Dissecting GTM for Successful Integration

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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 where leading M and A practitioners share lessons learned from their experience. If you're interested in keeping up with the latest on M and a science, visit mascience.com you'll find more about our products and solutions, but you can also sign up for a free newsletter. Every Monday we share highlights from our interviews and invitations to events as we build the greatest community of forward thinking M and A practitioners. Again, that's mascience.com I'm your host Kisan Patel, CEO and founder of M&A Science. Joining me today is Dustin Delawski, Director of M and A Integration Management at Cardinal Health. Cardinal Health is a home healthcare services company trading on the New York Stock Exchange under cah. Today we're going to dissect go to market for successful integration. Dustin, how you doing?

Good, how are you? Thanks for having me.

Thank you. That's not every day we get somebody from I just saw today a Fortune 15 ranked company to come chat with us about go to market integration.

Fun.

Yeah. If we can kick things off, could you tell us a little bit about your background?

For the first 13 years of my career I've held various finance and accounting roles. I been in this Director of Integration role for the last five years. I'll actually be celebrating my 15 year anniversary with Cardinal Health later this year. My finance and accounting roles have included Controller of a distribution center and Controller of a large ITSAP implementation project. I have my cpa, I'm a certified Management accountant and I was just recently certified as a post merger Integration Expert by the Institute of Mergers, Acquisitions and Alliances. I've been fortunate that the roles that I've held have been in smaller business units within larger companies and through these experience I've gained two Perspectives that really helped me out in this role. One, the smaller business units had adopted the level of process standards and controls of the larger corporations. So I was exposed to really high standards and expectations for managing a business early in my career. And secondly, smaller business units are generally run by smaller teams with a larger scope of responsibilities in their areas, which allows you to learn the business processes end to end versus just one or two pieces of a business process. So with those combined experiences, I feel like that really primed me for this integration role.

Yeah, it's really interesting how you developed very diverse professional background all within the same company. Like you don't see that too often. It tends to be up one vertical.

When it used to be limited brands, but then yet the past 15 years all cardinal health.

Very interesting. Shall we get into it? How do we integrate Go to market successfully?

Yeah, there's so much to unpack. And this goes without saying for any area of integration, start by creating a set of guiding principles and refer to them often, especially as the team encounters competing priorities and decision swirls. Making sure that these guideposts align with the deal rationale is super important. And then the business should leverage the IMO team to bring a disciplined approach to the table. So for Go to Market, we use a framework that includes an assessment of both businesses across eight different go to market areas. And then we use that assessment to evaluate the integration points and considerations for the various business processes. So for purposes of our discussion today, I'll go deeper into the prospect to customer in order to cash processes. So keeping those go to market factors in mind, we start following the framework by completing the Go to market integration assessment mapping exercise that maps each of these areas to the back office. This aligns the team on the current state of the business where there's overlap differences and highlights where there's opportunities enabled by the deal. And this helps the teams think through integration considerations, particularly as it pertains to prospect to customer in order to cash.

So we have two main areas, the prospect to a customer and then order to cash.

Yep.

Yeah. Can we expand on those?

I'm a visual person, so I developed some slides to take us through this. So I'll start by running through a refresher what those are. Prospect to customer. A lot of times it's referred to as B2C in shorthand. This is the process that supports all the steps from reaching potential customers through winning the business and onboarding the customer. So this is your market intelligence management, your marketing programs, how you manage your pricing, managing your sales pipeline, the Offering and management of your contracts, the customer onboarding. And this also includes the variable compensation and then for order to cash, often referred to as otc. That process supports all the steps from ingesting an order from a customer to collecting the cash for that order. So that would include your orders, managing your rebates and incentives, managing and delivering customer service, generating the invoice, performing customer collections, cash application, and then managing your ar, including your bad debt and write off policies.

There's a lot going on here. This is fascinating, but to actually go through these and explain which each of those actually do because these essentially are different functional areas.

It is a functional area, but it could be several functional areas as part of the process.

Okay, so I think most of us are familiar with the functional areas, but you've sort of laid out in a pretty good workflow in terms of your prospect to customer. In order to cache, could we review each of those steps in the process?

So this is not like anything I created. This is actually what SAP uses whenever they're doing an implementation and I'm sure more businesses than SAP uses it. But it's the business process hierarchy. I don't know if you've ever heard of that before.

I've not.

Being on the SAP implementation project, as I mentioned, everything floating in my head around business processes just fell into place after I was on that project.

Oh, interesting. So you took a lot of that sort of the ERP type of thinking and brought it over here and basically map it to your go to market.

They think of it in different levels for the processes. So you can think of level one is the order to cash piece and then what I took you through was the level, like a very high level of level two and then level three is that next layer down. So basically the way that you would implement SAP, but then also the manual processes that support your process would by each of these steps. So within SAP you build either a form or a workflow or a report, some sort of query that basically supports.

Your processes that sort of explains why it took so long to get approved as a vendor over there. And when we use the term MPI in the industry or new product introduction, is that similar to this?

Yeah, that would be part of the new product development, this concept to market. I'm actually working on a project now where I'm getting closer to this piece of the process before it was really around the prospect customer onward. So it's been interesting to be part of the concept to market piece because usually my integration experience, the concepts already created, we're just integrating concepts into concept.

Yeah. Is there a big differentiator there or is it essentially you just skip over a big chunk of the part of the process?

Yes. Maybe I just haven't had the experience where a business had a very distinguished concept to market work stream. But if they did have one, then we would set it up as a workstream to integrate.

Got it. This is helpful to get a sense that here's your steps in that process flow, but there's a whole series of other things that go on behind that.

Yeah. So for instance, when I was talking about the market intelligence step, that's where you're defining your identifying your customers and your segments, developing your category and product strategy, determining what that customer experience would look like, conducting your competitor analysis, design and develop pricing and then develop distribution channel. So basically each of these are a checklist of how to start a business and run a business.

Yeah, that's what I was thinking. This is interesting. It's interesting how complicated it can go from. I'm running a company with 45 employees. Now we think of MPI and it's just one little checklist here. It is very comprehensive.

It's almost like a menu too. Though I don't think any company would do every single item on this list.

That makes sense. It gets some thinking on how they should approach it. And I guess for you on the integration side, it gets you thinking comprehensively as well about those specific things that you would need to bring together.

One of my aha moments early on in integration is you don't just take the finance team and integrate finance into finance because in a smaller business, the finance team actually might be doing sourcing and indirect procurement and a whole host of things. Or in a bigger corporation, your finance team is doing finance like FP&A budgeting, forecasting. So you really have to break the work down into the business processes, no matter who's doing the work. How are we going to plug how they source indirect items today, how are they going to source it tomorrow? No matter who might be actually performing it, it could be the CEO that does it at a smaller company.

That's why it's important to break things down by the process and what specific things are actually getting done and do it more around those tasks.

And it's even more important if you're doing carve outs.

I can imagine.

Yeah. Because the whole company and the whole team isn't coming with the purchase, just different pieces of it. And you're going to have to tease out which pieces are going to have employees to support that while you look under the hood and figure things out and which pieces you're going to have to do day one or set up a TSA for break it down to.

Those small tasks and then understand where the people are going to cover those tasks. Can we go back to the other side and maybe talk through planning?

Did you want me to start going through the buckets?

Do you think it makes sense to.

If we're talking about go to market specifically, I'm going to hit on these again and dive deeper into how to make the connection between your go to market and your back office. Basically was the next section.

Okay, so in reference to ptc, otc, why are they important part of go to market planning?

So your prospect to customer in order to cash business processes actually support the back office execution of your go to market plan. So the last situation that you want to find yourself in is for the sales team to execute flawlessly on their half of the go to market strategy. When a bunch of business and a bunch of customers, and then once the customers start interacting with your back office, they have a bad experience on receiving invoices, receiving customer support and trying to pay their invoices. So it's really important to make sure that everything's aligned before you start introducing customers to the back office piece.

That makes sense. You'd have to obviously just make sure again, that whole workflow we talked about, your process is there and you're not just integrating the functions when you don't have every little task covered so that it flows all together seamlessly. And then. And that's why it's important to have it all mapped out.

Right. Because the marketing and the sales team, they built a great product, they're getting sales and in their mind the task left to do is just invoice the customer. And there's just so much more that goes into it that the sales team and marketing marketing team might not have visibility into. So doing this exercise with the marketing team, sales team, the business process owners in the room at the same time gets everyone on the same page. And we make sure we don't have any gaps in our integration, planning or any bad assumptions.

That makes a great deal of sense. So you're running this exercise looking at all these steps from both sides that you're looking at your company and also with the target company.

Yep.

Who's ultimately in charge of mapping out this process?

Yeah. So the IMO facilitates it. They facilitate any workshop meetings, the mapping process. But it's really important for the business to Remember that they own the strategy, the, the processes and the execution of go to market. So really the value of this assessment is dependent on their commitment to the process. The teams involved in the initial mapping process may vary by business and depend on where we are in the deal timeline. You may have constrained to access some resources really early in the deal, but we try to include representation from marketing, business development, sales, finance, general managers, business process owners, and commercial technology support.

I'm trying to get a sense, Dustin, it just sounds like it starts pretty simple. And as you get access to more information and more people on the other side, it just gets a lot more detailed and comprehensive. Is it fair to say it's a pretty iterative process, like early stages, thinking of strategy, thinking of the big picture, and then it's shaping through a series of events, maybe meetings to detail things out as you go. Or is it just big chunky milestones? What does it actually look like when you're shaping all this to build this plane?

Yeah, it's a very iterative process and I think it would help if I walk through what this framework looked like. So it's a grid where we have the different go to market areas across the top. We focus on eight of them. So this is what works for us. Different businesses might align these differently, but we look at market strategy, customers, distribution channels, products and services, value drivers, organizational structure and employee sales incentives and, and then the sales processes and enablers. And so for each of these, and like you said, it's an iterative process, you'll go through this again and again and again depending on how the deal's structure, it'll be very apparent where we need to focus our time and energy. But ideally you would map out the current state of the acquiring business, the current state of the target business, and then using that information to call out areas that overlap, areas that have net new capabilities. And this is where some, some of your deal revenue synergies may show up. So this would have a big star next to it that this is high priority for integration. And then within each of these areas, we can map them to the integration points and considerations related to them. As we all know, each deal is different and nuanced. So it's possible that some of these buckets wouldn't be relevant for the assessment process for every deal. But it doesn't hurt to go through the complete exercise at least once. So you can roll out scope. It's easier to rule out scope than make an assumption that there isn't scope there. And then you have to go Back later and turns out there is. So I can dive a little deeper into each of these areas and take you through how I'd map them to order to cash and prospect to customer.

I think that would be very helpful. So far I'm getting that you're building out your go to market workflow from both sides. Your organization, the target organization, you're identifying these essentially the revenue synergies and prioritizing them as you identify them. A lot of agile stuff here because you got this continuous prioritization, the continuous the iterations and then it'd be great just to walk through the approach that you have or the segments that you've outlined just to give a good example.

So the first area we dive into is the market strategy evaluation. So this is where we would have documentation of the scope and size of the market, any market geographies, growth opportunities as a result of the deal. We would highlight market trends relevant to the deal, the deal impacts on the sales pipeline of each business. Brand recognition considerations are big here and then any strengths and weaknesses. So you're doing a slot at the same time, but really getting the team to get the lay of the land and diving in a little bit deeper than they may have during the initial management meetings. And so for market strategy, as it maps to the prospect of customer integration, you'd want to think about how the decisions you're making in your marketing strategy. All those components that I just listed, what do we need to do with our market intelligence management? Do we have any integration points there? How we're managing marketing programs, any branding decisions, any marketing collateral that needs to be updated. Do we need to consider the sales pipeline process, order to cash? The process components to consider would be any documents that the customers receive that include any branding. So if you're going to do a rebrand or co branding, you actually have to go through and update the logo on any customer facing document, invoices, statements, stunning letters. So any document that's a result of the order to cash process and anyone who has had to do that before in technology it's a lot more complicated than it sounds. So it's good to plan for that and budget for it in your integration.

Budget, which is a whole other topic. So we get marketing strategy figured out.

Yep.

This is when we figure out what's the joint brand is going to look like and that kind of stuff.

Yeah, if you're buying a business that has a complementary product, how are we going to bundle those together? What's the story we're going to tell? So that will take a lot more integration thinking. If you are buying a business where it's the exact same product and maybe you're just entering into a new geography, you might not have that much to integrate into because there are so many similarities.

Are you working with different leaders through these different areas?

Yes, we typically have a business sponsor, but then we have leaders in each of the functional areas. So I'll move into the customer evaluation for this area. The team will document the customer segmentation, any customer satisfaction measures and scoring customer types, counts key customers contract structures, any customer journey mapping strengths and weaknesses. I think that's really telling things like customer journey mapping. If the other side doesn't have that, then there's probably some work to do before you even can start integrating. You have to know where you are to know where you're going.

Would it make sense to do that first to start customer journey mapping before you do all this?

If we sat down and we were going through this and was like, okay, we have our customer journey map, what's yours? And they say we don't have one, then maybe take a step back and say, okay, before we continue down this assessment or in parallel, let's map out your customer journey.

Okay, that call comes within customer segment.

And sometimes it's nice to have. It just depends on where a business is and their life cycle. You have a really small team, they may not have something like a customer journey map and it might be tribal knowledge. Everyone has it in their head and it's just a matter of getting it down on paper. So for the customer integration points for prospect customer, that could include the pricing process, customer contract structuring. It may be that if you're buying an entity that has complementary products or services that your current customers would use, then you'll have to think through amendments and addendums to the current contract for those new products or offerings. Customer contract structuring is really tricky. So this is a thing to dive deep in when you're integrating because a lot of times the contracting team and the sales team will write contracts that the system can't process. Like the system's not built. And so you end up with a lot of manual processing outside of the system. So for example, if you have some SLA reporting to do and that's not captured in any of your systems, that means someone on the team will need to manually track any sort of sla. So any new customers would need to be onboarded into the prevailing prospect customer or order to cache system. So if you are migrating from one system to the other such as your ERP or your CRM system. So there's a whole data alignment, cleansing and migration process that happens there and then for order to cache the process components to consider would be anything in the process, especially if there's significant increases in transaction volume. So if your process can handle 100 customers and you're actually buying a business that will double that or significantly increase it, you really have to take a look to see if your processes and your teams can handle that volume. There's the data mapping I mentioned, figuring out which bank account the receivables should go to. Customer service integration and training, profitability reporting, your receivables management, bad debt assumptions. And this is where the communications team and any customer change management resources should be leveraged to roll out any customer facing changes. There's a lot going on here, especially if you're integrating a business with completely new customer segmentation.

Yeah, it sounds like there's a big difference between a significant overlap in customers. Maybe you're buying something that's already in your ecosystem and there's a lot of overlap versus entering a new area that has all new customers. Sounds like that would affect a lot of the considerations around these areas and prompt more changes versus not.

I'll move on to the distribution channel evaluation. So this includes your distributor identification channel types, part and performance geography, any technology enabled ordering strengths and weaknesses. And so from an order to cash and prospect customer really the biggest implication here. As an aside, the other business process that would be heavy here would be your make to distribute or receive to distribute business processes depending on if you have manufacturing or warehousing components. So basically this is more of your supply chain side of the equation. So moving on to products and services and you'll see some of this overlap like with the pricing and the contracting depending on which angle you're approaching it at either customer pricing strategy versus a product pricing strategy. That's why you see things listed multiple times. So the products and services portfolio of each business their value props the pricing strategy strengths and weaknesses. And then for prospect to customer, this will tie back to your pricing strategy and management and your customer contracts. Implications for order to cash items to consider would be the product master data any new revenue streams. And this is I'll highlight this area. I mentioned it earlier but new revenue streams are a real simple litmus test on how complex your integration is going to be if you're acquiring a business that has new revenue streams that are different from your current revenue stream. So an example would be if you're a distribution company. So your revenue is coming from moving boxes around and you want to get into the business of adding a technology based service or vice versa. Your current order to cash process team and system will probably need a lot of work to accommodate any new revenue streams. Because they were built around the current revenue stream. Businesses tend to build their systems around their processes. This is an area where leaders really underestimate the level of effort to make changes and additions to order ingestion, processing and invoicing. It's really more involved than adding a few new billing. So this is an area where you want to make sure you have a lot of integration budgets set aside. I'll move on to the value drivers evaluation. So this one is a little more ambiguous and very specific to the business. It's basically your value drivers for each business. So that could include key capabilities. The way this bucket would map both prospect to customer in order to cash integration would be dependent on what the team identifies in this section as the value drivers are very specific. However, it should be noted that this section is important because what the team does identify as a value driver should drive the integration priorities and urgency. So we don't want to disrupt the current value drivers and we want to implement the infrastructure to support the new value drivers as quickly as possible.

Who would own that with you? Who would you work with in leadership?

Who owns that value driver? Is the value in a product? Is the value in the way that we interact with the customer? Be part of that customer value mapping should highlight where your drivers are and then if you were acquiring a business that had value drivers in different parts of the process, then that's where you'd want to make sure that whatever process being integrated into can accommodate those. So I'll move to the organizational structure and employees evaluation. So this is the structure of the entire organization, which means where the new business will roll up into the acquiring organization as well as the reporting structure and team structure for the businesses. So here you'd want to consider if it's a carve out versus stock deal because that would determine which employees are coming with the deal and which areas that you may need to have a TSA for to support the process before you're able to fill roles in your business. This includes the employee role mapping, sales territory, alignment, reorganizations, culture, key talent. One good example is that the team should ask the question, are any customers loyal to certain salespeople or account managers? So would the customer go with the salesperson if that person went to a competitor? And I've seen That in practice, actually. So you really need to ask that question. Identify those salespeople and account managers as key talent and have a plan in place to retain them.

This kind of gets a lot of the odds and ends. Now, do you look at these different sections as work streams specifically or how's that approached in terms of managing executing in these areas?

All right, I'm going to go off script and show you another file. Did I show you this when we chatted the first time?

Nope.

Okay, so basically you can see I have the columns with each of the business processes and then I have the functional work areas down the side. And then here, and this is based on my lens from Cardinal Health, the level of involvement of each of those functional areas within each of those business processes. High, medium, low. And so for the medium low, you would probably invite them to the first conversation with the highs, just to rule out scope, make sure you're not missing anything. But your teams that are going to be most involved would be the medium and highs, each of these. So when you say is it going to be a work stream? I probably would have an order to cash work stream and that would consist of all of these teams with medium and high next to it. But I probably would have one business.

Process owner and they got to work across all those functions to accomplish their things to do.

So I would probably have order to cash meetings. Like I wouldn't have just a finance meeting or an accounting meeting. Now where I would have a functional area as its own work stream would be something like hr. Even though HR crosses everything, I probably would pull them out as their own separate work stream.

You're essentially creating as cross functional teams.

Right?

And you're building out your work stream based on the big part of the process that you're executing on.

Because what we were running into was for procure to pay, we would go to the. And again, this is a symptom of a business being so large that your work is broken up across 20 different teams. We're in a smaller business, might be across five, but we were working with the direct procurement team. But you can see that master data needs to be involved. Treasury Ops team, sourcing, finance and accounting all need to be at the table to have a really constructive conversation around how you're going to integrate your procure to pay.

That's actually good how you prioritized within those pillars of what you're driving towards in integration. Who exactly need to get involved and the priority of having them involved.

A good example for order to cash is everyone forgets about sales tax until you haven't been collecting sales tax when you should have been.

How many cats do you actually end up hurting throughout the process? In a typical deal, I would say.

40 to 80 at any given time. It is a huge organization so they probably have 20 on their own with all the different IT components.

Yeah, fascinating. Yeah. There's a lot of elements you can expand on and how do you approach the project management of it? If I keep referencing Agile because I see that even the cross functional nature of the way you're structuring teams to go execute on a plan that's prioritized based on value drivers. Really interesting stuff for a big company. You're not as behind times in terms of the approach on doing these things. It seems like a lot lessons learned over experience.

Yeah, I learned a lot actually in a short amount of time. But again going back to my background, I think I've spent the last 18 years preparing for this with all my business process learning. The general rule is do your homework. Tweak one piece of the process that is seemingly disconnected from 10 steps from that that you end up breaking something.

I was picking that up as the theme on this that while you're doing this you're trying to proactively identify what are the breaking points. You mentioned that with the limits of systems and adding all the new volume of activity. So it seems like that's a big part of it is you got to keep this radar out for things that'll break along the way.

It's almost like assume everything's going to break and go wrong and so you have narrow down and how to not make that happen. Falsely assume the other direction that oh, this will integrate seamlessly. They sell stuff, we sell stuff. I'll be fine.

I like that. Assume everything's going to break and figure out how not to let that happen.

Two more buckets. The sales incentives. So your sales incentive program and programs objectives incentive percent amounts. The payout structure. Teams should really be thoughtful here. And this is where the human component comes in. You're bringing two different teams together. They might have completely different incentive programs. So leadership really needs to take a step back and say how do we want to incentivize these teams to work together to sell what we're trying to sell. But from a back office standpoint, the highlight is in the prospect customer process where you have your managed variable compensation. So you could have a system that manages this for you. Surprisingly or maybe not surprisingly surprisingly. A lot of teams do this manually in Excel based on sales Data. So any adjustments that you're going to make with bringing new sales folks in or maybe revamping the compensation process or the incentives have to make sure that is covered in the integration, keeping sales reps happy.

It's important to capture revenue synergies.

That's a good point. Do you have to create a whole new incentive to meet your deal objectives? You want to make sure that however the program is structured today isn't going against your deal objectives. And then lastly, we come to the catch all sales process and enablers. So this is the overall sales process and the strengths and weaknesses for the business. This is where the team would discuss enablers required to achieve the revenue objectives of the deal. So this is where you ask the sales team, what do you need to be successful? What is in the process today that would inhibit you from being successful? Is there something in the process from the business that we're bringing over that enables success that we don't want to break? So this is really a good opportunity for the combined teams to build the optimal process to support sales efforts. And then from a back office perspective, for prospect to customer, your integration points would be anything that enables cross selling if you're bringing new products into the picture and anything to enable building that healthy sales pipeline. So looking at how you manage your sales pipeline, but then it also is dependent a little bit on ambiguous, on whatever the team identifies that enables them. So it could be any part of the process really that they identify as an enabler after doing that mapping and like you said, iteratively, maybe a couple rounds, a couple workshops. The further along you get into the deal, the more access you're going to have. You can go deeper into the teams to draw the expertise out. And so you would complete that, have a report out of some sort for leadership and then that should inform the guidance that the business gives for the integration of the future state of the business. So our processes and teams going to be absorbed into the acquiring business unit, into the acquired business unit, or is it going to be a hybrid where it's the best of both business approach, which is ideal but probably the harder of the integration choices.

Where are you at in the process?

Right around close.

How much of this do you have figured out versus how much do you end up figuring out after close?

It depends. If you have a nice chunk of time between sign and close, you can actually get a lot done. Because typically by the time you sign the sprint to get the legal tax, finance due diligence is out of the way and you have more Opportunity to get time on calendars to do the integration planning. So if you're going to have a quick sign and close, you'll probably have to wait till after to really dive in and get access to the experts. You do it as early as feasibly possible. Every deal will be different. Every deal has different priorities and timing. Sometimes the IMO gets the pushback on planning because the team is so focused on due diligence. So my advice would be that you assess the risk of postponing the assessment. And since the IMO team typically has that big picture view, we would evaluate if the success of the deal relies heavily on revenue synergies and nailing the go to market strategy. So if that's the case, the deal is very revenue heavy. The IMO should insist on starting that assessment process as soon as possible. But if you have a deal that's more of a tuck into the core business, or if it's more of a cost savings play, you could probably get away with executing the assessment later.

I could just imagine you, Dustin, asking that how important is your synergies around revenue? And then just be like, yeah, that's what I thought. Get me in there.

Because of my finance background, I go into the deal model and pull that info myself. Like I don't even wait to add. I have a template that I fill out and that's where I get a sense of like where my integration work is going to be.

Makes a lot of sense. You got the full spectrum to be able to get access to that information and respond accordingly.

A takeaway or just sum up the timing of it. Just like anything, it's important to take the time in the beginning of the planning process as much as possible. So you can save time from misalignment and confusion in the execution phase where the stakes are a lot higher.

What is reporting to leadership look like? What is expected there? What do you provide?

If it's a huge deal, we're going to have a steering committee of really high level leaders, but we always have an executive sponsor and it could be that we report directly to that executive sponsor on either a monthly basis or a quarterly basis, depending on where you are at the deal. Sometimes that sponsor likes to have their finance HR important business partners at the table for that report out as well.

When you think about overall integration, like what portion of all of it, Well, I guess again it's going to depend on the deal, so we'll get that out of the way. But just thinking about yours, go to market, but then everything else outside of Go to market. How does that compare with the overall slice of the pie? Is it just mainly the straightforward kind of cost energy type of integrations go.

To market will be a lot higher for those revenue synergy deals and a lot higher if we're getting into new territories. So that's where the framework we do have a section that says new to the acquiring business current state because those are things we're going to have to learn. We're going to have to get up to speed. Ideally you'll have key talent staying on from the acquired company to help get you there. That's why they're identified as key talent and why we have retention programs. But yeah, it's the more differences there are, the more, the heavier the integration and the learning curve will be.

More emphasis you should make if that's what you're betting on.

Yep.

What about budgeting for this? We've referenced that a few times. Where do you begin? And just thinking through how do you budget expenses? Is it something that you try to get your different leaders to roll up that information to you? How pragmatic do you get about it?

That's actually part of our due diligence process where we collect information from each of the work streams. So this is more at the functional level versus the business process level. But they actually turn in a template where they have any incremental recurring costs that they think we're going to incur because of the deal. So it's not in our run rate, it's not in their run rate. But then also all integration costs that we need to consider for the deal. So that a lot of it's usually it set up setting them up on cardinals network devices, things like that, something for go to market. So that's where we actually have a cheat sheet for each of the areas. But you'd want to think about your marketing collateral. Are we going to have to buy brand new collateral, invest in that? Do we do trade shows? Everything down to updating the logo on our trade show. Set up the tablecloth, everything like that. Business cards.

Does budgeting for integration vary wildly deal by deal or do you see a certain range it typically falls in? Is that like benchmark against percentage of deal size?

It's actually I always joke that it's inversely related. So it's the smaller deals that are actually going to be more expensive to integrate. Because if you think about it, a smaller team, a smaller company, they're probably on QuickBooks or some sort of nimble accounting system. Cardinal Health uses SAP to build anything In SAP is expensive to do it the quote unquote right way, where you're trying to integrate and get all businesses onto a common platform, it's actually more expensive to integrate the little guys.

That makes sense. I never thought about it that way.

And network something like the network, it's more of like how many facilities and building sizes versus the actual cost of the business. So you could be buying a tiny company, but if they have a huge office that we're trying to get on our network proportionally, it would look really weird compared to a bigger business with the same office space. So this is where the tech companies get super expensive.

Totally different approach needed. What are things to watch out for when doing this for the first time?

Skipping the process mapping portion. That's kind of when I get on my soapbox and insist that if the teams don't already have a process map of their business processes for current state that we get those teams like to blow past that step. But really this is where the maxim go slow to go fast comes into play. Because a lot of people are working off of their own mental map what that process looks like. And that could be based on their heuristic, based on their experience with the process, or even more dangerously, they're not experienced with the process, just making assumptions of, oh, I assume this is how we invoice. So really mapping it out and getting everyone on the same page is step one in my mind, making sure that the leadership is bought into this exercise. Some leaders want to blow over the project management portion of the program. Again, the whole idea of go slow to go fast. So you really want leadership support that this is a worthwhile exercise and the team should take the time to sit down and complete it and be very deliberate with how they think through it. And then also remembering that this is a framework, it's supposed to be flexible. Depending on the deal, the team needs to focus on the areas that are relevant to hitting those objectives.

Yeah, it sounds like knowing your own organization processes, having it mapped out really well to benchmark or compare with the company requiring is key. Hence the process mapping part. Leadership buy in and then keeping in mind it's a framework that it'll continue to adjust and evolve. What are other lessons learned from your.

Experience to not only focus on the front office piece, so that would be the sales team and the marketing program that you need that sound infrastructure and process in place to support your execution. And not discounting the complexity of what that infrastructure may look like. Just in general, if your plan is to grow inorganically through M and A, you really need to sit down before you dig into M and A to make sure that you're defining your back office execution requirements early on in that process. So businesses tend to customize their systems to fit their business at that point in time perfectly, sometimes to a fault. The more customization you add to your system, the harder it is to scale. You lose flexibility. So if you are planning to scale with the new revenue streams, as I mentioned earlier, try to make decisions so your hands aren't tied down the road. Basically build your systems with the future in mind. And it may be that we have no idea what the future holds. It could be products and services that don't exist today. You see how new products are popping up in the market that we didn't even dream about 10 years ago. But at least keeping that in mind that we may need to solve for something that doesn't exist today just so that you have that flexibility to do so. Or you prepare yourself for the cost, do so and plan accordingly. From a capital perspective.

Yeah, I think it's a really fair point. Keep your eye around the corner to plan ahead.

Another point that I found during this process, which I think it's so cool when people have their aha moment during exercises like this because these are the exercises people roll their eyes and groan about and then you set them down and you walk through it and they're like oh my gosh, I didn't even think about that. But I've seen where the IT infrastructure and commercial technology implementation timeline was out of sync with the go to market target dates. So for example, we took the go to market timeline, including any pilots and launches that were dependent on the IT development. And when we did this exercise early on, we realized that one of the key IT development deliverables to support the solution was going to be completed six months after our pilot target date. So we had that conversation during due diligence. We were able to make adjustments to the timeline and assumptions before the deal model was locked down.

Gotta be flexible and adaptive.

It's all about putting it on paper and getting it in front of people. It's like the simplest thing.

Yeah, it sounds like it's very collaborative at that point. You have some documentation on it, you're inviting the feedback and communicating the whole plan to everybody.

My boss says clear writing is clear, cleared thinking and actually have it written on a little whiteboard behind me because it's so true. I guess one final lessons learned is you can make a bad assumption if they are on the Same system. So let's say you're on an ERP system and you're purchasing a company on the same ERP system. Kind of going back to my earlier call out around customization, each business probably made customization decisions around their offerings at that point in time. You wouldn't want to overlook and not budget for integration there. You really have to dive in to see if you are going to migrate one of the businesses to a single system, that system can accommodate it or if you need to actually build things out within it.

A lot to think about.

Altogether a lot to think about.

Dustin, I got to ask, what's the craziest thing you've seen in M and A?

Oh, I don't integrate Intel.

Don't integrate Intel.

Ask me in maybe 20 years.

Yeah. Scratch out the names and dates.

Maybe offline.

Okay, fair enough. Fair enough. It's tough when you haven't been in several roles to vary the story. It's kind of identifiable in your circumstance. So we may give you an exception of this, Dustin. But over, over happy hour sometime we'll have to catch up on some stories.

Sure. Maybe we can have a in person, no recordings.

We've been doing more of those. If you're going to be in New York the rest of this month, I'm going to be out there and where you have a couple events we're hosting. This has been really great. I appreciate taking the time. This has been really valuable. I like this walkthrough approach that you had. It makes a lot of sense. Bigger picture, thinking around how go to market integration comes together.

Yeah. Actually I have another analogy I'll share with you that I use and it coincides with your agile approach. And before agile became a really popular term, we've actually used the flashlight analogy where you have a tiny flashlight in a pitch black room and that room is basically your integration discovery. And the more you walk around and the more you learn, your flashlight beam gets bigger and bigger until eventually you can see the full picture. And that's what this process does. It just helps you get more and more of that bigger picture.

I like that. That's a really good analogy. Just over time you'll get the full picture. So you got to keep turning your flashlight around until you get it all really cool.

Look at all the corners under the bed.

Thanks so much, Dustin. I enjoyed it. Here's to the deal.

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