Developing an M&A Thesis

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It's going wonderful. Thank you so much for having me. I'm very excited to be part of this wonderful series.

My pleasure. I'm excited for our conversation. Can we kick things off with a little bit about your background?

You're not going to be surprised to hear that I was an investment banker in a past lifetime. In fact, I think a lot of investment bankers do tend to move on to corporate development over time, but the rewinding back to some 20 odd years back or more. I took a economics class in high school, very much a one on one type of intro course. It intrigued me now that I applied to an undergrad business program, enjoyed it and then post college went on to investment banking where I spent about 11 years, most of it at UBS and Media and Telecom and having had that experience I very much enjoyed being in banking. But I was attracted to the concept of moving to corporate development and having a more direct seat at the table. A principal's perspective of working through a corporate strategy and then helping guide the leadership from that strategy to an M and A approach that helps accelerate it from there. I joined Viacom back when it was Viacom in 2014, just at the point where the company was shifting its capital deployment strategy from one that was very much focused on return of capital to shareholders to one that was skewed towards investment in growth. A mega merger later, a name change later, and a number of M and A deals later. Here we are at paramount.

I won't hold the Ivy background against you. Once you're at least a year in corporate development, that starts fizzling away. And it is an interesting point around the principal's perspective. I think there is a lot of truth to that. When you not only have to execute on the deal, but do it to the point where you're going to achieve those results that you intended to go after.

Absolutely.

More accountability on the line. I think in some ways, what is an M and A thesis?

Sort of developing a view on the specific areas where M and A could be deployed and could act as a accelerant to the broader corporate strategy. We try to form that investment thesis in advance of evaluating specific opportunities. Obviously it doesn't always work out that way. That's really. Ultimately our goal is to have an investment thesis developed around specific areas that would support our business and allow us to be in a position to be efficiently reactive when opportunities come up. So now what are the questions that we're trying to solve for when we develop an investment? I think generally it tends to be. Obviously these are predicated on kind of what is your broader corporate strategy? What are the areas we need to strengthen to be better positioned to deliver on that strategy? Number two of those areas, which ones are really viable to be supported by M and A? There's going to be certain areas that are more likely to be supported by organic investment. Once you've determined where do you want to invest and where do you want to invest in an M and A approach? Number three is what are the specific targets that you would rank on your list as being the most attractive ones that can support your goals. So that's how we think about it. Broadly. It's not a single investment thesis. Right. There tends to be a number of different pieces around specific areas of our business where we are focused on M and A and we think M and A will be an effective lever in growing parts of our business.

Is there something that helps you Determine that I guess it's like organic growth versus inorganic growth or where specifically do you get that sense that this business line would benefit from acquisitions? What are some of the criteria?

To be frank, a lot of it tends to be driven by iterative discussion of our business unit leads individuals that are close to the operation. They see how the business functions day in and day out. We can use maybe Paramount as a good example and obviously that's where we are close to the business. Let's say we look at a few areas where from a corporate strategy perspective, it's no surprise that based on what our leadership has said publicly, streaming, streaming and streaming are sort of our top priority at the moment. And what does that mean within streaming? Because that was a pretty broad. So within streaming, obviously there's a question of are there consumer audiences that we can't reach today with our streaming product that we want to try to be able to reach? Are there consumers that we're not able to reach because of how we're distributed, where we're available? Is there content specific IP franchises that we need to add to our platform to make it more exciting, to make it more interesting and to help us retain and get current customers and get new customers within our target them. Could we improve our user interface language availabilities other functionality in a way again that helps us retain customers and helps us encourage ongoing customer usage. So that's kind of how we might think about the different areas within a broader corporate strategy of streaming. And as we think about each of those areas, I think questions that come up are do we have the engineering bandwidth and ability to improve and accelerate along some of these parameters? Maybe the answer on new interfaces, yes. We have large teams that are really focused on developing new user interface and we don't necessarily need to acquire in that area. But perhaps there certain specific functionalities where we determine that we don't have the engineering expertise to really be able to organically tap into that specific component. Now is that something that corporate development by themselves can make a determination? I'll be frank, I'm not a technology person. So the simple answer is no. So how do we get to an answer on that question? We spend time with our technology team, we spend time with our product teams, we spend time with a phys teams that really focus all their time on kind of parts of our streaming organization. And that's how we determine what are some more specific modules where we just don't think we have the resources internally and the time it's going to take us to ramp up on those resources. 6, 12, 18 months is simply too long in the context of a fairly quickly evolving ecosystem. And so it's through those kinds of very detailed conversations with our partners. But the folks that are closer to the operations or closer to the technology, closer to the product, where we really figure out, can we do it ourselves and where do we really need to think about M and A as a way to accelerate what it would take to build it on our own. Let's take as an example, another area, ip. Right. Certainly one can develop ip. So the answer on M and A is not mutually exclusive. Where our business is creating new content, is creating new characters, new stories, et cetera, we do that as a matter of practice. Is there a way to again, add more scale, add more volume, by going out and acquiring IP that already exists, that's already been out in the market for many years, that people of different demos are already well, familiar with and recognize, so that you don't have to start a greenfield development of IP and build it over a number of years, but you can add the eight character or story that people are already familiar with. Certainly I think that that tends to be a situation where it's not a mutually exclusive answer. It's really a. You're doing both, you're doing organic and you're thinking about inorganic as well. I think it's determining the areas where you want to build. An investment thesis does tend to be a combination of really being collaborative with your operating partners and thinking about areas where you can jointly pursue organic, inorganic activities.

I'm getting a few interesting themes. One is the customer. There's a big emphasis and the customer, or how are you trying to improve the experience for them? How are you tapping into new markets to access new customers? So a lot of thinking around that and then end state, then working backwards.

Absolutely.

And that helps you get a sense of does M and A fit in that puzzle to get there?

Absolutely. It's interesting because you're talking about developing that end state in an ecosystem that's changing fairly quickly. So what that end state ends up looking like is different depending on where you're doing that. Assess today, a year ago, a year from now. But yes, I think as we think about that, it absolutely is a question of where do we want to be in terms of number of subscribers, where do we want to be in terms of who we're serving, how broad of an audience we're serving, what markets we're tapping and thinking about. Okay, how do we get there? Is what combination of the class like Buy, build and partner is the right approach for that end state. Considering kind of your internal resources and also quite frankly, what are the options that are out there in the market? I think it's easy to say we want to acquire in this very specific area and we want something that really moves the needle. The simple answer may be there's not that many assets out there that fit within the criteria that, that you have modeled up and not all of them are going to be necessarily actionable. So there's a practical constraint when you're doing this kind of exercise around what's the ideal versus what's, what's actually actionable and doable.

Where do you start with all of this? Where do you start developing an M and A thesis? If you think of building an M and A function or the thinking around it, a lot of times there's already a corporate strategy in play. So maybe keeping that in mind, how would you go about developing an M and A thesis?

Any M and A thesis obviously very closely aligned to your corporate strategy. I think in the corporate chart, it's the broader overall umbrella of where we're trying to go. And as you peel away layers of that, you get into more and more detail in terms of what are the components that help you get there in your situation.

Do you have like a dedicated strategy group and there's already like a bunch of heads that are wrapping their head around strategy or is it just held in the C suite? Where do you usually see that?

A couple of different pockets. We see a lot of that across our peers as well. Strategy can have a lot of meetings, which is to say it is the same concept of you have a broader corporate strategy. Where are we going? Streaming. That type of really overarching corporate level strategy does really need to be ultimately endorsed and driven by the C suite. Right below that sort of umbrella strategy, you have a lot of much more nuanced business unit level strategy work that needs to happen around. Well, if you're saying streaming is my strategy, that we want to be a leader in streaming, how do you get there? What are the products look like? What parts of the market are we covering? What do we need to have to get us there in terms of our offering? And all of those questions require the next level of work on developing the strategy. And look, I think of the M and A thesis as being a very direct byproduct of that next layer of discussions and strategy work that is set and that is had by business unit individuals that focus their time on biz dev and focus their Time thinking through where their business is going and what they need to get there. And having an effective partnership between corporate development and the business unit counterparts I think really is the first step. I think having a strong partnership, very consistent dialogue, recur, a cadence for staying current on kind of the progression of the business and what they're seeing as areas where the business could benefit from acceleration is what allows us to cohesively work out that type of investment thesis. It's not something that is done in isolation by a single sort of corporate development team sitting on the sidelines. That's never going to be an effective way to drive forward revenue for a company, at least from our perspective. Obviously every company is different, but having a close collaboration and working through, understanding sort of the needs of the business and thinking through with them. This whole concept of where could we be spending our time where M and A could be helpful in terms of helping you meet those business needs is where we start to coalesce around areas of M and A priority. And that's step one, something that we work up with kind of our counterparts on the business side. But then there's the concept of getting buy in from the leadership of the business unit and that buy in and really not just buying to the concept, but really championship of that concept is really key in terms of moving it anywhere beyond that. Ultimately if we pursue an acquisition, it's the business unit that's going to be helping integrate that acquisition and running it in most circumstances going forward. So if you don't have a true champion in the business unit, who's saying this is the asset that's going to really accelerate my business? I want to do this type of M and A in this area. It will really help change the nature of my business overnight and I will make sure that it is successfully integrated and run within my broader business. If you don't have that level of conviction, it's difficult to see a path to a successful M and A outcome. And I think that's why I have initial process Being collaboration with the business unit is so important. Once you have that kind of level of conviction and championship by the business unit leadership. The other component that's really important is to really establish consensus among other constituents within the company that will be directly impacted by M and A approach that will want to pursue, let's say for example, a certain content asset. That content asset may be directly driving a studio business, but it would be really for the benefit perhaps of streaming and may have implication on ad sales, may have implication on the distribution team. They have implication on what we're doing with consumer products. Even though there may be a single kind of business unit leader who is driving the M and A, they're not going to be the only ones within the company that are impacted by taking that approach. And so we really need to go to those other various teams and get their take, get their buy, their interest level as to whether they agree that kind of pursuing one specific area will be beneficial across the board. And that takes time. And that's also right. And you're naturally going to have different perspectives whenever you're going out to four different teams with four different sets of focuses. But again, I think ultimately to be in a position where you're taking an M and a thesis, you're taking it to your corporate leadership and saying this is where we should invest. Having that sort of consensus, having that buy in across the organization is really what allows you to get the green light, get the buying of your corporate leadership. And then what happens once you have that bind, once you have that buying, then you're in a position to be proactive or be reactive. You've kind of laid the groundwork to take it to the next stage.

I was curious if through the business unit versus through Corp Dev, purely in the proactive side, where do you see most of the deals coming from?

It's across the board. Similar to what I was mentioning in terms of how we approach developing a thesis and really focusing on collaboration. It's the same in terms of sourcing. Just to use as an example. If we determine that we are going forward in a specific area and we've identified 10 targets that we think are valuable, perhaps we've ranked them, we have a sense of kind of which ones we want to approach and we determine that. So doing an initial proactive outreach is the right next step. We'll figure out where we have existing relationships, right. Where is there an existing dialogue? And it tends to be sort of a close combined effort between the business unit and corporate development in terms of going out and making those calls. In some circumstances you're better served to initiate a dialogue from more of a commercial perspective. You want to try to form a relationship and many times forming a business unit level relationship with a counterparty is helpful. Bring a laying the groundwork, understanding whether there's natural rapport between yourself and the company, whether there is the type of commercial sort of benefit or strategic benefit based on what you're able to suss out that you are anticipating based on public information, but you don't really know until you engage with a company in those cases, it's really preferred for the approach to be done on the business unit side. In other circumstances where perhaps it's a company that is already in a commercial collaboration with us, where we already are aware of the fact that they would be a good partner to us, corporate development may undertake a certain outreach. So I think we tend to really look at it on a case by case basis and kind of determine whether a corp dev or a business unit outreach is the right strategy because you.

Can leverage who's got an established relationship and whatnot. Going back to the business unit leaders, I'm thinking of marketing. They always use Personas or icps. Is there different Personas in business unit leaders? How they perceive M and A, where you have some very optimistic about M and A and others that may be very pessimistic about M and A. How do you see that? Is there a breakdown of different Personas in that regard?

You absolutely nailed it. There's a wide spectrum of perceptions around M and A and they range from oh gosh, M and A is too tricky, too hairy, too much of a distraction. I would rather not pursue it unless I really have to.

That's the avoid the deal Persona right there.

And it spans all the way to I love to do all M and A. Any M and A. I will happily pursue it.

That's deal happy Persona right there. We have the deal happy. Absolutely. It's exciting. Let's do deals.

As a corporate development professional, one has to be in a position to work with the whole range and know that going in. I think if you are thinking about an opportunity in an area that is led by a business unit leader who you're aware is deal happy. I think it's important to manage expectations and manage excitement early on to make sure that you're focusing on. Well, we have to do our diligence. We really have to understand where this is the right target before we endeavor too far. Managing expectations on kind of bit process and valuation and making sure that you're taking things sort of one step at a time. Meanwhile, I think if you're dealing with a Persona that is M and A shy, there's other things that you may focus your time. I think one's going to be thinking about in to what extent the company you're dealing with will be one that can run fairly efficiently. Will there be a crossover of management? Will there be components to the deal structure you can think about and emphasize that will mitigate some of the transition risk that a leader may be Focused on to the integration risk that will naturally happen. Thinking about emphasizing what the two outcomes are with and without M and A. What does that look like from a financial and P and L standpoint? Look, I think it's needing to change your approach and focus on how you run the process depending on the business units that you're dealing with. Keeping in mind that at the end of the day they're going to be the ones that are ultimately tasked with running that business. I think we have to be conscious of making sure that we're there as partners to help them make the right decision around whether it makes sense to pursue an acquisition or not. Unlike when you're in banking, I think we have to be in a position also sometimes to say, no, this is not the right deal, we shouldn't be pursuing this, or the value has gotten to a point where it no longer makes sense for us to pursue it. I think it's easy to get into a situation where you are looking at M and A opportunities and you get very excited around that M and A opportunity. Especially if it is someone that's more deal happy, as you said, and letting that kind of personal excitement around the opportunity maybe to some extent cloud kind of your judgment as to where you're taking and whether you keep pursuing it. As the facts change during the process.

Do you get any that's in the middle between being too adverse to emanate to feel happy? Somebody that's a little bit corporate thinking, balanced.

I think of it as a continuum versus bookends. It's really across the board.

We could have a balanced M and A EU lean IT Persona. There just might not be as many out there.

I like that Persona. I'm a fan already.

Yeah. Because then you can build out and say, hey, this is where I'm trying to get everybody at.

I really tried to bring everyone to the middle. Absolutely.

And it sounds like there's some therapy work involved with this because you're doing a lot of listening. You're getting the person that's trying to avoid the deal, but understanding why are they trying to avoid the deal or what those concerns are. So that if there is that right opportunity that does map to M and A, can you get an alignment? Can you get on the same page? Because ultimately they got to be the champion. They got to take accountability and ownership and be excited about the deal. You're vetting that out and then you're the person that's other side that wants to do as many deals as humanly possible and beyond. And so okay, let's talk this through and make sure what's actually realistic and that's going to generate real value at the end of the day. That sound about right?

I joined Viacom just as the company was shifting the thinking around capital allocation. When you've had a company that's been very much focused on return of capital to shareholders for some number of years, you naturally do have leadership that hasn't done a lot of M and A, hasn't had to pursue integration, folding new companies into their businesses. And naturally one is a little bit averse to things they haven't done recently that they just haven't practiced around it. And so when I initially joined the company, there was a little bit of that effort you're just mentioning now, which is to say almost like M and A one on one type sit down where we talk through M and A and we talked about what the process looks like and what the steps may require, level of effort, commitment, what all does it take to pursue M and A, what does it. But what could it mean for a business? And those were helpful discussions to have. And it may not be something that gets covered in one half hour session. It does require ongoing conversation and for individuals to get more ease with the topic. But that is important if you are an organization that just hasn't had a recent track record of being very M and A having. And particularly if some of the strategic kind of focus is now towards doing. Having increased M and A activity.

Have you done that? Have you taken somebody that's a big doubter of M and A and turned them into an advocate?

I wouldn't say it's gone from 0 to 100, but certainly 0 to 30. Okay, and we'll take 30. We'll take 30, 35, 40. I think that's good progress towards the middle, as you were saying, where you hope folks contribute towards.

It's kind of like completely doubtful to like, all right, I'll give it a shot. We'll do this. What happens when you get an inbound deal bank, whatnot and it doesn't fit into the M and A thesis more often than not.

It's not that it doesn't fit into an M and A thesis. It usually is that we just haven't done the work to develop an M and A thesis in the specific area where that inbound opportunity is focused on.

Now this is a really interesting one. How refined can you build a thesis that it's not going to cover everything out there?

Absolutely not. It's in very specific niches. Get an Inbound. It could be interesting, it's certainly related to your business, it certainly could be an interesting part of your business, but it hasn't been one of theirs where you've really done kind of the preemptive work around building a thesis. And it happens, this happens. It's life. You can sort of pre plan for everything and for every part of the business that you can get involved in. And so what happens is you have to do everything within that short period of time that one has available for a first round bid. And it's a lot of work. You may determine that, look, we as a team, and by team I mean corporate development, I mean the business unit that could be benefiting from this are willing to allocate the time to run it to ground. And that's what we do. We say, look, this is going to be a big lift. It's going to be three, four weeks and we're going to have to answer not just one question which is, oh, hey, does this company that's within the realm of an area where we have an investment thesis, where we have sort of a pipeline, does this company sort of where does the thread on our pipeline and is the information we're getting supposed to supportive of it being towards the Type of the 5:1? It's a tough question to answer, but it's a very discrete question. You're going from that to needing to answer three or four questions. Is this a niche that we really want to allocate capital towards for M and A? Is this the company where we want to allocate that capital? How does this company compare to others that are out there that we haven't fully assessed yet? So it does require quite a bit of a lift. It's doable. It just puts more pressure on all the things that are involved. This sort of relates to the reality of corporate development, which is that you're working with business teams who have a day job, they are running businesses, they're running an operating business and there's a lot of effort that is required in doing that. M and A is a part of what they may be doing, but it's a part, it's not all of it, as it would be for corporate development professionals in any circumstance like this. It really comes down to making a decision around allocating the time of a team. Do you dedicate the time, which could be substantial in the case we're describing here, to bottoming out whether an inbound opportunity kind of fits within something that could be a worthwhile capital allocation area or do you allocate that time towards more effectively running your business, which is your data. And in some cases the answer is yes and the answer is no. You can't have the answer be yes in all circumstances. Educate an intuition that you're not going to get to something ultimately that's a yes on that transaction if you decide you don't allocate time to it.

In your industry, do you run up against PE often on those competitive processes?

Yes and no. Our industry tends to have a lot of subsectors, but in some of those subsectors lend themselves to P for sure. And sometimes it's challenging for P to be competitive because they're really predicated on benefiting from strategic synergies. There's certainly components within media that are very much cash flow generative businesses that have recurring contracts, recurring cash flows, and have historically been very PE friendly subsectors. Having said that, look, I think it's not lost on anyone that you have parties out there like Kendall Media who are investing a lot of dollars towards rolling up very much growth companies in the content space. An area that traditionally we haven't really thought of as being dramatically competitive with private equity. Despite kind of what's going on in the macro environment, private equity still has a lot of dry powder they need to use up in the next year or two. And what that's meant historically, I think what that could continue to mean again depending on how things work out from a macro standpoint, is that they have been more likely to look outside of their very traditional cash flow driven subsectors in terms of where they're putting money to work. In general, certainly PE is a big clearance.

I was curious because the way you describe the amount of considerations, thinking through the strategy, getting general stakeholder alignment about doing the deal, and then you look at PE venture capital space, they're putting chips on a roulette table at that point and they just go right to town. So that's what I was curious. How do you keep that balanced with the nature of the deal process being so competitive?

My hope is that on the sell side, advisor side, when you're running a process that you're designing a process that takes into account having financial and corporate participants. And I think there's awareness that if you have corporate participants, you're going to benefit from the synergy play that is inherently there, is going to impact your timing and your process. Naturally you do have to allow for some incremental time in round one and round two. I think in general that tends to be built into the process timeline. So whenever you do have a process that's starting to go financial and corporate players and in some cases you are going to want to go out and do some pre marketing. I think we have found that that's quite helpful in cases where a self led advisor does pursue a bit of that kind of preview approach, puts in a few calls, gives a sense that an asset is coming to market in some number of weeks and really allows corporates do a little bit of that pre work to the extent that they haven't to get that internal agreement and internal view developed so that they're in a better position to be reactive when a more formal process starts. Certainly I think from a sell side standpoint you want to be best positioned to have as many participants involved in your process as possible. So to extend that little tactics like that can be helpful in getting certain players that do tend to have a little bit of a longer lead time involved in the process. Why not utilize them? We do appreciate that. Obviously there's going to be some situations where you just don't have the benefit of that. You don't have the benefit of preview, you don't have the benefit of a longer tenured, round one process where you can do the work you need to do. And in those processes, look, it's a decision that is made with our senior leadership to fast track our approach. I think you have to have that type of flexibility in your own internal process if you are going to be competitive. I think being so rigid in terms of your process and never deviating from your process will naturally box you out of certain opportunities.

It's a really good point. Sounds like you definitely spend a good amount of time networking with bankers just to get that leg up when they do have something that's in the scope.

Again, I just. Our hope is that if you're a sell side advisor and you're planning to run a process on an asset that is within the media ecosystem of where we focus that it is a call that we would receive. But sellers tend to run different kinds of processes. It's not always guaranteed. So generally I think as a corporate development professional, staying in the flow of information, staying in the loop, getting a sense of how the market's changing, what's coming up, what are folks thinking about? Just generally staying in the flow of conversation from an investment banking community standpoint is important. That's one of the facets of the role.

I think what I'm hearing from you is you like finding your own deals.

You have to have a mix of Everything. Sure, it's wonderful to be able to proactively go out and find a deal, but those tend to be lower probability. Right. If you're proactively going up and you're calling 10 companies, some number of those companies may have an interest in engaging, but a large number may say this is not the right time. And that's a fine answer, by the way. I think laying the groundwork and establishing a connection, articulating some level of interest from a strategic standpoint is always helpful. Even if it's not actionable day one, it could be actionable in a year or two. We tend to play the long game.

It's definitely a longer sales cycle, that's for sure. How do you develop an M and A thesis?

Companies, including ours, have to make kind of decisions around how we allocate capital between organic investment, inorganic return on capital, etc. We know that we have a confined pool of capital that could go to work toward inorganic activities. It's not going to be unlimited. There may be a few players out there that have unlimited pool for revenue, but I think those are a few.

Laughing because I think we're thinking of the same names too.

But yeah, exactly. So the reality is, I think when you consider that you may have a specific pieces around 4, 5, 6 areas of your business where you believe that M and A is a good answer, is a good lever, is a productive one in terms of growing the business. But the reality may be that the capital that you have available and the M and A targets that are out there, and the skill, it's not viable to put all five or six at the same level in terms of priority. And you have to ultimately sort of decide where you're really putting your time and putting your effort. In order to do that, we do have to look at each other and say, okay, who are the targets that could address sort of our growth priorities in this specific area? What's the size, what's the actionability? And how does that play into kind of the capital that we have available? And some areas. The answer may simply be that there's a handful of small players that will simply not move the needle. And then there is one or two really large players that would take a substantial capital investment need that may preclude you doing many other things. And so it's really a judgment call based on some of those parameters. As to within the 4, 5, 6 areas that you're focusing and do have an investment thesis, which ones are you elevating a higher priority at any given point in Time. That's not a single point in time decision. It's not a decision that purely made by corporate development. I mean that's the byproduct of consistent conversations with the C suite, with conversations with the business unit leaders and then continue kind of assessment of how the ecosystem of what are the assets out there, what's actionable, what's available, what are our peers doing, all that kind of influences given point in time how you think about prioritization among those different areas of investment.

I like the way you emphasize the capital allocation part. That makes a lot of sense. I've been in a situation where I found an opportunity not even thinking about our. We're a small company, right? Capital allocated for and you don't. And automatically you're starting to don't have clear sight of that. And you could be pulling from capital that you should have committed to the organic because obviously M and A has got its own risk parameters around it. So I like having that clarity and then even within that prioritize what types of M and A. That makes a lot of sense. What's the biggest challenge when developing your M and A thesis?

A lot of it is kind of around what I was mentioning earlier in terms of really bandwidth and bandwidth by operating teams who really need to run a business. We do find a lot of times that if we are trying to use any more proactively and you're trying to get that sort of time commitment to really sit down, work through a thesis around a specific area, work through list of companies that requires a certain time commitment by business unit counterparts. And in some cases there's a view that they appreciate that this is something they need to do and they want to allocate the time to it and they're ready to go in that respect. And obviously that works out well. And in some cases I think you're met by the just the practicalities of life which is that there's competing more urgent priorities that come up like an inbound M and A opportunity that's going to prompt sort of quick action. It's just getting that ongoing engagement and time commitment in some cases could be challenging. I think if you develop strong partnerships internally and have that good dialogue and can you really stay on top of areas where you want to collaboratively work to work, that certainly helps having that established relationship. But it is a. It is an ongoing struggle of time I think as we all know.

How many stakeholders are you interacting with within your company? We're talking about C Suite, a lot of different functional leads and all the different business unit leaders, our functional leads across business units within business units.

Many, I joke, but I think that is the reality of anyone in corporate development. Naturally you have, as you said, you have a C suite. You have business unit leadership and working teams or strategy biz dev teams at various parts of your business. And you read some of our properties off at the start of the conversation. Each of those properties will have teams that kind of focus on the more granular strategy within the business unit. And those are teams with whom we interact and engage with on a fairly consistent basis on the sourcing planning side. And then as you think about, okay, you've identified a target, you're in process, you're executing, then you're talking about partnerships on the execution side which beyond the business teams. I think as a corporate development professional you have to have a strong relationship with kind of your corporate legal team that focuses on M and A. You're really close partners there in executing M and A. You're pleasing with the tax team, the accounting team, litigation, compliance, other areas. And that's part of what I think makes it a very exciting place to be in a corporate development role. You're really touching many parts of the organization kind of corporate functions, business unit functions, leadership.

How many people are we talking about?

Like 100 on an ongoing basis. That sounds right. We will have sometimes deal teams that are 40, 50 individuals deal team that is going to do the diligence participate in various functional parts of negotiating agreements. It's not unusual to have deal teams of that size when we're pursuing M and A.

Do you hear a business business units have a corp dev within them.

They do not. No. We tend to have a centralized corp dev function but as I mentioned, they will certainly have business development and strategy individuals and those are our close counterparts when we look at M and A.

The reason I'm asking you about some of this stuff, I'm trying to get a sense of your time allocation between all these stakeholders and folks internally, your team that you work with and then external. Because now we've gotten this, this M and A thesis. There's know the ecosystem of the bankers and PE firms and what they're up to. But then there's just proactively going to these targets. How do you balance your time with that and still be able. I feel like the big value add is finding the deals proactively.

The mix of time allocation between all the functions you mentioned will naturally differ over time. There's going to be certain weeks where you're really focused on Execution around the hassle of large deal. There's going to be certain periods of time where you're really focused on trying to proactively source some additional deals. It oscillates. I think you need to handle all of those different facets. In terms of sourcing, I would say, to be fair, I think larger companies do tend to get the benefit of getting more of the call. That's just a function of being a large publicly traded company. If you are on the sell side and you're pursuing a process and you're going out in a more regular way to a handful or more than a handful of names, you do tend to include the larger companies that are out there that are in or adjacent to the space of the south side, the south side company. And so I think the way you might approach corporate development, if you're at a smaller firm versus at a bigger firm, maybe a little bit different, I think the mix of proactive versus reactive may be a little bit different as well. In most cases, we do tend to get a fair amount of inbound activity per year that we work through and that we spend time on with our partners on the business unit side. Does that mean that we don't do proactive? Absolutely not. We do a fair share of proactive approaches as well. But that's simply to say that I think most things that are generally actionable in some shape or another, I think we get a sense of. We hear about. We get the call, et cetera, and we can react to them and assess them. Instead, we have to balance that with proactive in areas where, in this specific cycle of where we are in time, we're just not seeing as many inbound opportunities. And so we have to try to create them. It's a mix. It's a balance. I don't know that we get it exactly 100% right. All the time.

Being at Paramount, I bet you get some funny pitches where people are, like, pitching you movies or things like that. I don't know. Do you get stuff like that?

I also think that the corporate development title sometimes leads to a bit of confusion on LinkedIn, because a lot of times in development, right, in movie creation, episodic creation, there's a development kind of concept in the title of individuals that focus on that space. It's a whole different kind of development. It's constant development.

You do. Okay, we'll save that for the last.

Question, but it does create quite a bit of confusion, I will say. I've gotten more than a handful of pitches for movies and I have to politely alert them. That's not my area of expertise.

How do you approach prioritizing companies in your list?

I think there's certain parameters that are consistent across different parts of our business and then there's going to be certain parameters that are more specific and depending on what sort of subset of a company or trying to categorize or prioritize is I mentioned for actionability tends to be certainly a metric across the board that we look at. Does it mean that we can't approach a company where we don't know the level of actionability? No, of course not. But it certainly is helpful to have a sense of kind of which companies on our list we've heard are thinking about doing something proactive versus not. The other parameter, again related to some of our earlier conversation on capital is size. Trying to get a sense of size, which is not always easy by the way, because we're relying initially when we're doing sort of these kind of screening exercises, we're relying on public information and sometimes there is helpful public information out there, sometimes there's not. But trying to get just a sense of size and kind of how that fits within the realm of that moves the needles, but still is not prohibited from a capital standpoint. So those are fairly general parameters. And you go into kind of the area of more specific parameters and let's take as an example ip, right? We talked about ip, certain characters, episodes or series, et cetera that we may be evaluating. Let's say we acquired Garfield as an example some number of years back. Well known property has been around for many years. Whenever we look at those kinds of IP opportunities, we may look at things like what's the longevity in terms of that ip? How long has it been out there? What exists in terms of created content versus ability to create the refresh content around that ip? Is the IP encumbered? Is it already under license by a number of other parties or is it an IP that we can readily use post the transaction? So a lot of those more kind of nuanced questions and parameters fall into place and depending on what you're looking at, the items that I just listed off are going to be dramatically different. If you're looking at a niche trimming provider, very different kind of set of parameters.

I'm not hearing you have a highly sophisticated algorithm to calculate all this stuff.

We don't have a Monte Carlo simulation.

For calculator forecasting ROI even. It seems like there's all these other factors that, that really drive your prioritization.

There's a lot of software qualitative drivers that really inform where we want to focus our time. And when you're down to just a very small handful of opportunities and you do get that next, you do engage with them and you do get that next layer of information and you do have enough to really build a business plan around what you could do with that property. Specifically then I think what you're mentioning, which is what does the ROI look like, what's our return, what is our ability to pay? All of those I think questions then come into play and we can answer what does this look like with and without the acquisition? What is the impact to our business? I think quite frankly, when we're in the initial screening phase, I think we can gather enough information, kind of form a qualitative view around the strategic benefit of pursuing an asset. But really getting into the detail, that's kind of where we focus in our time as we get into a process and you get that benefit of that actual sort of diligence information.

I'm curious, when you go back to the strategy of thinking the market, you're obviously in some really fast moving spaces. How do you approach keeping up with things? How often are you changing strategy, reviewing it? How does that process go?

As you can imagine, our corporate strategies is really led by our C suite and the broader organization. We are in a fairly fast moving space. There's been a lot of evolution over the past number of years with the move from traditional broadcast and cable viewing to a streaming world and what that means for our business and for our properties. And so unlike certain sectors that are pretty mature and fairly stable, we do have as a company, we're in a position where we do have to evaluate fairly often where we're going strategically. If you were to rewind a number of years and look at our public investor presentations, etc, and look at our strategy, you will notice sort of an evolution, a shift, how we prioritize that strategy and how we move it forward and what's been message to the market. I think that's necessary. Quite frankly, the way that the world looks today in media and what our peers are doing today is different than it was five years ago and even different than it was six months ago or a year ago. And so it's very difficult to sort of solve for something, draft it and say, okay, this is for next five years. This is it. This is a challenge at any given point in time. I think the view as to where the market is going to be, where the streaming market is going to be in five years changes. I mean, I think the perspectives from the broader macro community have shifted over time in terms of where they think that market is going, what profitability will look like. When you get the profitability, how many players are going to be out there that are really within the leadership set, et cetera, et cetera. Those expectations change over time. We have to continually consider what our corporate strategy looks like and not just the corporate strategy at the high level, but also within them, kind of the subcomponents. Right. What is the right approach for our ad based streaming business? Pluto, what is the right approach for our subscription based streaming service Paramount Plus? How do we think they evolve in kind of the current market given where things are? And what does that mean in terms of what we need to spend time on from an M and a standpoint to help them get there? It would be much easier if it was a point in time assessment that we can just say, okay, this is done, we've solved the math and this is how what we're going to do for the next number of years.

You put like a calendar reminder once a quarter, couple times a year.

Not a calendar reminder, but we do have very specifically designed recurring discussions with our team. It's not a point in time, it's not ad hoc. It is. We make it a point to have recurring discussions with our business counterparts. To stay on top of that, we collectively are seeing changes in the market. We are thinking about where to go.

Do you have a format for those meetings that works really well? What are you seeing in the market? Any new ideas or things we should not be doing?

I think to some extent having the benefit of it, having a little bit of a free flowing discussion is also worthwhile. And I say that because at any given point in time you could be discussing what's going on in the market and what that means for their business. You could be discussing areas where they feel like they don't have enough of the resources to do what they're doing organically. You could be discussing very specific targets that we're in the process now of assessing and specific processes that were in mid execution. Quite frankly, it tends to be a combination of everything in that line of topics that tend to get covered. So I think having some flexibility around where you're focusing your energy and oscillating between them is helpful.

Yeah, that's like the right way to approach it. Siren, what's the craziest thing you've seen in M and A besides getting pitched movie scripts?

I wouldn't characterize this as crazy. I do find that just sort of fascinating. Pursuing cross border MA it's just really interesting how different parts of the world approach M and A versus how we might pursue it in the US in the US if you're in an M and A process, it's procedural. You have around one, you know what you're doing, you have a round two, you know what the steps are with cross border M and A and specifically around sourcing cross border M A. It's interesting because it's not necessarily call someone up and say I'm just selling your company. It just simply doesn't work that way. In a lot of cases you're dealing with companies that are family owned. That's been the family business for some number of years. They're very close to that business. If you want to acquire part of their business or partner with them in the market, it's not a matter of calling up and saying hey, let's get a deal done. A lot of times it's really that long play that we were mentioning the long sell. It's sitting down, forming a relationship, having some collaboration and having a series of recurring meetings and setting up that connection before you get into a let's talk about a potential partnership or let's talk about buying your business in this area of the media. And I think it's important to keep that in mind as you are approaching opportunities in our parts of the world because I think the approach is going to be different. I think if you go in and say I want to acquire a business, it's not going to be always well received.

From what I heard pretty much every other country you need a lot more patience and how deals tend to flow from here.

And I guess my comments are more around when you're dealing with a lot of family owned businesses, family owned founder owned businesses and having spent time in latam spend time in Asia, there's certainly greater importance on that relationship building concept. As M and A professionals. There is that natural inclination to jump into sort of M and A chatter and I think it requires some train at least at the onset.

That's true. I'm probably a whole other interview series there because you're right, it's different approach, different thinking about how you develop relationships and a lot of cultural nuances that fall in play. Sara, thank you so much for the conversation. I learned a lot about building an M and A thesis.

This was such a pleasure. Thank you so much for having me on. I really enjoyed it.

Cheers. Here's to the deal.

Go.

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