How to Balance Culture During an Integration

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He said, I'm doing great. How are you?

I'm great. Thanks for taking time from doing deals to have this conversation.

My pleasure.

Can we kick things off with a bit about your background?

I've been with sonkaban for nearly 25 years. I started with them in 1999 for about 13 years. Before that I was with a small industrial automation company. But in those 25 years I've been in their abrasives business in Worcester, Massachusetts where they make Norton sandpaper and Norton abrasives for 11 years, two years in building materials before going over to Europe for four years and building distribution and back here for the last five years. So I've had a fantastic career with them. I actually started as a sales manager, not in operations or a general manager. And after about seven years in various sales positions got my first job running the abrasives business in North America. So it's been a fantastic run for me here at Sankobahn.

Can you tell me about the M and A experience you've had over there at San Gaban?

We've been quite Busy the last three, four or five years here in North America. We've had about 5 billion over the last five years, 3.5 billion over the last three years in either external growth or internal growth. Making a couple of quite large meaningful acquisitions. And Continental building products in 2019 and K can, which is a siding manufacturing distributor in Canada this last year. And gcp, which is a constructions, chemical and building materials manufacturer that's global. So been pretty busy. A lot of work on the teams, but been a really exciting time for us.

How many deals you worked on in your time over there?

There's a lot of them don't come through. I'd say probably over 50. I mean a lot of deals you don't go forward with. We've had lots of small acquisitions. I don't mention that go back all the way into the abracers day. But there's also been a lot that we've either been involved in that we decided not to go forward with or a lot we've been involved in that we didn't win, But I'd say 50 is a pretty safe number of all sizes from enterprise value of 10 million to the continental and GCP deals which were 1.5 and 2.4 billion. So some big ones.

So out of 50, how many did you take home?

I'm going to ballpark the number, but if I go through all the small ones, I'd say eight or nine that I've been involved in, maybe 10.

Okay. I want to talk about culture. We had an interesting conversation about this and you had a big emphasis about culture and I believe it varies from leader to leader and how they look at culture and M and A from one extreme to the other where it doesn't matter. Culture will get figured out afterwards and we're going to end up with a new culture anyways. To a lot of consideration around culture at a time. Even if this deal makes sense based on the characteristics of the different respected.

Companies cultures, it does run the gambit. And I agree. I've seen some very successful companies that are coming and put their culture over the business right away. And from our perspective, we truly believe the people are the greatest asset you're getting. It's not the products, it's not the ip, it's not the locations, it's really the people and their knowledge and their abilities and what they have built as a business. For all these great businesses that we merged with or acquired, you want those people to come on and become an additive resource onto your business. So the first thing we look for is a culture that kind of matches. And I can use an example of Continental, where we have our principles of conduct and action, which is really the foundation of how we behave with what we call tech, which is trust, empowerment and collaboration. And they had something called the Bison Way. Their logo was a bison. And when you looked at the components of the Bison Way, which was transparency and communication and collaboration, and you looked at what we had in our conduct and action principles and. Or our trust, empowerment, collaboration, collaboration. Our initial meeting with their teams after we acquired them, I put both slides side by side and I basically said we're coming from the same DNA. If you take a look at what's important to how you behave in your business, we have the exact same principles. So we started with a point of trust going into it. So the first part is that their management style, the way they behave is aligned with how we do. That's one of the cultural sides that they are competitive, they want to grow. So some of that aspect of growth and energy that we look from a culture side. So if you do that correctly, I think you get a much better fit between the companies. So that's the first thing I'd say about culture is having one that fits. Understanding where the differences are is critical going into it and for me a big gating process on an acquisition. If the culture is way, way far away, then you really have to understand whether you have the time, the energy and the ability to merge them into the proper homogenized culture. The second part of it is respecting the culture. When you make an acquisition for a company, again you're acquiring the people which is the greatest asset. You're acquiring the relationship with customers, the know how within the and they will do things better than you will. And for some people in your organization and some people in their organization, it'll be very hard to accept that. It's hard to accept that you're as the acquiring company, that the company you bought sometimes for some folks in the organization is going to bring in some manufacturing technique or manufacturing software or productivity aspect that's better than yours. So you need to go into it with this concept that we're here to learn from each other and take the best practices and make this one plus one equals three. And that again is leaning on that culture of trust, empowerment and collaboration of making sure you're really being transparent, open to communication.

So it sounds like there's three key areas. One is understanding both organizations cultures. The second is figuring out the approach and how you're going to be integrating the companies and that the impact on culture. Then third, the respect in terms of let's be open, that's not one way there could be different learnings that could be applied from both sides.

I'll give you one more small story about it. When we acquired Continental, we merged our gypsum businesses together. The leader of that gypsum business was the former leader of Continental. The head of the sales of that gypsum business was a former head of sales for Continental. And the head of manufacturing was the head of manufacturing for Continental. The purchasing person was our purchasing person. The finance person was our finance person. HR person was our HR person at a high level and R and D. So my point is we actually probably took more of them into our business than we pushed into their business in that acquisition. Although it was an acquisition, it was a merger of equals. And the learnings that our team took from their key leaders in their position and the learnings they took from our key leaders of the positions that they were in really built a fantastic team. That was much stronger than if you acquire them and just bring them into your organization and keep your same leadership. Again, it was not easy for all of our team to accept that when you're in a competitive situation and you acquire someone in your same area, you want to show them that you've taken over this and you've got this great winning attitude, so to speak. But it worked out great. You've asked any of the team right now, they would say that it was really the key to success of that integration.

Wouldn't that be tough? You acquire a competitor in a segment.

That they run the business.

I sit there with our sales team and they got all different types of language they use for competitors and yeah, strategies that they build. And how do you go from that to we're all going to be on one team and play nice together?

It goes to the cultures match. So the communication styles were the same. It went from picking the right people, which is what I find when you move people around an organization that if you pick the right people that the team respects and sees why they have the position, the respect eventually comes. So when people became unemotive about it, stepped back and said, this is the leadership team of the new combined business. There were no weak links. There was no way someone could say that was the wrong choice or the right choice. And the members of our team that held certain positions in those roles were fully supportive of the merger. And we made sure they had good places to land in the back end. So they were involved in the merger of the two businesses. And so our head of sales is the next year actually helping that other head of sales succeed with a new team. But it was a bit of a culture shock for both businesses. But I would say it was really one of the great keys to success is getting those right people in those right positions. And to give you one more point of context, this acquisition closed February 4, 2020. We had two live meetings before COVID locked down the east coast. The vast majority of the integration was done in COVID lockdown. Even another level of complexity to it.

What's the key to making that work in that situation where again, competitors. I'm thinking in my head, is there a story or narrative, the leadership to share with the broader company? And this is why this really makes a lot of sense. How do you get all the team aligned?

You are completely transparent. So you explain exactly why the decisions are made and what you're hoping to get out of it. And I said before, you pick the right teams, you stand shoulder to shoulder with Those teams and you speak from the same voice. So Jay Bachmann, who was running Continental, he and I would go in front when we were live, would be in front of all the different meetings and talking from the exact same script. Not because we coordinated, because we believed in the same thing. And then the leaders in our business that were senior, that either held some of those positions or were peers, fully supportive and engaging the whole process. The view is when you make an acquisition, we are making a very strong commitment to our mother company on being successful. My commitment in this is always to make sure that when we make an acquisition that we're paying the right amount of money for it, we're getting good value, but then that we deliver what we said we delivered, we delivered the synergies and everything else. To do that, you've got to put the best team in place. And I firmly believe I've gone through a lot of restructuring businesses and everything else, as you probably have. When you pick the right leaders, when you put the right teams, there may be emotions involved, but people look over and say, in the end, I can't argue with it. Jay's the right leader, Bruce is the right manufacturing leader.

We can follow that and the strategy. It sounds like you're pretty transparent about this is why we're doing this deal where we see the value opportunity, very transparent.

When we do a deal, like any of the past deals we've done in the last five years, my entire leadership team, even if it doesn't reside in one of their businesses, are involved, not in the deal, because sometimes they're public company deals, so they don't know when we're doing deals, but strategically, where we want to grow, how we want to grow, what kind of things we want to look at so deep in the organization. How we're trying to grow and what we're trying to do in North America is well understood. And we are probably, I won't say overly transparent, but we're very transparent on what works and what doesn't work. When we make a mistake, I make plenty of mistakes. Trust me. I'll explain. My town hall meetings sometimes start my town hall meetings with the things that I've done wrong in the last six months and that I'm trying to work on and people there are there to support you.

Then, Mark, can we go back to very, very beginning early stages in a deal, I'm just curious. In your approach of even understanding or talking about culture with the other respected executive on the other side of the.

Company, it's really through either known from industry or it's on the one to one discussions as you're doing management presentations or you're doing plant do. That's where I get most of mine is from a. Normally in a deal you have at some point of day or two day management presentation session where you're with the senior leaders of the other company and yourselves and how that dialogue goes, how information's presented, how questions are answered, the back and forth that takes place in those conversations normally say, personally, from my perspective, we don't normally close an acquisition without going and visiting, if not all the sites, the major sites, because you're buying some physical assets as well. So you want to go see whether the plant in Palatka, Florida is as you expect it to be. And so in that case you get to walk the floor. You get to walk the floor with the senior leaders. You often, depending on where you are in the process, get to interact with some folks that are running the machinery and supervisors and engineers. And again, just how that interaction is how the dialogue goes between people. The level of knowledge the plant manager has of the people is a way to get a feel for how that culture fits in. And does it feel the same way as me walking a plant in our area? So that's the interpersonal side. Then of course the tangible is it a safe plan, is it laid out safely or all the safety things, is it a clean plant, is it running well? And all of that gives you a pretty deep insight into the culture and where you'll have areas where you probably need to invest and grow and bring people along and where you have areas where you think that's better than the last plan I visited on my patch so we can learn from that one.

Do you ever address culture directly with the counterparty directly?

Probably. I'm pretty, I'm a pretty direct person.

Like asking about what are your values? What's the leadership?

Oh yeah, we expect as part of the management presentation discussion for them to talk about their values. What their we call it trust, empowerment, collaboration, we call it principles of conduct and action. You know what their foundation is the Bison way, whatever it may be. So we address it that way. We have had in management meetings where we've shared differences to say, okay, in our business we would be more transparent with our teams on what you're sharing right here. And we think if you were more transparent with your teams, you'd have maybe better data to share with us because there's clearly a gap between A and B. So we'll share that side of it. We don't get preachy or luxury about it.

Why is culture such a difficult aspect for companies, especially larger companies, to manage?

Because it's deeply embedded into the organization. Culture is built over many, many, many years. So when I think of the culture of Sacabawn's, a 365, 367 year old company has a lot of years of culture here in North America we're well over 100 years uncertainty. So that culture goes deep in. So even if the senior leader changes how they want to drive a culture, it would take years and years and years to percolate down into the organization. So you have to respect to some degree the foundational culture of both businesses and realize that these key employees working in the organization are going to be interacting side by side. And if they behave in a different way, communicate in a different way, are transparent in a different way, don't collaborate, then you're going to have huge, I call it heat loss, lots of energy that's going out, the atmosphere, because it's just, it's internal, I won't say conflict, but debates. So I think it's understanding what that is and how much you can influence is critical.

Where does decision making fit into it?

Decision making on culture or how decisions are made?

Both. But understanding culture through how a company makes decisions. Because obviously there's a way of work getting done. But I feel like this is a pretty interesting element within that.

It is, it does eventually manifest itself in a very tangible way in decision making. Because if you're in a smaller acquisition, very entrepreneurial acquisition, decision making may be all up to a single person. So therefore there isn't really a decision matrix or levels of authority. It's just one person's baby, so to speak. And everything runs through that individual on a smaller acquisition at times. And then when you come in with a large organization, you have delegated authority levels and you have approval levels and you have from purchasing different levels and P and E different levels and effects, different levels. And as that matrix overlays an organization, if it's a small organization, you have to be very careful. They can't absorb that matrix because all those authority levels reside with three people. But in a large organization, it's the same thing. You have to take a look at what their matrix are for that, how their delegated authority goes. And we basically map it and say here's where we are, here's where we're going and we do a change management process to get there. We don't take anything for granted that we just apply it we go through a change management process to apply it. When you get your new HR benefits, your new HR programs, there's always pluses and minus. We go through a change management process and if you're gaining on five areas, but there's a bit of a takeaway on one area is it's an emotive area, maybe we'll bridge that gap for a year with one time payments or something else. But we try to put ourselves in the employees shoes, whether it be delegated authority, whether it be things that impact them, because in the end, for most employees, strategically for an acquisition, it's what impact is it to me? I can't expect a supervisor in a plant or an operator on a line or a key sales manager to say, yeah, I'm going to take a big hit on this or be completely unhappy with how things are going because it's great for Soccer Bond. It needs to be something that I understand is okay with me too.

You're putting out some interesting challenges for smaller companies. I've always been curious about that because larger companies tend to want to build a playbook and standardize their approach for doing acquisitions. But then if you're buying a smaller company, what you described sounds like they're going to be a lot more fragile. Any other specific challenges around that?

And I've worked with some companies that are very large that buy either distributors or other type organizations and they come in and they go very quick and it works really well. They're built up to do that. So I'm not saying our way is right, but I think when we look at smaller companies, because so many things run through the same people, we actually have learned through acquisitions have been more challenging. We put almost a gatekeeper between us and the small company. When the head of environmental health and safety wants to go do plant audits and the audit division wants to go audit the acquisition and the purchasing division wants to go take a look at the purchasing opportunity in all these areas where we have large structures built on that. So there's someone deploying. They're all coming to Mark. Mark's the guy in the small company. And when they come with all the best intentions, completely overwhelmed. And so what we do is we put a barrier up and we say if you want to come see Mark, you have to come to this integration manager. And if it's evolving health and safety or it's involving financial compliance involving cybersecurity, then we go in early and we do what we have to do and then we step back and then we Let the company continue to run and do what they do well, and then slowly but surely, we pick off the areas of the greatest benefit. We think we have high purchasing synergies. Let's get the purchasing team involved because otherwise everybody will go in and you'll overwhelm the company. You'll add massive cost to it. Because our cost structure is always going to be bigger than a small company's cost structure. And before you know it, you've got this beautiful young, small, young, small, whatever entrepreneurial company that was sudging along, just burdened under this massive beast that's added all these layers.

That seems like the right approach is have an integration leader act as a valve.

Yep. Slowly let them in. Yeah.

Manage all these activities that need to get done against the predicted value drivers.

We've learned that by doing it the other way. I have to be completely honest. We've learned it by going back on some small acquisitions, saying, what happened to that? And we learned it just got overwhelmed by the business. And what you end up with is a nice little curve that was doing this going up and it has this little dip during the overwhelming and then comes back up. And we said, can we just cut that dip out? And by breaking the valve, we cut that dip out.

That's interesting. A lot of philosophies on integration is to rip the Ben Aid off, do it as fast as possible.

And I've seen it done really well that way. So I want to be very clear. I've watched businesses do that where they rename, nameplate the business right away. This is our playbook. We change the computer system right away. You. It's a different integration structure. You have to have a different team to do that. And I've seen it work really, really well. So I look at it, I'm like, wow, I really admire that. That's not how we do it. It's a combination maybe of the size and scale, combination of the culture of ourselves and Sonka Bond. But whatever it may be, so it can work. I agree. You'll get someone on this podcast that will tell you great ways they can do that.

That's why we do these interviews. We want to learn. I know, and it's good to know that, hey, it's always. It depends, I think is the number one response I get on questions of this podcast. That's a good point. What are the common mistakes made by teams first attempting to address culture and.

Integration, not communicating enough so almost everything can be solved by two way communications. Listen twice as much as you speak and Just take it all in. So sometimes, for whatever reasons, personality, leadership, whatever, maybe someone comes in a bit stronger with more speaking than listening. So that's one of the common mistakes. Allowing, like I said, that we solved this one, but allowing too many resources to go into one too soon is the one we've really learned with this roll valve side of it. It goes back to when you make the acquisition is understanding when you make an acquisition that there's clear value that you bring to this acquisition and there's clear value that they bring, and making sure you keep those in clear view at all times. So you know where your value is, you know where their value is. You're going to learn more. But you know what the core value you thought was, so you don't destroy their value and you leverage yours. Because otherwise what happens is again, you're a very large organization. You could just end up overwhelming what they bring with what you think you bring to it. I guess I had to put it in simple words. You should be extremely humble. You should be extremely humble.

Make this all simple common sense.

Yeah.

Communicate well, have control of the process so you don't overwhelm the company. Make sure value is clear from both sides and keep that alignment there. Give me some real mistakes that you've made. What were examples of some things that you learned the hard way.

Make sure that again, these more smaller acquisitions, but goes for bigger acquisitions that you have an owner in the business, in your business. So if it's a very large acquisition in the North American region, I view myself as the owner. Now, there's obviously really talented integration managers, there's business managers involved. But I take it extremely personal that I'm here for the transition of the closing. I've had at least two smaller ones in my long career here, where the driver of the acquisition left either right at the acquisition or right after, right before, you know, so the driver of it was gone. And then you really lose a lot because you can replace it. But the energy that drove you to make that acquisition was gone. So making sure you have an owner that stays within it. I'd say the ones that have been challenging have been smaller ones. So when they're smaller, what I've learned in the mistakes we've made is smaller acquisitions that weren't completely embedded in something we already did. So there have of an adjacency. And they weren't big enough to pull us to that adjacency. And therefore it took time to build them up to the size we wanted to. Small acquisitions are as Hard and complicated as large ones. And they require sometimes as much resources, but they're much smaller. So your reward is very small. Because even if you double the ebitda, it's still a relatively small number versus a large one. They take a lot of resources, so we challenge the smaller ones more and more.

Okay, interesting. Having committed driver, it sounds like smaller companies can be more challenging. Particularly so if they're further away from your core.

Yeah, a small bolt on that. You do everything the same and same raw materials, really, really adjacent. Those are great. But as you get a little bit further, harder.

I go back to your keys to success, the communication control and clarify value. I want to find out, like, what are the key things, activities you do to make sure that you have that strong level of communication. It's always easier said than done. Hey, we gotta communicate. We can put a bunch of meetings on the calendar, but that doesn't mean people are actually communicating. How do you actually make sure that's done?

We've learned a lot there as well. First off, we have a very. And none of these would work well without a really extremely talented integration team and central services team. An acquisition could be any one of our five or six businesses. But it's the same HR team, it's the same finance team, it's the same IT team, the consolidation team. All that flows through the same group of people. So what we've learned and works very well is we put an integration manager in charge for a large acquisition. We have an integration manager for both businesses. So we had one from Continental and one from Sankobahn that worked together as co integration managers, one for gcb, one for Sankobahn, co integration managers. So we make sure we have a very good project manager who's in charge of running the project, keeping it on schedule, tracking risk registers, understanding what coming up and whether resources are there, flagging when there's a gap in resources and that reports to a steering committee, which would be myself and some other senior leaders.

That project manager is separate than the integration manager.

The integration manager is a project manager. So he's integration manager. Skill set is a project manager. And then there's a project manager, a stream for hr, there's a stream for it, there's a stream for purchasing, and they each have their project stream. So it sounds a bit structured. And they are teams populated by both businesses. So you have to have this structure in place so that when something starts to get out of whack or out of timing, it can be raised up quickly. Resources can be Deployed. And in that is a communication leg that is tied to making sure that what's happening in this integration team is being communicated to the employees. They're being communicated what's impacting them. And then there's just a cadence that goes on. And it starts on a weekly basis, goes to a bi weekly basis, moves to a monthly basis, and then disbands when it's done.

I like the approach and the emphasis on having the integration leader. There's a what about the companies? And I've seen a number of companies that they're doing their first acquisition. They're infrequent acquires. They do zero to one acquisitions a year and the integration gets screwed up on all of those because there's no budget for integration. None of this. The idea of having integration leader. Maybe they'll think about getting a consulting firm till they get a quote and they change their mind. What's your right way to do that? If you were to advise. Saving myself of doing first acquisition and thinking about integration.

A few things. I use the analogies, like doing a plumbing project at home first one that always leaks. But you could do it again, but you don't have to. So it's repetition that makes you better at it. So I think what I advise is that acquisitions can be really exciting there if you do a lot of them, if you don't do a lot of them, there's an energy behind an acquisition. If you're doing a public company acquisition or even a private company acquisition, you could be on calls two, three times a day, on three time zones, seven days a week. You could be diving into some really meaty subjects. There's a lot of adrenaline and excitement in the acquisition process. I would say a lot of details. Teams are coming together. That's easy. So there can be a risk that when that's all over, there's like this breather of we've accomplished our task and all you've really done is committed yourself to some metrics you said you'd hit based on doing this acquisition. So one is to make sure that as you're going through that you're learning in that process and you're building the integration plan behind it as you go forward. Two is to get people who are really good at project management and really good at this kind of thing on your team. You've got to find someone, even a small company, you've got to find your best project manager. That's not me. They will not give me a software that does Gantt charge. So they just won't let me have it. You have to find someone who lives and dies in project managers skill set who can run it. And you need to make sure that they drive the project going forward. Because often the strategic person, the idea person, the business person is not that person who's also a great project manager.

Did you use an e external resources for integration?

Pretty rarely. We use some HR resources for benchmarking, but if I'm just thinking through. No, not really. We use our internal teams almost fully.

Very like bottoms up essentially organic development of your integration muscle.

We've got a great team here. They move mallets. Everything I've told you they will agree with. But then they'll say he has no idea how much work we're doing to get this done. I do. But my point is when you talk about bringing in 800 employees in Canada, a thousand employees in the U.S. bringing them onto healthcare programs and medical programs and pension programs and 401ks turning over all the computers in a global business like GCP on a day in a big bang, everyone gets a new computer, all the cybersecurity is on it across the world. You think of all those things that take place, it's because we have the structure in place and then just incredibly talented people that make it work. They make it work, I believe, because they know the goal, they know how important these are to our businesses success and they believe in the culture that it's about the people and their experience. So they do the best for them.

How many deals do you think it took to get to that point where like they got it, they're doing integration right and you're really happy with the results?

It's been an evolution. I would say I can only speak personally because I think they've always been great. So from my own perspective, the last five years we've really hit our stride by being honest where it's really worked well. Some of the earlier deals have been very successful but much more painful, a lot more challenging going through. And we have, we've gone back Pat Malarkey, who's really our M and A guy, business development gentleman who's been doing this role and is fantastic at it, loves it for so long. In our business we go back and do lessons learned. Why didn't that work? What would we do differently? And we have this playbook and it's pretty entertaining because he will come to me and say this thing you're looking at Mark, you know, it's got on our book, it's got three X's on it Here and only two checks. I've got to walk him to why those X's should be checks or else we say, you're right, it's not a good deal to go to. So we have a culture in here where people will come back and say it's. You're trying to push the envelope on this deal. It's against some learnings we've had, so we should probably not do it. And we listen to that.

That's a really fair point. It sounds like generally speaking, the first couple deals are going to be pretty turbulent. Always a lot of lessons the hard way, but then it gets much better and better every time. In terms of the learnings, you have discussions around it. Are there any other approaches you do to retain those learnings? Deal for deal? Because I feel like you can document a lot of things, but then the actual going back and digging that information and referencing again is a whole thing. I don't think anybody's figured out.

No, I agree. We've been a little blessed. We've documented it, so we use it. We've had some real good seniority in the deal teams. So they're there. So that allows them to bring the knowledge personally, which has been fantastic.

You're using the same people over and over on these deals.

Yeah. So Pat's been with us for decades and been doing this. I started in certainteed in 2011 the first time and he was working with us on deals then. I've been able to interact with him for 13 years. So he has respect of everybody, but also has this. Not only this document, but he has the personal knowledge to walk us through it. And there's others in the team across the integration spectrum that are the same. And I go back to the fact that none of this is of any value unless your senior leadership's willing to listen to it. You can't get acquisition fever. You can't get so excited about the hunt and the chase that you lose the logic that in the end you are creating value for your shareholders and your employees and you're building a more sustainable business that ties to the strategy of your company. If those things don't fit, no matter how exciting it is, it will end up being a bad deal. So my role, head of North America, is to support the growth of North America, support the being a leader in light sustainable construction and support company Sankoban to be the best business they can be for the next 300 years. If the deals don't do that, no matter how exciting they are for me.

I don't do them well when you approach making that value clear for both sides of the organization because they have unique capabilities of value they bring to the table and being respectful of that. How do you make that stick? Because a lot of times I hear as you progress through a deal, those things can get forgotten. And next thing you know, people are scrambling to check boxes on the list instead of thinking of the big picture. And what is the goal here?

We have a very, again, robust, I would say, synergies and strategic tracker that we track on a monthly basis for an acquisition. We know what we again expect. Part of this in business is financial. So we know what financial commitments and returns we thought we would get from a sales perspective, from a profitability perspective, from a market perspective. And so we track them on a monthly basis all the way through the first three to five years of the deal, depending on if we hit the metrics and blow them out of the water in the first two years, maybe only track the first four years. So we're always having them in front of us and the other businesses taking a look at it going forward. And it's very objective. So we're being objective with this. They're not subjective activities. So that's one way that we do it. But the merging of the cultures, the fact that we can get that successful one team built out of it goes to the fact of whether you're really living the values that you say you're living. I feel like in the vast majority of times we learn from each other and I believe we've got a people centric culture. I'm sure every CEO says this. We have a people centric culture and a respectful culture that when people come into it, they say, you know what, this is a good place to be and I can stay in my same role and do just what I was doing with a company that was acquired, have all the same respect and autonomy that I had or more or now I could grow in a global company and go anywhere. I think you have to live your values. That's how the culture side sticks, the return side sticks by tracking. It is objective, it is manic that we were on those numbers every single month. And what are we doing and what's working, not what worked. And if we're not getting there, what do we have to change so that we can go back to Sakaban and say, when you give us money, we deliver value and therefore when we have good opportunities, we hope we can get money again.

Can we talk about the mothership? What is their relationship like? Because for them, you essentially operate as a business unit of. I take it, as a business unit of North America.

We're one of six regions. Yep.

In terms of the governance and your M and A activity, what does that look like?

All acquisitions go through Soccer Bond for approval and are part of our long range plans and strategic plans.

What an improvement. Like, what does that look like? This is a French company. I can only imagine a lot of scrutiny on every single deal that you're doing from a lot of different perspectives.

Well, there can be, you know, Sakaban went through Transform and grow in 2019 and Benoit Bazin took over as CEO and really delayered the organization. So I report directly to the CEO, as do the other regions, as does the head of the high performance materials business. And it's become much less matrix Approval is a. Depending on the size of the acquisition. We put together papers on the value, what the acquisition's strategy is, why we think it's important, where it fits into the strategy. It has to fit things we've talked about already. It can't be out of the blue like. Like suddenly decided business is available, that we're going to go someplace we've never talked about. So there's always tied to the strategy B. It's then talked to through the strategy department and with my boss Benoit. So we go back and forth, debate it. It's the right activity if it's a big public company, if it's a big acquisition, they're involved from day one. I'm not out acquiring US public companies without Benoit driving it, being involved in it being unique to the whole process. There's a board approval that takes place when you go into any sort of binding activity. But so I guess my point is, for me, it's very seamless. We continually update our strategy. We continually communicate it to Ben Waha and the strategy department with Sanka Bond, we're continually looking at what that may mean as far as internal and external investments. When one becomes available or actionable, it's never a surprise. There's a question whether the timing's right, whether the price is right, whether the strategy is still right. Those discussions take place. Sometimes we say yes, sometimes we say no. I found it for this larger company, two different cultures who will American and French. I find it very seamless.

Really?

Yeah.

No points of friction. There's got to be some points of friction.

Honestly, no. There's been points of. You say friction, I'd say there have been points of disagreement. Maybe this is the value. This is the strategy going Back and forth. But I've never had a situation where the dialogue back and forth didn't make sense in both places. And in the end we got to an agreement. It could be an agreement against what I thought I was wanted to do. And I say, yeah, you got at a good point. We'll go forward. I'm one of six regions, plus the high performance materials. They've got to deploy capital across all those. I may sound a little Pollyannish. My role is to deliver opportunities for the company to look at, to see whether it fits where they want to go next. I try to deliver the best opportunities to win that discussion. If they come back and say they want to grow in South America at this point because they have something more interesting, my job is to get back to my desk and do my job on the rest of the business and move on. And I have no issue with that. That's the role of, of a regional CEO. I make my best pitch. I've won a lot lately. Sometimes I don't.

What are the success metrics they're measuring you on?

Well, it's value creation, ensuring that we create value with the acquisition. So it's return on investment Roce, it's hitting the EBITDA synergies numbers that we communicate to the market. So they're very clear, they're very well laid out and we're very harsh on how we track them to make sure that if we're saying we're having synergies, if we're saying we're having benefits, that they actually show up in the P and L when the company reports the results.

There's a lot for you to think about the whole investor relation component of this being a public company and that you're getting additional scrutiny on the seven day activity from external stakeholders.

You do.

What does that mean? Is that. Do we look at the story and the perspective from another angle? What does that mean?

There's a great investor relationship team in Paris and so they manage the front end of that. We share the story, they share what they need in order to make it the best. I'd say going forward. And then for me again, it could be very simple. When we go ahead with an acquisition, I know the commitments I've made to the company for the acquisition are the commitments they've made to the investors. Truly the message to my team is these are my personal commitments to our investors. We will hit these commitments. If we can't hit these commitments, we won't do the acquisition because it will impact the other 170,000 employees in the world by missing these commitments. So I take it very seriously. I think I tell the team it's all about our credibility, and we need to continue to maintain that. The only way we maintain that it, in my opinion, is to hit your commitments so I don't have to come up with the investor relations side, up with the strategy side for the region. But I know that whatever we commit to, we have to hit because that's where they're committing to our investors.

Where does that get tough? Is it doing an acquisition? We talked a little bit about it, but when you get further away from your core, is that where you start having to put more thinking about what that message looks like?

The more complex the message for investors, the less investors like it. I'm not on that side of the world, never have been. So I don't, and I don't want to upset them. But when it's complex, even wildly strategic, and makes perfect sense, will they always dig in deep enough to see that value versus where it's crystal clear you're expanding your gypsum business in North America. Gypsum's your number one business worldwide. North America is the second largest gypsum business in the world. You're becoming larger in North America. Pretty good message. So it's quarter Sanka bond technology is known globally. North America is a big region. You're expanding into a very clear message. So those, I think, are always easier for the investors if you're. And I think GCP was easy, but more slightly more complicated because it had a global construction chemicals business, easily understood, and a building materials business, which is more North American, which we took to certainty. So they had to think about splitting the two businesses still very well understood by investors because it's like we were probably the only business that could have done it, that had a big North American construction business and a global construction chemical business. But I think that's what we have to think about strategically. Does it make sense to the investors without being overly complicated?

That's your greatest skill, is keeping things simple?

Mark I tell people simple as hard.

Hard got good at it over the years. When we do these acquisitions that get away from our core, going back to the integration of cultures, is there differences in how you approach that?

We tried not to do many that are away from our core because they're very hard. So we generally focus on core acquisitions. One of the statements I made at one point was, if you're in the hamburger business and you want to get into the chicken business for lack of A better word. My personal experience is buying a small chicken company to learn from. It's probably not the right way to go. You need to buy someone big enough that they can. Can drive that new leg of your business. Because if you go away from your core, you're really laying down another foundational pillar. Not bolting on anymore. You're doing another foundational pillar. So my view, personal views, if you go away from the poor, you have to buy something big enough to be a foundational pillar. You're sharing cultures, but they're driving you to that new business. Small things that are far away from what you're doing, they don't have enough inertia to build you up in that business.

Really good points around that, that, that you want to be able to. You're investing enough that it's going to make it worthwhile at the end of the day. Not a small little experiment. If you're going out of your core.

Right.

Is the cultural piece in terms of integrating it much different? Is it less evolved since it's not?

No. The basic culture is more involved in the sense that you end up with a situation where you know even if you're building a new foundational core, you're still going to have the same shared services, the same purchasing, finance it, cybersecurity. So they need to be able to work within the entity the same way. The area where it might be different is they may go to a different market, they may go to a different channel, they may sell in a different manner. They may use independent reps versus direct people, they may use some other component, go direct versus distribution or distribution versus direct. That side, you have to respect that difference and not say, we only do it this way. So you have to respect their methods of going to market. When I say culture, it could be simplified to how you interact with your peers. Your behavior walking down the hallway, your behavior in the cafeteria, your behavior in a meeting is where you can really feel the culture of a business.

You're a walk away from a deal because you didn't think the culture is going to fit.

Yeah. A number.

A number. Have you walked like far after loi?

We've walked away probably after getting through the first phase of being in the second group of people. Being in the final group of people looking at it. Yeah. Either through management presentations or through other red flags that just made us feel like. Like it was not a good fit.

Yeah. It's interesting because it's not quantitative.

No.

I have this spreadsheet that says don't do this deal. It's almost like off the wire. The gut feel.

Yeah. And it goes the other way. Understand that they can walk away from you too. So when you're in a deal again public company deals slightly different than others but when you're in an M and A deal they can leave too. They can decide that my culture is not right that my team doesn't fit. They never have to say that they can just not accept your bid bid or downgrade your bid from some level. So you're always also trying to make sure that you're selling. Why you'd be a good partner.

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

Anything crazy that would be interesting your viewers I couldn't share with you. So some oh my moments.

What's like the craziest post close purchase.

You seem actually most of them are pretty tame on the process and when you buy a public company there's no real crazy things there. When you buy entrepreneurial private company it's their baby baby. It never really has the ones we've been involved. It never has really been about the money. It's been about who's going to be the best parent for something. I grew up from the ground up so amazingly I look at it thinking I'd be out buying something. I don't know what I'd buy. Maybe a nice car or something. But they're generally. It doesn't become a big financial issue. They've been obviously wildly successful because they've done a great job with everything and it's more likely you're just going to take good care of my. I view it as their child. It's my child.

I think the culture is changing. You don't see that in a lot of ways.

You don't don't or they're not telling me.

Paid on some mortgages and called it a day.

Yeah. Take away the stress of what you what you want to have every day. From a stress perspective. Mortgages are paid off retirement set. I'll do what's fun right now.

Things are changing. People are cutting back on drinking or we do happy hours and the bill is relatively low. So I don't know.

They don't exist anymore. I know. Yeah I know. They're going to be a little bit more healthy than you and I did younger.

Yeah we get that check. Buy a Ferrari something.

I mean there's probably a few cars that would take my interest.

Hey Mark, thanks so much for taking the time to have this conversation. I enjoyed it. I learned a lot about culture and integration. You've helped me become a better M and a scientist here.

My pleasure. It's been great chat with you and I really appreciate the opportunity. Hope you have a great day.

Hey those of you with us, thank you for sticking through. Until next time. Here's to the deal.

Foreign.

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