things. Again, keeping that agility in what you do is going to be huge as you start to do your own acquisitions and your own integrations, knowing what the end goal is and oh my gosh, define done. That's one of the biggest things I can stress too is define done because the teams want to understand, the target wants to understand as well. What does done mean? What does integrating look like or integrated look like? So you have to define done, but then define that again. Autonomy versus integration of how much you want on each side of things as well.

That's a Good point. Because there has got to be a line you draw where after this milestones are met, then we're at business as usual.

Yep.

Are there things that you wish were asked before loi that don't get asked? I'm curious about this because it's just. It's funny getting to loi because you really don't know a lot about this company. And it's. Yes. You look back and said, oh, we should make the checklist bigger before loi and ask. But you can't do that, which is hard. You can't. It just sets the wrong tone. You're gonna scare someone off if you do that. So you're trying to be very respectful. You're trying to set a nice tone. This is gonna be collaborative. We're gonna make this a good experience for both of us. You got to keep it very short and concise. But then on the flip side, as a buyer, I have all these concerns around the integration side because these are the things that are going to bite me later and that really going to mess with the deal thesis if I don't get it right. So I was just curious if there's things there that were things that you noticed. I even found the conversations around culture to be difficult and got to learn to be comfortable, to ask questions, to understand culture.

Yes. That's what I was actually about to go on is understand their team dynamics, who they have in what positions. Not just look at the employee roster, but really try to have those conversations if possible. And I know you can't dig too deep pre loi, but you could probe with the right questions, but then try to understand their culture as much as you can. And again, it's so hard to do pre loi because then you're trying to keep it as concise and efficient and quick and get to loi as you can. But I would say those things are going to then set you up later on, especially for the integration phase, is really trying to understand as much of that as you can pre and when a deal is being done and somebody's about to be handed a multimillion dollar check, they're going to tell you what you want to hear to an extent. But knowing how to add some additional questions or pick apart some of their statements, that will then give you that insight. Because if they're going to be out of the picture for us, for example, with rollups, if they're going to be out of the picture, who do they have on their staff that is going to then step up? Who's Going to manage, who's going to lead? Who's going to do this? What is the culture in the office currently like, if they're going to keep the office open, is it going to fit our culture? And you'll know those things really quickly once you start to dig into those questions. And the employee roster is the starting point. And that's always something you want to get pre loi.

Do you look at other resources like LinkedIn, Glassdoor, or any of those things to.

We'll do that. And sometimes just a basic Google search will tell you so much.

Do you get, like, red flags? Do your company get, hey, we see a bad culture fit and we can't do this deal.

We've seen that before. It takes multiple teams seeing that. And that's okay if it's just up to one person. If you're running with a very slim team, it might be one person. They're like, oh, that person might not fit. Again, why you need the communication, why you need to bring people in internally to really start to understand is because then you can have multiple perspectives on it. And again, I may see something in their culture that an executive might not, or somebody in operations may see something in their culture that somebody may not. And I'm not saying bring all of these people in pre loi, but based on their answers, you'll get to feel some of those things much earlier in the process or even post loi. You never want to back out loi if you don't have to. But once you start talking to the seller, you'll start to see and learn more of those things.

Yeah. What I'm curious is if I'm a deal lead. I'm focused on building a business case for this deal and you're into working on that. The culture isn't the big emphasis of that. I know it's a thing to think about, but when you're ultimately trying to build a business case to get this deal approved, that's a very different focus. And what I'm wondering is you have these other perspectives that you want in to understand the cultural fit. What times would you even say, like, as a percentage basis that you realize is a bad culture fit before loi vs after loi?

Most of the time it is after loi, because then you're.

That's what I think's the reality.

It is the reality. If I could have it my way, I would do more pre loi. But again, that's not reality. It's just the nature of the game. But there are certain times in certain cases that we do find that pre loi, especially when more executives will get involved because the bigger of the deal, we'll have more executives get involved. And that's great because then again, they can see those different perspectives pre loi.

If you look at top reasons why deals go bad, it's always something around integration or poor culture fit. Those are like literally the top two reasons integration failed. Bad culture fit. I have rarely heard of people walking away from a deal from bad culture fit.

In reality, you should.

I agree.

I just never absolutely should. Because it's going to depending on the size of your company and the fit, larger companies are going to be different than what we see and what we deal with. But negativity spreads like wildfire or toxicity does too. And so it's one of those things of you don't want that. Like we have a really great culture with where we are and how we do things as a whole. And so we want people that are going to support that culture by having living and breathing that culture themselves. So when it's completely different and it's no, we only pay minimum wage and we make everybody work 50 hours a week and we only give three days of vacation, those kinds of things are going to tell you more because then you're also going to see on the employee roster how short the tenure is or this and that and those kinds of things you'll be able to pick out. But yeah, absolutely. Because you don't want a bad apple in your orchard. You just don't. I know it's just one, but you don't because it will affect every team.

I want to hear more. If anybody listening has more stories of walking away from deals post loi because of poor culture fit. I'd love to expand on that because it's an interesting one and I feel like you're invested in the point of walking away from a deal post loi. Depending how far you're at, you've got a good amount of money sunk into it. A lot of people's time you do.

But sometimes that dollar amount is so small compared to what you're going to be paying to close the deal and then knowing it's going to be a poor fit after the fact. So knowing that before is incredibly powerful. Knowing when to say no and knowing when to walk away.

What separates good to great corporate leads. Yes, I like the things that you address because there are more universal themes that I feel like could be adopted for anybody. Like it doesn't matter what type of MA you're Doing volume or size.

My other tip would be hire right. Take time and hire for the right roles and trust the people that you hire. That's going to make all the difference too. So if you're doing an international deal, hire the right legal firm, hire the right due diligence firm, hire the right whomever to then help with what you need for those specific needs.

Biggest lesson I learned and building a company up from scratch. It's so much about the people that you hire. M and A is really interesting because maybe there is like an M and A degree now. As far as I know there is no. There's definitely no corporate M and A degree I've heard of.

I don't know of like a four year bachelor's or master's or anything that focused on M and A. There's programs here and there.

There is. I heard of. I think Illinois has an investment banking degree that you can get. There really isn't. If you look at folks that are in M and A, they come from all walks of life. I see them from the engineering background, operation background, sales background, legal, and a good old investment banking background. What do you specifically look for if you were to say this is going to make somebody a really great fit for M and A?

It's really just their experience in general. I don't try to fit anybody in a specific box based on their education, but it's their experience if they're able to then learn, grow, transition if they want to. You can find all of those things out through the interview process. But not having a formal corp dev background or investment banking background or anything of the sort, it's. I have a Bachelor's of Business administration and then I have 13, 14 years of insurance experience. That works perfectly for an insurance brokerage like ours because I not only have the business mindset, but then I have the insurance. I have the different facets of the insurance background as well. So I know who I'm talking to and I understand their agency and I understand what we are purchasing and how we're going to partner together. It's that kind of experience. I may look at somebody in operations or our SVP in operations may look to be hiring for her team and she may look at okay, yes, you have operations experience at a different company, but you don't have insurance. We can teach the insurance piece on that. Whereas on the client facing insurance side you want them to have an insurance background. But then the integration manager side, the fact that our integration manager used to run an agency herself, that's invaluable to us as we start to expand her team as well. That's what we're going to look for. The people that can float both sides with their experience or if it's, you know, needed a small facet of one, we can teach a piece as long as they have the majority.

That's so interesting. I like the way you framed it with experience because it's not a straightforward answer. No, keep referencing our own business here. But gone through the same thing where I used to always hunt down the industry experience, but that's not the biggest value add hires we've made. It's always been folks that have done something unique where they've been involved in startups, subscription software and have scaled and been part of that growth. So now I look for that. Have you done B2B SaaS and have really been part of some exceptional growth.

Because you can teach the M and A side of what their role is going to be.

The tenacity, that learning to work in that kind of high pressure environment and build and grow and then that professional development part. No, and this stuff doesn't work in our industry. A lot of the companies out there are pretty stagnant. So if we expand off of experience, we end up with these kind of soft skills. That motivation basically.

That too. Yeah.

You have to have that.

Yeah, absolutely.

Like you obviously have that. That's what we're talking today.

Yeah.

How do you get a sense of that? Do you have an approach when you meet people you're trying to hire to get a sense if they're truly motivated or not?

Get to know them as a person, not just for the role.

What would you look for?

What they do in their free time, what their hobbies are.

Go home and watch three hours of Netflix.

Exactly. Or do they get out in the community? Do they volunteer? Do they hang out with their grandma every weekend because she's in a nursing home? You can really feel a sense for who a person truly is when you again, listen to who they are. A good leader doesn't just give direction, but they also ask the right questions. You have to know to ask the right questions. That all flows through an interview process. But it's not just, okay, what did you do during a challenging time with a project? Everyone's going to have their scripted answers because everyone knows that's usually a question. But that's not going to tell you who a person truly is. Even if you ask them. How did you handle a difficulty time? It's not going to tell you who a person truly is get to know them for who they are and ask those right questions.

What'd you do last weekend?

What did I do last weekend? We not only were in Texas, we actually smoked some meat, smoked some ribs and chicken and fish. For the non meat eaters like me, I do not eat meat right now, which is very untexin I understand. But one of my personal hobbies that I work on every weekend is I started making shirts to give back to a dog WR rescue that I'm very passionate about and helping with. So it's a shirt that says this shirt saves dogs and it benefits the Texas GSP rescue. And so that's something I work on the weekends is getting the sales out there and packaging them up, making them and just promoting the heck out of it on Instagram if I can. So every dollar counts to an organization that is volunteer based donation run.

That is so ironic. We did a leadership fly in event just a few weeks ago in Boston and we rented the conference space right next door. They had this big room and they're doing all these crafts but it was a fundraiser for dog rescue, not for profit.

That's amazing.

So funny.

I love the dogs. I have a German short haired pointer. So Texas GSP rescue is near and dear to us. We volunteer with them but we adopted from them and then we also recently fostered for them as well, which fostering a dog makes my heart complete.

Awesome. Well, now I know where to go hire. I'm going to go back to that, the dog rescue program. Hire volunteers there. You know, if you think about the relationship part of M and A and it's the thing that we don't talk about, if you look at all the M and A books out there, the book I publish, like we don't talk specifically. At the end of the day, this whole deal is riding off of a series of relationships. A lot of times I get the deal because I spent the time to build a relationship, which is why I have this huge point about getting out there, meeting the person, going back out there to meet them again and keep developing that relationship in a way that's meaningful. And that gives you so much more leverage. Even if you end up in a.

Competitive situation, building that relationship with your target and having your team build it with them post close makes such a big difference in maybe winning the deal. Like you said, it could be if you're in a competitive situation. It was, oh, we took time to build that relationship where it's somebody else, they're just a number on a list and they're just gonna go down because their goal Is to hit 100 deals in a year or something of the sort. And so really getting to understand that seller and really getting to know them will make things so much smoother because then they have trust in you, you have trust in them. And back to my M and A is like a relationship. It has to benefit you and it has to benefit them. And if you're missing one of them, you're not gonna have a success in your integration. While we call it the transaction, it's not just a transaction. They're not just a number. We're not just going down a list. We are truly getting to know them and their operation and really start to analyze it from beginning to end so we can then help them and better it for them.

Too. Much easier to find the common ground.

Absolutely.

Do you have a strategy when it comes to building relationships in M and A yourself? But is it? Do you communicate that with the broader team of, hey, here's our approach in terms of how we're going to build relationships or specifically find our way of working with this other team?

We encourage them to pick up the phone because so many people hide behind email and tone doesn't get conveyed right over email messaging doesn't get conveyed right over email. When you pick up the phone, you can then have a true, real conversation and then it can sidebar into this or sidebar into that. And so when you pick up that phone, it just helps. And I know that's something we've heard for years and decades of, oh, just pick up the phone and call somebody versus texting or emailing, but it really does make a difference, especially in someone who is already feeling overwhelmed because the deal is heavy. Integrations is heavy, especially when you're trying to fully integrate them into your company. If they and their team get a phone call from you versus 20 emails, it's going to put a much better feeling on them than the opposite.

I agree. I'm glad you said that, because that's something I do. And when I encourage others, I feel like they look at me like I'm old school, especially my young daughter. I call her. She never answers.

What are you doing? I'm guilty of it too. We all are. Of like, let me just send a quick email real quick because I may not have time to sit on the phone for 45 minutes. But more times than not, our integrations manager has told us of she called just to ask one question and they ended up talking for 45 minutes. And then she learned 10 more things that are stressing them or that they need help with or that we're doing good, but we could grow upon, you know, those kinds of things. And when it comes to our deals as well, like we will also not just have our integrations meetings and check ins with them, but sometimes I or one of the other executives will have regular check ins with them as well. It's just building that long lasting relationship. They will then put more trust in you and them and grow the team. And they can give you advice. You can give them advice. It's not just coming from 1, 2, 3, 4 people in the integration line. It's then branching out into the entire company and how we do things.

I like this one. Pick up the phone. This is your strategy to relationships in M and A? People don't talk about this. And I, I think it's so true. The deal I'm working on, I just got comfortable to the point where in everything I just would start picking up the phone with them and it was so much easier and I could tell, so much easier. He was a lot more comfortable in just the fact that I was coming up to him with the tough questions instead of trying to explain it over a long email.

And that helps in due diligence as well. Especially when you're dealing with small sellers. It might be a one owner type of place and they have one or two employees. So they don't have a team, they don't have an HR function, they don't have an IT person and it's them doing everything. So sometimes even during diligence it just makes them feel more comfortable, but it also gets through diligence faster of just hey, let's go through on a phone call and let's go through these items and then we can talk about if we need to pivot into something else or go in a different direction based on this conversation. I will do that more times than not. Of okay, here. The financial part is pretty straightforward. We need your financial information, right? Finances black and white on paper. But when it comes to the non financial, the legal side of things, it's let's have a conversation through this. And yes, we're still gonna have our requirements and we're still gonna go through this and hit every point. But let's do it in a conversation versus me handing you a list of another hundred items you need to go through because that can be overwhelming to especially a smaller seller who is still trying to run their business at the same time.

Totally true. What's your least favorite part of M.

And a having to convey bad news when we have findings like red flags. Red flags are hard because it's. Is it a red flag to stop a deal? You have to decide, is it a red flag that we need to pause it and recalibrate, restructure, or is it something that we could live with if we adjust something down the road? But when it comes to having to stop a deal, it's hard to have that conversation, especially when you've built that relationship with somebody and their team. But those hard conversations have to be had.

What's your favorite part of M and A?

My favorite part of M and A would have to be helping other people. When you think about it, you're really helping the seller take the next step for them and their company and or their family. Getting to be a part of that and then watch them grow afterwards is magical. Getting to feel that with them and experience with them, I would say making that difference.

Are you there at closing, handing them the check?

I am not, but I will let them know when it's coming, which is almost as exciting.

This has been great. Is there anything else?

I do have another piece of advice.

Yeah, let's hear it.

One piece of advice, especially for new people in the M and A field and new practitioners, is don't be afraid to call out the BS if there's BS there. I will say sometimes if you're dealing with advisors like sell site advisors, sometimes they will paint a picture that isn't necessarily 100% accurate because they're trying to sell their client sell a deal. Don't be afraid to say no. Again, there's power in saying no. But also if you got to call it out and cut it, you're like, you got to do what's best for you.

It's the most important lesson because I feel like in this industry there is a lot of people that have a big voice and a big ego that goes with that voice. They really can sound like they know what they're talking about and they could be completely clueless.

Absolutely.

And I found that a number of times.

Remember, they're a salesperson too. They're trying to close their deals so they can get paid. And sometimes it's not what you need. I've been saying for my whole two and a half years in M and A. M and A is very much like a relationship. It has to make you better and your company better, but you also have to make it better for the seller, especially if they're staying on and you're not just buying their assets, they're actually going to stay on and keep an office and run and be a part of your organization. It has to support both sides. If you're missing one of those, you're gonna have some breakage there.

Don't be afraid to call it the bs.

Exactly.

I like it. Amy, what's the craziest thing you've seen in M and A?

Back to don't be afraid to call it the bs. The crazy thing I've personally seen as a sell side advisor literally screamed at us because we were doing just that, lost their cool, completely flipped out because we were not having it and we were not putting up with it because what they had given us, it was the financial stability, the health of the company. It was just, it was different once we started looking into it. And when you start to call that out and somebody doesn't like it, it'll be very interesting in how they react. And that's how you will know you made a right choice and a right decision.

So the banker freaked out, completely freaked out.

Whenever we just happened.

What are you doing? What are you like, you're lying. Blah, blah, blah.

No, it was just we started asking the right questions. They would tell us things and we would start to dig and dig and explain to them why it didn't make sense. And that really shows the stability of the company wasn't there like they were trying to tell us. And so it was. We just stayed calm and stood our ground and the conversation ended.

Too much lipstick on the pig. And then it killed. End of deal.

Yeah. And that's okay. It happens.

This has been great.

Yeah, it's been wonderful. Thanks for having me.

Thanks so much for taking the time from doing deals to have this conversation help me become a better M and a scientist.

I've learned from you, so I hope you learned something from me.

I have. This has been great, Amy. Those of you still with us, thank you for sticking through. Until next time, here's to the deal. Thank you for taking the time to explore the world of MA with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you need help standing up an M and a function or optimizing one that you already have, we're here to help. And if we can't help you, we probably know someone that can. You can reach out to me by email. Kisan K I S o n a science.com or you can text me directly at 312-857-3711 if you just want to keep learning at your own pace, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter. Again, that's mascience.com here's to the deal. Views and opinions expressed on M and A Science reflect only those individuals and do not reflect the views of any company or entity mentioned or or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.