From Silos to Synergy: Best Practices for Uniting Diligence & Integration in M&A

Today's episode is brought to you by Grada. Grada is the leading platform for private market deal making. With its innovative AI workflows and investment grade data, Grada helps strategic acquirers effortlessly find research and engage with potential targets. All through a sleek, modern interface. Grada makes it easy to value deals intelligently and size private companies from the outside in. I love it. We use it for our pipeline development. Whether you're looking to find your next acquisition target or researching comps in your market, Grada provides all the data and automation you need to edge out the competition. Discover more, Win more with Grada. Visit grada.com to learn more. That's grada.com feeling buried under due diligence documents? Exhausted from spending countless hours reviewing and double clicking? Worried something might slip through the cracks? Imagine automating your document review process, saving time and costs. Dealroom just launched dealroom AI, designed specifically for M and A professionals. It's like having an extra pair of eyes that never tire or miss details. Automate document analysis and focus on what really matters. No more late nights, no more missed details. Just faster, smarter due diligence. Want to learn more? Head to dealroom.net and see how DealRoom AI can cut review time by up to 80%. That's dealroom.net because in M and A, every detail matters. Let Deal Room help you nail it every time. I'm Kisam 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. Hello M and A Scientists. Welcome to the M and A Science Podcast where we learn from the best in M and A to uncover proven techniques for enterprise value creation. If you're interested in learning more about how to optimize your M and A practice or want to get involved with our community of forward thinking M and a practitioners, visit Masscience.com and subscribe to our free weekly newsletter for the latest in industry trends, insightful content and community events. If you want to keep up with us on the go, head over to LinkedIn and follow M and A Science. Today we're shaking things up. This recording is a live session from the fall M and A Science Fair, an unconference for M and A practitioners where we break away from the traditional stuffy conference format and bring you unscripted real world insights on scaling your M and A execution. This episode I'm excited to feature Matt Arsenault, Vice President of Corporate Development, Strategic Alliances and Camilo Franco, Director of M and A Integration and Operations at jamf. Jamf's a leader in Apple enterprise management and security, traded on NASDAQ under J A M F. We're going to be diving into the critical topic of due diligence and integration synchronization. To get started, let's hear a quick intro from Matt and Camilo.

Matt Arsenault started at JAMF about three and a half years ago, was brought in as they were starting to think about doing bigger deals and formalizing the process. The Monday before I started they put out a $400 million LOI and I texting my boss asking if there was anything he needed me to do, prepare myself and he said no. Showed up Monday and handed me a whole bunch of information to get ramped up on. From December 2020. We've been building the process and formalizing and scaling.

Camilo Franco out of Greenville, South Carolina so if you're down in the Southeast, come say hello. I've been at JAMF now for two and a half years really. I have a corporate strategy background but did some divestment work there and some integration work at my prior company. So Matt brought me along to kind of help along with the integration side of the house at jamf, formalizing that process and trying to make it a bit better.

Sounds like a good team and a lot of progress since day one there, Matt. We've been talking a lot about buyer LED M and A. I wanted to get a sense of what does that mean for your M and A function as it's evolved. A lot of times you're doing your first deal and it's following a traditional seller led approach. But as you progress and continue doing more and more deals, your process evolves and becomes more buyer led. What did that look like for your process?

The interesting thing for JAMF is because we're so focused on the Apple ecosystem, we actually have a really strong guardrail on strategy. So for us, even our largest acquisition was buyer led. Seller was not in a process, it was a technology set that we knew we needed because we were trying to expand from security on macOS to iOS. Even the largest transaction was buyer led. We went in, we did a lot of our work upfront, but the number one kind of way to make sure that you're looking at those things is to have that clear strategy and sequencing. As a software company, we are very product led in the way that we do that. We're looking at that roadmap and an element of what could be next and then I'm sourcing deals 12 months before we would even start a formal process. So we're closing the ones that we were looking at last year now and then looking for the deals for that next phase of roadmap acceleration and customer value acceleration.

I think another piece to that is getting integration involved really early on in that process. So Matt and I work really well together as he's building out that pipeline and having those conversations. He's including me in some way, shape or form so that I know what's going on, have a pulse on where those things are going, and can already begin formulating some of those integration planning pieces and teeing up resources internally too, to know, okay, when this thing does come down the pike, we're ready for it.

I think that's also key strategy sequencing and early integration planning. Let's break it down. How do you synchronize diligence and integration planning?

I was very intentional. I don't know if any of you paid attention to what Camillo's title actually is. He is both integration and operations. I put him in charge of setting up everything from loi on. So he coordinates all our due diligence activities, all of our integration planning. He's the main point of contact with our executives. We're working on a deal right now where we don't even have an IOI or evaluation range. We've already met with our C suite on the key kind of synergies and synergy plans and integration plans, because to justify the valuation we want to pay, we have to have that solid. The first thing was being very intentional about setting up that idea that due diligence informs integration planning and therefore the person in charge of both of those work streams is the same for our team.

One of the very first things I did after joining JAMF was evaluate systems, figuring out, hey, what do we use today in the process? And it was scattered everywhere. We have members of our team here who can attest to that. We had certain people that use SharePoint for this and Confluence for that. And we also store all this stuff in Dropbox. And so there was information overload and everywhere. My first chat with Matt was like, all right, I think we need a tool that can help us bring in all of these different resources. And again, it's such a cross departmental function and everybody's using something different. So what can we use to streamline this process? Enter deal room. It was one of the very first things going through the process of approving a software package that we need. That was fun. We were able to get that done and start using the tool and exactly what you said, bringing that full blown process from all the way due diligence, all the way through integration in one place where all our information is stored and people can get onboarded way faster from an integration perspective and know that, oh, this is my source of truth for everything that we're building out has been a huge facet of where we've been able to streamline the process and become more successful.

It was a lot easier for us to justify that spend because we did our largest integration in JIRA and Confluence. So when the board asked us for a Gantt chart, it literally took the program team four and a half weeks of going through all of the JIRA tickets to create the timeline in an Excel spreadsheet. And so my boss was like, yeah, we're not doing that again. So we really did look for that system that allowed for us to get to ease of reporting and that coordination element.

I heard two things. One, are you guys familiar with the concept integration led diligence sounded like what you're describing, but the second one was the tech stack. But let's break that down a little bit because it sounds like you're running diligence altogether.

Yeah, having that kind of front row seat to the entire process is key. Running the diligence process while also already having and formulating an integration plan and the resources that we need to allocate for that has been huge. I think the other piece to that too is, and I think we all kind of can attest to this, the vast majority of the people involved in integration are not full time integration employees. They're resources that have a full time job. And this is just additive to what they do, which is challenging to have a full set of, hey, we did due diligence. Here's the report outs that we have from due diligence. We now know the resource allocations that we need to make this successful and we can begin planning or we can highlight red flags and say, yeah, we're not going to have the resources available to properly integrate this company. And that leads to better executive decisions on whether to close this deal or not, whether to move forward or not. So that kind of thing I think is huge and wouldn't necessarily exist if we didn't have that kind of tie that bind between the integration side and the due diligence efforts.

We talk about early integration planning. Can you walk me through how early? What are you actually doing?

So I can say, and this is one of the reasons why I Love dealroom. We manage pipeline in dealroom. So all the conversations that Matt is having with, it's a long process for us. So he's having these conversations for 12 months. Sometimes that information is going into deal room and we're managing that pipeline there. As soon as those and we move that we have our phases set up. As soon as it moves into the phase where, okay, we're pre loi, we're starting to move forward. We're putting this in front of our investment committee for approvals. I'm already involved. I already know what's been happening. But now, okay, we're full fledged. We're going to open up a data room. We're going to put in all those preliminary findings that we already have and we're already starting to build out those data sets.

We're before loi still.

Yeah.

Okay, walk me through that. What are you doing before loi? I know you're starting to put some stuff together information, but in terms of integration planning.

So we've built out like a pre loi DD list. We're wanting to have a good conversation with you about this. And again, this has been moving for a while. This is the key top 10 financial information that we need in order to come to a proper valuation. So we build that out, all that information goes into deal room, into the data room that we open up for them pre loi, we start building out that data set. There's very few people in that data room at that point. It's basically our team and our financial analysts that are doing all the modeling for us to make sure that we're at a proper valuation. So that's kind of built out pre loi. Once we have a proper model built out and we can give a proper evaluation to our investment committee, we have that meeting with them, get approvals, goes to the board and then move to LOI from there.

The important piece there is that valuation has to have kind of the idea of synergies. We have to have the plan of what sales team is going to be bringing which products to market. We have to have the idea of G and a leverage, if any, already built in. You sign an loi, it's a commitment. And so that really brings that focus early because the assumption is when you're sending that loi, you are closing that deal. And it really does help bring that perspective early where the head of engineering is already talking about how the two product technologies could come together. The teams are really thinking about that pre loi and that means that we sign way fewer Lois have fewer targets. But really early in the process, we actually have a good sense of what.

Our integration plan will be.

You have an integration thesis?

Yeah.

What goes in it?

Whatever Woody tells us, we have basically the first employee of the company has been the kind of driver of our expansion strategy. And so he starts with the thesis, which I would say is very loose lines on a piece of paper that then Camilo and I get to color in. But it is, this is why we would be interested in this deal. It's in this space for us. It's this extension. Here are the teams at JAMF you will have to work with to optimize that. And we bring in some of those senior leaders pretty early into that process so that they're contributing pretty early for us.

That go to market piece is fairly important as well. So how are we actually going to move this now from this integration piece? Yeah, we're integrating them into the company, making sure there's a cultural fit. All of those things are important. But then also how are we going to go to market with this new. If it's a new product or if it's going to integrate into our current products, how is that going to work? And what teams are involved in that? What sales teams are going to be able to now take this product and sell it? Are they well equipped and enabled to do that today, or is that something we're going to have to allocate resources for and plan for as well? Does the company come with that go to market function already or is it just a smaller startup kind of thing that doesn't have a go to market function yet? And do we have to allocate for that? All of those things are. We're already having those discussions and building out that thesis on, okay, this is how we would make it work. And here's the approximate cost to that.

Then you sign loi.

Yeah.

How do you progress or what does that continuous look like?

The LOI signing is when we start to get the next layer of management bought into the integration thesis and the plans. They'll color a lot of the pieces in. That's kind of when we go from our C suite down to our vice president level. Across the different departments post loi, we go from anywhere from 14 to 18 people involved pre loi to like 30 post loi. And so a lot of that transition is about that knowledge transfer down from the executives to the team and then allowing for them to add the value within their areas. But we have a pretty firm goal set at that point because the Executives have signed off on major milestones, major targets, major pieces, and then the team is coming in to enhance that and.

Execute on it and then full blown due diligence. So kind of have that top tier, top 10 kind of view already, but now we're going to dive into all of the nitty gritty of what you're about, what you have, what skeletons are in the closet, all of that kind of thing. Obviously management meetings as well, to make sure that there's a cultural fit and trying to get face to face time not only with their teams, but our teams having that with them to make sure that this is a good fit and a move forward for us.

Teach me more about balancing doing diligence and integration because it sounds like a pretty big lift to do both and have a clear focus on identifying risks versus is planning to realize value later on.

If you have your integration plan up front, your findings are what modifies that in a lot of ways. We do it backwards. We do due diligence then integration plan off of that. We don't actually get our thesis. Build that thesis and then test it with due diligence. That's what the experience at JAMF has forced us to do really is if you've built your thesis now, all of the findings that you have are an adjustment to the plan you already published, not a creation of that plan. And I think that it is a really interesting mind meld. We can't do high volume. We're doing two, three deals a year, but we're making sure they're the right deals to do. But that's a very important mind shift set in saying I already know what my risks are going to be and then I'm going in and proving through the accounting due diligence that ARR is the way we would measure arrangements. What are we going to bring over to the balance sheet we're going in and the legal calls and making sure that the contract and what we're negotiating shares that risk appropriately. That is one of the things that the team has pointed out. You can either pick quality, price or speed, not all three. The one that we give on is speed. And that's because we are so intentional with saying this is what's our two or three year horizon. So if it takes me two years to close it and a year to integrate it, we're still on time. So we do allow for that period of diligence to extend. But that's why having that buyer led approach is so important to us. We have to have that trust on the other side where they're not thinking that we're extending to push it out or not do the deal. They're actually understanding what our thesis is. We are sharing it with them and they're actually helping us solve some of the questions even before we're fully through the due diligence process.

That's actually a key point that brings a lot of value. Matt is building that relationship for so long that by the time we get to these stages we're actually. They're so bought into not only what they're doing on their side but our kind of future forward thinking about what this can be and what those synergies are. They're well bought into that and are supporting of that or are informing that in some way. So I think that's really key and helpful for us to get to those next stages in a way that. Okay, yeah, this integration plan actually makes sen and is validated through due diligence or if it's not, then we can pivot and change and do so in an informed manner.

In our current in discussions I think we only have four deals and Krista, you can correct me if I'm wrong, but I think we have four deals in discussion which is our phase prior to what we would bring to our investment committee. I want to say the average time in deal room for all of them is over two years. Yeah, we have a giant pipeline in our outbound of interest. Inbound of interest. We have an in contact when we're starting to build those. But the ones that we're bringing in, even the ones that are banker led, we've been talking to them for a while pretty long time.

Integration planning starts really early. You got an integration thesis before you sign loi and it sounds like it's pretty iterative. As you go through diligence, you're killing that integration thesis into a formal plan.

This is the risk of allowing for that flexibility is a lot of the teams that are joining us. I keep trying to tell them 80% of your plan isn't going to change no matter what you find. So give me the 80% and we'll put that in. And they say but what if I find something? I can't put the 80% in. So that is the back and forth that we have with our departments as they come in is because we are planning so early and because it is so iterative, they don't feel confident in a final published plan ever. Even after close we will continue to iterate. But it's saying for our IT organization guys you're always going to have to understand what systems you're going to have to put an SSO in front of. That step is going to be the same step no matter where we're at now you might find that they don't have an sso, but the step is going to be the step. And that has been a lot of the education that we've had to do. As we bring that next layer of people on is be confident in what you need to execute on. Yes, it can change, yes you can iterate, but most of it will be the same.

I'll say too. Having one of the things that becomes challenging with our process is that there are a lot of different people involved in every process. So we'll have this HR person is handling this particular deal. The next one, it could actually be a completely different individual. So we're having to onboard that individual to our process. This is how we do things. This is what we do. These are the tools that we use that kind of thing. Prior to having a system of record really that kind of ran through that process. It was a very challenging thing to onboard new members. And sometimes you're onboarding 50, 60 plus people that have never done a deal in their life but know their function and are the new person that are going to be responsible for helping this process along. I think having a system of record that now we can bring them into this and say, hey, here's all the information you need, here is the repository for that and here's our process. And building that process out in a way that's simplified has been huge for us too from a scaling perspective as we have so many new members that we have to onboard through our process.

My last two public companies have been very intentional about actually making sure anybody who is touching the integration is getting credit for it. And I would say pretty readily that every integration takes more than 200 people in the organization.

How about the seller experience? When you're working with that target company, how much can you plan with them or give them a heads up? You're public too, so you obviously don't.

Want to trigger any gun jumping laws with the sellers. The concepts are the most important thing. To keep selling them on your engineering team is important, but we want to move the sales teams into OpenRex. How would you think about expanding your product into the Japanese market? You give them enough where they understand what the synergy could be. They actually help you build into what would be possible. So stretching the seller a little bit to think about how to transform into While you're in the due diligence process and integration planning process is important and identifying what individuals and roles are going to contribute going forward. We have more recently started to lose our founders pretty quickly. It's actually working out a little bit better for us, to be honest, because those startup founders are really looking to be extremely agile and it doesn't fit into the scalability of the company at this point. So we're pretty open with them to say, do you actually want a corporate job when you can buy a yacht and hang out in the Mediterranean? But we're making sure that they're part of that planning for their team for that succession plan. Who were you thinking would take over for you in engineering? Or if the CEO is more of a sales guy who takes over the sales teams, you start to plan that life cycle with them a little bit more upfront. It's really helpful because it sets that expectation. And then the message comes from that seller or the management team of the seller, not you on day one saying, we've decided this. It's put that founder or put that seller out front and he's the one delivering the message of all the great things we'll do together.

And then having an integration leader honestly on the other side of the house. And once you start bringing these things together, having someone that is your go to for integration activities is really important too. And the last deal we did, we were challenged in a lot of ways. External factors that were completely outside of our control from a deal perspective. But having an individual on that side who was intimately involved and trusted by the target and middle management employees that he could lead those efforts from an integration perspective and really sell them on the value and synergies that we'd created together. It wasn't my plan, it was our plan. I think that was really important to sell that vision.

Let me make sure I got this right. Sounds like the key is to be very transparent on synergies throughout the process. Being able to communicate that with the target company and get that feedback from them to better identify the roles that are going to contribute to capturing those synergies allows them to be prepared for the messaging on day one where they communicate to the broader company and team members so they're bought in as well. And then Camilla also mentioned is finding that integration partner on that side that's really going to be there to jointly navigate that effort altogether.

I don't know how you do that, but you take notes. We said for like 15 minutes and you're just like, oh, hey, yeah, you said this, that's perfect.

That's what happens when you got a short tension span. I got to take perfect. What about measuring success in terms of the transition from diligence to integration or the managing risk associated with that? Or is there no transition?

There is transition and there's always going to be transition because like I said, you're extending the team. So managing the risks. This is something where I haven't seen a company do it extremely well yet. It is really hard to go from six suite members to 18 VPs to 200 contributors. It really is hard to manage that. The balance scorecard is something that is important. What are the key drivers and milestones? Making sure the financial model is tied to the integration plan? I think there's still areas to improve for us for sure. But the thing that I am really focusing on at that point is what are the major drivers of the change in that business model? Is it a new market and new SKUs or a new sales team that's going to be able to sell it? Is it a new feature that needs to be built into the platform and then we'll track release dates on all of those types of things. The one thing our former CEO kind of made sure that we had as high level metrics always was that we believe in the tech that the employees want to work for jamf, that the customers that we share or will share will find value in the solution and that we'll be able to scale quickly. It fits in those four categories. It could be product, HR people, sales, and back office if you're thinking about the functions that execute on those. But those are the level where we're managing to that expectation and then measuring off of that.

I think the other component to that too and something that we're still honing in on but is just accountability for all of that. So we can build out a business thesis with synergies and say this is what we expect from our team. We're not necessarily the ones executing on that. So then being able to transfer that into a business plan where there is accountability on meeting those synergy targets and saying, yeah, this is where we are six months down the road. Here's how we're measuring against that original business thesis and making sure that there's accountability to make that happen is something we're still working through, but I think is vital to being able to measure success and actually come back and say, yeah, we did the thing we said we were going to do extends from.

A deal thesis to really detail out specific goals and Metrics? Yeah, I think it's time for some audience questions. I can keep going but I want to give an opportunity for folks to ask harder questions than I've been asking.

When you're doing integration planning and budgeting and projecting, how do you balance the need to drive the business to be aggressive about completing integration?

Meeting financial goals with setting realistic goals.

Sort of the same thing as you have with the GM on the financial. Everyone wants their budget to be sandbagged but you want the budget to be realistic. How do you do that in terms of integration, execution planning?

Yeah, that's really challenging. I would say we start out with a framework and we're still tweaking this, but we start out with a framework of our first 30, 60, 90, 180 days. These are the activities that we know we're going to have to complete in that timeframe in order to be successful and meet the business case that we've built out. So that integration plan is following that framework and every department is building out within that framework. So I think having that helps with, especially from a timing perspective and expectations, setting those expectations and being realistic about it. We know within the first 30 days and frankly HR is going to get 95% of their work done in the first 60 days whereas our IT department, they're going to get their work done in probably it's going to take 90 days to do a lot of the work that they have to do. There's going to be different metrics for each department but I think having that time bound framework helps and then we report against that. All the reports that we built out in deal room which I'm so thankful for and get drive up to our C level executives is built off of that framework too. So they can see, oh yeah, you've completed 90% of your 30 day plan in 20 days or whatever and we're ahead of schedule or more realistically we're actually behind schedule.

I think that helps the jamfs. Block your ears on this one. So that's the plan that everybody knows about. And then there's the guidance plan that the CFO, the head of FP&A is going to put. So they are already thinking about and they're drilling quite honestly me in the background. Okay, you say we're going to get through this in 180 days. We've never done that before. What's realistic? Right. So there's the guidance model that takes that kind of aggressive plan that we put in or the standard plan and translates it to really what the management team is committing to the board and the shareholders more or less. So as you mentioned that you have quite an extensive M and a pipeline. So I want to understand in this dynamic environment what tools or strategies that you find are most effective in coming up with that pipeline. Since things are changing in such a fast pace, specifically with AI coming into the picture and industries like tech. Of course I've spent a lot of time talking to other Corp dev folks about this concept which is the good old Gartner hype cycle. And honestly being through a couple of these different cycles, Whether it was IIoT or big data or machine learning and now AI, the promise is higher than the delivery potential right now. So it is changing, don't get me wrong, it is changing the way that people are delivering code, it is changing the way and speed at which you can innovate, but it isn't changing the rules of where the company you're trying to drive yourself to. So yes, AI is making significant steps forward, but it is not revolutionizing every vertical of software yet. It is enhancing productivity for your engineers. It is creating better customer experiences. But the core value of the software and your customers value in interacting is only enhanced by the AI. It is not driven by the AI at this point. And that's the important thing to really think through is where are those enhancements that you want in your product portfolio or in your go to market reach. What I'm cautioning on is the noise that comes through the AI world at the sort of visual top level that everyone's talking about. You got to get back to that deeper level of strategy that says what am I trying to transform for my customer? What is my workflow? What is my value proposition? What's my differentiation? And then think about how that AI fits into it as opposed to chase the new innovation and come off of your existing value proposition. Unless you're going to be OpenAI or one of the big folks. So I have a question about intangibles in a deal specifically anything else you'd add in terms of best practices or challenges in evaluating the intangible factors in an acquisition?

Wow. Okay. We actually talked about this a little bit yesterday and I think this is one of the post Covid challenges that we have. JAMF is a distributed workforce. We're all in different parts of the country or world global company and then many of our targets are in other markets. There is a piece to meeting like we are today and I think it's funny that this question is actually a virtual question. There is something super Valuable about being face to face with people. As Shay said, vibing and really meeting. What is this person like? How do they carry themselves? How do they manage their business and their day to day life? Even So, I think some of the challenges of COVID were we weren't able to have in person management meetings. We were doing everything virtually one of those intangible things is going to dinner afterwards and sitting at a bar and hearing about their love for their dog. But those pieces actually mean a lot to. How successful is this integration? Is this cultural integration going to be? And do we align even from a values perspective? And those are things that are hard to get even around a management table meeting. You want real life experiences with these people and spending time that only comes in that way. So I think that's one of the intangibles that I would say has been challenging post Covid, but that we're getting back to now a little bit more getting face to face time.

It's probably blasphemy to say this at a science fair, but the elements of the art of this is important. The experience that you have in doing it a few different times, the interviews, process of diligence, those are the pieces that do make the difference between what looks like a good deal on paper and actually getting it over the hump. Trusting that instinct and growing that over time and hiring folks that have that expertise is really important to make sure that it's successful.

I gotta ask real quick, what's the craziest thing you've seen in M and A?

You set me up on this one.

Yeah, that's all you.

That's gonna be two versions. I made another version later on at happy hour.

But do you want the one I gave you last night?

Yeah, that's a really good one.

One of the craziest things I've seen in M and A is this was very early on when I was just a consultant. The owner was running things through the business. Two of the things that he ran through the business were a Ferrari and a Picasso. And the Picasso was in the front office and he decided to add it to the fixed asset register and depreciate it. And the client I was working for basically took him to court and said, we own those now because they were on the fixed asset register. And the deal said all assets of the company. So they took over the Picasso and the Ferrari and it paid for their purchase price. Oh, man.

Thank you so much for the time. I appreciate the conversation. You've helped me become a better M and a scientist.

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 Podcast. 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. And 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. If you just want to keep learning at your own pace, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter. Again, that's mascience.com here's to the deal. 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 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.