Evolving Your Corporate Development Function

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

I'm Kisan Patel and you're listening to M and A Science where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during M and A deals.

Welcome to M A Science Live. Putting together companies is complicated and taking them apart is even more complicated. We take lessons from real practitioners and enable them through Deal Room, our platform. In this podcast series we focus on interviews with leading M and A practitioners to learn lessons from their experience. Learning proven techniques is key to optimizing your M and A practice. If you're interested in learning more of connect with us at our networking events and access our educational resources@mascience.com we also have a newsletter where we put our events and podcasts that we do. Make sure you can subscribe to that as well. Again, that's mascience. Com. I'm your host Kisan Patel, CEO and Founder of Deal Room. Today I'm here with Mike Palumbo, Director of Corporate Development at Halo Branded Solutions. Mike is a corporate development and M and a professional with more than nine years of exposure to finance, operations, executive leadership departments of middle market companies. Today our discussion is about evolving your corporate development function. Mike, to kick things off, can you tell me about Halo and your role there?

Halo Branded Solutions we're based out of Illinois, a couple hours outside of Chicago. We've got offices all over the United States. Promotional products distributor. So think about anything with a brand on it. A mug, a hat, a shirt, pens, tchotchke items. All sorts of stuff that you collect and gather. Stress balls, Anything with a brand we're the second largest player in the market, about a $24 billion industry, highly fragmented. I can't quote the numbers off the top of my head, but something like a huge percentage of all the businesses in the space do less than a million in sales. So you had a $24 billion industry. You've got a lot of small players, mom and pop shops that distribute these types of products. So us being number two in market share, perfect situation for a roll up strategy or being a platform and growing through acquisitions. That's a little bit about Halo. I work in corporate development which is basically focused on mergers, acqu strategic partnerships, things like joint ventures. Although we don't do a lot of the ladder, we do a lot of M and A work that all falls within my purview and that's a new role for us. The company is very old. It was not very old. I mean it was founded in the mid 20th century and grew pretty well up until 2000 when they restructured and over the last 20 years have just really grown by leaps and bounds. It's a great company. It's been a great role. Yeah, happy to delve in a little bit further into that.

Kisan, you were the first hire on this corp dev team.

Yes, that's right. So maybe helpful to mention that private equity owned 5th private equity ownership fund right now TPG growth. That sort of led to my involvement with Halo as well. They were a client at William Blair which I worked prior to being at Halo. I was in the services and industrials group, had an eight year career in investment banking. Worked my way up to William Blair, landed on the industrials and services group and sure enough I remember my colleagues talking about Halo wasn't a deal that I was working on or staffed on. For those of you that weren't that are in banking or were in banking. You know how very close knit everyone hears the deals that are going on around them. So I'm very familiar with the name and they started recruiting and I heard they were looking for corporate acquisition. Immediately rang a bell. Private equity owned historically been pretty self sufficient with acquisitions. The current management team is very capable, very strong on an M and A fronter. Our CEO Mark Simon, an attorney by trade, CPA background, tons of deal experience. So it comes very natural for him to do deals. But I think they had gotten to a stage where you start to really grow as a business and you develop that need for a dedicated person to come in on a corporate development level and provide that support. So the CEO can continue to CEO. They also contribute but you carve out that role. So you know I know you've done a lot of work on and a lot of interviewing on one person teams. I know it's a pretty common can be a common situation. A portco of a private equity group gets to a certain stage and they need to hire a corporate development person. Just by my interactions with your platform Kisan, I know that's not uncommon. So it's interesting.

I feel like we should rename this podcast to Surviving as the first corp dev hire.

I tell you, it's.

Well, I think there's some interesting substance there because I've worked with a number of companies that don't have a corporate function at all. And they obviously have an approach of getting deals done through various functional members and getting it done by splitting the responsibilities up. And then over time they realize they do need to build a more formal business line to handle M and A activity. So I want to hear more about that. What was the evolution like since starting at Halo? Can you walk me through that?

Yeah. And that's exactly the situation that we were in. That was how the company did things. You think about a business going from 50 million, a hundred million in sales to eclipsing half a billion, three quarters of a billion. There's a lot of stages there in the earlier years. And when you're 50 million in sales or a hundred million sales, that's how deals get done. It's by the executives. They have the business intuition, they know the targets, especially if they're, you know, doing stuff in their own space. And they, you know, usually have maybe some outside counsel and an accounting person and someone from operations or something that can get a deal done. And it's a very efficient way to do deals. They just do it themselves. That's how Halo operated and they did it very well. Prior to me joining, I think we had done 25 plus deals in the last decade. For me coming into a role, they're not doing much wrong. It's an interesting dynamic. So then what's, so what's the inflection point? Right. Hey, we're going to hire somebody in corporate development and we're going to dedicate a role to this. I don't know how that goes in other scenarios other than mine. I think you were interested in chatting about this. What does my situation specific look like? And yeah, happy to walk you through that.

You're the hot shot banker. I right away wouldn't like you. I would be like who I think he is. He's coming in with his Excel models and he's supposed to build our MA function. That's right. I'm interested to know how you evolve through that to actually get settled in a corporate development role. Because obviously you've been there for a while and you're still there.

Yeah, we have a really interesting culture in a sense that you're really accountable for your own success or failure. Our management style is very entrepreneurial and I don't think anybody, any of my colleagues at the C level the director level C level, or the CEO who I report to. I don't think anybody really had experience, much experience dealing with a corporate development person. So there's not much directive to give. I remember coming in and no one really telling you what to do. There was no directive. It was just, hey, get comfortable, learn the business, and then I'll be interested in what you, Mr. Palumbo, have to recommend for our process and ways to make us better. So it was really, and we talk about a blank canvas. It really was a blank canvas. I read a book which, if anyone out there is switching roles or maybe getting promoted, going into a new department, switching companies. It's called the first 90 days. I remember one of my first days, I met with our COO and he's like, you got to read the first 90 days. The 90 day plan, I think it's called. I have one of the two. It's like a Harvard Business Review book. Everyone's read it. It seemed like everybody had read it. And it was immensely helpful for me. One, understand the business, meet the people, number one, and number two, and then number three was understand the process that they're currently going through. Being a banker, coming from banking, you have that just innate desire to really understand the core business. And I can't stress enough how important that is. What products are you selling? What services are you selling? What's the value proposition? What makes your company better than its competitors? How does the back office work in the supply chain? How does the sales team sell? What does it go to market when a sales guy is out there, Sales guy, gals out there selling. Why? How? I want to meet these salespeople, I want to meet our department leaders. I want to meet everybody in the business and just talk to them about the business, understand how it works, the model, how we make money, what our competitive advantages are, all sorts of stuff. That was really, I think, number one, I spent, I think 30 days probably interviewing department heads, meeting people, flying to this location, drive. This is pre Covid driving to that location and meeting folks and introducing myself and really just learning about the business. I learned a lot, but I still wish I would have pushed a little bit harder in that stage because this is vital information. If you talk about trying to go out and buy a business, how are you going to buy a business? Plug it into your business if you don't even really even understand what you're doing? So vital. The first stage is really understanding the operations of the business model.

So that makes a lot of sense. Understand the business and really know the pieces that go along with it. What about the folks that were currently engaged with M and A activity? What was your interactions with them?

Most people had interaction with M and A. If you're talking to department heads or C suite, they all had some sort of exposure. I didn't know what's going in, but every time I talked to people, they had questions on integration, which is an interesting sort of point here. It was always, oh, well, I help with integration on this. And we do this really well. And this we need a little help in. Or sometimes I'm confused on this or can you explain this to me? But I didn't know that I was going to get that. When I talked to these people, I was thinking they're going to ask me about diligence and modeling and data rooms. No, no, it's about the onboarding part because. Or the integration and conversion part. That's the part that they're dealing with. These are the business leaders that have to implement all of the things that we promised during diligence and business planning, strategic planning. We've set it up, executives have set it up. And then if it's time to execute, we buy a business, execute on it. They've got to deal with the actual implementation and execution of that. Number one, you hear a lot about integration. And I was meeting people face to face. I remember really being able to read a person or understand what kind of conversation I was going to have in that. That meeting with the department heads based on their body language. Some people would. I swear they wanted to jump out the window when I said, yeah, hi, I'm corporate development. I do mergers and acquisitions. They would want to hide under their desk or something. Other people very excited to meet me. You can tell them immediately based on their reaction, their body language, their experience they've had with M and A.

What questions are you asking them to learn about what they're doing and what the challenges they're experiencing?

I was trying to ask all the same questions. First of all, what's your department do? So billing. How does billing work? Goes back to that point I was making earlier. And understanding the business part of it was a learning experience for me. What do you do here in a much nicer way. Right. What's your involvement in M and A? And it was always some sort of integration or onboarding capacity, which in and of itself is indicative of. Maybe they should. They should we expand the role in diligence. Could they help out a little bit earlier to alleviate that pain a little bit later on or could ma. This person seems really insightful on billing or on order entry or maybe a back office task or sales. Are we. I wonder if we're leveraging that expertise during the diligence process. So yeah, it's just trying to. It's pretty basic to understand what they do and their involvement in the M and A process.

Let me ask. So you go through this process of formalizing corporate development function. How do you plan your M and A processes?

Armed with a really good knowledge of the business is number one foundation. From there, it's. You're new to the organization. The first thing to do is to recognize that they're doing a lot right. With that in mind, what are they doing right? You gotta be very careful not to jettison things that they're doing right and try to replace them just because you feel like you may need to change. Or not attempting to understand what they're currently doing right. So that in a nutshell is understanding the process. The process that they go through to acquire companies. It's listening, it's sitting down. Whoever the resident experts were before you got there, whoever was working on deals before you got there, it's if you have that luxury is to sit, really work with them, sit down and understand what they do and how they do it. There's this thing that you get the itch to want to jump in. It's the action imperative. You want to get in there and you want to. Well, wait a second. Why are you modeling it like that? You should model it like this. You just got to really sit there, kind of close your mouth and listen and really listen to what they're doing and walk through one, two, three processes, whatever it takes. And watch how they're doing things. Because you really need to identify first of all what they're doing right and how to preserve that. And then where can you add to that, not replace it. You got to save those things you're doing right and add better ways or enhancements to what they're already doing. So it's understanding their business and it's getting in there and understand their process.

You get there, understand their processes. Any other like specific mechanical things or just you're looking at the folks you report up to, the C suite, the board members that look at like, what have you actually done tangible to help evolve that function outside of learning the process and starting to introduce some new things. But what did that look like to really formalize that?

Yeah. Then it becomes where do you start adding value? Because to the stage. And I think I deliberately Wanted to explain it this way is that you can't add any value until you've really understood what they do in the basics, the basics of the business and the basics of how they do things. Then you can start offering insight and value. It may be a while until you can do that. For me, it was. I had to really slow myself down, not try to act too quickly. You can run into a lot of issues. They're making bad decisions and then losing friends and then losing credibility. And then you continue to make more bad decisions versus the opposite. Right. Which is understand as much as you can. So the value that you're bringing is useful and you're gaining credibility, you're gaining allies, political allies within the business. And that's a virtuous cycle moving its way up. So how do you add value once you've understood where they're at? For us, it was by us, I mean myself and one of my close colleagues, Mike Fina, who's our head of integration. We sat down and we said, listen, we're going to create playbooks. I'm going to focus on the corporate development playbook and he's going to focus on the integration playbook. He had been there for several years prior to me joining. Him and his brother owned a business that was purchased by Halo and Mike transitioned into more of an integration role. So he had a little bit of a Runway, but it was putting together a playbook. From there, it's okay. Outlining the steps that they currently go through. Understanding the pains, the things they're doing right, the things that they're doing wrong, then retooling that you're streamlining and you're trying to alleviate those pains in the back. And I think what we did is we focused on. And actually I can pull up my playbook here. I'm not going to share it on the screen, Kisan, but please don't.

I don't want you to get me in trouble.

Somehow counsel comes after you.

Get the legal counsel calling me, you.

Get a mean letter in the mail.

I'd like to hear a little bit about what do you think of Framebook? Because I feel like the playbook's a loose definition. I tend to criticize them a little bit when they become extensive checklists. They discourage the out of the box thinking that's really needed in M and A and the quick on the feet responsiveness. So I'd like to hear about what's in your playbook and then maybe talk about sort of alignment of the people both through the deal process.

And I'd say our playbook on the corporate dev side, it was more of an educational tool for the executives, for the executive team and how we wanted the process to look. Recall of basic information that an investment banker might think is basic information. But to them it can be very impactful. So it was starting with what are the pain points, what are the things we're doing right? And then we carved out four key initiatives, like four things that we wanted to do. How did we do that? The first thing that I turned to, and I don't know how I saw where we were with our process. I knew there was ways to make it better and to add to it while preserving what they're doing right. The first thing that I think of is my network. Who do I know from investment banking? My fiance also was in investment banking and went over to corporate development. So I was very lucky to be able to pick her brain and network with her and how they do things. The first thing I think of is, wait a second, people have figured this out, People have implemented this. They know what they're doing. Who do I know in my network? It can be a resource. At this time you didn't really have this platform keys on, so there wasn't that option. You're looking online, you're doing research, you're talking to people. And then I found your book, actually the Agile M and A which had some very key points in it. One was that integration has to participate in diligence. Integration. Diligence have to be one cohesive process. There can't be that wall because that's where you get the break in communication. The people that are doing the diligence aren't communicating with the people that are doing the integration. So bring those two things together, that was one. And then really work on your tactics. When it comes to implementing diligence. For us it was establishing an internal cadence of meetings with our team and then externally with the seller's team. So we're managing, we're putting in formal process to manage the diligence timeline together and collaboratively and make sure there's no barriers in communication. We also had a little bit of a focus on who's making decisions, who's got the ball. If you're in a position where you've got a lot of people doing diligence, who's consolidating all that and making a decision? How central versus decentral do you want your decision making process during diligence to be? Right? Think about it. The diligence process, you're Going through, you're going to understand the business, trying to raise any flags, findings and then bubble up the key findings and determine, is this something that we can accept, solve, push off, how do we handle these? Going into closing takes sort of the boots on the ground to consolidate that information. But then when you bubble it up, do you have the right team to look at that, to assess these findings and to say, okay, this one we're okay with, this one we're not okay with, let's find a resolution, how much is this going to cost? So on and so forth. Getting that internal structure in place of having a centralized decision making unit and a decentralized team to go out in diligence and really dig into their niche areas of the business. That was one of our other key initiatives. So you focus on those things, those three, four things and from there you can take that sort of building intact, like tactics, right? Slides or procedures. This is how we're going to start things. This is how we're going to build this thing. This is how we're going to communicate. This is how the team is going to be structured. This is when people are going to start getting involved. The group is going to expand over time from those key initiatives unfolded a number of good steps and stages that will be implemented.

So let me give this straight. Reading my book, Agile M and A solved all your problems.

Yeah, that's right. I basically just gave it to all the team and I was like, hey guys, I got, I'm going to go play the pipes, we'll go play the bagpipe.

I should make a prerequisite for these interviews. I'm flattered you mentioned it. The things I did, like what you did, what you just mentioned was how you spend the time to actually identify the pain points. A lot of what you described is essentially developing the operating model and how your teams are connecting and working together. And how you mentioned the idea from the book was having one unified process between diligence and integration, defining that and then the other key piece was around decision making. You understood the value of having a good process for making decisions. I like the way you talked about the design of having it centralized but then decentralized and the approach and folks actually executing those are really good areas and good tips. Is there anything else I may have missed?

No, those are two of the main points. Now I will say it's not everything, it's not exhaustive and these are concepts and these are abstract ideas. Just because you thought of it. Great. Just because I identified a couple of areas where you can make improvements or areas where I like to focus. It doesn't mean it's going to get fixed or it's going to be implemented or people are going to adopt it. You got to be aware of that. You start with a low hanging fruit, it's going to be a process. It's not going to be one fell swoop. Redesign the whole process. It's going to take time. Especially for me. Our diligence team is really, I'd say 10, 12 people. You know, everyone probably wants to look into a couple of things to make sure that they're not inheriting a bomb. When we buy a business, you've got a lot of team members and you think about new concepts and introducing things. You got to be very sensitive to people's reception of that. Some people will hear it and really internalize it. Others will hear it and go back to their old ways, maybe not like it. So there's one thing to talk about it and to come with ideas. There's another thing to execute. That's why I think that's where you come from when you talk about a. The playbook. Just like a bunch of bullets. And it is in that sense. It is in that sense. And that's the gap, right? It's great. Get in a book, cool. It's actually gonna sit on the shelf and collect dust. You gotta execute it and you've gotta implement it and you've gotta try to adopt, push for adoption. And that is the process.

Well, let's walk through that because you're approaching two years in this role. Building out corrupt function from scratch. What were your key challenges along the way?

One of the main ones, it was conviction. It's hard to explain, but it's having conviction in your process and why you should do things a certain way. Because what you're going to get confronted with whenever you try to change something, whenever you try to improve a process, that's what we're doing here. This is a process of a company. There's a little bit of that structural like who's the team and how do they organize and how do they communicate. It's a little bit structured, but it's mostly the process, the steps that you go through and when. And when you're trying to implement something like that, change something, the question you're always going to get is well, why not just do it the way we always did it? It works. You will always get that. For me, it's become just a habit to anytime I want to suggest a change or an improvement or an addition, extra work. Even if you're trying to add value, you might be creating extra work for somebody. It's. Why not just do it the old way? My first six months, I couldn't answer the question. I didn't have the conviction because I didn't have the real life experience. I was coming in from an investment bank into a corporate development role. I didn't have corporate experience. I couldn't say, well, hey, that's what they did over here at Google and it works great. I couldn't say, well, I write in a book, if you are going to make a recommendation or try to push for change in an area, you've got to really answer that question, why not just do it the old way? I internally struggle with that just a ton. And I don't think the answer has to be complex, but you got to deliver with confidence, with conviction, and without having any experience in corporate development, which is much different than investment banking in my view, in a number of ways. There's a lot of similarities obviously, but the team component, the process is much different than banking. Now that I think about that, I'm going to say that with conviction. That was probably one of the biggest struggles.

I like that. I think it's a lesson that took me a while to learn. I wish I learned earlier. But essentially giving people the reason why if you're looking for somebody to do something or make a change, you got to give them a reason why. And I feel like a lot of times we forget that step. I've learned this even as a parent with children. Like you gotta give them a reason why. Even they're smart enough not to take a response or action on just those directives. But if you can give them a reason why it aligns well. And I know there's even a lot of scientific studies around this and human behavior on how you influence others by driving it in with the reason why. That sort of builds onto that theme around having convection in your request.

Yeah, and I still struggle with that. I mean, I struggle with that all the time. Because here's the reason you want to get. You want to see like, whoa, that's the way it's supposed to be done, or that's what I read, or that's, come on, man, that doesn't hold up. That's kind of try telling that to the CEO of an almost a billion dollar organization. That's not a good reason to give people. And it's not. So you've got to think, really think about how is this going to not Just to you know, these are great ideas. We believe in the process because we come from corporate development folks. Most of them come from banking or from some sort of process driven role. And it's ingrained in you and you see it happening. We've got to look into the numbers this way. We've got to use this sort of tool, the sort of data room tool to do it. You have these things that have just worked in the past. So seems like it should work now, it feels like it should work now and it looks like it'll work now. But you've always double check, always make sure you've got that real reason you've really thought about. Hold on. Is there a different way to do this? Is there a better way to do it? Or is this an area where I really have to institute change? Just leave it alone. You know what, man? Sometimes I'll really think something's a great idea with the process and I'll think the way we do it is fine. It's for what we need to accomplish. Have your goal in mind for what we really need to accomplish. Do you really need to do that?

We'll talk more about driving change. I think that's an important topic. What was your biggest challenge? What was really, you could be honest with me and the potentially thousands of people are going to be listening to this later. What was the real thing that you struggled with and building out the corp debt function as a single person.

That's one of them. The other thing is just not knowing what to do. I was never in corporate development. I was in investment banking. And you understand things like how to model something and how to project financial statements, how to run a data room, how to manage data room, how to complete diligence in a timely manner, how to organize, get people organized, how to ask questions, how to talk to people, how to pick up the phone and get stuff done, how to be efficient, how to work hard. That's all very helpful in corporate development. That's not the end. It's not all similar. Right. There's a lot of things in corporate development. Working within a corporate structure and trying to get sign off and decision making done. Get on people's calendars that are extremely busy doing their day job. It's all new. Here's a great example. You're the buyer instead of the seller in many cases. So most bankers come from sell side M and A. I want to hear about that.

What was the difference between your deal process at Blair versus what you're doing at Halo?

Yeah, great question. That's one of the main differences. You're used to selling versus buying. Huge change. I had this situation today. Somebody sent me an loi. They just said, here's an LOI ready to go on due diligence. Well, what do you do next? What's the next move? And you're coming from investment banking. We knew what to do with an LOI when we received one from a buyer. But when you're the buyer and you've got to get the team set up, orchestrate the team, who should get involved and when and why, who's going to be doing accounting, due diligence? Are you going to reach out to the seller? What are you going to say? Who from the internal team is going to do what? It's all really under your purview and it's a much different setting that up. If you haven't done that before. It's a whole new set of steps that if you're not coming from corporate development, how do you know that? How do you know what to do and when and what's the best you can guess? We're all smart. You can make really good decisions and try to do what you think is appropriate. But I always think somebody's figured this out. There's a lot of ways to do this. There's only one best way. You always want to achieve that. Now you can't let best get in the way of just doing well. So what's a good way to do this? How do I do it? That's all new stuff and big challenge when you're coming into a role like this without much experience.

Well, I'm wondering if you're working on the sell side and you're helping companies divest, you're interacting with buyers. Don't you have some insights in terms of the difference between a sophisticated buyer, unsophisticated buyer and some of the nuances where this guy should have really done this on the buy side or done this in diligence. I feel like you would have some interesting insights working the sell side. And on top of that, I want to criticize a little bit because I feel like corp dev needs a diversity and sometimes having folks from the business unit involved with corp dev obviously has some values. I'm curious to know, like where is the strength and weaknesses come in? Because I think for you, you mentioned a lot of the challenges was learning the business and getting involved where that as opposed to people that were already involved in business, know it. I'm wondering if there's some of these nuances that you do bring the table outside of skills on modeling deals. But I feel like being on the other side of the table. There are some points that you do understand about the buyer.

What kind of buyer would be my first question. William Blair has a lot of financial sponsors. They dig in a much different way than a strategic would. I think that's probably number one. You got a lot of followers. I'm sure they work in an array of different types of banks or non banks, different types of industries. If you're used to dealing with financial sponsors, you know the questions that they're going to ask and the associate is going to put a list together and send it over to you for the investment with the goal of creating some sort of deck for the investment committee. But it's heavily based on economics. With a strategic, you're going to get just a broad variety of sort of different interactions when you're in investment banking. I remember back when I was at Citi Capital, we had a strategic look at a deal and it was a mess. There was like 15 people and they wanted us to come out or they wanted to come out and visit our client, the seller. They wanted to come out and visit for two weeks and just sit in the conference room and pour over files and talk about things. And it was everything but the financials. So that's one interaction. Other strategics, depending on how frequently they're they're doing deals and who's at the helm. Kind of a similar approach as the private equity group, but more often or not, it's a different. They're buying it for a different reason. So their questions are going to be different. Me coming in at Halo from William Blair, I was very used to the questions that you get from financial sponsors.

Got it. So you have some insight in terms of, hey, here's some different levels that buyers operate and do their diligence. The other thing I wanted to get into was when you go into your role, your M and A role, what is the first thing that you're doing to establish credibility?

It's to not make mistakes. I touched on this a little bit earlier. It's truly to not make mistakes mistakes. It's don't let that action imperative win. Don't feel the need to jump in too early. There's a balance here because you've just been hired. Your goal is to get up that learning curve and to start adding value to the business where the value that you add is greater than the cost to the enterprise, your cost to that enterprise. So there's this need I got to get the learning curve and start adding value.

I got this question on chat that sort of relates and it's around the decision making. Earlier I see Raz here is asking if you had decision making frameworks or processes that you've used or recommend, how do you come up with some of your criteria and what decisions need to go up in there? That's a tough one. I feel like the ones when I talk to people that do use decision making frameworks, you tend to go in a rabbit hole on those things. And I feel like then you end up with more people and more complex criteria than you actually need.

I don't really have a framework. I have a framework on how to prioritize work. Like what I want to make decisions on next, when a decision needs to be made and when it needs to be escalated. Very delicate balance. Right. Part of the value that you add is autonomy and taking things and just in making decisions. But you can't make the wrong decisions. I think I got a pretty good way to answer this. You're not going to be able to make a lot of decisions in the beginning. You're going to have to sit back and listen really to defer to other people and escalate a lot of the time. And that's okay. That's okay as long as you're learning and you're trending in the right direction. I remember the first 6, 912 months I was calling a lot of people, I was asking for other people to sit in on things and deferring just a lot of because. And that's okay as long as you're trending because what you don't want to do. The alternative is that you try to make an uninformed decision or a bad decision. It turns into a vicious cycle. You want to get small wins early and avoid any sort of negativity early on. So defer if you have to and learn about the business to the point where you can start making more and more and more decisions over time. If you're afraid to make that decision because you don't know, you don't know the answer, you don't make the wrong decision, at least earlier on, forego making a decision and escalate it and defer.

So interesting view. I feel like decision making, I'm writing notes on this because I think this is a topic of its own and it actually be a fun one to do as a roundtable just to get inputs in different organizations and how they approach it, because I think it's very much rooted with the company's culture.

Yeah.

I feel like that's why it just uniquely evolves organization to organization.

You do learn that I don't know the answers to everything. Some of it is also trying to know the answer to something that you probably. Maybe it's not your call. Trying to overreach. Trying to make a decision in a realm that really there's experts that deal with that. Part of that learning process and deferring process is to learn who the experts are in what areas. If you're confronted with a decision and you know there's two experts out there that work on that, you're a team. Leverage their knowledge and bring them in and add support. How can I help you make this decision?

If a team seems to be unorganized or they lack just general communication process, what can you do as a leader to help alleviate those problems?

That's tough because you're going to run into people that everyone has a different communication style. You've got to understand their communication style and try to meet them where they live. Number one, especially if it's a boss or somebody that's superior, you've got to accommodate them. I often feel like I'm bothering somebody. But what's really helpful is talking to people, making sure that you're communicating often enough, and having meetings. If you've got to do a quick call in the morning, or if you got to loop somebody into a meeting, even if you don't know that they should be there or not. I go through and I do it anyways just to get more communication rather than less. It's a little uncomfortable. Sometimes people don't want to be looped in or they don't communicate that way. If you err on the side of being more inclusive than exclusive and starting developing a rhythm or a cadence with that, people come around eventually. There's a number of different ways to attack that. There's different tools you can use. There's different processes that you can set up. Maybe that person is the wrong person to be working on something.

Give me an example of what have you done that really creates a value? I mean, these are. I get the general gist of it. I'm just curious, what are specific things? I want to get the little nuggets for the other person in your shoes. That's on the first day of having to develop corruptive function. How can you make some dramatic changes?

So identifying the right structure that you need, the right people that you need to get involved, that's number one. Getting to know those people very well. You're going to be working with them, getting the right process in place, just establishing some sort of framework and alignment on that process. It can be very simple stuff. I think I was just talking to a colleague today. We were talking through. I give a live example. We were talking through a small, kind of like an aqua hire. Let's just get together on this guys. I've got the right team in the room. Let's try to due diligence here in three phases. We're going to focus on accounting. That's the long pole in the tent. As we round that corner, start doing more onboarding and operational sort of confirmatory diligence. And then we can start preparing for close and drafting an announcement. So something as simple as that, sort of a process setting 3, 4, 5 milestones and getting everybody aligned on the same page. That in itself does wonders for adding value and putting order and organization into a process that can be very complicated. High anxiety, lots of moving pieces.

That's easier said than done. What are some tools or tips to the trade that help you get there.

On the process side or more on the tangible tools?

Yeah, I've heard that a lot. Just getting people aligned on the same process. When you have especially folks that are all silent off in different parts of the organization, they have different ways of working within their teams and you're trying to rein them in to work cohesively as a team when they may even have their own cultures within their own team that are unique and they just don't work with each other on a regular basis.

That's a really good question. The first thing is to define. Hey, listen, for us it was let's know you're involved in diligence or integration. What's important to you? What are like the top two or three things? Get an understanding what everyone wants to look for. You gotta get a list going, man. You gotta get a checklist going of like things that people want to accomplish and make sure that everyone sees it. For us, man, it was absolutely vital. Start using Deal Room. It was one of the tools that we brought into. And this is not a plug, by the way. I want to say something bad just to offset but I just mentioned.

Yeah, you know, that's for me there is a level of bias because I've been involved with the creation of that product. I would like the good and bad because I think there's benefits of it. But I always believe there's no. We're never close to perfect. There is a lot of room to grow and strive for perfection. So I would be curious to understand what tools you're using. Obviously we have a product that you use if there's other products that use outside of that, and then just hear the good and bad of those.

Yeah, really any sort of project management tool. This kind of goes back to the difference between corporate development and banking. Banking. We're used to using a data room to load files in and usually requests were tracked on an Excel spreadsheet or something. It can become a mess when you have 12 different buyers and they're all asking similar questions and how does it all line up? And we've used multiple data rooms over the years. But any sort of project management tool where you can create a list of to dos and have people check that off, work through it as a highly valuable tool for us in diligence. And then as we started using it during diligence, the integration team saw us using it and said, wow, like I have a huge integration checklist. They were using Smartsheet for integration, I believe, and now I'm pretty sure they've fully switched over to our current platform, which is. Right. Deal room. But what that brings any sort of platform that you use, what it's bringing is visual visibility. Okay, where is everybody at on what they're doing, who's working on what? Because it's not just assigning a task. This was a new sort of concept to me. It's not just assigning a task to somebody saying do this because every task is cross functional. So it might involve hr, but finance also has a very big decision to be made with that compensation plan. It could involve supply chain as they change it up, then how is it going to change up our ops, our customer service process? So when you're looking at a business, there's a lot of cross functional issues. If you don't have it organized in a way where everybody can see what everybody is working on, whether it's an Excel spreadsheet or a project management platform or deal room or whatever. Then you just get people working in silos. People are just talking past each other. They're not on the same page with things. They might have two different answers. If I ask, hey, what's the plan for the three employees? One person might say something different than the other person. It's a horrible sort of trap to get caught in is not having that intercommunication.

I'm hearing real time views on progress and then intercommunication or maybe referred to as collaboration. I want to hear a little bit about that because I've seen A lot of corp dev teams where their functional leads tend to work in silos, which ends up. Here's a template list of items that I used from the previous deal and I'm essentially doing a checkbox activity looking for the immediate doomsday tomorrow type of risk. And the reality is they need to be able to connect with their other peers and different functional leads to be able to connect the dots and identify the underlying risk and opportunities in the deal. I'm curious if that anything that you've worked with or seen changes in.

Yeah, absolutely. There needs to be a quarterback. There needs to be somebody to bring everything together. A conductor. Not a big orchestra guy, but I know that the conductor plays a very large role. Big football fan, go pack. So I know that the quarterback has a really important role. The only way around this Kitan is to commute is communication. It's the only way that this, that the siloed issue gets solved. It's making sure that you're communicating, communicating, communicating. And what I found is that calls and emails don't get answered all the time. Meetings I was, when I was coming into the role, I try to set up a meeting and be like, hey, my next availability is in two weeks. I'd be like, what? Like you can't just. I am eight to five and you want to talk to svp, it's got to be two weeks from now. Doesn't work. You can't get everything done with phone calls, meetings and emails. So you've got to have some sort of consolidated, consolidated tool where people can log in at their leisure and track stuff. They're getting reminders, they're getting. It's just another form of communication to make sure that everybody is understanding what everybody else is doing. That's the only way to get around it.

Project management tool. Real time progress views. Improved collaboration slash communication. Any other tools? Chat tools. Anything else you're using?

No, not really. We have teams, but we don't use it very often. We were big zoom, you know, obviously big zoom people you got to work on teams.

DRAM integrates with teams. If you don't know that.

I think I might have heard that we don't use teams very often. We got a handful of people that'll use it. But zoom was enough for us during the pandemic. Man.

So what was like before and after? Because you said they weren't using anything before when you stepped on the scene. So you've introduced a handful of tools since you came in and a lot of this was lining around process and being able to put those sort of process flows in the tool to help get people on the same page. Walk me through. What was the difference? I'm curious. Before you got in there almost two years ago and today, what would you say are the main differences that your company actually approaches? I would even look broadly how they approach M and A. That's different. Before they had a corporate function.

I think what it's doing today, I think the difference today is the organization and the upfront preparation. Just alone, the planning, the knowing what to expect. Even if somebody's doing the same amount of work today as they were before I was around, even if it's the same amount of work, just being prepared and organized, it takes the anxiety and stress level from like a nine down to a two. Because they know what to expect, they understand what's going to happen. They're not scrambling. Just a thought of like, I don't know, I don't know who's handling this and what's the next step? Like I can know my immediate task, but where is this going to go afterwards? And then you start thinking about other things that are going to be due down the line. If in your head you're thinking there's no plan to tackle any of this, it raises that anxiety and stress level to a whole nother level. Even though it doesn't do any good, it's not like you have any extra work. It's the same amount of work. It's just knowing that it's organized and taken care of and thought about and planned out, it's helpful. So I like to think that as we progress and as we get better with our process at Halo, I'm hoping it's just going to be something people are excited about and enjoy and we want to do more of. It's not creating issues or additional stress or anxiety.

I like that. Reducing the anxiety, improving confidence, getting your team members in sync. These M and A functions don't evolve so simple and easy. They take a long time. We did the interview with Cisco. Even after 200 plus deals, they're still innovating and rethinking their M and A approach. Which brings me to you mentioned integration and there was this lot of emphasis on integration that folks that you talked to, you were surprised where they're top of mind was around the integration activity, which I feel like the theme of the last two years of interviews is around the emphasis of integration. That's the make it or break it point of the transaction. What's your approach to working with integration.

Utmost respect for our integration folks. It's a whole nother realm. Somebody did the work and thought this is a cool company to buy. Then you throw it over the fence and you guys got to go make this work and actually deal with these employees and send messages, communicate with them and change their benefits. And it's an awesome position and a ton of respect for our integration team. That's where a lot of the pain could come from. You don't diligence a deal a certain way or you overpay a little bit, it's usually not the end of the world. But with integration, if it's done poorly, it can be a nightmare for everybody. Can tank the deal, people quit. You're going to leave a permanent sour taste in somebody's mouth on the other, maybe the seller's team. It's got to be done well. For us it was starting with integration. And what can we do earlier on, even before diligence, before the LOI is signed, even when we're forming our pipeline, what can be done at those earlier stages to make it better for the integration people? And our number one solution was get them involved early, bring them in. They're going to have to deal with this on the back end anyways. However, from their department is leading that charge to sign them as an integration leader and get them involved. One call is all it takes during diligence. A couple of questions, whatever it may be, just get them involved. They'll know the timing, they'll see the updates. They don't have to be in every meeting or be deeply involved in the diligence process. But they can see it coming. They can see it coming. They're much more comfortable instead of, oh, hey, by the way, we bought a business today. That's not how you want to approach that, but that's how we like to handle integration.

How does Halo being headquartered in a pretty rural part of Illinois impact all of this? I'm just curious, did that give you a nature of the current environment of working remote or were there other nuances and challenges with it? Just curious if there's something around that nature which I think is a bit unique.

Yeah, it is not having a face to face presence. This is pre Covid. I think we're all experiencing this now. It's probably the same shock that everyone here has had when they had to switch from going to in person meetings to being remote. I think I would go maybe once or twice a month and visit folks, try to knock out a bunch of meetings and then come back home and Work remotely. It didn't really get much in the way of the day to day. We're talking with so many people, not only in Sterling, we have offices all over. I think we have 50, 40, 50 offices all over the United States. Our chief of integration is in New York. We've got. One of our main sales leaders is in Ohio. So we're pretty much remote anyways. And actually the pandemic has helped in that sense because now instead of calling, we actually see each other's faces on zoom.

Yeah, very interesting. Somewhat similar challenges at that.

Yeah, very, very similar. It's nice to see like the operations and to be able to be in person for that sort of stuff. We've got a fulfillment center. See how people interact and actually meet people. Very big. But you can, you know, you can do that by a couple of visits here and there.

Last question. What's the craziest thing you've seen in.

M and A other than the William Blair closing dinners?

Oh yeah, I've heard about those.

I gotta tell you a few people.

I can probably name drop that I've.

Heard stories about epic closing. Yeah. But that's not really an M and A event. That's more of an extracurricular, right?

Yeah, that's not that crazy. That's like the norm.

Yeah, we. We had some awesome ones, man. Went to Tulum on one. We went golfing out in Scottsdale for a couple days. We did an awesome ski trip in Deer Valley, did a Napa wine, like a three day Napa wine tour. They did some really incredible closing events. Hard work put in. And they really wanted to appreciate everyone's hard work. So those were pretty awesome. But I think real M and a crazy story. Yeah. When I was at Citi Capital, we sold Jayco, which is an RV business, to Thor, a publicly traded RV consolidator. Jayco is a family business. Third generation, I think second or third generation. Started in a chicken coop in Indiana and grew to be a huge company, very successful business. We sold the company to Thor. Being privately held in a generational business. They had a big family. The owners, it was two brothers. Their mother was still a little bit involved who had started the business with her husband and all their sisters and kids and grandkids. And I remember we closed the deal, sold the company for I think it was 500 and I think the public announcement is 576 million or somewhere around there. We drove to Indiana to meet the whole family in a conference room. We brought checks, Somebody brought checks. I think it was one of the brothers too. Just tell people what, hey, here's your share of the business, or here's what you're going to, you know, you're going to receive from the sale of our company we sold to Thor. We think they're going to be a great steward of the business. And by the way, here's how much we sold it for and here's your check. I mean, it was incredible. People were crying and hugging us and just the nicest people on the earth. And you don't get to see that when you're in M and A. A deal closes and they, you know, guy goes by the boat or whatever. But this was family, generational family from four generations in the room or five generations in the room. This was the culmination of generations of work. And they're seeing it and they're feeling it and they're. It's changed their life. And I feel like I was on Oprah or something, you know.

Yeah, you're like Ed McMahon. You're just hanging out the million dollar chicks like the big. You get a million dollars. You get a million dollars. Even better.

That was incredible. It was cool. Wow.

That was like the most positive, crazy M and A story I think I've heard in this podcast.

It was wild, man. There's a lot of not so positive ones, but that's one that sticks in my mind.

Hey, Mike, thank you for sharing that great story and sharing your lessons and experience with us today.

Thank you. Happy to join and been a wonderful conversation. Thanks for the opportunity.

I think you got a nice plug for Mike Fina to get on the podcast and share his view from the integration side. So I think we're going to have to follow up with him and get an interview scheduled.

I told him he's next. I said, hey man, you gotta, you gotta come on in and say everything that I said. I'm actually delivering.

Yeah, the other side. I want him to know they'll tell the other side and we'll hear and validate your point.

It's the other perspective. Yeah.

We're publicly putting him on obligations to take the interview. Thanks again, Mike.

Thank you.

Here's to the deal.

Thank you for taking the time to explore the world of M and A with our podcast. Please subscribe for more content and conversations with industry leaders. If you like our podcast, please support us by leaving a five star review and sharing it. I enjoy hearing feedback and connecting with our listeners. You can reach me by my email. It's Kisan K I S O n@dealroom.net M&A Science is sponsored by Dealroom, a project management solution for mergers and acquisitions. Additional educational content is available on Deal Room's blog@dealroom.net blog thank you again for listening to M and A Science. See you next time.

Foreign.

Views and opinions expressed on M and A Science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.