How Proactive Integration Engagement Can Differentiate Value in Deals

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Good. How are you doing?

Great. Can we kick off with maybe telling us a little bit about your experience?

Absolutely. So I got my start at Mercer, which is a consulting firm and focused there on M and A consulting. A lot of due diligence for private equity firms. Dabbled a little bit into integration planning as I got more interested in it. Wanted to move away from the risk management numbers assessment and more into strategy and long term vision for a lot of larger Fortune 100500 companies. So after doing that for a little bit, fell in Love, went to WeWork, was part of the beginning of their integration program development, and then after that left New York and then joined Twilio out in the Bay Area because I wanted to really get into tech. Started their M and A integration program about a year and a half ago and I'm now at Coinbase.

They all sound like very boring roles.

Yeah, the most boring. It's funny, they always say you work all the time, you have crazy hours, why do you continue doing it? And I was like, every deal is different. I wouldn't want to do it if I didn't like being kept on my toes. There's no two days that have ever been the same in my entire career.

I agree. So I think that's what makes a lot of fun. One of the things that I've noticed through these interviews that's shifting is our whole focus in M and A. Traditionally we've always focused on valuation, the strategy, finding the deal. But now all of a sudden there's this big emphasis on integration planning, much more so than there was previously. Why is that?

Yeah, it's definitely an interesting trend. My role even exists now as an integration focused person. We always have corporate development focused on the valuation, the deal we're going to get on this company that it can further our strategy, new customers, new market, new region. But then we're now realizing that there's a huge gap in the what now? We've spent so much time investing in this company, financing it, and we have this great set of talent, tech, but what do we do with it? How do we build that into our existing roadmap? You have two entirely separate bodies of companies with different operating models, different financials, different approaches to product, different cultures, different. There's a huge gap in how do you even merge those. And it's not an overnight practice, as I'm sure you've seen in a lot of your conversations. This is like a one year, three year, five year work. And you have corporate development. Who's onto the next big thing? Leadership, board of directors, they want to buy the next big thing to further our strategy even more. But then you have this huge investment that isn't actually seen through. So there's so much more interest and focus now on making sure that we get the right ROI for these big investments.

I think that's what it comes down to. I think they're realizing that, hey, there's this statistical failure rate and maybe the returns aren't there or the original thesis didn't meet all its objectives. Sounds like that's a big driver.

In my free time I read a few M and A articles and you'll see that the rate for failed acquisition is much higher than you would think. It's well over 50%. And acquisitions typically fail because you miss the integration activity aspect of it. So absolutely that's the realization nowadays. And doubling down on integration activities is more important than ever.

All about integration. Either make value or break value.

Exactly.

Can you share with us how you position yourself in a proactive way to optimize the integration planning process? Where do you insert yourself in the deal process?

I love having worked for the companies I do because they're pretty small, they move very agilely and it's really easy just to reach out and say, hey, what are you working on? It's a little different when I either report into corporate development itself because then at least work under the same hood. I hear about what is in the pipeline all the time, but if not, if I sit in a separate org which I also have, then I usually have weekly check ins. Have to have strong relationships with the folks in corp debt to know what their priority is, how fast a deal is moving and just see what's coming down my way. It's the active engagement and constant checking in with corp jet because their timelines are I'm sure you've seen they're really slow until they're not. Until you get to almost a term sheet and then it's like drop everything go. I try to involve myself as early as possible to know what's coming down the pipeline.

All right, I have a couple of questions around that because you mentioned two distinct scenarios that I come across. Whether you're part of the corp dev team or sitting outside corp dev team. What's actually better?

Verdict still out. It's funny because probably the biggest thing I notice is if I'm part of corp dev then I hear everything right? You get the whole nine yards. The hundreds of companies they scope for investments, for ventures, for partnerships and for acquisitions, for acqui hires. You hear all of it and you want to get involved in of it. Or you actually don't know which ones you should get involved in when it's like a grab bag. But it's good because you get to see the full scope of what's coming down your way. But if I don't report into corp dev I only hear about things when they hit a certain threshold when it's 60% likely to happen, 70% likely to happen already presented to board and then that's when I can really dedicate my effort into it. Both have pros and cons. Not sure which one's the right way to do it yet.

I hear about getting involved earlier from 90% of the people involved with integration. Yeah, how early?

That's what I'm struggling with, because how early is too early? The 60, 70% threshold, I think, is the best. When you're about to do a term sheet, when you're about to submit a memo to the board or leadership team. If I get to see that and be part of that conversation and start commenting, start thinking about the what next that I think is ideal. Knowing way too early when we have first conversations with the founders, that is almost too early.

But even then, couldn't you bring some insights to the table and say, you're building this model out and you're putting these assumptions in there. Let's talk through some of these assumptions. Wouldn't you have some perspectives on that, since you're the one that has to carry it out?

So the funny thing is, I typically love to have a perspective on that and have a lot to say in the background, but I realize a lot of integration planning is a lot of what we can or can't do. I'm usually the one saying, oh, this is what you want to do, but we have to be mindful it'll take a year, not the three months that you want. And no one wants to hear that at the beginning. When you're in the middle of negotiations and trying to court a company, you don't want someone from integration saying, oh, that sounds like a brilliant, big idea and lots of fun. But then you have Johanna coming and saying, oh, but we really can't do that. I'm the voice in the back of Corp Dev's head at the very beginning, but they usually don't want me bringing all the obstacles.

Yeah, you're the voice you want to keep out of their head till. That's why you have to.

Until they're, like, ready to hear the whole nine yards. Right. Because what they start out with is, oh, this is the big vision. We have this amazing plan for our companies to join. These are how our team can emerge. It's going to be a beautiful partnership. And then you have me saying, okay, but it'll be really difficult because finance, accounting, tax reasons, customer relationships. I'm the one who brings in the whole nine yards.

Maybe you use a party pooper.

Yeah, I'm a little bit of a party pooper.

Joanna, can you walk me through the steps in developing an M and A integration program.

It's interesting you ask that because coming into WeWork, it was a really, really immature process, but we built it into an amazing process with an awesome ecosystem of partners throughout the company who we did deals with every time. And it was a well oiled machine at Twilio when I was there. Same thing. You start from nothing, but then you build it from ground up and everyone's marching to the same beat. At Coinbase, I hope to do the same. So the way I've been approaching it, first, what I love to do, especially because these companies are, they're disrupting the industry and whatever industry they've been in. So I always want to listen first. What is the secret sauce? Understand the lay of the land, how is the org structured, who are my key stakeholders and how do they operate, how do they manage their teams, how do they communicate with their ecosystem and their leadership? How do we make decisions? Even that's a big one for us because when you're moving so quickly and reorgang all the time, no one knows who makes decisions anymore. My first thing is to just listen, understand, codify some processes, document as much as I can. Once I have some processes mapped out of what they've done in the past for acquisitions, who's usually involved, what works, what hasn't worked, that's when I start bringing in my experience and matching up with programs and processes that have worked previously. I always have to do that a little bit delicately because you want your company to move super quickly, but you also have to bear in mind how scalable is it? I've been in situations when companies I work for can't scale, so we just hire more folks to cover our bases. But is that really the right way of thinking about it? So that's my tough position of we're growing so quickly, we're getting an influx of talent and people through acquisitions, and then how do we actually build this into something that's repeatable and scalable? So that's when I kind of marry the previous way of working with my experience and building out a new program for the company. Once I had this program mapped out, I love to partner with the business units as well to get their partnership on it. A lot of the times I can say, hey, I think this is going to work for corporate technology because it's what I've seen in the past. And then they can say, no, this is not how we do things at all. We don't use JIRA or we do or we use Something different or use something homegrown. It's less about what I bring to the table and more about being a thought partner with the business unit leadership to build up this program. And so that's kind of the first big part I like to chew. But then after that it really becomes important when you socialize it. Socializing and getting buy in from leadership in your ecosystem team is so important because documents and processes are great. But if no one wants to do it, if no one actually believes in it, if no one thinks it's helpful, it's dropped like a hat. No one will actually follow it. So my big thing is socializing it, getting buy in from leadership and then lastly actually trying it out. I kid you not, Kisan, the number of acquisitions I've done and the number of lessons learned I've conducted, there are always lessons learned. I think there will always be lessons learned. For me. I can never, always cover my basis. Every company is different. Every acquisition is different. Every region in the world is different. Every founder is different. It's always trial and error. No program is perfect. You always have to approach it in a way that it's dynamic and it's breathing and it's living and it's always improving.

These are some great points. I like how you go from doing this formal discovery, really taking the time to understand what the current issues are, things of that sort. Then you're getting alignment with the other leaders that you're going to be working with and then you create this feedback loop so you're capturing some lessons learned, making improvements incrementally as you go. I want to dig into that change management piece because I feel like that's where everybody struggles with. At the end of the day, nobody wants the new person coming in to make change. And it comes in in multiple ways. Even from you developing the integration program to the companies that you're acquiring. How are you getting that alignment? I ultimately believe that change doesn't happen unless there's a compelling reason to change. I'm curious your philosophy or approach to getting the alignment to be able to drive some of those changes that you see are needed?

I think I've had the luxury of coming into companies that have previously done quite a number of acquisitions before they even hire me. Whenever I've joined, I meet everyone and they immediately know that this is a pain point for them. So I have the luxury where they say, thank God you're here. We've needed this cross company coordination and connective tissue because we haven't had it before. Proving that this is needed in the company is not so hard. But to your second question, change management, how do we actually get this to be bought in? It is a lot of bottoms up work of constantly just understanding the processes and how I can slot in a different way of thinking. Every team will operate their roadmap, their priorities, how they trickle down information across the org a little differently. So it's for me to sit with them a lot, have a ton of meetings with them, understand how they want to approach it and then add suggestions. I am hardly any sort of specialist in any company. I'm more of a jack of all trades. So my positioning usually is a thought leader. I'll sit with you, understand what your priorities are and then I'll say, okay, this acquisition wants to focus on this. This is what leadership wants. This is what we're making investment for. How do you think you can marry your prior way of thinking to how I'm trying to accomplish this goal? And that's when we discuss and formulate new plans, which is why it's so important to have a dedicated stakeholder who's interested in M and A and wants to work on it and is willing to stretch their role a little bit. When you're trying to build a company, you're like, I'm going to do A, B and C. This is how I set goals. This is it for 2020. But then you have to readjust and say, well, now we have this huge acquisition coming in. My first three priorities have to be deprioritized because now I need resources to, to focus on integration activities. There's no way that I can tell someone that that's what they need to do. It's always me partnering with them, getting their input, seeing what they can stretch, what they can move around and how we can work together, change management. It's a slow process, but you're exactly right. Otherwise you can't get buy in and you can't get people committed to this special project that I'm asking them to do outside of the day job.

You spend the time to really understand them, to get in their head or get their perspective first. And then you're using that to think of the path to get them aligned with the goal that they need to be at.

Absolutely. Hey, and I gotta be honest, it's not entirely selfless. I learned so much. I learned so much throughout that process. One of the favorite things I had about Twilio is we have a team called Super Network and they're focused on building out the infrastructure for connectivity around the world. Never in a million years did I think I would learn about that. And they took so much time with me just to explain all the needs of their business, all their priorities, what they needed for me if I wanted to enter a new market, the hardware they need to build out, the shipping, the customs associated with the cost, who actually where the touch points are. Never in a million years. They needed my help to help them build out their own map. But I also learned so much. So it's not entirely selfless.

I'll say that being avid learners, the underlying skill that ultimately you need to really drive some of the changes.

Plug. For all the companies I've ever worked for, I think they are disrupting their various industries in different ways. And if I'm not constantly trying to learn from them, I'm going to be left behind and I can't.

You know, within that there's a lot of management. Do you have an approach that you follow in terms of how you get things done, how you get others to get things done? I think that's one of the biggest challenges I hear with integration. You start with the deal and it just continuously expands with a myriad of activities that need to get completed.

Yeah, my approach is a little more hands on. Going back to what you're saying, I love to learn. It's helped me actually plug in. I think whenever a team is too strapped or if things change so quickly that they don't have time to pivot, I'll lean in as if I'm like part of their team. So let's say compensation, that's something I should have done a lot. When you have a total rewards team that's super strapped, I'll be the one who steps in, helps with those conversations during due diligence. I'll do the side by side and I'll make a recommendation based on whatever knowledge I have about that company and our company. And then it's easier for the total rewards to respond to what I proposed because I have full picture, I've seen this happen before. As opposed to just giving them a blank slate and saying, hey, I need you to tell me what the new compensation structure is. Which then oftentimes people think, wow, that's a lot of work you're asking me to do. I think the luck that I have is that I get to kind of slot in and help out every team as they need.

One thing with your role is maybe a little different than similar roles in different companies is you're in these high growth organizations. I feel like they're transforming in their own ways, just the nature of their business line. How do you balance that between carrying out your integration objectives but still trying not to disrupt this pace of growth at a rapid rate that's happening with.

The organization that's like an agile framework. Every day is different. No two days will be the same. It's constantly learning. Everyone's roadmaps will change. I've been at companies before where, I kid you not, if we set okrs at the beginning of the year, they'll change at least five times. Whether you like it or not, your resources change, your priorities change and acquisition comes, you move a ton of things off or we've restructured the org, or we hire a new executive and want teams to move in different directions. The overarching answer I have there is just to stay agile, stay on top of it, stay agile and continue listening to what's going on.

It's a big buzzword, but I like the way it sounds like from you. It's more mindset than anything else. Forget about all the buzzwords, acronyms, following this and this, reading my book, whatever it is, it's just literally have such a change oriented mindset that you know you're in an environment that's going to be constantly changing and just go with it.

Yeah, I love that you say that. Change oriented mindset, that's probably a better place for it than agile, right? Because Agile is usually tied to the PMI framework. But change oriented is that anything can change at any minute and you have to be okay with it. In consulting a lot of times when small things change at much larger companies, the entire process is broken and everyone doesn't know what to do. Tons of meetings now about how to restructure everything and our approach has entirely changed. Whereas in these high growth tech companies, when major things change, everyone's almost so used to it, they're like okay, what next? And I think that's what I thrive in too. It's always someone coming in, how about we think about this differently and then everyone goes, okay, let's play it out. And you play it out and if it's the right thing to do, we do it. That's a great way to continue growing as a company. I will say it's not always fun when you're leading these large scale acquisitions and trying to welcome in tons of employees into your org. That itself is changing, but you gotta roll with the punches.

I'm curious about when you are going through an integration, but then there's almost something that comes up that May be a great opportunity to shift plans to capture additional value. I feel like that's where the agile mindset adds the most value, especially for the companies that do their fame. Transformative M and A. Do you have an example of something like that where you've worked on an integration project and during it it's like, whoa, we got to change plans because this is going to help create some value.

This has actually happened more than once, so it's not so common that large pivots are happening. And easy example. Many times I've acquired a company and we're saying we just want their people or we want their tech, or we want the region or we want their customers, but we're going to deprecate their platform, we're going to deprecate their product, we're going to move customers over. That is just a very common way to approach integration activities. Because you come in with a bit of hubris right as the acquiring company and you're like, ah, we don't need what they have, we don't need their connections. We only want to parse out this value and it's going to help us grow so much. But then the few times I've gone in and then after a couple months of integration planning with the acquired company leadership, you actually dig into their systems and you're like, actually, they do have something really good going on here. They really do have some soft footing in the market or the tech, or they have some relationship with employees and they can attract talent in a way that we can't as the acquirer. So then you say, you know what, maybe we don't deprecate the platform or maybe we don't rebrand them, or maybe we don't get rid of other customers. Maybe we want to keep them and grow that customer base because they're able to give customers some sort of value that we as a larger company can't. Large scale integration plan has changed. Everyone is affected when you do that, but at the same time you can capture so much more value that way. So not uncommon.

Cool. Sounds like an area to write a book on.

Got to learn from you before I can do that.

We'll learn from each other. And co author, we talked about getting involved with diligence early. What are the benefits of building out your integration process pre diligence?

So I think there's so much value into building out your integration process pre diligence because a lot of the times I've seen, or at least early on in my career, the traditional way of thinking is we do diligence. And then you take the outputs of diligence and you develop an integration plan. The milestones, the planning, the huge project plan that everyone has to line to. But then there's so much information that you could have gathered during due diligence. A lot of times when you repeat the questions. So for instance, in due diligence, you ask what are your benefit plans? Because employment council wants to know if you're up to snuff, if you're actually providing benefits that are legal to all your employees, or if your premiums are okay, you're not overcharging your employees, if you have any legal issues at hand. But then two months later you go into integration planning. You ask the same questions but in a different light. You go in and say, hey, what are your benefit plans? You hear about all the plans, but instead of trying to find out if it's legal, you're now trying to find out, okay, well, what's important to employees? Is having cheaper premiums on your health insurance plans important to employees? Maybe, maybe not. And that's so important when we try to merge things like that. That's why I love to have integration early on, during diligence and maybe even before to start thinking about that. How do we kill two birds with one stone? It also helps us move faster. It reduces the amount of conversations and documentation that founders have to provide. You of all people know the questions we throw at founders are massive. A million tabs, tons of questions. So so much redundant conversations, they're exhausted. They still have to run their own business. They're making a huge decision. That's why I think it's so important to marry these two processes and get ahead of it so that we can start planning ahead without wearing down founders with redundant questions.

The big thing is you're basically avoiding having to rediligence the deal for your integration efforts, which essentially eliminates a lot of the redundant requests that go to the target company. What does the mechanics of that build out process look like during the diligence phase?

You have all these folks in corporate development focused on red flags. That's what we always hear, red flags. What's going to kill the deal? I'm going to say with 99% certainty. I've never seen total rewards kill a deal for them. I like to have them in the conversation early. Yes, you can ask your legal questions, but having them ask a little bit, step further. And that's usually when I come in a little bit of that partnership and coaching before the call and Saying, okay, it's great to ask this one question, but can we push on this a little bit more? And oftentimes even I'll jump in and just like, wait a second, can you tell me more about that? So not just total rewards, but let's say payroll or accounting. You'll ask, oh, how are you doing your books? Are you doing it US Gap or are you doing it international accounting practices? And they'll be like, oh yeah, we're doing this. And I was like, oh, great. But then it's on me to either coach my business unit partner or for me to just speak up and say, well, that's not how we're doing it. We're not accounting in that way. That's not the frequency that we do it. We do it monthly or we do it quarterly. You're doing it off cycle. What's the uplift going to take when we do integration? Is this actually something that we can write off and be like, okay, later on we'll tackle it, or is this a big gap? Is this something we can't actually overcome in the us Maybe not too big of a deal, but when you think about internationally, if we're acquiring a company for the first time, that's international and we're so used to US based accounting practices and reporting and SEC filings, when we acquire someone in Asia that doesn't look at finances the same way we do, just even though they're doing it fine and above board, integrating that with what we currently have is a huge uplift.

Walk me through the relationship because it sounds like you have integration conversations with the company that you're going to be integrating. Want to get a sense of who you're actually talking to there, what does that look like? And then the corp dev team, because they're the ones that have been steering the deal and they still technically are until it closes. What does that conversation look like and how are they looped in?

It's definitely a partnership of all sorts. So you have corp dev leads, due diligence. I work with them in the very early stages to identify integration milestones, obstacles before we even move to functional stakeholders. When we get to the due diligence conversations, Corp job will still lead. The functional stakeholder will still lead on the back end, like coaching on the back end of how do we think about the what if? Helping the leaders across the org think about the what if and poking them into to really think about long term planning. So in the background also join in just more tactically. That's when I start Developing my high level integration roadmap of what our biggest obstacles are in trying to align across the board. Timing of how everything should happen together and how it should stack. Not unlike event planning. If you were to plan an event, you need people A, B and C to arrive at a certain time. You need your caterer to now come join the conversation. Then you need your DJ to show up at a different time and your balloons to drop at a different time. While I get to sit into these due diligence conversations, it's on me to say, okay, so what are some of the gating integration milestones that we have? What do we need to align what is the dependencies to something else? Mapping those out and then feeding it back to the functional stakeholders and saying, does this sound right to you?

How do you build out optimal milestones for the various work streams? Integration and what do you use to track them?

It kind of differs. Can't speak too much about Coinbase since I just started at other places. It depends on what the company likes to use, what tools they already have in place. Ultimately it dials down to what the business is comfortable with. These companies are moving so quickly, you can't just force a project plan upon them. And I learned that as a consultant moving in industry. I came in with a big spreadsheet and said, these are the milestones, these are your trackers. This is what everyone needs to fill in. Give me your dependencies, your due date, your status, the whole 9 yards. Not even joking, Kisan. They just ignored me. Everyone across the board just ignored my biggest spreadsheet. No one touched it. They're just like, we're not doing it. This is too much. I'm so focused. When you work at a high growth company, to be a partner to them, to see what they respond to, how they like to track their metrics, what are their existing metrics too? What have they already set for 2020 and how do I build in my priorities to align with their priorities like two birds with one stone. I'm helping them, they're helping me, we're working on it together. I can't just force upon them all these new metrics that they know nothing about.

From what I'm hearing, it sounds like they need deal room. I'll be sure to have one of our reps reach out. Besides that, I guess I'm curious when we mention of working with these companies, they're ever changing, you're approaching it with a change oriented mindset. Are there other technologies or tools that you use to keep that robust Dialogue going.

It's a mixed bag. It's this change oriented mindset that anything can always happen. So you have to be able to pivot really quickly. It's a lot of multimedia, hyper aware approach. We're moving so quickly. Some people respond to Slack, some people respond to emails, some people like face to face calls. My approach is just all over the board. Of course I'm big on documentation so I always document everything. All the processes, all the decisions that have changed and the implications. But then my approach is pretty bespoke. I'll slack people saying, hey, make sure you check this out by the way, there's a change. Or if I think there's more dependencies, I'll be like, hey, can you hop on a call? Let's talk through something that just happened. What do you think? What's up? Are your responses going back to a business unit partnership? I'm so focused on, it's so important that I don't just take a decision and say okay, this is what's going to happen next, it's okay. Well this is an opinion of one person. How will this affect you? How should we be thinking about it? How does that affect what we had already previously decided? I'm a multimedia faceted person who approached at all angles. I also think if you're moving so quickly and you're making decisions that change every day, you can't expect that if you drop something into a document or a kanban or a smartsheet that people are going to see, I'll do that. But you got to notify and bring to everyone's attention and make sure that we continue marching to the same beat of the drum.

You're on a different level. This is like hyper dynamic project management.

Yeah, maybe that's what we should coin hyper dynamic multimedia project management.

While we're talking, I'm slacking a note to our sales team to make sure they show you our slack integration. We do have that built in, so you can throw those tickets right in there.

Oh, that would be fantastic. All the companies that I've worked for recently are very spec oriented. It's definitely becoming more prevalent in my life to learn how to use it.

The point I think that I've learned is it eliminates the whole idea that everybody has to be at the same place at the same time to have a conversation. You connect that whole thing. Even if you're in a different time zone, you can always catch up on the thread and then you get the faster responses because I'll see it on my app and know, hey, this is internal. I'm going to answer this. I don't care what state of mind or what I'm doing, I'm going to respond versus the myriad of emails you get. I'll check that a couple times a day and that's it.

Yeah, absolutely. I'm the type of person that wants zero unread emails in my inbox. But we all know the people that have like hundreds. If you email someone there's a high likelihood they won't read it. You're really codifying, documenting really important information. So that's why I'm so focused on also just giving them a call, also slacking them. And weirdly enough at all these high growth companies you're marrying really fast paced Gen Z millennials who work all the time, who are on the computer all the time, on the phone all the time, so they receive information so quickly. But then you also have the older folks from the leadership team or the people who are not used to it. You haven't really bought into slack or being on your smartphone 247 and thus you result to emails. Because of this weird place that we're in, you have to approach people at all angles.

You're not slacking board members about upcoming opportunities.

Someday I'm just going to like slack them.

What's a bpm? Why have you found them beneficial?

Yeah, I love that you bring that up. I love the idea of bpms and that's something that Twilio actually does. I actually don't know many or any other companies that do this but I thought it's so important to the way that we integration planned and moved. So what a BPM is, it stands for B is the big picture, P are your priorities and M are your milestones. So this kind of starts at the big picture of what are we even doing? Why are we even here. Priorities is identifying the values. What are our value drivers? What is making us actually want to pursue this opportunity? And milestones are really the things you're tracking towards the more numbers oriented like the key results of an okr, so to speak. You're moving so quickly in an acquisition, especially at a tech company in Silicon Valley. The reason you're acquiring company may be different than that you thought about yesterday versus tomorrow or the way you get there will be different or what's important or an obstacle. You discover something during due diligence, you discover something past due diligence that changes the entire way you think about it. But what's so important about having a bpm which is that big picture. And your key values is that when you have a deal team of 60 people working towards on its acquisition and executing upon the integration, it's that North Star, even if little things come up, you look to this North Star and you say, okay, take a step back, take a breather. We all get in the weeds. But why are we doing this first place? Are we doing this because we really just want a presence in a new country? Okay, if that's the reason, then don't get so hung up on customer acquisition or branding. Like branding is important. But if we really just want to have a presence in a new country, that's what we should be focusing on first and foremost. That's what we should be using board of director time for or executive team time for is to talk about how we really establish that foothold. That's why I just love the idea of going into any acquisition. Honestly, I love to kick off due diligence process with my ecosystem with that big picture. I think it's so important of even as you're going to due diligence, like we said, you have to have the integration lens on. What's the lens that you put on for this acquisition in particular? And that big picture really sets it. We're all aligned and we don't need to check in with every little decision made. You give everyone a little bit more autonomy in running their processes that way as well.

When I talk to people about what goes wrong in M and A, it's a very common thing to talk about the loss of alignment around the deal objectives. This sounds like a good approach to it. You mentioned you bring it up in the kickoff, but a month later, three months later, how does it stick and how do you. And you mentioned it even changes. What's the consistency to make sure it's utilized and referenced.

Kind of the m of the BPMs is the metrics or the milestones. It trickles down. If your big picture changes, then you need to reevaluate your priorities and your metrics. What I typically like to do is every week or every month, depending on how large the acquisition is, you have this feedback loop with all your stakeholders and say, hey, remember this is the big picture. These are the milestones tied to it. How are you tracking towards it? And then later on during the integration, I actually do regular checkpoints with the executive team. I have one person from each of the functional teams come and report out on how they actually working towards that big picture. And that's really helpful. So we don't lose sight of what we're actually doing. We don't get lost in the weeds. We don't get distracted. You actually have to come to our CEO and say, this is what I'm doing with my team to progress towards what you originally want to do and get out of this deal.

Got it. So you own it, you update it, you reference it continuously, and then between, you send a bunch of slack messages and video calls.

All the slacks, all the calls. Especially in a remote first world. I'm a big fan of just jumping on the phone. I think there's just so much value when anything changes in an acquisition or decisions are made or something comes up to see people's reaction. He said, if I told you one day that we're going to acquire a company in Nigeria for reason X, but now we're going to do it in Ghana instead. If I sent you a slack, you can just be like, okay, as opposed to, if I just hopped on the phone with you, I'd probably see a huge reaction from you. And I get to see your immediate response of, oh, shoot, well, now I have to consider CDE instead of xyz.

You ruined my next five nights, woman. What'd you do?

Yeah, exactly. And then at least some humanity comes into it and I go, okay, how can I help you? Going back to your previous thing of when people are so strapped, I'm used to the working 24 hours a day. So if I notice that you're strapped in, it's like, okay, well, let me help you out, or let me see if I can talk to leadership. And how do I reallocate more resources to help out here as opposed to the slack? It's just, okay, sure, it sounds like.

You'Re plugging a lot of things in places when you're going through integration, because obviously a lot of things come up and people are going to need these additional resources. We talk a lot about synergies in these deals. What's your approach? I feel like companies have a different philosophy around it. Some sort of, that's all. They drive the deal around and they get really detailed and nitty gritty about it where others could care less. I'm curious how you track it and what's your approach in managing it.

It's funny you say that, because I definitely noticed earlier in my career when you were working for a Fortune 100 companies, synergies are so important. What vendors can we consolidate? Which contracts can get rid of? How do we find redundancies? And it's just really a line Item like saying, hey, we are now gaining this acquisition for their revenue and we're saving money on these synergies. Kisan, I have not looked at that in quite some time. When you're at a company that's just high flying and focused on growth, that is the least of our worries. It's interesting. I think that's just definitely a more traditional way of thinking about it. Synergies are of course important. At the end of the day when I have downtime, I would love to be able to look back and consolidate things and clean things up a little bit. And I have, I have done that. When I do have the free time, I do focus on like vendor contracts, systems migrations, things of that nature that will get us dollar value synergy. But yeah, I wouldn't see that as a priority as much as it used to be.

It's almost like a different category. Everybody talks about costs and revenue synergies and here you're thinking growth synergies like the examples you gave are more of like, hey, there's a lot of value to capture with a lot of these approaches or things we're discovering during integration that we may not notice during diligence.

Exactly. My synergies today are no longer cost synergies. It's more like wait, these two people are so brilliant. If they sat in the same room they could probably build this amazing product for us. And that's what I'm going to capitalize, that's what I'm going to focus on. The ip, the tech, the knowledge share is just so vast in the companies now that that's definitely more of a focal point.

What do you do to ensure that there's realistic synergistic fit to achieve roi? I think this goes back when we're talking about diligence and how you get involved in there and maybe when you're sort of evaluating some of those views.

Around synergies, I think this is more like culture fit is where I would actually see the biggest obstacle. And Kisan, I'm sure you know, if we were to dive into culture, that would be another hour for us. I'm not sure I have the right answer. It's a lot of conversations, it's a lot of evaluation, it's a lot of value setting. I think more often than not going back to Twilio, I have only the best things to say about that company. First of all, they are so focused on the Twilio magic that we would look at companies and we see is the founder is the way that they work? Does it actually line with the Twilio magic? Do they truly care about being an owner when all else fails? If shit hits the fan, are you willing to step up and not pass the buck? And really. And we also said draw the owl to build something out of nothing, to create a new process and to make the best out of what you're given. That kind of mindset was something we cared about a lot. In the companies we acquire, are they cut from the same cloth? And if they are, then our teams will work together and hopefully jive well together and achieve roi.

So your view around synergistic fit to deliver the ROI is really more around culture.

I'm super biased with tech companies. We're not really developing like a physical product. We have no supply chain issues. Our highest cost are our people, our talent, our people, their capabilities, and the way that we work well together. One plus one. Hopefully with two people cut from the same cloth and really excited and curious will be three.

Do you tend to keep the founders around? What is your view about earnouts and their implications for integration?

This one goes either way because this depends on the founder entirely. Personally, I don't think this is something that an acquired company should decide ever. It always should be an open conversation of, do you even want to stay around? Are you a serial entrepreneur? Why are you selling your company? Are you doing it for the money and you want to exit and start something new? Do you actually want to join us for a greater mission? Do you actually think that you also see the value we see in you and you want to be part of our growth? I think that should be a completely open conversation. It also helps us structure the deal. Instead of designing all these complicated retention strategies in the purchase agreement, a clear conversation of, hey, I want to exit is like, okay, then we won't try to retain you for five years where you're unhappy, we're unhappy. It's like, this is what you want, then you should be able to step away. If you actually only want to see this for three years because you want to help out with the integration, that's all the gas you have left in you, then great, we'll try to structure a retention program to help you stay for three years and do the best that we can do to support you, I don't think this is ever something that a buyer should determine.

Have you seen that you've worked on a deal where you're like, this guy shouldn't be on this long of a retention program?

Absolutely. It's so common when you're acquiring companies, you have these serial entrepreneurs who just love to build. They just want to create something new. They create their new team. They're super opportunistic. So they're brilliant minds who just see opportunity everywhere and want to fill that gap. And to have them plug into a much larger company where you are growing really quickly, it becomes more bureaucratic. Even though you're trying to accomplish a bigger goal that just doesn't align with them as people. And so I feel like that just becomes a little bit trapped for them.

That's some real good uncut truth there.

A little too honest.

Yeah, I like it. That's what M and A science stands for. Pure science. Before you actually purchase the seller, don't you do the due diligence on operation by asking at least 150 or so questions for the idea?

Yeah, it's not even 150. I'm sure it's like hundreds, hundreds of questions on due diligence before we actually integrate. And maybe what you're trying to get at is before we even start to look at integrations. I guess the purpose of this talk was more to say that integration planning does come in during the due diligence phase process. Right. Like integration planning, if you're doing it post acquisition, you're really late to the game.

Really. There's a strong overlap where you can pretty much reutilize a lot of the diligence information for integration.

Yeah.

Would you say you should have access to all of it?

I like to have access to all of it. The more information, the better. The more I can plan, the more obstacles I can identify. Simple example is if I know that one of our teams is looking to expand their product in a certain way or we're trying to enter a new market, but at the same time we're trying to acquire in the market or acquire a product. That's something that's good to know ahead of time. So at least I can start having those conversations and marrying the two parts of the company so that we all talk. Not too early, because then I'm just spinning up an entire integration plan or not, but early enough that I can at least identify those high level conversations that need to happen.

That's a great message for corporate people out there. Last question. What's the craziest thing you've seen in ma?

The story that I love to share with friends is, is probably not one of those crazy ones you typically can get where something went massively wrong or something you didn't expect happened. Once I Look at is when I started at Twilio, I loved it because within maybe a month and a half, we did an acquisition so quickly, and I didn't know anyone. I was still in that discovery phase that we're talking about. I'm just still trying to meet everyone, know how processes work. But we. We were fast moving, and it was an international acquisition. And I was like, okay, well, these are the people I'd like to meet. I met them, and then they were like, this is the timeline. And I was like, okay, shoot. Well, I need to meet the team. I just went to that location and I brought, I think it was like 18 other Twilio folks with me, because I was like, I need you guys as my subject matter experts. We're entering a new market. We're entering the market. We're breaking ground, new region for us. Like, I need all these subject matter experts to be on the ground with me for about two weeks.

This is overseas.

This is overseas new region.

Half the company with you.

Yeah, I did. I did. So I was just like, well, I'm not a subject matter expert in any of these things, but I know what I need to be informed on. We're essentially establishing an entirely new entity for us in a language that none of us spoke. Actually, we did find someone in the company that spoke the language, so we brought her with us. I literally just started. I'm just getting my footing, and I was like, guys, we gotta go. And so we went. And I think it's the craziest thing because it came together so, so beautifully. I thought, like, the welcome events, the way we were received, where the company's going now, how much we've grown using that entity in that company and the relationships that we've been able to establish in that region because of this hub. I think it surprising or not, was just the craziest, most beautiful thing that came together. And the support I got from my ecosystem, hands down, was unexpected but very welcome.

That's an amazing cultural experience as well.

It was funny because when I did the welcome sessions, I usually kick off the welcome session like, hey, you've been acquired. This is what it means for you. I forget how this came up, but someone during the networking was like, oh, so how long have you been at Twilio? And I was like, do I tell them? Do I tell them I also just joined? Or how do I. How do I say this?

That's awesome.

Yeah. Good times.

Hey, I want to thank you for the time today. This was a great interview. Those of you listening want to follow us or challenge us on Peloton, I have a hashtag mascience going on. Johannes will be my first person to join that hashtag since I just made it the other day. Till next time. Thank you so much.

Thanks for having me. This is awesome to chat.

My pleasure. Here's to the deal.

Here's to the deal.

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

Foreign.

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