How SS&C Conducts Acquisitions

Hey Shyla, do you remember learning your ABCs?

Of course, Dad. A is for acquisition. B is for balance sheet. C is for corporate development.

And D. Yes, yes, you're right. Do you know why I'm asking?

Because it's time for another M and A Science Virtual summit.

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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.

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Welcome to M and A Science Live, where leading M and A practitioners share lessons learned from their experience. When you use proven techniques in M and A, more value is created. If you're interested in keeping up with the latest from M and a science, visit mascience.com and subscribe to our newsletter. Again, that's mascience.com I'm your host, Kisam Patel, CEO and founder of MA Science. Joining me today is Bill Stone, founder, chairman and CEO of SSNC Technologies, a global provider of software and investment financial services. SSNC has undergone over 60 acquisitions since 1995, the largest to date being the acquisition of DST Systems at 5.4 billion. SSNC was taken public in 1996, but was taken private again through a leveraged buyout at 492 million in 2005. SSE went through a second IPO in 2010. Today we're going to talk about lessons learned as a private and public company. Inquirer how are you doing today, Bill?

I'm doing well. Thanks for having me, kid.

Hey, thanks for taking the time with me. One of the things in getting prepped for this interview, Bill, I found really fascinating was your background and essentially reverse engineering your success and looking backwards from the current 18/billion market cap. You have 60 acquisitions. Your story essentially starts in Evansville, Indiana and you grew up as a sibling of one of nine, captain of the football team in high school and then you ended up going in the CPA career track which led you down the accounting stream and essentially gave you early exposure to M and A. So what I get out of that is this sort of mix of the competitiveness, that burning desire to win, while also the financial type A component as well.

If you're going to do Business, it's best you understand numbers. M and A is a very much a numbers driven process as well.

That's true. The numbers always got to make sense. So SSE has been incredible successful acquirer and has used these strategic transactions to grow significantly as an organization. Can you explain this mindset and how it contrasts with organic growth?

Yeah, I have spoken about this a number of times that in our view have a very talented development team and we can always build it. But often we have large sophisticated customers that don't want to wait. So they want some particular functionality and they want it yesterday. If we can find an organization that we can acquire and deliver that functionality to one of our clients, it's a win win. Plus we like to be able to buy things that we can sell into our client base. So we have 18,000 clients. So if we can find something that's going to be attractive to them, then that's a very nice leverage point. And then we also like to take what we have, which is over a hundred products and services, and be able to sell it into their client base so that you get chances to grow the revenue as well as almost all companies that you acquire, you don't really need two CFOs, you don't need two lots of what would be considered the overhead of the company. Really you get a chance to streamline that which obviously improves profitability.

So what I heard is time to market versus building it from scratch. Expanding on your current profit or portfolio of products to your existing customers, but then also acquiring customers that you can then turn around and sell some of the other products you already have in your portfolio.

That's what we think the formula is and that's what we've executed on what.

Triggered you to start making acquisitions.

Sometimes when you have a really good product, you can buy legacy companies and replace their product, give those customers and take good care of them, give them white glove treatment, but then they'll upgrade to your brand new good product. That started back in the early 90s where we had a product that we bought a couple of companies or products out of a couple of companies and then we're able to move their customers onto our new product. And that was very effective. And so we had that view and have had that view ever since.

Were your early acquisitions these sort of end of life cycle products that you essentially acquired and then look to move the customer base to your product line?

The first couple were. Yes, the first couple. And then we went into product extension trying to be able to have things that were complimentary and trying to be able to realize that even in the 90s and it's even more so now, it's accelerated ever since that the complexity around technology and the functionality that these organizations need in order to operate on a day to day basis is increasingly sophisticated. They want as few vendors as they can have. There's an awful lot of knowledge out in the world and there's an awful lot of ways to apply that knowledge into technology. SSC is not going to be able to be all things to all people. You have to pick your spots, you have to be the best at it and then you have to have great service in order to be able to leverage it. That's not always easy. You have to have people, you have to have motivated people trained. Right. You have to have people who are not tone deaf. You hire people that are going to be customer facing and they only open their mouth when they switch feet. That's a problem. That's a real problem. So you have to be sensitive to that. You have to realize it's not what you say, it's what people hear important about. Having a successful anything is pretty much being able to listen as much as talk.

That's really fair point. So started off with some of these end of lifecycle products then moved over to more of the complimentary products. That essentially makes a better experience for your customers. They have less vendors to deal with on the end of life cycle products. How do you evaluate those companies? I've always been interested and find it difficult. Is this still like a typical purchasing on a multiplier or is there other ways of looking at it?

Generally if you're buying a product out of a company, that company is primarily interested in how well can you service that group of clients because they want to sell other things to that group of clients and they don't want a bad taste in those clients mouths because they sold it to near do well. You have to take care of them both from the sales company who sold it to us company to those customers. And so we have a number of times where we have bought like Citi Fund services or Wells Fargo fund service or other. We bought something out of Unisys. But taking care of those companies customers makes us a great acquirer. And that message goes out that if you want to get rid of something SSNC is a good home. They'll take care of the customers. The customers will have a better experience. Your employees that are going to go to SSNC will have a new lease on life and that allows you to stay in the M&A game when you might not be willing to pay the prices that are in the M. And.

A game, you're pretty transparent when you would acquire that business line in terms of what you're going to do with it afterwards and how you may move those customer base to a different product.

That's right. But we don't do it precipitously. We listen to those clients and depending on the numbers again, so really hemorrhaging, you've got to move quickly, otherwise they're all leaving anyway and it's just a mess. Right. So you can't wait when it's in that situation. But when it's a good business and the products work, they just generally what happens is they don't have the latest database, so they don't have the latest interface, so they don't have fast enough connectivity or they don't have something else. And people get frustrated and then they want to move. And often it's not economic. The thing works cheap. Why would you switch? That isn't everyone's motivation, making sure when you're selling, sometimes you're selling your organization when you're trying to get somebody to sell their company to you. And obviously price is a pretty big motivator.

Right?

But it's not the only motivator and it's realizing around the soft things, the things that you can do in order to be able to create. If they can sell to who they want to, it's us. That's what you're trying to do. And hey, would you get priced out? Not chasing that. But if we lose somebody paid a big number and they may be over levered or they may be something else that's going to cause them heartburn as they try to try to integrate that acquisition.

How involved in M and A are you even going from early days to now? Because it sounds like you're having a lot of these conversations about the strategy and negotiating some of the terms.

Yeah, I'm pretty involved. I'm not as involved in the day to day due diligence in the deal room, virtual data room. But I'm very involved with pricing. What? Multiple. Why? And I'm also pretty involved with if you're the business that's going to buy this company, all right, how much your bonus is going to get tied to how successful this acquisition is.

So you've been working with your business leaders within your company on their acquisitions.

Exactly. They have to understand that this isn't other people's money, this is our money. Treat it like it's Our money. Because if you don't treat it like it's our money, you're going to make less money. And you have to be honest with people. Right. You can't tell them afterwards. Too late. You got to be upfront and you have to have difficult conversations which aren't particularly fun but are necessary as part.

Of M and A. Is that sort of headcount reduction, things like that?

That. And then also, why would we pay nine times sales for this company? You have a big development team. There's no burning hole in our pocket that makes us have to go get this. Why don't we pay that number? Let's just go build it. 9 times sales. How are we going to make any money? Again, it comes back to people have to be able to answer those kinds of questions. And when they can, okay, may not still get to nine times sales, but you might get five, six, seven. That's getting a little dicey. And some of these things are going to 20 times.

Yeah. In this market. Yeah.

Yeah. It's like, how do you ever make any money? Aren't you in business to make money? I think Jack Welch said, look, this is not philosophy or religion, this is business. There's an answer. There might be two answers, but there's a very finite number of answers. It's not unlimited. It's not a library. You don't have thousands and thousands of books from which to choose from. This is right now, right here. Let's make a decision based on the best available facts for both sides.

Yeah. Bill, you've successfully operated SSNC both as a large public and private organization. How does operational and growth strategies change between public and private?

Primarily they don't. Primarily it's the same. If you're running a good company, you run a good company for whoever your owners are. One of the things that you may have, and something that changed when we were private in 05 is we used to be an earnings per share company from 96 to 05 and cash flow from 05 until I would say really recently. 2019, 2018, 1920, we've been an EBITDA company. Earnings before interest, taxes, depreciation and amortization. That's how Carlyle ran their companies. And that's how we ran ssnc. That's what we focused on. So what you could do then, if you can finance acquisitions with low cost debt, it's making hay. The sun's shining on M and A. Make hay. And that's why you see some of the valuations, because the debt's so Cheap and it's technology and if it works and you have lots of maintenance streams coming in or SaaS streams coming in, awfully profitable. So you can really handle a lot of debt.

Has your M and A strategy changed between public and private?

Not really. I think in the private side they had a broader spectrum as to what they would want us to acquire and what we were particularly comfortable with. So they would. The guys from Carlisle are plenty smart people and they had a lot of confidence in us. My background, Rahul Kanwar's background, all of our backgrounds are CPAs and running large organizations or large processes within financial institutions. Whether it's a broker dealer or a bank or insurance company or a hedge fund or a private equity fund or a real estate company. It's really understanding the numbers. And if you work at SS&C in a senior capacity, you got to know your numbers. If you don't know your numbers, you're going to feel like you're in front of a Gatling gun. And these questions are just firing at you because ultimately investors have 10,000 choices. They invest based on those numbers. Growth rates, profitability, cash flow, ebitda, eps. There's all kinds of different criteria, but ultimately it comes down to numbers. What's the tan total addressable market? And then what's your market share? Can you double it? Who's your competitors? What's their market share? So it's always comes down to numbers when the more numbers, the more confident you can be in how you're operating your business.

Don't the economics change? As a public company, essentially your price is fluctuating. It's based on public perception. A lot of times those economics work in a good suit for you to do these acquisitions. And you look at some of the other platforms like Oracle and Salesforce, they're essentially acquisition platforms. It seems like those economics allow you to do more deals and take a lot more risk.

If you look at the size of the private equity firms now, they're an enormous source of capital. And they also, if you look at some of Thomas Bravo's acquisition, I think they bought ellie Mae for 3.7 billion and sold it less than three years later for 11 billion. How do you do that? That's almost $8 billion worth of market cap in a three year period. And Orlando Bravo's a smart guy, really smart guy, and he's figured out that cash flow in these software companies pretty sticky. And again, as a private equity firm, whether it's Thoma Bravo or Carlisle or KKR or TPG or a Whole bunch of other ones. Blackstone, and you can just keep going. Right, And Silver Lake. So it's just. And those are hundred billion dollar pools of money.

So essentially the thinking is really similar in terms of how they're approaching M and A, what it means to the bottom line. You're essentially contrasting that. It's really similar to the way these large PE firms already acting anyways.

That's right. The only challenge I would say about being private is it's hard to use equity as a binder of talent to the company. When you're public, it's right there in front of you. You have 10,000 stock options. The strike price is 47. The stock's at 72. That's 25 points. 25 times 10,000 is 250,000. So you made $250,000 in equity. When you're private, I don't get to say, hey, Keith, how about that 250,000? You go, you're citizen. Well, so what's it really worth? And then it puts management in particular the CEO and the board, in the uncomfortable position of deciding what value is.

Right.

When Bill set value, that's a bad situation. And you're undercutting the price, which I just don't even want to be in that discussion.

It's already defined for you and you're public.

Exactly. The markets tell you what you're worth. You don't have to believe it. You can decide you're undervalued. And we like to buy back our stock when we think we're undervalued. And we generate tremendous amount of EBITDA. For the last 12 months ended March 30th, we had about 1,886, so that's almost $2,000,000,000. When I started the company in 1986 with about 20 grand, hey, it's not Apple and it's not Microsoft off, but it really does create a nice living.

Any other mechanical differences between doing deals private versus public? Obviously, different disclosure rules apply.

It's not as independent when you're private. If we're going to do a big acquisition, Carlyle's got to be on board. And if they're not, it's not going to happen. As I said, Bud Watts, who's a really good guy and was a Carlyle deal guy on us one time, we were disagreeing and I said, okay, Bud, let's vote. They voted. He got 70, I got 30. He wins. And you just have to recognize that, look, if you're not going to live like that, you shouldn't have sold the company to that private equity firm to start with. You got to be willing to be a big boy about a big girl. Same thing, right? If someone makes an offer for us and the board accepts it, you're in play. Now maybe you thought that when that offer came in that I was or I thought that I was going to stay a CEO, but somebody else comes in and tops that offer and they don't want me as a CEO. I think they're going to win anyway. Generally, whoever comes in with the highest price, they tend to win. And you just have to be aware that it don't frivolously put your company in play if you don't really want to potentially lose your role.

That's a decision to make along the way.

It is. And people get surprised when we've bought some companies where I've had to tell the CEO, remember, there's only one CEO and I don't want to get in a battle about it. In fact, I'm not going to get in a battle about it. And if I do get in a battle about it, there's going to be one CEO and he's never going to talk to you again. You have to have clear lines, responsibility and authority and accountability and you can't blur them. You can't say, oh yeah, Keith, what kind of co CEOs. No, no, no, no. That's pretty important. And I think the more upfront you can be, the better off you are.

I'm picking up as a theme being upfront transparency. What else are you looking for in acquisitions?

SSNC is an expertise place, so I generally socialize with the management teams of the deals we do that I'm involved with about, hey, look, this is not a place for the faint of heart. We have very big customers, they're very demanding. The work we do is very detailed. So there's a lot of knowledge that it takes and thinking quickly is pretty important. We're not selling popsicles here. It's not going to be your big smile in a 25 cent popsicle. That ain't going to cut it. So it's understanding that it's a lot of minutiae and people have to be willing to understand that every day we have to deliver them. And we have $2 trillion in fund administration, over 1700 hedge funds or 7800 management companies, I think representing about 5000 hedge funds and probably 7, 800 private equity funds. And they're generally not run by a type B personality.

Let's talk about numbers versus culture. Because this whole conversation you've been very focused and numbers oriented. And a lot of people talk about culture in these deals. You got to have a culture fit, otherwise things can turn into disaster and things like that. But it seems like you have a different approach about that.

I think the approach is just what we talked about a minute ago, about being transparent, upfront, friendly and nice to people. But let's hit those numbers, huh?

Yeah. Your accountability comes back to the numbers.

Yeah. And when you're succeeding, it's amazing. The camaraderie that gets created, that everybody knows they have an oar and we roll in the same direction. People that try to create a culture, I think is a mistake. You have to be who you are. And if you read too many business books, all that kind of does is turn you into it. Like, you get whiplash. I can't do that. And it's okay to read them, but it's not okay to change yourself to try to be Jack Welch or Steve Jobs or anyone else. I'm not a perfect human being, and I tend to think most people I work with are not perfect human beings. And I don't believe our customers are perfect human beings. And we have to have a relationship that is based on trust and belief and execution. A lot of people like to talk about strategy. What's your strategy? Well, strategy takes about half a day. That execution stuff, that takes a lifetime.

Exactly.

And it doesn't go away.

So really it's around having transparency, aligning around these financial goals and really building that confidence that both sides are aligned around achieving those goals. And essentially that becomes a driver and almost like root of thinking about culturally that, hey, we're going to execute and hit these goals.

I think that's exactly right. I think people go into business to make money. You're not doing M and A science because you're. What you really want to do is be a cheerleader. You're doing it so that your audience has access to a knowledge group that you're providing and that you have a chance to cash in on that or build a business that works out well for you from a financial and emotional and all those other things. But financial is why most people go into business. And if we can create a situation where our execution is pretty good and our EBITDA and cash flow is good, then we get to pay good raises, pay good bonuses, have the stock price go up and people get to work because they want to, because they increasingly can make money. And depending on how ambitious and talented people are at ss, you can Make a lot of money.

That's a platform to generate wealth. That's ultimately what you want to create. How do you think about value creation after buying a business?

Again, it's, what was cash flow when you bought it? What's cash flow now? What was revenue? What's revenue now? What's margin? What's customer satisfaction? What's new product development? Sometimes, like, you buy companies and it's difficult for the people to understand we're in a hurry because they may not have been in a hurry. We're pretty egalitarian at SSNC. Like, equity is distributed to about maybe 60, 65% of our people. Remember, we have 25,000 people. But our view is that everybody should participate. You have to perform in order to participate. It's not everybody gets a green ribbon. Somebody won the race, Somebody's faster, they can run faster. It doesn't make a difference if it's a man or a woman or anything else. That person won that rating. And same thing with ideas and service to customers and all those things. The things that make a business successful really are pretty identifiable. And you can pretty much evaluate. I don't do written evaluations of my very top people because I talk to them multiple times, generally a day, and they know exactly how I feel. And I would tell them, man, if you don't know how I feel, you're tone deaf. Like something. I try to manage my emotion, but I'm not that great at it. And I grew up in Evansville, Indiana. I'm used to being nice to people and smiling at people. I tell a story, my mom. One time, I was working at a broker dealer, and I told my mom I was about 25. I said, mom, everybody out here thinks I'm laid back. And she said, they don't know you, do they? You got to be careful. I used to tell people, I said, look, I'm smiling and I'm nice. Make no mistake. I'm as competitive as anybody you've ever met. And I'm intense.

It sounds like you have a short feedback cycle. You're not waiting for the quarterly reviews. You're sharing that feedback sooner than later. And competitiveness is instilled and encouraged throughout the company.

That's right. Sometimes we do acquisitions and they would have monthly sales meetings. They find out we generally have daily. Wow. And we're interested. And if it's a big deal, it's like when people on our quarterly calls will ask me, what's going to make a difference in this quarter if we win these deals? It'll be a lot better than if we don't win. That's just the nature of the business. It is a profitable business. It is all the things of what you would want at the same time. Very competitive, Very competitive. And you have no choice but to make sure of it. Whoever's calling the play knows how to call a play. Like when we do sales, we do salespeople. You know who I like? Quarterbacks. And I like point guards because they got the ball. And that's like that deal, right? That's the ball. Get that ball over the goal or in basket, throw that ball to that guy over there who can make the shot. Don't throw it over to that guy over there. The last time he made a shot was 1942. Don't throw it to him. So you get people who understand competition and you're never alone. There's competitors. What knowledge do you have about it? Even in acquisitions, you want to know who the competitors are of these companies that you buy. And you also realize, like, I've lost a few deals that I thought for sure we were going to win. Things come out of the woodwork that, wow, that's why you went with them. And it's really eye opening to see the different reasons that people like one time they said, well, you didn't treat this one guy, whoa, wait a minute, you only got one half of that story. You didn't get the other half. That would have been a non issue. But you don't always get a chance. And that's why, as much as you can, you want people to be your friends, but your colleagues, you can compete without being nasty. You can disagree without being disagreeable. It's unfortunate in our society today that people hold things to a point that it's different, but that doesn't make them a bad person.

I agree.

There's good Democrats, there's good Republicans, there's good independents. There's good lots of things. No one made me judge and jury.

No, I agree. You don't have to shy away from competitors. A lot of times you can actually find ways to work together.

You can't. You got to be careful. You get pickpocketed, too.

That's a fair way to look at it.

Don't be naive.

Yep.

That guy's so nice. He's so nice and he's got his hand in your pocket. We once had a. These guys that was pickpocket came to show us when he was at a dinner. There's about, I don't know, 75 of us or 80 of us. And he walked around, just talked to people, and he walked back up on the stage and had four watches. And he'd tell this guy, I took this one from you, and I took this one from you. And then he went by, walking around, and my brother was at a table with me, and he was so concerned the guy was going to steal his watch. He just kept saying, and the guy left and say, see, I still got my watch. Why don't you check and see if you still got your tie? And the guy had taken his tie off and he didn't know. And it's understanding that that guy was a pro. But I get into negotiations on M&As, and I start feeling like, oh, I'm out of my depth here. People are firing too many numbers too fast. I tell somebody, I have a good friend that's done lots of acquisitions. Every time I talk to you, I have to go home and think for a week what you said. You talk so fast, you got all these different structures. And I'm going, look, we like to have common stock and then we like to have debt, and we don't like to have cross collateralized structured securities. That takes a PhD in mathematics to figure out exactly how this works. I'm not a financier, I'm an operator.

When the terms get complex, that's a red flag. I was going to ask what were some of the key lessons from conducting over 60 acquisitions?

That's one of them. And another thing is to do your due diligence. And then also one of the things I teach all of our people is if you get a whiff that they're not shooting straight with you, don't walk, run. One time when I was with the CEO and cfo. Okay, so how many deals did you do last quarter? And they're looking at each other. And I don't know, Joe, did we do two or do we do three? And I looked at him, I says, I don't know if he did two or he did three, but you better know. I said, last quarter we did 55. You want it highest and lowest, but I give you every one of them. You guys did two or three and you can't remember. That's a red flag.

Right?

Or another time we're doing an acquisition. And they said they had two offices in India. I said, okay, where, where are those officers? Didn't know. They didn't know where their offices were. That's a red flag. This is a business that is operating where the senior executives are flying way too high.

Right.

You know, we have 15 offices in India. When I can walk through each one of the cities and how many offices we have there, it's knowing the business. You kind of got to be into it, to use a phrase.

Know the numbers, know the business, know.

The people are the business. You have to know if you have the best team. I like to hire point guards, but you got to be able to dribble. If you hire a point guard, every time they start to dribble, they kick the ball out of bounds. That's a problem. And so you need to know the people. You need to know your capability, particularly your capability versus a competitor.

How do you assess that? I feel like that's a tough thing. I don't know if you're pulling HR resources to do their own analysis, but how do you getting the read on that?

Go on sales call.

Just one of their sales calls.

Yeah, go on sales calls. It's not magic, it's work. You got to go in there and see. All right. Sounds like these people know what they're talking about.

Yep.

You're in there going, oh my goodness. Oh my goodness. And it happens. You have really good people, they get really good opportunities, Sometimes they leave. That's the nature of this. There's no ironclad contract that they can't leave. And so you need to know, and you know your talent base is depleted and then you got to go rebuild. And you've got to be aware. And usually it's because you're not winning this often or a new competitor comes into the marketplace. You need to be aware. You need to understand what artificial intelligence is and natural language processing or machine learning or any of those types of things. If you don't know what they are, and that's the de rigueur, you might as well be using a BlackBerry instead of using an iPhone. There's nothing wrong with a BlackBerry, but Apple's got a $2 trillion market cap.

So far. I got the complex terms as a red flag. If things are beyond understanding, really know the numbers, make sure that leadership knows their business to the detail. And then the people side of it is really observing what they're doing in their natural behavior and getting that read on if they're the right type of leadership that you want to work with on a go forward basis.

Yeah, nobody likes surprises.

Any other sort of lessons or big challenges you've had to overcome on M and A?

Yeah, we've done a couple that we wish we hadn't and that we thought we did enough due diligence. But we did it or stuff that we found out late in the game we decided was not that bad, we could handle it, but we couldn't really. And that's a lesson. As I said, I don't care what time it is in the deal. You learn something that you didn't like, you better stop. You better make sure that, whoa. What else is underneath this?

That's the hardest part. I feel like the term deal fever gets thrown around where there's a lot of truth to it. You've got a lot invested into it, Board's aware of the deal, you're pushing and chugging along, and you start ignoring some of those things. How do you keep from doing that? Maybe some examples you've encountered would help. A light on that.

One time we were looking at a company and it was the first time I met with them, and we were pretty far down the road, and the company was based in this one town, and we're talking to the coo, and she didn't live in the town. I said, oh, okay, where do you live? And she said, another town. I said, Isn't that like 80 miles away? Yeah. I says, you commute 80 miles each way. And she said, once or twice a week. First time we knew that COO wasn't on site was in that meeting. Maybe that's just an oversight and yada yada, but it wasn't a problem. And it was late in the deal and we wanted to buy them, but that was a tip of an iceberg. It wasn't that big of an acquisition, and it didn't hurt us that bad. But rather than being a nice accelerant, for us, it was more of a put Humpty Dumpty back together again.

What gets unwound from it is a lot of people issues that you got.

To overcome and people that you were thinking that you were going to be able to rely on. When they live 80 miles away, they got one foot outdoor, maybe both feet. So it's just those kinds of things, and it's one of my sayings to people all the time on is that life's about little things. When it's a big thing, people have their best suit on, got their hair combed, shoes shot. They're ready. Big game, they're ready. It's not the big game. And people just hang around and you hear things and you go, oh, I don't like that thought. Now those people don't realize that they said those things in front of you. What they were really saying is really important because it was their truth. The other thing is the polished presentation. You can learn stuff from polished presentations, but learn a lot more when you observe. Keep your eyes open and your ears open. Try not to talk too much.

Fair point. How do you preserve value during an acquisition? I think there's always a fabled dip of performance after you buy a company. How do you manage that?

Mostly it's making sure that you have evaluated the talent inside that company because you're going to have some attrition. Some people just really like being CEO and they're not going to be able to be CEO. They're going to leave. And others like being cfo, but they're not going to be CFO anymore. They're going to be CFO of a division and then they don't like that or a subsidiary. So you're going to have attrition. The question is, do you have enough talent in that organization to overcome that attrition? And have you evaluated who that second line talent is and what you're going to do? Because you already know and they'll tell you, oh no, I'm here for the long haul. It's like when a portfolio manager or securities analysts tell you, oh yeah, we're long term investors. Wall street long term, that's about 90 days. So you just got to be aware that stuff's going to happen and you have to have enough talent. If there's not enough talent in the organization, you have to have enough reserves in your organization to send in the.

SEAL team, read between the lines and prepare for the worst.

That's exactly right. And don't be a fatalist about it. You're the leader. You got to be upbeat. We can do this, feel good about it. You're capable. You know what to do it.

Bill, it seems that many of your assets you've acquired run fairly independent, some of them keeping their name, operational structure. Can you explain this strategy and how SSNC typically approaches integration?

What we try to do is if the name or the product name have equity, so if people know it, then we tend to allow that equity to play out. And as it lessens, then we start to integrate it. And there's not a separate corporate name or even we don't use the name anymore. A lot of our products have a lot of brand equity, whether it's Geneva or it's Intralinks or EZ or Ezeclipse, those are well known names and their various businesses that they're in. And so we don't want to drop those names. And then people Go. So now you're Equiquin Pro or some other made up name to figure out what's equipment. It used to be Interlinks and it used to be Advent and it used to be Edison. We just created a new name. We try to be wise about it. And I wouldn't tell you whether or not we were wise or unwise except we have $18 billion market cap and that's not too bad.

Now that's the front end. What about the back end? Is that a different approach in terms of trying to manage cost savings or whatnot?

We're very quick on the overhead portions of companies we acquire so we integrate the finance and HR very quickly. Marketing, it's pretty centralized.

You still keep the level of independence of the numbers because I can tell you're very focused on the financial metrics as well.

Well, that's because the people that are in charge of if you want to measure them, they have to have numbers. You can't beat them over the head and they don't even know what you're talking about. Right. You have to agree with what the numbers are going to be. And if they're hitting them or exceeding them or missing them, it can't be a gotcha. We don't want. We have a number of businesses that are three, four or $500 million a year and you got to be cognizant of it. SSNC is almost 5 billion in revenue. 1% is $50 million. We have customers that pay us 50 to $150 million. You got to take care of them. Be aware.

What's the hardest part of your job?

Cocktails don't start until 5pm I would say is the most difficult thing.

It's everything.

There's no real worst part. I mean the worst part is always when you have to let someone go or something with a personnel issue. That's always very difficult. It's also. We're big plays. So everything that can happen to a human happens in our organization. And some of it's sad. A child could die or be accidents or other things and that's very difficult. And you try to do the best you can and help in every way you can. You're still the leader and you have to lead. You don't get to hide and you don't get to. You can weep, but do it fast because the team needs to know you're still there. The next play is going to get called and there's not going to be a drop in the efficiency and capability of the organization because they Want to succeed when, like you, they're young, so you know you got your career in front of you. If you want to keep the best people, they got to be motivated and they also have to have opportunity and then they also have to have accountability. And you have to celebrate the victories with them. And yeah, you have to feel bad about the defeats, but you can't dwell on the defeats. You have to celebrate the victories and pay attention.

I was going to ask what your favorite part of the job is, and it sounds like you're getting into this.

I think the victories, right.

Winning deals.

They asked Tom Brady, when are you going to retire? He says, there's nothing quite like running out of that locker room onto that field with 70,000 fans cheering. Whenever I retire, I'm going to miss that. We don't have 70,000 fans cheering us, but victory is pretty important to us and we enjoy it a lot.

How's your time managed as a public company? CEO M&A is obviously the largest investments your organization or corporate makes. So obviously there's time and you're heavily involved with that. Then you're dealing with investor relations. You're dealing with your internal leadership. What does that look like in terms of how you manage your time?

I think you have lots of time. Just you have trouble making decisions. And when you have trouble making decisions, you don't have as much time because you're contemplating upon contemplating. You have to get your facts together and you have to make a decision. You have to move on. It doesn't mean you don't go back and correct. Sure, but nobody gives me a to do list in the morning, right? I don't have any to do lists. I'm much more trying to figure out where we're going next. Makes sense as an acquisition candidate. What doesn't make sense? Who really knows what they're talking about? Who's full of baloney to try to make sure you have those things and trying to make sure that. I like to call it a cadence, but there's a cadence of the company. There's a rhythm, tempo. You don't want it to go too fast and you certainly don't want it to go too slow. So you have to have kind of a feeling and a measurement. How are we doing? I can usually tell when we have momentum and I feel good about where we are.

I feel like you have to constantly prioritize. I can't imagine managing even just the number of volume of deals you're doing today.

Again, you have to trust your people. You have to Hire really good people. You have to trust them. You got to give them rope and then sometimes you got to change them. But that's your job. Sure. I assign our financial statements and our internal control statements and representation letters. We have offices in Shanghai and Beijing and Singapore and Hong Kong, Sydney, Melbourne, Tokyo, all over Europe, all over North America. Do I know what everyone's doing every minute of the day? I do not. I do not. But I have competent people. We have a good system of internal controls. I have a lot of confidence in the accuracy of our financial statements and other financial data. And I trust our people. And sometimes it blows up in my face, too. I don't like that. But what's the alternative? Running around like a chicken with your head cut off? I'm not doing that. And I expect people to do their job.

Pretty straightforward. Bill, what's the craziest thing you've seen in M and A?

I don't know that I've seen anything particularly crazy. We got offered to buy bank in the Caribbean once by a really big investment bank and we said no. Three months later it was out of business. Fraud all over the place. Missing some of those opportunities. Yeah, that's why you got to pay attention.

Yeah, that's really dodging some bullets.

Exactly. And I don't care what's on your card or who you work for. I want to ask my questions and I want to hear your answers. I'm not just assuming that you're some superstar and rent a car.

You got to have your discipline. Bill, this has been a great conversation. I want to thank you for your time today and teaching me a lot about M and A.

Thanks for having me.

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