From Accounting to an M&A Career

Hello Ma Friends. This podcast is brought to you by Firm Room, an M and A Science company. Twenty years ago, virtual data rooms would come to your office to scan documents to put on servers. That's why they charge per page. However, now in 2022, with everything in the cloud, it makes no sense to charge per page. That's why we created Firm Room, a virtual data room that's intuitive, built for public company security standards at a fair price. It's only $500 per month. Check it out with a free 14 day trial. Visit firmroom.com again. That's firmroom.com 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. Before we kick things off, I'd like to send a big thank you to you all, the listeners of the M and A Science podcast. I was just reading some of our recent Apple podcast reviews and feedback emails. I'm truly flattered and grateful we have listeners that are getting real value out of our podcast. Also wanted to point out that between mascience.com and dealroom.net we now have over 1500 pages of content online. It's the largest publicly available collection of M and A content on the Internet. Anyways, thank you. Now onto the interview. Welcome to M and A Science, where leading M and A practitioners share lessons learned from their experience. If you're interested in keeping up with the latest from M and a science, visit mascience.com subscribe to our free newsletter Every Monday we share highlights from our interviews and publications so you can continuously improve your M and A skills for free. Again, that's mascience.com I'm your host, Kisan Patel, CEO and founder of M and A Science. Joining me today is Kayla Davis, Vice President Head of M and A at ABM Industries. ABM Industries is a facility management provider traded on NYSE under ABM today at over 3 billion market cap. Today we're going to talk about the key skills to be successful trading transitioning to an M and A career. Hi Kayla, can we kick things off with a little bit about your background?

Yeah, absolutely. I actually started my career a little over 15 years ago at PricewaterhouseCoopers in accounting, their assurance practice. And that's where I got my CPA certification. And really the first nine years of my career I was purely focused on accounting. So after PwC, I joined ABM Industries and the accounting group where I led SEC reporting technical accounting. Back in 2015 I had the opportunity to take a role and FP and A actually leading corporate FP and A at ABM, which was my first experience outside of accounting. Still very much numbers driven but really the first time where I got to see a little beyond the numbers. And because there's a lot of projection of the future and how the company will be doing from bottom line standpoint, there was a lot more interaction with the operations team. I'm looking beyond the numbers and where I got to really start seeing how the numbers are really coming together for a company. And then recently, a couple of years ago, I had the opportunity to start my career M and A also at ABM Industries.

That's a big transition going from accounting to FP and A, then moving into M and A. How did you transition to M and A? Was it a conscious decision or did it just happen?

It's actually a very interesting story. Never thought that especially starting out in accounting that I would end up in M and A. I was involved with purchase accounting after the deal was done many times, but never really ran a deal. And it was a time in my career where I was ready for a change. And it just so happened the M and A function was just starting stood up or we didn't have one really. At ABM we had not done any acquisitions in years so our corp dev department really was non existent then Once I knew about the opportunity it sounded very interesting to me. So I raised my hand and asked to be considered for the role and I was fortunate enough for the executive team to give me that opportunity by chance. Not something that was planned, but really glad that I made that move.

What's interesting is that you got hired from within. A lot of times companies do big searches and typically hire someone with a banking background. Was there a listing for the role internally or were you more proactive?

I was very proactive and it wasn't something I was a job that was posted. There was a change in leadership and reorg happening. So the as they were standing up the we knew as part of our new strategy that we needed to be very proactive and aggressive with M and A as part of our growth. So I was fortunate enough to understand or to to be in the middle of the discussions where I knew where the company was going. So when I saw that opportunity, I reached out to who is now my current boss and asked them to actually give me that opportunity.

Okay, you were very proactive about it. You weren't waiting around for an opportunity to Fall from the sky you reached out, heard you're trying to build this.

Look, you mentioned it yourself. Typically it is someone who has that corp dev background, years of experience, experience. And it was a risk really taken by my company as well because like I said before, I had no prior experience in M and A. But I feel fortunate that they trusted me in that role and I've learned so much. It became very clear to me early on that I had a lot to learn. A lot to learn.

I'm still caught up in how you convinced them to let you do it. How did you convince the executive team?

I don't know. Honestly, it helped that I had been with a company for over five years at that point. I mean, I've been here for. In June, it's going to be 10 years. So I had a history with the company in different roles. I knew a lot of the people also and operations that I built some of those relationships and my role in FP&A. And I had taken a new role within the organization before. So making the switch from accounting to FP&A, which are more closely related, I was able to do that. So I'm hopeful that the reason behind it was because they trusted that I could do it. But it was a big leap for sure.

You had a track record, a reputation for being a doer. What skills did you acquire from your FPNA role that you found useful for M and A?

Before I even go into that, I want to share with you the transition to a whole different ball game. So once I was given the opportunity, it was okay, now what? And I was a one person team, right? I had not had a chance yet to build out my team and I was doing a lot of research and I came across your podcast, which I found very helpful. It was again the beginning of me trying to send up this function. As I was thinking about it, I was okay. All I know is finance and of course, knowing the strength of the financial profile of a company, the balance sheet, that's second nature to me. I could quickly cipher that. But then also before we even dove into the details of which targets are the best for us, I took a step back and looked at internal to abm. What is our capacity? What are we trying to accomplish through M and A? And what types of businesses would make an impact in the bottom line? What are the more attractive ones from a financial standpoint that will give us the most return in the long run? So just even within abm there are more profitable businesses. Some are more profitable than others. So that gave me that initial confidence to at least be part of the conversation and start somewhere. But I would say that as I expanded and had conversations with and started to work with the cross functional teams, I started to then expand knowledge and what I understood, what was important, M and A. But specifically, to answer your question, the previous experience in accounting and finance, the obvious one is yes, you do have a good understanding of the numbers and that's always helpful. It's not the only thing that's needed. But also because accounting is so black and white, if something doesn't make sense, you have to dive. It's like the numbers will tell you that you have a mistake here when you're trying to solve something. So that has taught me to when something doesn't seem right, to dive in the details and really figure out, okay, what is it that's causing the numbers not to make sense essentially, or something not to make sense. Taking that from my previous experience, I applied that to anything M and A related. So now I was in a position where I know that I'm not, so to speak, a smartest person in the room or I don't have the most knowledge here. If anything, the team, everybody else has expertise here. It was more about becoming curious about certain aspects of the different functions and what they were raising. And then if something didn't make sense or if it didn't smell right, so to speak, then I would ask the question of either saying, hey, this doesn't make sense to me. So it just doesn't tie together. And I found one of two things. Either I didn't know I was uneducated and that was a learning opportunity for me, or there was really something that needed to be looked at more deeply and it snowballed into looking at something more closely and ultimately making the diligence process a lot more effective.

You're still in your FP and A role, right?

No, I just M and A.

Okay. Yeah. I was trying to contrast that PNA role where you were working across functions in that regard. You kind of use that curiosity to get a better understanding of why things the way they were or that came later when you got into natural M and A role.

I think it was there before and I was fortunate in the FP and A role specifically because I was part of the. I was leading the corporate FP and A and in charge of or helping all the functions with their budgets. That's where I created a lot of those relationships and also understood a little more about the types of headaches that they have. So to speak. So that gave me an appreciation for what goes on in other functions. But really in M and A is a very different perspective because it really comes down to evaluating if the whole company is worth buying. We will have the opportunity to make it successful. And that takes more than just the financial numbers. It's really like looking from the legal standpoint, HR operations. So it really. It got enhanced a lot in M and A role, for sure.

What was the hard part of transitioning to an M and A role?

Look, I wouldn't say there's one hard part. Like I said earlier, it was completely new to me. It's uncomfortable. It was very uncomfortable. And what I found early on is again, I was on the phone with people who have been in the industry for years and years. Here I was. Sometimes I didn't even know the terminology. That was pretty standard. And M and A world started really from the ground up and from zero. Even speaking the same language was almost like learning a new language in an aspect. That was hard. But what I learned early on was that, look, I have a lot to learn and made it very clear to people that I'm new to this. And I asked and use that curious mindset to say, I don't understand it. Can you please explain it to me? And what I learned is that people were really helpful. They're like, oh, okay, we understand this is new for you. So they would take the time to explain. Right. Getting comfortable with the fact that there's a lot here that I don't know and I need to ask for help. It was a huge learning curve, for sure.

Know what you don't know. Do you have examples of that? Like when you identify that there's a lot to learn. But was there specific approaches? Were there people that worked closely with M and A that you got some insights on? Where did you start learning?

From all sorts of places. So I had mentioned to you, like the M and A podcast, M and A Science podcast was a great resource for me to get started for sure. A lot of online reading materials. I did a lot of research. I had the opportunity to work on a separate project with some of our consultants from McKinsey who actually had also offered their help in terms of get me started. And they shared some great materials and same thing actually with bcg. One of our first acquisitions that we did, BCG was side by side working with me. That was so helpful, just to see how everything plays out and observe it real time, but also with the different functions. Again, as we were going through the diligence process, just understanding what's important to hr, what's important to legal, to operations and why is it important? How do you sift through the noise? Because initially we would have a request list of 500 items that we would want to ask a potential target and knowing to push back and say is this really important or how is this going to change our mind about this potential target? So engaging in those back and forth discussions, even knowing that it's not my area of expertise, but having those healthy discussions helped a lot to educate me but also get us to a better place. Like I said, using the resources that are out there. Also networking. I reached out to a few people on LinkedIn actually and that was very helpful.

We have a variety of external resources. Thanks for the plug on the podcast and networking as well. Learning from other folks in the industry, also consultants or another external resource that could get hands on, help you with some of these early deals. And then you mentioned internally connecting with your functional leads, building the relationships with them, getting an understanding of what's important to them. I think that makes tons of sense right there. How did you align yourself with the people in M and A?

Again, it goes back to that being transparent all the time about where we are and getting on the same page essentially about what is our goal here for the organization, what are we trying to accomplish? If you're asking about internally, the benefit that I had internally is that we were all kind of rusty. We had done M and A before, but not in a few years. There had been some newer people who had come to our organization. Although people have had been involved in M and A before, it was understood that we were all starting from the ground up. Where I came in was make sure that we were aligned with the enterprise priorities in terms of building a framework and saying here's what we're marching towards and the types of companies we're going to focus on. And I think that helped us all internally get aligned. And then in terms of when it came to the functional leaders really being there to be a resource for them, but also letting them understand that they're on the driver's seat because they're the ones who really understand their function the best.

So no top down management style. Pretend you know what you don't know. Not at all.

I don't think I'd be where I am if I took that approach for sure.

I want to walk through what changed from when you moved into the role, the way things, maybe the company was doing things before, what some of those.

Big changes were for Me, the change that I observed was where we're starting from nothing. And I can only speak to my observations and the role and the behaviors in the organization rather than what was done before. Because like I said, I was really involved. And I know that we had not done any M and A in a few years. But I knew early on as I was engaging in discussions with our operations team, they were eager to do M and A. Some of them had discussions already with competitors in the market or people that they work with that they want to sell, we really should buy them. There was this decentralized mindset of, okay, you're the M and A person. Here are five companies I want you to contact right now and buy. I had to tell them, okay, no, we got to slow down. We're taking an enterprise approach here and the first thing that we need to do is align with the executive team on what are our enterprise priorities. There's limited funds here and then we'll see how those companies fit in that priority. So a lot of communication and working together to get on the same page in terms of we need to do this the right way. And there was also some frustration for sure because they've been waiting and then now here I come and say we have to take a step back before we move forward. And really, we really need to get clarity around what makes sense for us and then we can align on what targets to pursue. So as a result of that, we've created a framework that a good part of last year, at the beginning of last year was spent on that where we've created clarity at the enterprise level in terms of what does good look like from a target standpoint. Now we're proactively building a pipeline and going to each business unit to build a pipeline that we can then proactively reach out to those potential targets. It's a much more disciplined approach. It's definitely a change for our organization from at least again from the feedback that I'm getting and working with the different leaders. But I think it's definitely the right approach for us and we're already starting to see how things are coming together. It's definitely a lot more centralized and we're learning because we have the same teams, at least at the cross functional level involved in M and A. We're learning with each acquisition, right? So we're getting better and better and we're creating our playbooks and we're creating a process around it.

A lot of your deals aren't sourced internally.

Working to build that. We had two deals in the last year and both of those were inbound. One of them came through our of our operators. The other one was a very large deal able, which closed at the end of last year. Now we're in the process now that integration is underway and things have settled down a little bit while we're remaining opportunistic with what comes on the market, very much being proactive and we're doing an outreach to those attractive targets.

And you're using various people internally to be able to do a lot of that, whether they're leadership from different business lines or it seems like you're fostering some ideas for acquisitions internally.

It's interesting because we have multiple ways of sourcing deals. Obviously we have the bank relationships in our industry. There are very few assets that are very sizable once you know them. It's more of an opportunity of what might become available if it's a good fit. And we have the executive team, including our CEO who stays very close and has conversations with people in the industry. But that goes all the way down to that branch level operator. And our business to begin with is a people business where it's very much about relationships. We have multiple layers of the organization. Engagement like the corporate dev team will obviously speak with private equity firms that are in our space and banks and then. But it's been wonderful to see the engagement at the operations level. And we were actually searching or using the tool the other day to use key terms. Somebody was marketing a tool and we were using key terms to come up with potential pipeline. And whatever came out of that tool was actually very close to what we had already sourced from our operations team. So that was a good validation that we have our ears to the ground in terms of who's out there. That's a good fit for us.

You mentioned you had to create a framework or identifying what's actually a fit. Can you walk me through that framework?

So the way that we categorize or how we score targets is through three different lenses. One, is it a strategic fit? Two, is, is it aligned to our operations or its operating model? Is it attractive to us and how they do business? And last but not least, it's a financial profile and our ability to grow and what it does ultimately to our value as a company. This all stemmed from a very coordinated effort with our executive leadership team team who took honestly a good amount of time back in 2020 as we were planning for our five year strategy. Think about, okay, M and A is going to be a big pillar for us. Let's Give some guidelines in terms of what would be a good strategic fit for us and what types of companies do we want to pursue. A lot of effort went into getting all of that alignment. So that made it easier for. For me to then partner with the business and say, this is what's been established at the enterprise level. We've already done the homework. We have an idea of strategically what makes sense at the enterprise level also. But also we want to understand for your priorities at the business unit level in the next five years, what strategically makes sense for you. Because we don't want to use a one size fits all the evaluation criteria is the same. So it's again the strategic fit operating model and the financial profile. We have guardrails at the enterprise level and then we also have our building guardrails specific to each business unit. So then we ask them to define what it could look like for their specific business units. And within. There's several criteria within each of those lenses. So it's. We score potential targets across 15 different line items where we give them a score of 1 to 5 of what makes them attractive. And that kind of gives us a blended score and helps us prioritize who we want to reach out to.

How does it get communicated? Is it. We have a bunch of little sub areas and we're scoring them individually and it rolls up into a bigger score. We have a letter grading system. We have more of a summary around why it's a good fit. What does that look like? How do you communicate that?

Yeah. So the framework is something that everyone, even at the executive team, is very familiar by now because we've used it for the past year and we do this potential acquisitions, whether it's inbound or we're proactively building the profile in the pipeline. It's interesting because depending on who your audience is, that communication will change, obviously. But what I like about the framework is that it doesn't change. The way we look at every acquisition is the same right. From those three lenses. So it's well understood both at the executive team level and at the operations team level when we're working with them. So when we're working with operations team, we have regular meetings. We meet at least once a week, if not more. And then we've gone through the workshop. That was one of the first step of let's define what a good score looks like or what gets a five in each category versus a one. And then within there, then they have to fill out other details and we document our pipeline. Obviously we have it all stored somewhere. And then we generate reporting with highest, lowest. Now when we prepare for and those are very well understood and you speak with operations team, they will tell you off the top of their head why something makes sense. But it's more about how do we then package that and communicate it to our executive team and ultimately the board if needed. And that's where that community communication is more about this blended score which everybody knows where it comes from and how it's put together. And then also we have a bit of a write up for each of the top targets that our operations leads will actually meet with our executive team and explain why those are good targets to pursue and how they make sense for their business. So there's multiple layers of communication.

I like how you have the main pillars between the strategic operating, financial fits and then it's going to be a big variable, obviously company to company, industry to industry within those. But you made a point around emphasizing what it actually means, being able to define what the 5 actually means. If we're G on that, the 1 to 5. So I think that was a key element is making sure everybody's on the same page and they understand what those scores mean. I'm curious about the strategy part because it's unique for for you to come into this role. There's a company strategy may be familiar with, but shaping it into this M and a strategy, was that challenging? Did you have to get help with that? Like how did that work? And it's almost like there's an ongoing component of it where it keeps evolving.

I don't know. Like I said earlier, getting started honestly was a challenging part. Now that I've been in this seat for a couple of years, once you get over that first Humphrey, I guess, or once I understood what I was dealing with, then there's a lot of opportunity for creativity. And that's where for me it's fun because we get to build something together again. It's not just me building this, it's really the entire team helping build this. And all I'm doing is providing a little bit of guidance or translating what was defined as our strategy and trying to make it more tangible. Working with the operations leads. I don't know that I would describe it as challenging. It's definitely something new we're learning. But I think so far it seems to make sense. Right? It's come together and it served us well.

Pretty iterative it sounds like. Keep revisiting it, evolving it, getting input from the various stakeholders in the organization. There's this thing in the industry where people talk about deal fever, when we think about, hey, I got a set of criteria that I think a big part of it is to make sure someone just doesn't run off with the idea to do a deal. And they get to that point because they got the right people to buy into it, influence them, and they end up doing this deal that probably shouldn't have got done to begin with, which is emphasis on the strategy, emphasis on the scoring process to make sure we're going after the right companies. What do you do? What do you do with one of your executives you work with has that deal fever? Have you seen that?

It's very real and it's hard not to have that, especially when so much has gone into evaluating a company and there might be certain aspects of it that you really love. I think we have a couple of things here that help us with that we. One is exactly as you said, that framework, in a way, it's a good way to say, remember, this is what we aligned on. So let's go back to the scoring framework and here's why it doesn't make sense. That's one way to do it. The other thing is we're extremely fortunate that like M and A boutique it as a company very seriously. And our executive leadership team is, including the CEO, is very much in the know about what's happening in M and A. And we have a very collaborative culture here. Even with the executive team, we have frequent meetings. If there is someone who has that yellow fever or for example, that person will be heard. But then you're really in a room full of decision makers who can counter that if needed and together can come to the right conclusion.

They're having that culture where transparency is there. It's collaborative. People are pretty comfortable voicing up about, hey, here's some things to think about or reasons we shouldn't do this deal so with that influence, right? Because in some ways you need to have that as part of the culture. People are comfortable speaking up. When you get into this role, there's obviously things that you wanted to change. You might have had experience coming from this other area where you did things and learned from it, want to apply it to this new area you're in. What was that like? Do you have any tips on that? Because I feel like when I talk to people, similar situation, they learn, they get all these ideas, they wanted to start implementing it, but then also they're faced with an abundance of resistance to adopt any kind of change. Did you come across that when how'd you overcome it?

I have come across that before in my career and I learned from it in a big way. Not so much here in this specific role. And I think part of what helped was people were eager to acquire companies. So it's kind of like okay, well just help us acquire and let us know what you need and will play our part. It was great. The harder part really was just slowing people down because they were eager to go and buy companies. And sometimes there was a level of frustration of why is it taking so long? And I think what helped there was just you said earlier transparency and consistent communication of here's where we are, here's what we're trying to accomplish and here's what we need from you or we don't know yet what we need from you. Right. And we need to figure that out. Do you have any ideas? So I think when it comes to that, again, like I mentioned before my previous experiences I've encountered 1of1Change is hard is really when decisions are made in isolation and people are hit with a surprising news that something in their world is changing. I've tried to avoid that as much as possible and it's paid off.

The transparency is a big part. I like the part where your reference example you don't know you have any ideas. And that was the key part I picked up on bite people in to contribute and then they all of a sudden get part ownership of the change you're trying to drive. We talked about strategy and sourcing. Are there other areas of the M and A life cycle or stages that you're involved in?

Yeah, so I'm actually involved end to end. So it's from sourcing to all the way to integration.

What does integration planning look like? When do you start thinking about it? How does that work?

Integration planning? We really try to start pretty early on. So while we're still in diligence and when things are starting to come together essential or it looks like this deal is definitely going to happen, we encourage the cross functional teams and it's really the same leaders that have that are running with the diligence for the most part to start thinking about okay, how about integration? And we are building playbooks we have. Each functional leader will own their part of what, how they will integrate and obviously we need to. It all goes through the IMO Integration Management office. But ultimately the leaders are empowered to ultimately come up with our plan. And then I will say from my experience with the large acquisition with Able, it was a pretty large lift because there were so Many moving pieces at the same time. We're going through a technology transformation internally. So it's not just the acquisition itself, but also how does it impact everything else that we're doing. It was a lot of coordination. I think we definitely landed in a very good place. But again it was that consistency of. And we still hold our integration management office meetings once a week where things have settled down, but we report out here's what's happening so that everybody's aware of how their areas might be impacted now as it relates to future deals. And we've had a couple of deals so far and obviously we're going to have many more. Part of what I'm working with the leaders on is how do we start planning for smaller size, tuck in deals and how does that integration look different and how can we start about thinking about it now? Because I know we know it's coming at some point in the future versus when it's a one time larger deal. It's probably a different approach and what parts of the business we want to integrate day one versus what we want to wait on. So I actually will correct my answer. We're thinking about integration even before we're starting the deal because we recognize there's a difference depending on the profile of asset that we're acquiring.

The strategy of integrating evolves too from where you learned on previous deals. The big thing my talk to practitioners is essentially the accountability. At the end of the day we create an integration plan and when we go to execute it, ultimately it's keeping teams aligned on priorities and focused on those priorities. We got a big theme going on so far, this conversation around transparency and collaboration. But how are you maintaining accountability on those post close results?

First of all, there's three main areas that we are tracking from an integration standpoint. When there are synergies assumed obviously in a specific deal, we want to make sure that we have a specific plan for that. How the synergies will be realized, the timeline and what function is committed to what amount. And that's tracked by person essentially. And the finance team helps us in collaboration with the HR team. So it's really finance and hr. The other two aspects are more business driven and the way that we look at any acquisition really and then the integration. But even from evaluating an acquisition is what is the impact that this is going to have on our team members and on our clients. And those are key. Especially I mentioned earlier, our business is a big relationship business. We have over 100,000 employees and we service clients that were on the client side and working with them regularly. A big change, especially acquiring a company, would require us to really keep a pulse on how do our clients feel about this change or the companies that we acquired. Is that going to be a concern in terms of those clients being under the ABM umbrella now? So we have the client dashboard and then what we're tracking here is all the jobs that we have acquired and understanding really like where do they stand, having built in relationships with those clients from day one and constantly staying in front of them and making sure that we're managing those relationships and sharing with them what is our value that they're getting from this acquisition or being part of abm. The other side is the team member retention and making sure that especially key employees where keeping pulse on are they feeling included and are they feeling. Obviously with any acquisition there's going to be a lot of uncertainty in the beginning and people's world is changing. But just that change management aspect and staying close and communicating and going back to again. The theme of transparency goes a long way. We meet with the owners of each of those three dashboards weekly. The operations dashboard or the client dashboard is owned by our operations lead and then the people dashboard is the operations person working very closely with hr. So the three of them really come together because ultimately that also can impact synergies. And on a every other week we report to our executive team where we stand and if there's anything that has changed that they should be aware of. And then we also report regularly to the board, obviously at a much higher level in terms of how things are progressing. Accountability is key and people know that they're being held accountable for their piece of what they own.

So three key areas, synergies, customers, people. Essentially map out your synergies. You're tracking that and then you're holding individuals accountable for what their responsibilities are around that you're understanding the impact of the transaction with the customers and the people. And that's where you're also building out some dashboards around the customers and people. Can you give me. I know it's hard because we're just talking through this, but I'm pretty familiar with the synergies. Right. And the synergies essentially is a lot of tasks that we're doing and there's progress on that and maybe there's some financial measurement and I just want to get a sense of these each dashboards. What exactly are the KPIs or the key things that you're highlighting specifically to.

The synergies or yeah, we could Kind.

Of like go through each one. When people talk about hey, we do synergy tracking. Okay, there's a bunch of to dos are we tracking that? And then there is a lot of financial Are we tracking cost savings expenses that we're making to do the integration one time reoccurring what exactly is on that Synergy Dashboard?

The Synergy dashboard is purely financial driven. So it's and the majority of it is people related and then there's non or related synergies like just gaining more efficiencies through suppliers or real estate or whatnot. But the whole dashboard is financial in nature as it relates to synergies. Anything that is integration related that doesn't necessarily have a dollar impact or even the activities that could have a dollar impact are tracked really as part of our integration management office when we do our weekly reporting to make sure that people are still on track with their activities or if they need any help specifically for the I will just say for the people part of the dash where the majority of the synergies come from. Each function is listed out on the dashboard and they have a target number that they need to hit for a run rate synergy number and then also a date by when they need to hit it. Every couple of weeks or every month we report where we are compared to what was planned and if there are any changes that could make that different or could lead to a different outcome.

This is for the people side in terms of how you're doing.

This is for the synergy side that primarily coming from the people from the org design right. Of the merging the two companies. And if there are any variances to what was expected again it goes back to the accountability piece has high visibility. It goes to our CEO and his executive team. So there'd be prepare to explain why there are any variances. Right.

It's interesting because it sounds like on the corp dev side your Synergy dashboard is very financially driven. You want to benchmark that against what your goals were. And then at the IMO level they're more into the task tracking thing. Okay, are we getting the activities that is going to hit the output of those financials that in turn gets reported up to you and that's mainly what you're really honed in on. Then ultimately the board wants to know like how are we doing on it? And pretty summarized for yeah, I don't.

Want to miscategorize that. When we report to the board that's a zoomed out view of all the integration activities that simplified. Right. And saying kind of here's where we are on the timeline and what has been done versus what's still upcoming. It's something that very much does get reported up. It's more of we don't go into the nitty gritty, every line item type of detail and if there's anything important to report, then we'll call that out.

What about about other dashboards when we talk about the customers, for example, what are you tracking there specifically?

Yeah, so for the customers, like I mentioned, we have a detail of every single customer that was acquired and a lot of review goes at a granular level. What ends up making it to the dashboard is categorizing, okay, what cross selling opportunities have we had so far and how much have we expanded because of the different relationships and also what are some potential clients that might be at risk and what are we doing about them?

Cool. So this is really like your go to market kind of key areas shows up on this customer dashboard and then the people side, I'm assuming headcount. Hey, we had hiring goals. And is attrition something you're really keeping tabs on?

Yeah, attrition is a big thing. And the people dashboard we've really split into functional and operational. So again, starting with the acquired organization and tracking from day one. Sorry, what? Out with X number of people in operations and functions. And we are here now. Right. And we split out how much of those exits were planned versus what were unplanned. And then again it helps us to identify. Well, especially if it's operations related, that's where we stay. We're very close to that because again, going back to the relationships, last thing you want is somebody who was in a key position leaving and taking those client relationships. That's where a lot of work goes in, I think to make sure we stay close to that. And then again, what gets reported is more about and it's month to month, have we seen any changes? And life to date. Here's where we stand. Essentially one of the things that we track is also high potential employees that we've noticed through working with them. So a big part of when we acquire companies is that we want to make sure that we take the best of both cultures. Hopefully it's a cultural fit. But also we want to help people feel included and we have learned from companies that we've acquired. So how do we put them on the spotlight and make sure we keep them happy?

That's really cool. It's not just tracking attrition, trying to prevent people from leaving, but also can we identify some stars here and keep tabs on them to figure out who's going to be the next Kayla going to move up to head of M and A. I like that, that even taking a proactive view that there's some talent that we can look at as being value creators. Let's talk about some lessons learned. Do you have any big lessons learned advice for practitioners? There's quite a few that actually listen to M and A science podcast. Brand new into corporate development in the exact same shoes Kayla that you went through where they worked in a function, aspired to get into the corporate development. Hopefully they got some advice earlier if they haven't gotten in to be able to break through. But once they're in, what are some big lessons learned to help them get acclimated better and be more successful.

It's funny because I was thinking about the lessons learned and I had come up with three Cs, which now I have expanded to five Cs best based on our discussion.

Let's do it.

So I'd say curiosity, courage, clarity, communication and collaboration. I will say curiosity and courage is really what got me here to begin with. So it was a completely, yes, it sounded cool, but also to take the courage to say, okay, it's a new function and I'm going to figure this out. Once I found myself there, it's like, what did I do? But just it was that courage that helped me make that move. And curiosity is really, once I was in the seat, learning, I knew I had a lot of learning, getting my hands on every possible research tool or speaking with and collaborating a lot with a lot of people to learn from their experience. So those were a couple of lessons that served me well and that I will make sure to continue in the future. I would say once I was in the role, getting everyone to be on the same page on what is the vision, what is it, what are we trying to accomplish? And get everyone to see what the mandate is and providing clarity around that. I think that's huge. It's not only to ground people on the same set of rules, but also to ground us in going back and saying if something doesn't make sense very quickly, let's move on so we're not wasting our time. Communication. I cannot stress this enough, especially being in this role. There are so many stakeholders. So you're dealing with all the leaders at the cross functional teams, dealing with executive members, board, dealing with all the operations, leads. We have many pockets of the business, right. And they each have their own need. And there's so much happening and so much changing all the time that communication is missed, even with one person. It might seem minor, but it could lead to a lot of headaches down the road. So being organized and communicating as frequently as possible will pay off. And collaboration, honestly, it's a team sport. M and A is a team sport. It's not a one person thing. So the more people are engaged and the more opinions and expertise you bring to the table and I think the better the outcome. I never make any decisions on my own in this role. It's definitely a team decision.

IRCs are linked together. You essentially need the courage to really, you have curiosity, but you need the courage to even expand on it and ask these questions that maybe some people are a little uncomfortable or shy about asking or take that opportunity to even get the role, get out of the comfort zone. So I definitely think they're connected. The clarity is almost an outcome of that, that now all of a sudden you can have this better understanding. The communication part is how do you take that and amplify it so others can get that clarity? And then we talked about earlier about getting the understanding from others and that feedback that lends to the collaboration. Your Cs are all connected together.

Yeah, it works.

Kayla, what's the craziest thing you've seen in M and A?

I don't know that there's one crazy thing I've seen in M and A. However, one thing that I've noticed is that things really heat up towards the end of a deal those last few days. When it comes to closing the deal, it becomes very critical, I will say. And sometimes something very small can blow up or may appear small can blow up the deal. And this is after all this effort put in and investment time. So adapting and being flexible during those times is key. And knowing to reach out to the right people for help obviously is also key. I'm fortunate to be surrounded by such a talented team here at abm because ultimately we keep each other in check. And if it does come down to that in the end, where all this excitement has been building up and like you mentioned earlier, deal fever, right where. Where you're ready to close the deal, we know when it's a good time to walk away. And sometimes making a decision, it makes a lot of sense. So I don't know that I can pinpoint one crazy thing, but it does seem like all the crazy stuff happens at the end.

Yeah. I want to hear an example. You don't have to name any names or dates. I'M curious if there's something that you saw that was really surprising. I never. I've heard a lot of stories around this where the 12th hour approaches. People are asking for weird things to be thrown into the contract. This odd behavior. I'm curious if you've seen anything like that.

I remember one of the deals that we actually ended up walking away from. It was early on and it was very clear that the person, the lead operator and it was a smaller business. He had older relationships, really, and he knew the major relationships. He knew the business really well. The whole management team was impressed with him. And in the 11th hour we find out that he's going to take a different position and go and work for a competitor. We can't have that happen.

Wow.

And they still wanted to close the deal and we ended up backing away from it because it's just too risky.

Yeah. Little material there that wasn't quite disclosed in an appropriate time. I'm curious if the person would disclose that from the beginning. Either A you would have saved every lot of time or B, maybe you would have figured out a way to make him make it work or convince him that they could stick around and retain.

Yeah. I don't know. It sounded like even the company didn't know that that person was leaving until the very end, blindsided by it. Yeah.

Gail, thank you so much. I enjoyed this conversation and learned a bunch from you.

Thank you. This was awesome. Appreciate you giving the time.

Here's to the deal.

Foreign.

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