Executing M&A in Healthcare

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Again, that's mascience.com I'm your host Kisan.

Patel, CEO and founder of M&A Science. Joining me today is Roy Schonenberg, President.

And Co CEO at Amwell American well.

Corporation, which is a telemedicine company that connects patients with doctors over secure video.

Traded on NYSE under amwl. Today we're going to talk about how to execute M and A in the healthcare space.

Roy, how are you doing today?

I'm doing very well. It's good to be here.

Thank you for taking a break from running a business, a public company, and doing M and A deals. Can we kick things off with a bit about your background?

Sure. As you can hear from my accent, I wasn't born in the US I was born in Israel, lived there for a good chunk of my life, trained in medicine and then somewhere in the midst of all of this, started turning to the dark side of technology and gradually did more and more of that, started a company back in Israel, a technology company that did things with intensive care units and smart alarms and alerts and everything else. Our first customer was Mass General Hospital of all places. So I ended up traveling to Boston very frequently and lo and behold, at some point switched over from Israel to Boston, spent some time at a certain academic institution here and then started another company that developed web based medical record right when the Internet was invented, before electricity was invented millions of years ago. Got that company done nicely and then started mwell billions of years ago. And here we are right there in downtown Boston.

So you got the bug, medical background and a startup bug. It's been a journey for you because you've been working at this company for a while and then M and A came into play. How did that start evolving?

First of all, I don't think that it's a tribute to our bright thinking. When we started the telehealth company 15 years ago, Covid just happened two or three years ago and made this whole industry burst into flames. But we started AmWorld in 2006 just to give you a sense. The iPhone was introduced in 2008. So this is how bad our timing was in terms of being really early to the game. I think paradoxically, and I'm sure we're going to cover this at some point, but paradoxically, having that amount of time ended up being very necessary when you want to do anything disruptive in healthcare. Because this industry, more than any other industry, is designed to reject change for a good reason. When you go to med school, they teach you that any change in clinical practice needs to go through 50 different clinical trials and steps and approvals and everything else. It takes 10 years for a drug to hit the market in everything in healthcare. We do this not because of bureaucracy, but rather because we want to protect patients and not do anything different that may be harmful to them. That's true for technology and healthcare as well. So the fact, long story short, the fact that we started doing telehealth in 2006 actually allowed us to work very closely with the movers and shakers of the industry, not only payers and provider organization, but also legislators, medical boards and others to really understand what's the right way to build it. And in turn, that allowed us to position ourselves hopefully on the right side of things and also really advise us in terms of our M and A approach through the years.

Let's break down this healthcare space. Cause I think there is some distinct differences. And you got this first one. The healthcare projects changes. There's that component to it, regulatory. I think it's probably pretty adjacent or maybe part of the reason why.

Regulatory is driven in my mind by those two things. Right. One is the patient safety, quality of the care, the access to care. Regulatory is very involved in this. And then the other piece of the regulatory effort is to make sure that the cost of this thing is contained. To the extent that we can say that it's contained, because it really isn't, we're not doing a very good job there. But a lot of regulation is around fundamentally the rules of engagement for Medicare and Medicaid, the government programs. But that sips into commercial very quickly. So the rules of right and wrong and where money can go and what investments can be made in many ways are driven by the regulatory climate that is of course influenced not only by the consumer side of things and the provider side of things, but mostly by the payer side of things in all the ways that Washington works. And that has definitely influenced fairly dramatically the evolution of digital care and telehealth and everything that we do. Yes, regulatory is a very big part of it.

What else makes the healthcare space distinct?

There's nothing like it. It's one of the only markets or industries, whatever you want to call it, where the people that consume the goods have no idea what they're consuming. The people, that is the patients, they just do as they're told. The people that provide the goods have no idea what it costs. These are the clinicians on the health systems. And the people that pay for everything are not in the room where any of this happens. And there's more. But even with just these three truisms, there is nothing like this industry ever in any other place in modern economy, the incentives are built completely skewed in order to accommodate this very funny model of how people consume health care. And the other piece of the puzzle is that the level of job security is almost perverse because we know that no matter what, health care will continue to exist. We will always need people break down. We will always need health care. There's a sense of you can't really hurt health care because it's like the Maslow thing, it's a necessity. So even though it's an industry that works on economics, it really doesn't. It will have to continue to exist no matter what the economics are. So that's the fourth crime that in a way colors the way healthcare operates.

It is unique. It is unique. And what you described, complex in terms of whose interest lies where.

Yeah, someone said, who knew healthcare was so complicated?

It's funny, when I first started our business, I used to go to the startups for the healthcare, their meetup events for motivation.

Yep.

I would hear them sorrowing their woes and selling into the healthcare space and thought selling into finances is so bad. I want to go back to. Because I obviously want to get into the M and A side with the healthcare space. But before jumping in that, I'm curious about what led your business into acquisitions, what's spurred up doing those first acquisitions and what was the driver, the strategy behind it?

Different companies in healthcare and health tech specifically will probably give you a different answer depending on what area they're in and everything else. But for us, it became very apparent that what we do, which is probably different than what people think we do, what we do is not video conferencing. What we do is logistics. We're a logistical infrastructure company that brokers the interaction between the people that provide services and the people that need the services under a variety of different circumstances, in a way not dramatically different than what Amazon has done with goods. For retail, we broker the distribution of live healthcare. What that means is we need to be productive pretty good with all three domains that participate. We need to be good obviously with patients, consumers. They need to be able to use us for all of those kind of things. We need to speak provider language really well because they're the ones supplying the goods, whether they're our providers or affiliated providers or health systems or whichever one it is. And we need to play nice by the rules, which means we need to work very closely with payers. We need to really understand their language on coverage and eligibility and all those fun words that describe how the insights of healthcare work works. It's really hard. A lot of companies are getting really good at one of the three. They have products for hospitals, or they have a product for Pears, or they have a product that is consumer oriented, whatever, fitness or anything like that. For us to succeed, we needed to speak all three languages and we needed to tie them together. We need to create essentially a switchboard that allows all of these things to somehow work nicely together. I can tell you without blinking that it's a Herculean effort to learn 1. It's borderline almost suicidal to try to work with 3. During the different acquisitions that we've done over the years, yes, we have acquired companies that create either technology or services. But what led those acquisitions is will we be in a position to tell a better story to a domain that we need to participate in our vision than if we try to do it on our own? Are we going to be closer to payers in our ability to deliver their benefit structures? If we buy Silver Cloud, are we going to be closer to health systems and how they operate services within hospitals? If we buy a Vizia, are we going to be in better position to work with consumers in their own reality if we buy conversa, et cetera, et cetera? Or are we going to have more behavioral health availability to the market if we buy a line? These are the kind of things that drove us. It's really more about being in a better position to learn a language of a domain that we needed to play.

When you look at the strategy of each of these deals, how much of this strategy was really defined at the company level that you could then peg these opportunities? I feel like it just varies. I'm trying to get a sense of how crystallized do you have it where clear as day that this company is going to fit in as an acquisition or a company strategy, or is there some shaping to make that company and you shift the strategy?

We're actually very lucky. One of the things that are very different about Amwell has been that from the very beginning, we were not venture capital backed. From the very beginning of the days of Amwell, the two other companies, my brother and I did well. So we had investors saying let's fund whatever you're going to do next, including some large institutional investors. So the way we carried ourselves as well, and specifically when we talk about our M and A strategy was not influenced by let's just have inorganic financial growth. Which is the thing that confuses a lot of M and A strategy. Is this accretive to our bottom line? Is it Helping our EBITDA and all of that. It's not that we weren't aware of those things, but it wasn't the driving factor for our M and A. And we were in a position to actually ask ourselves, even if financially this looks great, what else does it do for us? And maybe I would even go a step further and say the privilege of saying we really want to acquire this company because it allows us to tell a different story. And then if we think that they're a great company to do that, let's make sure the financials are accretive the other way around.

You're calling out the elephant in the room on this one, because that happens more times than not where M and A is the strategy of itself, because we're trying to fuel growth and use that as the driver.

Don't get me wrong, I'm not suggesting that the financial rationale for acquiring company is not incredibly important. And you need to do your diligence and you need to be very comfortable that it's going to truly be accretive when it's all said and done. And those efficiencies that you get all of the whole way more about this than anybody. But we were comfortable walking into those because we led those acquisitions by having essentially a framework of how that company is going to advance the current business of Amworld. Without that company, how will our existing promise to the market and our positioning and our differentiation in the market, how will that dramatically improve? Because those competencies or those capabilities or those assets are going to be part of Amworld. And then the money, and then make sure that of course it helps us financially. It doesn't become a drag on our budget or our operations or whatever it is. When you're not stressed for the cash or whatever it is, you also tend to have a little bit more time to do the diligence in a proper way. You have the ability to confirm the extent that you can. That coveted piece, what we talked about earlier, that company is really good at a domain that we are not that good at. Everybody will tell you that they are, but you got to do better than that, right? You have to actually understand why are they good at this? What do they think is their secret sauce for being successful inside hospitals or inside pair markets or whatever it is? You need to check that not only listen to them, but also listen to their customers, who happen in most cases to be our customers as well. So you have the opportunity to check all of these different boxes. Then you make the finances work and then you move Forward.

Yeah. It's interesting how you put that consideration in their view, how they see their place in the market and then ultimately how it's going to come together. And with that combined story which evolves, you've done how many acquisitions so far?

Five, I think.

Okay. Google told me four. So. Which is typically what Google tells you.

Google told you 4. From the time that we became partners with Google, there were acquisitions that preceded that.

Since then, you ready for case study time? Can we tell a story on the first acquisition you did and maybe tie in some of the strategy talk that we've had and how that may have shaped it?

Sure.

What were the lessons learned?

I think the first large acquisition that we did was the acquisition of Avizia.

When you say first large one was there little ones that you just don't count? Because I'm curious about this because even as a growing company, when you start thinking about what's the first acquisition going.

To be, prior to that, we acquired a company called Aligned who was much more of a straightforward acquisition because it was. It's essentially a company that brokered psychiatric services to hospitals. They ran a group of psychiatrists, they have a network of psychiatrists. And we essentially bought the company and the network. So it's really more of a supply story that is now in this day and age, no question we have a behavioral health meltdown. It's hard to find any kind of behavioral health provider. So that was a good acquisition that we did at the time to make sure that our medical group has a very strong behavioral health network in it. And that was that acquisition. But it was more of the reason why I'm starting with Avizia is because the line was a straightforward purchase of supply. Avizia was a purchase of a technology company. This can be a very long story, so I'll try to make it short. What made them different? The reason why we acquired them was because we were at the time we were very much a payer oriented company. This was the days of urgent care, telehealth. All the health plans out there wanted to offer telehealth based urgent care because they thought, rightfully so in hindsight, that if they allow their membership to see a doctor online, that membership is less likely to go to the emergency room and stick them with a much, much bigger bill, prepare the health plan 100% now validated with data. But that was the drive. So for many years most of our business was with the well points of the world and the Uniteds of the world and many of the Blue Cross Blue shield of the world offering urgent care. We realized at that point that in order to really move the needle on healthcare, urgent care really isn't the story. We knew now that clinicians and patients can safely and intelligently deliver care to one another over technology. You had to begin to weave that into where most of non urgent care health happens, which is the rest of healthcare, hospitals, group practices, PCP offices and everything else. So we said we need to get onto the provider side of things. Getting onto the provider side of things is hard, I can tell you. I'm trying to be politically correct here. I used to be a physician at one point in my time. We're a tough bunch. We are really a tough bunch. We're highly critical. We don't want to change, we don't want to do all of those kind of things for the right reasons. We try to be very conservative with the liberties we take with patients. The notion that you can care for a patient without actually putting a stethoscope on their chest is foreign to a lot of, or used to be anyway, foreign. And we said, yes. Part of our success in the future is that we need to talk clinician language. We need to talk physician language. At the time, the only way that technology was utilized inside health systems in the provider side of things was something called teta stroke, which is the case where you have neurologists are very hard to find. You have a lot of smaller hospitals that have a lot of patients, patients coming in with stroke. They don't have a neurologist on staff. So they needed to use technology to have a neurologist oversight the care of that stroke patient from far away. And that was a big novelty and it really saved a lot of people's lives. But that was the point of entry for the first time where technology was used to render care in a provider environment. That was the business of Avizia. They were building those carts that were primarily used for telestroke. But they found a way in. They were inside the provider environment, allowing clinicians to use technology to deliver care to patients. The decision to acquire them was not only because they were good and people liked their services and everything else, but because they knew how to speak technology to clinicians. That comes with a whole bag of capabilities. It's not only to speak to clinicians, you have to speak to their electronic health record systems, you have to speak to their scheduling systems, you have to speak to the nurses who are facilitating the interaction with the clinicians and so on. That was the whole package. When we were Determined that we were going to enter the health system world. That became the reason for that acquisition. And then the money worked and the finances worked.

How many employees did your company have and how many did Avizia have?

Oh, I think we were. I have to fact check this or put a disclaimer, I don't know. This was a long time ago. I think we were probably somewhere around the 500 employee mark or 600. And they were probably 150, 180.

Okay, so pretty good size on this acquisition, is it? You're buying this company and it's unique because it's the way you describe it. It's like they're in different use case essentially serving a different market but bringing you capabilities expand in how you're delivering your current services. To get into this other area, is it you look at it as hey, we're bringing this company in as this different business line or is this getting what was the thinking in terms of how is this business going to be combined together and what's that going to look like going back to the story, to the market, when you look at.

It from the financial perspective, you obviously have to model it such that if we did no integration, we didn't tie the two together and everything else and they continue to run as two ongoing concerns that they will be okay. It's not a company that is in decline or is going to hit its nose on the curb in a minute. And we did verify that they had a good business, they have a good business or that part in Amble today is a very good business. But the thinking was there is a lot of analogies. Right. The similarity if you think about American. Well, before we can am well at the time, the urgent care brokering that we did for the payers allowed two points to facilitate to broker an interaction where care was actually delivered. A record was created, claim was submitted, payment was done. What Avizia was doing is they had two points that brokered an interaction where there was a patient on one side in a bed and there was a provider on the other side. And there was an interaction, a record was created, care was delivered, claim was submitted, payment was made. It almost sounds like the same business, radically different environments. The understanding was that we are going to acquire the company, we're going to respect the company's operation, we're going to let it continue operate and do its magic and gradually begin to take those similarities and put them together. Because from that lens we're almost identical. So we're like two planes running in parallel. I don't think the analogy is going to work where you actually become one plane, but because you're running into the same destination, not the same destination, but it really worked out extremely well. And probably the proof in the pudding is there's a couple of them. But to me, it's the fact that most of the vast majority of the customers of that company are AMOL customers today, all these years after. So we must have done something right. To me, the part that is even more profound is the fact that most of the leadership of that organization found a home in amwa, even though they did well and all of that kind of stuff. They're still with us all these years later because they still find the mission to be the same mission and the purpose and the culture to be compatible.

So give me some advice on building a retention package to keep people around.

It's interesting. There's not one prescription there. Clearly if you put a billion dollar in a retention package, you're likely to keep the person unless they already have a billion dollars. Clearly not economical to do. For every employee of the company, people have to be compensated. They're going to do whatever they did before, so there's no reason why the compensation should be harmed. But they're going to do more than they did before because now they have to do this kind of merger of purposes and goals and customers and cultures and everything else. So there has to be an upside to them by way of compensation and everything else. But I'll be the first one to say, I think if that's your strategy, I don't think it's going to work out very well long term. The financial compensation works for a little while. In the technology world, people always can jump ship and find another greener grass. With a company that just got really well funded and wants a quick way into something, it has to include an alignment on purpose. It does matter. I know it sounds like in a cynical world of only money talks and everything else, but if people don't feel that they found a home and that they can move the needle for an industry or for people they care about and they can be proud to come back home to their spouses or family and say, I have a much bigger impact today than I had before, then I don't think they're going to stay there. It's that simple. And yeah, there's always a little bit of examples on the left and right that are a little bit different, but I think the majority of people want to feel that they make a difference and you have to make it very clear and true that they're in a position to do that.

Yeah, I think you have a really good point. I always wonder about that in terms of the retention, but specifically you're referencing entrepreneurs. And there's always the cliche, hey, you got to start the next thing and next thing. But then you see times like your example, where they stick around and continue to be part of the platform and grow. I think you have a really good point. Like it's got to be aligned with that purpose. I don't know what else it could be.

You wake up in the morning, you go to work, or in this day and age, you sit in front of video. Whatever it is. If you are not excited about what's ahead of you today, your days are numbered in whatever it is that you do. It's just the way it is. Modern days, especially in the United States, there's so many options. You can always move to something else. You need to really be excited and you need to feel that your individual contribution is necessary to bring it to whatever it is that you're involved in.

Is there some approach that you have when you work with these leaders to get them interested or excited? How do you get them considering to be part of that purpose?

People who are, especially in a company that's going to get acquired long before you have the conversation with them, they know that these conversations are going on. They already have developed on their own a mental model of what will be great or I'm walking scenario. They know long before you know who they are and what they do. It's a different company. You haven't spoken to everybody and so on. You don't know all the better things and worse things about the company that you only know once you get together and become married and everything. But they do. It's fascinating. It doesn't always work. But if there's a way to allow them in some way to realize what they are excited about, you have a much higher probability of not only retaining them, but actually get them excited, motivated and deliver. But you have to listen to their idea. They know better.

So that's digging in, really listening, getting into their headspace. And then I think like you said, they already have a direction in mind. Let them tell you what are other lessons you've learned on this first acquisition.

Trust your instinct. It's a lesson that you learn again and again and again in life that not always, but in many cases your first impression is something that you need to take in very seriously.

We're going to turn this to A therapy session. Tell me the time. You're absolutely so pissed off, angry during your first acquisition.

I don't think I was pissed or angry. But you're always going to find things after the acquisition. That's just the way life is. When people go on a date, they dress up, they put makeup on for a reason. You look your best 10 years later, you love each other, but it's not exactly like you dress up for a date. And that's okay. You walk into it with the understanding that there is going to be a bell curve. Most of everything is going to be, hopefully, as you know it, some of it, very little of it, is going to be much better than you expected, and some of it is going to be much worse than you expected. The tails of the bell curve. I think the part that you learn is that sometimes you have an advanced clue to that edge of the bell curve. There's something not going well there. And you want to believe and you want to feel that everything is good and you want to focus on the main part of the bell, as you should, but you disregard it. And more often than not, I think that's a mistake. If you feel that you stumbled over something that doesn't make sense to you, figure out until it makes sense to you. Don't say, oh, I just don't understand. I'll understand later. That's fine, that's okay. And by the way, I just want to be honest about it. Other people that will be on your show will say, actually sticking to those things that you stumble upon to try and understand them may actually be a very bad business strategy. Because while you may be right, you may be completely souring the atmosphere of the acquisition by honing in on things that are bad or wrong, which are inevitable, and you're just going to derail the dynamic. There's a balance to this. As I grow old, I keep telling myself, when you have a hunch that something is wrong, you need to give it two more cycles than you think. When you say, oh, it's going to be okay.

The thing, I'm fascinated by this because I feel like there's this inevitable learning curve that you have to go through repetition, which can be painful and expensive. And I'm curious, what are examples? Maybe you can give broad examples of surprises you came across that you then in turn started emphasizing as part of your approach in M and A.

Surprises in technology. I'll give you one example. Often enough, when you look at a technology company for the purpose of acquisition, or whatever it is, they show you end products, if they're good at this, they show you a customer implementation of the product and the customer is very happy about it. If you really want to do the deal, you can say that's great and you will never be fired because you did the diligence. You looked at the product, you look at the implementation, you look at the customer is happy. So it's okay, right? But what is really hard to find is what was the non conventional effort that needed to go into deploying successfully that customer and what is the reproducibility of that effort to 20 other customers of the future? Because if that company literally killed itself days and nights, seven days a week, no economical sense of the world in order to make sure that works really well, they may have been successful, but it may be impossible to replicate. Unless you actually spend the time when the Fireside chat to hear the war stories of that implementation, you won't even have any understanding on whether this can be done again. And it's almost, I would say it happens more often than not because younger companies, that's what any CEO of a young company will tell you know that those first implementations of their product are life or death for them. So they will go out of their way in an incredible way to make them successful. But the expense of resources associated with going out of the way is a very big part of the financial formula. If that's what it takes to implement every time, that's a terrible acquisition. I don't think this example or the other example, but this is the kind of thing that happens all the time, especially when you acquire younger companies.

And this is why you got to pick those things apart and really understand it. Because this is your risk profile you're buying into.

And you have to do that smartly because you pick apart people that you want to be partners with forever and ever. You have to be very smart about the way you do it.

How do you approach a deal where you as one of the main principals is your brother, the co CEO? There's a whole other podcast to how you guys work together then capacity. Because that doesn't work with my brother. So maybe we'll have to do it. I'll bring both our brothers in. You're leading as principal in your doing this initial diligence. You're really lining the strategy. You're getting buy in to how this is going to get passed through the board. These things that you got to pick on and really assess this risk profile. You can't do it all. What does that look like as you Expand and bring. And I know you're going to tell me you have a trusted team function leads that you're going to pull in, but I want to know something from experience around how are you getting them really aligned, especially these early deals when it's first time doing this stuff or if there's any lessons there.

The first deals that you do, you make mistakes. Hopefully you're in a position to have really good advisors. Usually if you're sufficiently large and you have bankers to work with you and you have legal teams that work with you who have done acquisitions in healthcare technology and understand all of those kind of elements and understand risk stratification, maybe their systems are not secure and they have HIPAA violations that are waiting to be discovered. There's a whole bunch of things that you don't even think about that become your liability the moment that you acquire. But you have to delegate to due diligence in the time that you have available. To close a deal is hard. It has to be divided into teams. So you have technology team and a risk, you know, whatever IT team and a clinical team and this team and a finance team and all that kind of stuff. It's almost like second nature to say I want to spend as much time with the leadership of the company that you're acquiring because chemistry is so important, which it is, and alignment is so important and everything else. And it almost gets to the point that you're spending so much time focused on the other company that you have less time to listen to your people who are coming back and they have their gut instincts. The amount of time that you spend debriefing with your own team to really understand not only what they have found that is written, but what they're gut tells them is almost always underinvested.

Yeah, that's an interesting view because it's almost like you're doing the diligence within your team to really click down, you.

Have to do diligence with your team.

That somebody is doing a deep dive and maybe someone's struggling or isn't putting as much tension. Do you ever get that sense from it?

You learn a lot from the unspoken unwritten diligence. And it has to be a culture of communication internally inside your team that you're not just answering the questions of the diligence and getting the data, but you're also forming an opinion at every level. And you have to be able to explain your opinion and you have to explain your gut feeling and you have to suggest if you have a gut feeling about Something that isn't right. The best person to tell you, how do you actually find out is the person that had that gut feeling. So you have to listen to them for another cycle in order to do that. So maybe this sounds a little bit amorphous, but to me, you really have three cycles of diligence. You have the direct diligence with the leadership and the organization that you're trying to acquire. You have the second diligence, which is the readout of all of the things that came out from the diligence, all of the answers to the questions and everything else. And then you have a third cycle which is the. What's your gut feeling about this? Is there something else here that we don't know? Is there something else here that we need to know that we haven't asked about that was not in the questions that we want to have answered? That's the third cycle. And I think it's really important to follow all the way to the third cycle to get it right.

And you're amplifying, you're picking up the gut feel across different functions.

You said it. That's exactly right. You have to amplify the gut feel. That's exactly right.

You're not hiring consultants all over the place now. Nobody.

McKinsey, Bain, we've done McKinsey, we've done Accenture, we've done this, we've done that. Those cycles, they can help us tremendously in terms of just creating the discipline and the structure and all that kind of stuff. They come equipped with a lot of artifacts that are really helpful and smart people as well. But you are almost by definition much closer to your business, your strategy. If you took the pod that you get from McKinsey, six months training before they can help you do the acquisition, then maybe, yes. But otherwise they can help you orchestrate the deal really well. You still need to be the one asking the questions.

It's not a free pass.

No.

I want to touch on the companies you've acquired. Have they been through a proprietary process or through a bank controlled process?

Proprietary.

All of them.

Yep. One of them was actually close already to a bank in that sense. But for the most part, they. This was not bank solicitation. These were people that we knew and approached.

Is there a reason why. I guess this ties back to the strategy. Are these relationships you've had, have you networked through Findom? Do you find this company was particularly interesting and then approach the CEO? How do you source your deals?

It's what we talked about earlier on because the determining factor on whether we're going to sue an M and A is whether we think that we can tell a better story on how to accomplish our vision and our mission with that. And then make sure that the finances work and that there's no conflicts and there's no risk and whatever it is and liabilities and so on. I think because of that, for the most part, we're looking for things that are very specific.

So you're proactively searching and you reach out to the companies.

We're searching for this. We get a lot of options, a lot of opportunities from various bankers out there, and many of them are very interesting. But it's not the process, right? It's could we use this? Rather than we're looking for that. And the could we use this is, to me, murky waters. You can always use this to some A, this to some degree. But I don't think that should dictate your M and A strategy. You should have the purpose.

The purpose and how it expands the story. Okay, I wanted that context because what I really wanted to ask you is just like with your internal team, how you sync up, how you click in and expand that gut feel, how are.

You working with that counterparty and their.

Executive team, keeping them engaged? Like, what's the secret to managing that good relationship? So the deal goes smooth.

It's actually very easy if you respect that other company to be the one doing magic that you can't. Because that's why you bought them, that's why you acquired them or entered the deal with them. If you are able to do this, then you don't need them and you don't need to acquire them. You are doing this because they bring to the table something that you either couldn't do, can't do, can't afford to learn, don't have enough time to learn. For whatever reason, they bring that. And for as long as the entire interaction with their leadership team is driven by the fact that they represent a genius that you don't have, then it flows because they feel not only appreciated, but they feel proud and they feel a sense of responsibility because they are going to be expected to do that magic that only they can do. So on day two after the acquisition, they have that. They still carry that responsibility, which I think in many M. And as that get blurred, people say, oh, we get sucked into the bigger company and now just Brownian movement. It's everybody's responsibility, not only ours. And then people disappear because they lose purpose and they lose individuality and if that company that you join forces with is still trusted on its own to carry their magic, then you have a stronger footing for the future together.

Respect.

Respect.

You as CEO of a publicly traded company acquiring a company about quarter your size, how deep do you click down and want to talk to people doing your diligence, Get a sense of company culture, the gut feel, radar to the.

Extent that you can. I think that almost without exception, companies that are in the process of being acquired are going to be very guarded and very protected about talking to everybody around. There's not going to be an open door for a lot of good reasons. First of all, they want you to see a certain view of them and their executives are going to be very in sync in doing that. The moment you get to everybody on the floor, it's very hard to sink the message. And that's okay. That's like going on a date. You want to make sure it's good looking and consistent. I think the other piece of it is also that the young company needs to protect its employees psyche. If the acquisition hasn't been sealed and done and usually you need DOJ to approve. It's a long process. If you walk around and start talking to employees, you're creating, just by your interaction, a set of expectations that may or may not happen and that if the acquisition doesn't happen, will potentially demoralize that company's employee pool and create a lot of trouble. And it's unfair to them for a lot of reasons. A company that's being acquired needs to be very thoughtful about the balance of the exposure of the acquiring executives to their employees. Once the acquisition is done, it's in everybody's interest to spend as much time together and open the kimono and being very honest about it and everything else because you're family now, like it or not your family. So it's in everybody's interest to be as transparent and whatever laundry you didn't do together before, you got to do now. That's it.

There's reasons why it's going to be pretty safeguarded in terms of who you have access to. So you're probably going to be selective around that and proceed with caution there. But Roy, I got to ask you, what's the craziest thing you've seen in.

M and a craziest thing? I don't want to name names because I don't want it to sound as.

If, oh yeah, we don't do that here in M and A science, no names and no dates. We protect all innocent.

There are companies in my industry that have acquired other companies and then wrote them off to a fraction of their worth. And some of it is driven by the market and some of it is driven by just the changing concepts around telehealth and everything else. But I think that's the challenge when you buy companies for the finances. Finances can change. If you buy companies because they do some kind of magic that you need, it has a longer staying power. I didn't answer your question with names and directly, but I think you've tied.

It back to our theme of this podcast, which is great. It's have a greater purpose is your ultimate driver for M and A. That was good. We have a whole room to do a sequel, so I don't know if I could get time in your calendar. We're going to leave that to the team to see if we can coordinate that.

Let's leave that to the team and I'm sure they'll find this is fun. We can definitely do it.

Roy, thank you so much for taking the time. I enjoyed this conversation. It's helped become a better M and A scientist.

Terrific. Thank you for having me.

Those of you still listening, thank you for staying tuned. Until next time. Here's to the deal.

Thank you for taking the time to explore the world of M and A with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you need help standing up an M and A function or optimizing one that you already have, we're here to help. If we can't help you, we probably know someone that can. You can reach out to me by email Kisan K I S o n a science.com or you can text me directly at 312-857-3711.

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