Creating Successful Deal Outcomes Using Innovation

Hello M and A Friends. This podcast is brought to you by dealdoo. M&A is coming back. Would you like to avoid wasting hundreds of hours managing Excel Trackers and building PowerPoint reports? Do you want to make your process more efficient? Well, I have great news for you. Deal Room is MNA management software to save you time, headaches and improves collaboration so you realize value faster. Learn more@dealroom.net here's to the deal.

I'm Kisan 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. Welcome to M and A Science. Putting together companies is complicated and taking them apart is even more complicated. On this podcast series we interview leading M and A practitioners to learn lessons from their experience. Learning proven techniques is key to perfect your M and A practice. I'm your host Kisan Patel, CEO and founder of Deal Room. I spent 10 years with MA advisor and after seeing a whole slew of industry wide challenges, I started the company deal room in 2012. Pursue building the greatest software to manage M and A. Joining me today, Christian Van Bogdandy, Practice Director at Salem. His past experience include operational experience with serial acquirers such as Cisco and Symantec and Chris now is leading the M and A consulting offerings for Salem in the San Francisco Bay Area market. Today we're going to talk about how to use innovative practices to create a successful deal outcome. Chris, can we start off by telling us why you decided to focus your career in M and A?

So I've been in M and A for many years, starting out back in Europe, working a lot with GE and I do it really for two reasons. One, I really like a very fast paced change working with companies and don't get stuck in the analysis but very quickly go into the execution. And the other reason is I've experienced that for myself. Getting acquired is one of the most disruptive changes that I have experienced in my career. I think a well managed integration really focuses on making it easier for employees as well as for your partners and channel partners and suppliers and whatnot. I think doing integration work is really good work for the company value as well as for the people.

The value of integration that's kind of interesting and I've noticed that theme before with practitioners where they sort of had the full breadth of running the process, but it seems like you sort of see the integration part is the key driver in terms of gaining value or losing value.

Definitely a Lot of deals on paper don't make sense and they don't make sense in real life. But I've seen a lot of companies that don't place a lot of value on employee experience through the integration and they lose a lot of the institutional knowledge. And though they may get the products, they don't get the brains that built the products are leaving their company. So very quickly the value is lost and relationships are lost. So I see that happening quite a bit.

So a lot of the risk is even there as well if you're losing key people and key clients.

Yes, absolutely.

One of the things that we talked about and I think where really caught my attention was the whole aspect of decision making and decision making influence success to the deal.

I find very often the executives or leadership is very engaged when it comes to putting the deal together and putting a deal thesis together that then gets presented to the board and green lighted and funds are allocated. However, the deal thesis is not enough from a go to market perspective to really then give it to the integration team for execution. There are usually a lot of loose ends there. And the integration teams who already have usually a full day job on top of driving an integration, they are often spinning, they are spinning around products whether to end of life them or not end of life them, pricing structures, whether a facility is closing or not closing, whether brand is going away. I think it cannot be underestimated the amount of friction that that introduces to an integration if these type of what I call cornerstone decisions are not being made in a timely manner.

So a big part of your sort of emphasis and approach is making sure you can make decisions quickly. Yeah.

And usually when I start working with an executive team, I ask them, walk me through the last time you made an important decision like you decided to end of life a product or, or you made a decision around entering a new market. How long did that take? And walk me through how you made that decision. And now you multiply that by 50 decisions you have to make and you half the time into okay, now you have three weeks before announced have to figure all this out. How are we going to make all these decisions in such a short period of time? And then usually the eyes go wide open and people realize that this is one of the key focus areas that the executives and the leaders have to focus on.

That's interesting. I'm curious, what are the best case responses and worst case responses responses you get when you ask people that question?

Well, usually they start responding with we have a very collaborative working environment and we really look Eye to eye, and we are super aligned. I get the package and then I ask them, well, give me a specific example. And I usually come prepared and I say, when you started this bundle, this bundle in the market, I see when it hit the market, how long did it take you to actually make the decision to bundle these three products and these two services and make the pricing decision on that? How long did that take you from the beginning of the idea to actually execute it? And that's when they. Oh, it was like, you know, we had like a steering committee, but they met once a month. It took half a year.

Yup. That's pretty common, right?

That's pretty common. Then you know that you're in trouble for the integration. Then you know that, you know, you have to make all these decisions about whether which people you want to stay, which people you want to separate and find the future for. Which leaders do you want to keep for a long time, who gets a golden handshake for a period of time, et cetera, et cetera. So a lot of the work that actually has to get done, and a lot of these people, they're already through the whole deal cycle and they're exhausted. They just got their definitive agreement signed. They think they're done. And now I hand this over to the IMO and they just run with it. And then they realize that's not the case.

Do you ever come across companies that impress you and say, hey, we actually are really fast at this, or is that just an obscure way when you start dealing with large organizations, it just doesn't happen.

A company that really impressed me was GE Capital in specific. I worked with them. I did perhaps 10 deals, consulting capacity, and they decided to enter the European market. Was back in the days to be number one in the modular space. And they acquired all these small companies and they formed a new company out of that. And it was all done from a process perspective. That was impressive. It's a machine. It's a complete machine. It's one of their core competencies is creating market leaders. That was impressive. Every other company I worked with after that was significantly less smooth. The acquisition as well as the integration.

Only far and few have actually impressed.

You in that area, but it was also a different endeavor. It was basically building a company from scratch out of a dozen acquisitions.

Wow. Let's talk about using the model of agility to improve your deal process.

So when a lot of people, when they hear about agility, they think about continuous delivery cycles and teams that are doing scrum standups and et Cetera, et cetera. When I hear agility, the first thing that comes to mind for me is agile governance. Creating a governance structure that actually enables an agile working environment. I see a lot of companies that have agile working teams that have backlogs and do all the Scrum ceremonies follow the Agile Manifesto, but they don't have an agile governance process. So their governance process is still very waterfall, it's face gated and it really focuses on control, having them report green, yellow, red scorecards all day long on their progress rather than really enabling the teams in an agile fashion.

I think part of this too you have an emphasis of working with high tech companies. So you may see sort of a lot of these agile components which may be higher than other industries. The area you're pointing out is around the governance aspect may not be following the same type of agile approach.

Yes, again, the biggest disconnect that I see, teams that are working Agile, but the governance structure and the oversight and the steering committees are not agile. They don't follow an agile governance framework. Then there's a lot of friction.

Can you define what an agile governance framework would look like?

There is no one definition for it, there are several. But the key elements that I see is the governance body is accountable for developing an agile environment for the teams. They really focus on what's the environment that the teams are working in. A lot of governance models don't do that. They just focus on the progress that the team is making. They are not focusing on the environment that the teams are working in. Do they have enough capacity? Do they have clear accountabilities? Do they have clear directives and prioritization and let them prioritize the work based on the strategic imperatives rather than the other way around. The second one is they have a phase gated progress reporting. So every week or every two weeks they meet and then there's green, yellow, red and risks and issue old school program management rather than with the new tools that are out there. There are a lot of new tools out there where the teams can report progress continuously on a real time basis. So the executives shouldn't waste their time looking at green, yellow, red scorecards. The third thing is that a lot of the milestones that I see that the teams are reporting on are progress milestones against operational aspects of the integration. They don't report progress on synergy realization. So it should be green, yellow, red against synergy realization, not how far along are you with the integration of Salesforce. That's a good milestone. But if that's a Key milestone that unlocks for example the revenue synergies of a deal and that you can unlock the cross selling and upselling. How far along are you with that? That is a much more important question than operational milestones. That's kind of how I see agile governance and I'm trying to trying to introduce some of these things, but it's not my charter to introduce agile practices to the organization. My charter coming in as a consultant is to help with the integration, realize the revenue.

These are interesting areas you touched on. It sounds like even though company may embody aspects of Agile, when it goes back to the governance we're basically talking about at the program level in terms of how this stuff is managed across several teams. That's where you tie it back to a couple things. One, the reporting aspect, where the reporting should be continuous as these things happen. Partly mentioned using modern tools, but then also the milestones I think at a great point with they need to be focused on actual the synergy realization. When you look at the synergy realization, is that prioritized? What's the approach in terms of making sure those teams are aligned on that and staying focused on it?

There are three areas of focus that I see for the integration. The one is to keep the lights on the acquired companies, making sure that they don't lose their building or they bring in the revenue that they have outlined in their forecasts. Right. The deals that are in the pipeline and making sure that is not disrupted. It's number one. Number two is cost synergies and number three is revenue synergies. So a lot of integrations like the first 30, 60 days is making sure that the lights stay on by a company, making sure that you don't have attrition, that you don't have churn, customer churn, et cetera. The second one in regards to cost synergies, I do a lot of work in the tech industry. They don't really care about cost that much yet. They're starting to, but it's not a big focus. I did a lot of M and A in retail and in banking where it's like all about the synergies, market consolidation, deals, it's all about cost synergies. And then the revenue synergies vary a quarter, two quarters, up to a year later when you fully activate your partner channel and your sales organization. So quite often the IMO has walked away at that point. It's already focusing on the next deal.

You notice I'm curious just between industries, if there's a different focus or emphasis around building the go to market early. When we're talking about revenue synergies, you got a good point. Some industries really focus more on cost energies. Do you see that with maybe tech companies?

Where?

I mean, for me, when I start looking at other companies and it's around partnerships and other products, it's always a big emphasis and what that go to market looks like is sort of the first thing that we look at. But I'm curious if you see a variance there across those energies where other industries where you're seeing more emphasis around that go to market versus not the tech tac deals.

They're super easy, right? You buy a company that is usually not public and there's super small serious C funding and you just tuck in the product and you keep a couple of engineers. Once you start buying companies with a revenue stream, things look very different in the tech world. Quite often it is. They're moving so fast that they leave them alone for quite a while. If I look at the grubhub acquisition, European company in Amsterdam and the name is escaping. We eat something. They just acquired them. So Uber bought Postmates. I think much better deal. Grubhub did 13 acquisitions over the recent past. So Grubhub is not one company. They're like 30 companies. So if you buy Grubhub, you are buying not one company. You don't have to deal with one integration. You have to deal with 13 different entities that have been integrated to some level. It is so much more difficult to figure out what did you actually buy there. And I've experienced this myself when I was internal and we acquired one company and then you figure out that that company is really for companies. You have to determine the integration strategy around that and figure out where to untangle this whole thing.

Retangle. Yeah. Those are great views. What's your stance on Playbooks and how does your view differ from the traditional view?

Most companies that do more than one or two deals a year have Playbooks. I think it's a really smart thing to do because you want to retain the knowledge on what works and what doesn't work in integration, especially when it's a key part of the way that you grow as a company. A playbook is a good place just from a knowledge management perspective. Just put it in the table. We build a lot of Playbooks. There's always one standard model on this is the standard playbook. We also build a knowledge framework for everything that you did with this deal that lives here. So you want to go back to what did we do with deal X or deal Y, you can go back and say, okay, this is how we do quote to cash. This is the business requirement document that we used back then. It's like a knowledge management tool. The second thing is from a playbook perspective that I really focus on is decision making. Every function usually and every key process. Go to market process and on life process, there's certain key decision points that you can predict. So figuring out who makes that decision and how do you make that decision is a key part of the table. More value to the table than here are the day one activities that you need to do. You can download that from the Internet. But figuring out back to the earlier point around governance and decision making, it is absolutely critical that the decision making is as fast as the integration has to move. So figuring out what are the cornerstone decisions, like do we keep the brand? Do we not keep a brand? Keep the facility, do we not keep the facility? We bought them for product 1, 2, 3, what are we doing with all the other products? That whole battle around end of life, figuring out what are these key cornerstone decisions, who makes them and how do you make them? That's part of the playbook.

I'm curious, have you ever influenced a company to change their decision making process? You have a company that's like, hey, here's our 15 people on the steering committee. We take six months to make every decision. Have you ever kind of worked that through with the organization?

Yes, every single time the company after the deal comes through, like half a year into the integration, the leadership team will work at a different level.

Interesting. Is there a certain approach you take to doing that? One is already stagnation, where organizations are just tough to change. I like the idea of challenging the decision making process, especially if you can identify early that this is going to be your biggest challenge when it comes to integration is you got to make so many decisions quickly. But I'm just curious or sort of go back with the organization to try to shake things up and kind of think throughly about that. How do you actually prompt that change? It's a half million dollar question for you, by the way.

I know. There's so many things that pop into my head, like different companies are within the cultural environment of their ecosystem. There's a reason why so many tech companies are in the Bay Area though. It's so insanely expensive, right? It's the cultural ecosystem. If you buy a company in the Midwest, then a different setting and the leaders from there, they're also different. One of the key questions Absolutely. Key questions and where a lot of frictions can be introduced is leadership team for the long run, who do you keep for a period of time and who has to go as quickly as possible? And driving the integration decisions, as we talked about earlier, just from the acquiring company perspective and then how much are they bringing in the leadership of the acquired company? So there's already a major integration activity because they're usually sitting somewhere else. They're usually coming from a smaller company. More simplistic, hierarchical, linear decision making. A lot of them are founder, CEO. They're kind of the papa or the mama of the organization. Everybody has to go to them and say like the toilet paper is empty and the store can I buy another one? And then all of a sudden they acquired by a company like Atlassian or Salesforce where you've got distributed decision making matrix leadership organizations and they're completely lost. It's a $1 million question on how do you make these leadership teams click during an integration and how do you figure out where to draw the line?

Now that's a really interesting perspective in terms of the actual target company and how they get impacted by all of this because that's definitely got to be life altering in terms of we had our own ecosystem environment. Now we're in a totally new environment and have to adapt to it. But the whole decision making flow has completely changed. I gotta imagine that's gotta be very challenging for companies to transition to it. What have you seen or how can companies make that a better process?

First of all, talk about how we make decisions transparent. Yeah, Be very transparent. We know that you come. Hey Jeff, thank you for joining us. We know that you're, you let your company, you had all your employees there, 500, you know every single person. Now you're part of this. Welcome. You're SVP and this is how we make decisions around here. And let's first have a conversation around that and here on the board.

Thank you.

Chris has prepared all the cornerstone decisions we have to make going in the next two months during this integration sequenced. Very nice. Well prepared. But how are we going to make these decisions? It is critical to be explicit around that and to find the right model. And there's no one model and people will get uncomfortable and you have to manage through that.

Got it. So just being really open, having those tough conversations early and figuring out what works best for both sides.

Yeah. And also don't, don't be shy to. Back in the days you would take people out in the evening. I made that mistake. Once in Germany, I was helping an American company acquire a German company. The American company had their manufacturing facilities in one of those countries out there. I don't want to name the countries. We went to dinner together with the leadership team because in Germany it's very important to go and drink together. Right? That's a real unlock. The next day people came back together and they said, well, how was the evening, everybody? Oh, we love the food and we love the German beer and the sausages were great. We like meat too, where we are from. And then one of the German guys said, you eat dogs too, right? It was a joke. German joke. You know, Germans, they didn't invent the comics. So it was a bad joke. The guy from the other country says, yes, we love dogs to eat them. The whole situation went sideways when everybody looked at them and it's like, okay, oh my God, what did I eat last time I went to the cafeteria in that country. So it was just a situation that kind of went out of control a little bit. We had to pivot back into where does engineering live going forward. But there's no recipe for that. And there are so many different leadership approaches and leadership cultures and decision making models out there. I think it is one of the key things as a consultant to come in and figure out how does a company make decisions and how can we accelerate that to the rate integration can be successful.

We can both agree it's very much a part of culture in terms of how companies make decisions.

It is absolutely part of culture. And then cross cultural deals, whether they are cross country and the way that decisions are made in Germany, I'm from Germany, I'm from Europe. Is different than from the United States, is different than in Asian cultures, Asian countries. It's just different. And you have to acknowledge that and you have to be uncomfortable. There's no right way, there's no wrong way. There's a reason why companies grow and are successful. So just acknowledge it and then find a way going forward and be explicit about it. That's kind of how I see it.

Yeah, I should have mentioned that Chris is from Germany. We got a couple things. You're German and you also came through an engineering background in terms of your education. So you're sort of wired a little different compared to the typical M and A practitioner.

Where does the typical M and A practitioner come from?

Banking. We got a lot from banking. And then sometimes they come from the business unit. They get thrown in corporate development. You're one of the few where I've actually had A previous client of yours. Highly recommend to put you on this podcast. Usually when I talk to corporate development folks, they don't have nice things to say about the consultants they've worked with. So you sort of got a couple of good things going for you. And I'm trying to put the pieces together, which I think is partly. I don't know if it's being German or the engineering background, but you're thinking about these deals a little different, which is good.

I'm also really passionate around M and A. I think it's a great space to be in. I love doing deals. It's my favorite thing, helping with integrations.

Now, I know we talked about how you can improve company structure to have the best integration outcome. Were there any other points on that or we got sidetracked.

Yeah. Every crack that you have in the foundation of your organization will go wide open during the integration. If you have a shaky ERP system, it will show. If you have poor data governance, you are in big trouble. If you have a bad onboarding process today, wait until you are asked to add 100 or 1000 people. Anything and everything that's not working well in your organization will become a very sore point during an integration.

That's a great point. I like that analogy a lot. Anything that you kind of have as a small problem is going to definitely expand. That's a great one to think about.

Operational excellence. Companies that I see that are doing well during integration, they really care about the operational excellence and care about taking the friction out of the process.

I'm curious about this, just openly speaking here. A lot of times we sort of get fixated on integration plan, right? And I've seen this time after time where, hey, the integration leads didn't get much time to plan the integration. They got a couple of weeks before close, they put together something and then they're burning through this plan. It's interesting because a lot of times when you go through that process, you start identifying the additional opportunities. And I'm curious if you have a view on that in terms of, hey, we obviously are doing cost energy focus for some of this integration, but maybe identifying some of the pieces that may be expandable into opportunities for the company. So I've had to do this on the other side where one of our clients gets acquired, right? Next thing you know, I'm heading down there just to make sure we don't get replaced with some older legacy system. I'm kind of curious if, sort of if there's a view on that that you have to take a stance in terms of where are you getting the best practices or identifying the additional opportunities during integration.

At Cisco we were really good in finding value during the integration that were not identified during the due diligence. We focused on that and we tracked it and reported it out. Especially when it's a smaller company, it's very easy to lose these things because they're in the fringes and people don't really know how they fit. Then they just go away. And they may be inventions, they may be operational ideas. I'm helping one acquisition right now where the acquired company's salesforce system is much more sophisticated and fits much better their sales process than the acquiring company. Basically we have to dial them into a lower, worse fitting system and force them to transact with that because of scale. So those are the trade offs. But finding additional value I think is really critical for any integration and something that every IMO should do. Now the second question was around working integration plans.

Yeah, because essentially if you're doing that, you're going to have to disrupt those plans and make those plans very flexible to I guess goes back to agile. You got to make them adaptive because you're essentially going to update it and say hey wait a minute, this new CRM or their setup is way better. We should actually try to take what we can out of it or maybe even change our own instance to model off of what they're doing.

In my mind that's step number five. Step number one is the deal thesis that is presented to the board. Step number two is from the deal thesis. You define what's your integration strategy, Quickly integrating them or leaving them alone for a while, closing down after facilities, et cetera. Then step number three becomes figuring out what are the cornerstone decisions coming out of that. Do we keep those facilities, do we keep the brand? And then out of that. Step number four is developing your integration teams. Do we need a team that just focuses on getting out of the facilities? To get fast out of a facility is very complex. Do we need a team that just focuses on expanding with that new package in Japan? So we put a Japan team together and then you have the functional teams, the finance, sales, marketing, yada yada, yada. And then step number five is the integration plans. A lot of companies make the mistake, they take the deal thesis and then they present that out at the due diligence readout meeting to the integration teams that already been formed. They're all functional and say okay, every single function now develops the integration plan. What you get are integration plans that are just focused on operational effectiveness, if you're lucky around the deal thesis. But so for me it's a multi step process to even arrive at a plan. Once you have the plan, the plan should tie straight back to the deal thesis. And those are the things that you track. I'm a big fan of planning and I'm a big opponent for over planning. I'm not looking for a plan with 100,000 line items. I'm looking for a plan that somebody can put in front of me. When I'm looking at the plan, I understand the hypothesis that go into that plan that arrives at the deal thesis. That's my check for a plan.

I want to make sure we're on the same page about timeline. Going through these five steps. When we talk about the deal thesis, that probably happens really early. And then from there you get into the integration strategy. On that point, are we still before loi loi signed Where I can go.

From step number so step number one, deal thesis, you know, that's executive team, then integration strategies executive team. The sponsor and the IMO comes in and the deal team, then the cornerstone, same thing. So you still have the executive team. The next step, you start bringing in the integration teams. As they're talking about what are the teams that we have to put together and what are the key milestones that will get us to the thesis. So the first three steps can be done in a day and the second two steps can be done even for very large acquisitions. The whole end to end process for that is a week.

Then in terms of going through the life stages, when we start putting integration teams together, roughly what timeline are we at?

Those are the teams they come out of the due diligence. So you have a letter of intent signed and it's still pre announced.

Okay. And then we see like the integration plan, it's there, but then you're still adjusting it as you go.

Yes, and again, integration plans are really focused on value realization. They are supported by checklists. So here are all the things they should think about. This is relevant, this is not relevant, et cetera, et cetera. Just dealing with the data by company is a whole universal itself. Right. But it has to support and the business has to support, et cetera. So this is something that you have to plan around your data. You have to figure out what are your privacy, gdpr, ccpa, anything else, hipaa, I don't know what kind of data you're dealing with. Just dealing with the data component requires a plan for figuring out what you actually Acquired and what you're going to do with that.

What are some tips you have to avoid reinventing the wheel when it comes to the deal process?

Playbooks, document it. Have a post mortem for every deal that is led by the imo. Make sure that you document everything. And it's structured in a way. There's so many different models out there that are structured in a way that makes sense. Have a pre mortem for every deal. And so let's talk about, okay, the beginning of the deal and you do this together with the executives and you say, okay, it's half a year later, this thing went terribly south. What happened? It's a really good thought exercise around the risks and starting a sense of urgency around the risk. Because a lot of people, especially at that time, you know how excited they are getting term sheets signed and everything. And it's like a lot of money and how do we communicate this out? And there's a lot of focus on the immediate. So creating a mindset and creating a workshop around, you know, let's think into the future. We talked a lot about the success criteria of this deal. We talked about all day long. We're going to talk about this to our investors and our shareholders and our employees. Let's flip the coin real quick and say, okay, all this went terribly solved. I really like postmortems because they really shift the mindset and also helps the team to come together and work better as a leadership team.

I agree. I think that's a great tool, the pre mortems. Charlie Munger actually wrote a lot about that too. I think he calls it inversions. If anybody wants to learn more, that's another great view on it as well. So when it comes to postmortems, I'm curious to know if you found value in doing anything between pre and post. Because like in Agile, they have retrospectives which tend to be a little bit more periodic, where they may do them once a month or something of that sort. And I'm curious if an M and A, you know, hey, does it actually make sense to do that, to do a retrospective during the deal and start making adjustments while you're doing the deal, or if for you, you found it better to do it after the deal?

It depends a little bit. I think after, you definitely have to do one after the deal. But I also think that these type of retrospectives are really good in order to identify cultural incompatibilities. If you do a retrospective, for example, after the due diligence, where you start the operational due diligence where you start working with the other company and you talk about, okay, how was this working with the other company? What worked well, what didn't go well? They never followed through on the action items or they always show up 10 minutes late to meetings. And when you do these type of things, you start realizing that there are actually things that are not compatible with the culture of the acquiring company. And these are things that may be big enough in order to bubble them up and say, okay, we have to deal with cultural incompatibility. In my mind culture, it doesn't have to be aligned, they don't have to have the same culture. But you have to figure out whether there are things that don't work. For example, a company that I supported in Silicon Valley, in San Jose, they had quite another company in, I forgot the state, but they would start every meeting with a prayer. That created a lot of friction with the workforce down in San Jose. And they said, we don't want to start a meeting with a prayer. Became a big obstacle for them. And the CEO get involved and put the foot down and say, okay, this is not how we operate here. It wasn't something that the due diligence came out. The integration teams had to figure that out.

Wow, that's a great example. I like your view too, because I was thinking more of retrospective on the acquirer side. But I like the idea of doing a retrospective with the target company because I think that goes back to facilitating a transparent discussion and really start shaking those issues out and really deal with more of the people to people issue head on versus letting it blow gaskets later on.

For an acquired company, an acquisition is a tectonic shift. People's career ideas and everything just goes completely out of the window. So having a transparent process and also talk about the things that are working and that are not working is critical. I think it's absolutely critical.

You got a good balance for the engineering blood roots. You have to kind of balance this out with some EQ with the engineering side.

It's also associated with the psychology school for a while. Maybe you haven't missed that on my list.

I think so, yeah. I want to get into some of the questions. I know Chris's colleagues are watching on this. Feel free to ask him some really tough questions. Help me try to stump him here. One of the things we talked about was the observation of how pesky do deals. Kind of like what we can learn from that and kind of contrasting that between the corporate approach. But I'd love to hear you reiterate those thoughts again.

For a couple of years in my M and A career, I just focused on PE companies. Their primary focus is on obviously valuation and then the cost synergies. I think strategic bias, which most of the companies that we are talking to right now, they buy a company in order to drive strategic growth and they don't hold them in a portfolio in order to then divest them again and make money that way. It is drastically different. It is drastically different. And I highly recommend anybody who's in an IMO to kind of learn a couple of tricks on how PE companies do acquisition. If they do integration, some of them they only do integration of the back offices or they take out captive back offices and put everything onto the web. Right. A lot of the stuff that we would do is like you can IT department. You don't really need an IT department. Everything is now why do you have a data center? Whatnot. Right. So bring them into the current century around how support functions are being outsourced or being moving into the cloud. A lot more focus on cost and a lot stronger financial aspects of the deal. 1000% more focus on that.

Yeah, that's interesting. You kind of think that there's sort of lessons in one area, but it seems like there's lessons on both sides to pull from each other or even PE can learn some things from the corporate side. I think you're right about those shared resources and how they really make those transactions more efficient.

Again, it all depends what kind of PE firm it is. A lot of PE firms, they just have portfolios of companies where they may own a share or may own the whole thing. But the focus is much more on the financial aspects and the reporting on the revenue synergies of the deal is much more stringent. They happen much more faster from an employee perspective. I'd rather be acquired by a strategic buyer than by a financial buyer. For sure.

Yeah, that's a whole discussion of its own. The actual synergy tracking all the way through and measuring that. So we'll save that for the follow on interview. And you can I have a whiteboard to work with. So I got a question here from Jeff. What software tools are you finding most useful for integration and synergy? Project Management. To bring that up again, Ms. Project and Excel still prevalent. Or using more full lifecycle solutions like Deal Room.

I work with whatever the client has. I come across various solutions. Anaplan, Aperion. If they like to use Microsoft Project, we use Microsoft Project. Other companies use Excel what we use a lot now it's Google Cloud, Google Sheets, everything is online. Introducing new tools. I've done that in the past. Coming with a tool with the acquisition and then I have to explain the tool and drive adoption for the tool on top of everything else that introduces too much friction. So I'm trying to really use what the client is using.

That makes a lot of sense. I noticed too. And it depends on the lifecycle you're focused on. I'm always in these meetings consulting companies around information management. And it seems like when you're in integration and you've kind of in that realm where you're sort of de sensitized a lot of the nature of the counterparty aspects prior to sign it gives you a lot more flexibility in terms of what you can use. And I think you're absolutely right. If there's sort of things that are already adopted, smartsheets, whatever, it sort of makes sense to keep that going. Especially when there's just familiarity with it versus having to go over a whole learning curve and adoption cycle.

I've used Confluence in the past from Atlassian, which was pretty cool. But again, every single tool has an adoption curve during an integration, people are already working 14 hours a day. So to throw a new tool on top of that is a lot to ask.

Yeah, I think that that makes a lot of sense. Other parts of the lifecycle is totally different too. When you're dealing with the front end, you sort of maybe you're using more of a CRM type of tool. The diligence, you're using a different approach as well when there is more sensitivity. Rhianna's got a few suggestions here for plain view and smartsheets. So definitely a lot of tools that you can check out. I want to go back to one of the questions when we mentioned taking the lessons learned during the postmortems. I hear a lot of companies talk about this, Chris, where, hey, we take our learnings from these deals. We build a center of excellence, a lot of different initiatives to really collect this information and body of knowledge. How do you build the habits of referencing it? That's what I've been curious and I feel like even internally in my own business, we sort of struggle with it at different levels because you can condense this information and have a valuable resource. But it's almost another challenge to develop this pattern or behavior for people to actually continuously reference it and bring it back to top of mind. I don't know. I want to hear what the engineer has to say.

It needs a tactical owner, needs an Executive sponsor. So the executive sponsor for a lot of the playbookish taco material that we have is somebody that needs prop dev like an SVP level or a cfo. And then on a tactical level, the person that really keeps it alive is the imo. The job of the IMO is to collect all that information and make sure it gets to the point. Because people rotate in organizations and we are talking to a lot of companies, they acquire like one or two big deals a year. So how do they not start from scratch every single time? You have to build that knowledge around Playbooks. And the interesting thing is that I see now a couple of times we develop playbooks for M and A and around go to market and the next thing you know they call us back to develop a playbook for new product introduction. NPI because also very complex project, a lot of different stakeholders. Guess what, if you're one week delayed, it's one week of revenue that you're missing. So you better have your ducks in the roll in regards to how do you roll out a new product. So what we see is sometimes there's an add on effect around documenting how certain things that don't happen too often, they are very complicated, but they only happen once in a while. So how do you develop a muscle around that and not lose that muscle every single time after lifting that weight? That's where those playbooks come in. And some companies, they really like that and they take to it. Other companies, it's like you develop it, you come back there half a year later for the next deal. It's like, where's the playbook we developed for you guys? Do you still have a copy of that? We don't. We are not allowed to have copies. You made us sign that in your statement. You tried to trick me here to you where you can't find it. That happens too.

When's the best time to introduce that playbook? Is it like during a kickoff meeting or what point would you want to.

Start getting people after a failed integration? That's a really good time to introduce that.

Really Just wait till they fail.

Well, actually having said that, I'm now also seeing projects where our clients ask us to develop playbooks without a deal. So they have done deals in the past that didn't go too well. They have hired people from large companies that have seen Playbooks and they're like, where's the playbook? Where we don't have a playbook, where we need to develop a playbook without a deal. So we see that as well.

Got it. That's really interesting. Well, I want to talk to this last question because we're about to hit the hour. You ready for it?

Go for it.

What's the craziest thing you've seen in M and A?

Okay, no names. That was during the heydays of the Internet, like 2002. And I was working for one of those very fast growing companies and they acquired a company in San Diego for $272 million in cash. They had no revenue and they were a small company. And they sent me down there to start integration planning together with a controller. We arrived at the address. It was a rundown apartment, high rise. And we called back to Mountain View and we say, you gave us the wrong address. This is just residential. And they said, no, no, no, no, this is it. You're at the right place. Ring that bell. And was like, acronym. It wasn't. The company name was on the bell. So we rang the bell and the voice came on and was like, yes, what do you want? Pizza. Are you the pizza guy? And I was like, no, no, no. We're here from blah blah, blah for the integration. We're here to meet with the founder and talk about integration planning. And I'm like, okay, come up fifth floor. So you walk up there and basically the whole company was like a web based company was set up in the apartment and they broke through the wall to the next apartment to make more server room. So there was just a hole in the wall and then there was the space to the next. And then the founder came and the owner and he was barefoot, very Southern California dressed. We were like, yeah, we're here to start integration planning. And he said, but I don't have time for that today. We said, but we called ahead, you know, you agree to this? And he said, no, today I want to buy a boat. Can you come with me to buy a boat? So I spent the afternoon because I'm client oriented consultant. So I spent the afternoon in the San Diego harbor looking at various boats. I don't know anything about boat. I know sailboat, motorboat. I was like, this looks nice. This is too small for you. This is good. And then he bought a boat. That's the story.

That's how he kicked off integration and.

That'S how we started integration planning. He bought a beautiful sailboat. And then after the deal was done, he sailed around the world with that.

You introduced me that choir. I would love to tell them about our business over here.

They didn't make it. Oh, surprise, surprise, surprise, surprise. Yeah, they sold that company to another company. They spun it off again a year and a half later for $42 million.

Wow, that's a great story to wrap things up. Chris, I know you're part of a interesting networking group for M and A practitioners out in the Bay Area. Can you tell us a little bit about it?

Sure. MA practitioners, they're usually onesie twosies in a lot of companies. So you don't have a big community of people that do the same type of work you do. So we started a roundtable together with Atlassian, lyft, Okta and PayPal. We come together every two months. We usually have a speaker, somebody or outside of that circle. We pick a topic. It's working pretty well. We have like 20, 30 people that meet every two months and talk about all things integration.

I'm familiar with practitioners at those companies, so it definitely sounds like a very forward thinking group there.

Yeah, it's nice to have people that do the same type of work you do and to exchange ideas and just to have a forum where you can connect because again, most companies, they don't have large acquisition integration departments.

Very cool. How do people learn more? I know it's like a secret VIP type of group. Should they reach out to you on LinkedIn and drop my name or something?

Yeah, just reach out to me if you're interested on LinkedIn. That totally works. I'm happy to share ideas or have you come along to one so you see what we're talking about.

Everybody, thank you very much. Thank you for your time today, Chris. I really enjoyed the conversation and got some good takeaways.

Yeah, thank you Chris. I really enjoyed it too.

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