How to Break Into M&A: Lessons from Todd Manley Part 2

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With AI that pulls key terms and risks automatically, helping you move faster and more confidently. M and A is hard enough. Deal Room gives you the structure, automation and visibility to do it right, but without blowing your budget. Check it out@dealroom.net or tap the link in the episode description here's to the deal. 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. Foreign welcome to the M and A Science Podcast. This podcast is part of a mission to rethink how M and A is done. The old school Settle that approach. It's dead fire led. M and A is all about strategy, alignment and efficiency, putting value creation at the center of every deal. Now let's be real. It's not just about closing the deal, it's about making it successful. We uncover what truly works in M and A by learning directly from the best. I'm your host Kisan Patel, Founder and CEO at Deal Room and Chief Scientist at M and A Science. Today I'm sitting down with Todd Manley, VP of Corporate Development Integration at Intel. If you're not familiar with intel, they're an American multinational corporation and technology company headquartered in Santa Clara, California. They design, manufacture and sell computer components such as CPUs and related products for business and consumer markets. Traded on NASDAQ under intc, Todd's been in the M and A game for a long time, but what really stands out about him is how much he's learned and shared along the way. He didn't take the traditional path into Corp dev. That's exactly what we're diving into today, how people from all kinds of backgrounds finance, legal ops, you name it can break into M and A and actually thrive. We'll also get into some tips for interviewing both as a candidate and hiring manager and how to Build a strong network in the M and A world. This episode is part two of our conversation from last episode. If you missed part one, I recommend giving that a listen first. Otherwise, let's pick it up right where we left off.

It's interesting you mentioned how perhaps that wasn't being taught in school. I taught a course at Santa Clara University for a long number of years. It was interesting because it was a leadership curriculum that gave you like a little asterisk on your degree when you graduated. But it was noted there. But the curriculum was interesting because the first class or the first two classes were deep into some leadership practices at that point. Barry Posner was the dean. He had written the book, his research partner. I think it was the leadership practice, things like inspire a shared vision, model away, challenge the process, those kind of things. The students had a little bit of a framework around leadership and. And then as I came in, what I taught were more of like, how do you actually take some of those principles, put them into practice? We talked about things like networking, how to work in teams, how to have difficult conversations and such. And so there's aspects of how do you take some of these nuggets that excite kids and interns and younger people in the workplace and if they're still on their undergraduate journey, how do you plug that in and highlight that this is really important to you can learn from it and sounds like the story you just said. This guy was just completely jazzed up, excited about every conversation he had and just where things went.

That's a new power unlock. I still do this today. I have that same outreach and usually what I try to do is frame a problem that I'm trying to solve. Growing a startup, there's always something like, hey, I'm doing my first VP of sales hire. We're trying to scale this new function now, trying to figure out what's the best structure and something to reach out to. CEO.

Yeah.

I got a sense you've been there, done that.

Yeah.

And the more precise or targeted for, you know, I need help with this specific thing. I've had a really good response rate and I still continue to use that as a lever.

I'm sure you have an opinion of fill in the blank.

I have a sense you may have experienced this.

And it's interesting because if you start asking the right questions and listening the right way, you clue in real quickly into the care abouts that someone has and you just start asking like the simple questions. The next thing you know, they're talking for another 20 minutes. And you're learning a lot from them.

We sort of mentioned a couple of things. Like I talked about just direct LinkedIn, which I am a huge fan of.

Yeah.

All of a sudden you go global with that and then there's events, which is an important one. Are there any other avenues that you found? Pretty valuable other thing. There's like a flywheel you create. Cause when you meet people, there's a way you can get referrals or other intros without being obnoxious about it.

I might've been like an early adopter of LinkedIn, maybe back in 2003 or 2004. I got an email once and it was like, congratulations on being a member. You were member number, like 10,000, 432.

Oh, wow.

Something ridiculous like that. I've always appreciated just the general sharing of knowledge that, like, that platform has afforded M and A practitioners, whether it be celebrating the wins of people in your network or others who have done big deals, small deals, difficult deals, what have you. I always like hearing someone celebrate their team and the people they worked with on, hey, we announced this or we closed that. I think that's really great. And I also think it's having the humility to. Sometimes there's different groups out there where it's like, hey, I've got a problem and I don't know how to solve it, but I'm sure someone else has done something similar and I'm here to learn. And kind of that ideation and thought partnership in discovering that, okay, someone else has dealt with that before. Someone else has helped solve it, maybe in a different way. And here's how I need to think about it. For my situation, there's a lot to be said. And just getting back to the basics of meeting people in person, developing a relationship, developing an interpersonal connection that just hiding behind your laptop or your keyboard just doesn't get you. That's why I've always enjoyed going to conferences in the Bay Area. We've got a couple different groups that get together quarterly or twice a year just to kind of exchange notes, share and commiserate, celebrate. That's valuable because the work that M and A is, it's not easy. Sometimes there's situations where you're like, I don't wish this on anybody. So there's some lows. There's also some incredible highs where you just feel like you're invincible. You don't want to do too much and go cause bodily harm. And that's a different podcast to tell you about all the injuries I've had in my body over the years. But I'm glad we're coming out of COVID I'm glad it feels like we're starting to get back to human interaction. Tangentially, I think a lot of organizations are trying to figure out how do they strike that right balance with bringing people back to work to be successful versus the efficiencies of maybe some hybrid work or working remote. But at the core of who you are and the work you do and the connections you make, it's super valuable to make those one on one connections.

Hey, I got to ask you one because I don't have experience working a large organization, networking within the organization, because oftentimes I'm boggled by folks I meet and they're just, they don't do that. They almost don't buy.

So that boggles me too, because I ran into someone at this event who worked at a company I had formerly worked at and I just casually asked, hey, who's running this part of the business or that part of the business? They didn't know. I was like head scratching. Like, how do you not know? You should know, but finish your question.

Well, the pattern I've recognized is when I've seen. We had Harry Kramer on here and he came in as like finance associate to CEO track.

Just grew up through the company.

I've seen the partners in their 30s, but the common element was networking extremely well within the ranks and then also being able to solve their boss's problems better than their boss does. Those two things will lend you to a high level of success within a large organization.

Networking doesn't just happen because you're here and just like, hey, look at me. Come network with me. You have to have some purpose around it. You have to put in the action to go network versus being the receiver of networking. I joked my kids played athletics. I would always joke with them, especially when there were situations of physical contact. I'd say it's better to be the hammer than the nail. And my son knows this very well because the one time that he was the nail, he broke his wrist playing soccer. It was a 50, 50. And they came together shoulder to shoulder. The other guy just came in a little more with a little more intent. Son went down, put his arm down and wrist got broken. So he learned his lesson. And it was interesting because he learned that lesson when he was maybe 13. And to watch him play high level club competitive soccer. 14, 15, 16, 17, 18, and that hammer mindset, oh, it was like tearing kids up. I Had other parents that were screaming at this kid, my kid. I'm just going, yeah, he's a hammer. But I think you have to go out with intent. Large organizations can be so big that people just don't know where to, okay, where do I start? Who do I start with? Where do I go? Do I start at the top of the organization? That person may not have any time for me, or do I aim for the middle? So as you're thinking about maybe some strategies in larger organizations, okay, who do you work with right now that perhaps has been there for a while and they've got a network. It's almost like a logarithmic kind of network to network. And it's exponentially. Like, next thing you know, you're within like two people who can get you to the expert who does X, Y or Z. You reach out and you start networking with that person. It's a bit of the art of how to leverage those around you who know others to get to what you want to learn or who you want to, who you want to reach out to. And sometimes it's just being like, look, I have an interest in this, or I have an interest in that. How do I get there? And people will say, oh, you should go talk to Julie over there. She did this for five years, but she's been in her new role for two.

That's a really good point. There's sort of being in the conversation where you're really listening. You're really trying to learn from a person's experience and just keeping your mind in that listening mode, active listening. But then there's also a point when you gotta share what your goals are, what direction you're trying to go, just so that's clear. And that lends to more of those purposeful referrals and introductions without being like.

Forceful, not feeling like you're kind of salesy.

When you do that, you build real rapport. And then a person, they wanna generally help you out, they put that extra effort in. And two, it's just interesting how listening to people, sometimes you help them work their own issues out just by.

Yeah. Or sometimes in the conversations, you. You find yourself articulating something and verbalizing it and getting some sort of reaction back for it. You almost sometimes accidentally solve your own problem without even knowing it.

Exactly. Those are great. On just the networking approach. The thing I really struggle with right now is maintenance. I feel like even now maintenance is tough. Do you go through your network and start stack ranking it and say, hey, this is the most you Know, you try to do that, but then that evolves over time, depending on what you're doing. Do you create a cadence for staying in touch with folks that, hey, this person's on my Once a month, once a quarter, once a year, and see.

You when I see you, you and me, I went dark on you for a long time because of how busy I was. Unfortunately, that was the case. But you do bring up a good point. You have to be really purposeful around maintenance and remind yourself that you do need to do some sort of maintenance. Imagine I see how much enjoyment you get out of bringing your daughter on the podcast and her contributing. But imagine if you treated, let's say, view your relationship with your daughter differently and instead of her being your daughter, she is a colleague of yours in the industry. Now imagine if you didn't engage with her for three months. That just feels really distant. Like, oh, my dear, if I detach myself as a parent, that just feels wrong. It's interesting because, you know, like, you can think back to people, you know, friends, people in your network, and you'd be like, hey, I can call up this person. And within 30 seconds it's like no time has passed. Those are really special. You can't be absent in focusing on maintaining your network and staying in touch with people. And I'll be the first to say that I know I can do a better job of that. Interestingly enough, there was a period of time where I commuted to work on my bicycle, enjoyed it, the fitness, dodging cars, not trying to get injured. But you know what was something I missed? Actually being in the car and pulling up the phone and being like, I haven't talked to so and so I'll give them a ring and. And just some of those ability to just have that time to make the connections. And I think that's really important. And there's other ways that we can maintain the network, whether it's drop them a text, just say, hey, I was thinking about, like, I just contacted someone that I hadn't Talked to in two years. I saw on LinkedIn that they had gotten promoted and I gave them the thumbs up. Congrats on LinkedIn, but actually got on my phone, said, hey, congrats, we should go grab coffee. It's been a long time. A bit more intent and keeping that up front in mind. I know I can do a better job. A lot of people struggle with that too because, like, you'll have that interaction and you'll hear the other person say, I'm so glad you reached Out. I've been meaning to do this too. Or I've been remiss. There's a human connectivity thing that you can't forget. We're not all trying to get the biggest network on LinkedIn. Trying to get an ecosystem that is there to support us, to help us grow, to we contribute into. They contribute into us. It's much more multifaceted than just a number.

You know, back in the day I'd have. Friday afternoons are pretty open and I would just call people. It's fun. It's like a friendly prank call. You just kind of joke, you know, there's people, you know, call them.

Not a Shadur Sanders phone call, but.

It'S like a nice surprise. You're just like, hey, I just want to call. I give you shit.

You know, hey, good to talk to you.

But now I don't have any time anymore.

We need like an AI bot.

They're actually trying to do one. They're using like Delphi AI and they're trying to make a bot of me with feeding all the podcast transcripts.

Interesting.

I don't know how that's going to work. I'll let you know on that.

We'll have bot to bot conversations in the future.

Networking, definitely the most underrated, undervalued skill. So highly encouraged to put some reps in towards it. What I do is I tell the up and comers 30 minutes a week, just go on LinkedIn, connect with folks and try to book intro calls and use that as your just muscle to keep building networking.

Here's why I'm reaching out to you. Your background interests me in this or that, like some sort of little hook.

Keep doing it, you'll get good at it. Yeah, hiring.

Yes.

I gotta, I wanna learn from you. You built a lot of teams, successful teams. I've heard so much praise at Marvel, particularly like people are always like, you want to go learn M and A? Go see what they're doing over there at Marvel. You're too busy doing deals to talk to me when you're at Marvel. So I was just curious, you know, in general, a big part of it's just getting the right team working together. If we can talk through. What do you look for when you bring somebody to your team? How do you spot somebody with real potential? And is that true at Marvel? Was that really they were doing things right over there?

They had gone through a period of change where they brought in a new leader, he brought in his new leadership and that opened the door for them to turn the business around and start doing some acquisitions. I was not there for the first acquisition that they did, but there was so much positive momentum around how it worked and how it added value and benefit to the business that it created a flywheel effect and that the effect naturally carried into the subsequent deals. That was a model that was a bit more of the national Guard. No real dedicated team, except for a couple of us. But we had some outside assistants that would come in, some consulting assistant that would help. But you had people within their areas that really enjoyed doing the extra work it took to do M and A work. In those instances, they all recognized that, hey, I've got my day job, and I've got my integration job, or I got my job that I'm doing diligence and other work to suss out, is this the right thing? In those instances, people enjoyed flexing up to participate and help, and it was really great to see.

Pretty cool.

Yeah.

They got a culture where they were bought in and wanted to lend a hand.

Yeah, they were bought in. It was a culture of, hey, I know that maybe someone else on the team would do good. If I could bring them in, they could get some exposure, some apprenticeship around this and almost be a backup to me, or end up being the rock star of the group. It's fun to see how momentum around deal work shows up differently in different organizations, how they're structured and what they're trying to accomplish.

How do you hire the best?

There's no magic formula to it. I've had my own personal missteps and seen good deals, bad deals, And I see in myself personal traits that I can't put my finger exactly on what good feels like, But I can trust my gut because I know what bad feels like. I've had enough good experiences. I feel like I know what good feels like. And it sometimes just comes down to intangibles of just how does someone handle themselves in the interview? How are they able to articulate their background? I'm a big fan of behavioral interviewing. Tell me about a situation when you did this or that. And some of the foundations of behavioral interviewing Is that past behavior is a good predictor of future behavior in the course of an interview. And I understand some of the things that you did. I can then maybe throw out some hypotheticals to say, how would you think about this situation? Or how would you think about solving this problem? And it may not be a problem that is specifically tied to the role that I'm hiring for, but maybe it's a. Maybe it's a Question that highlights something I mentioned earlier around. I like to see leadership at all levels of the team. So maybe it highlights something there or highlights high area of ambiguity. How do you break that down? How do you think about that? What's really underrated is it's difficult to do this work when you have a mindset of that's someone else's problem to go solve. Kind of feeling like, this is the box I work in and this is all I do. There's so much to be done in M and A related work that if a candidate just shows that willingness to be like, I'm willing to do something that maybe I'm not the expert in, but I'm willing to learn and I'm willing to grow, that means a lot to me. Because there's always going to be more work than there are hands. If someone can feel comfortable with taking on something that is going to give them growth, going to learn, maybe they don't see it in the moment, but you see it in their background that you're like, you know, what if they were put into an opportunity that might be. They may feel a little difficult for them to step into and execute, but you've seen how that work can play out and perhaps the growth that can be had from those experiences, that's pretty valuable. You can't typecast candidates who wanna get into M and A. They wanna get into M and A because there's something about it that intrigues them. And like I said, it may not be for them. They may do one deal and be like, this is not for me. That's okay. But there is some reason why they're intrigued by it. Discovering through conversation, through interviewing, like, why is that? What about it? I see the wrong answer would be, I just wanna do deals. Okay, tell me, like, why do you wanna do deals?

You know, is there solving problems? It's something, right?

Like get to those deeper intro that show up in an interview that gives the hiring manager or the hiring team better sense of religion. Okay, we know who this person is. We know how they're going to show up. We see why they want to do this. That's important.

So how they can articulate their background. And then you're looking at some of this historical behavior and just to anticipate what the future would look like. And then ownership and their drive. What's driving the drive, Those are the main things.

Those are pretty important to me. Humility. You can't come into doing this kind of work thinking you're the expert that knows everything. I'M always learning something new. I've told my team, if I'm not acting that way, please tell me and slap me on the wrist. I do feel that over time, as you've had enough experiences, you start to develop a trust. Your gut feel like, is this true? That doesn't feel. And I've had some interesting conversations with peers who if you think too trades in the past like I'm thinking, like in the 1500s, 1600s, like a blacksmith. You just didn't become a blacksmith and start producing the best swords in the world for the Knights of the Round Table. You learned your trade. There's a bit of apprenticeship that is valuable to just recognize that that's important in this kind of work as you get exposure, as you do different kind of deals, as you learn from different problems that are solved. What's something that you wish someone would have told you earlier and the one that always I come back to is there's a ton to learn from the journey that you're on. And don't get distracted by the destination you want to get to. Destination is a great goal. It's your North Star. I want to get over there. I want to do this or I want to achieve that. That's great. But don't let that be blinders on you to being present in the work you're doing today and the work that is coming up tomorrow. To not learn from the journey. I can think back to a couple times in my career where I got a little too myoptic on that destination. And there was so much more I could have learned from the journey if I just had my older self slap me upside the head and say, todd, learn from the journey.

I totally agree with that. I learned the exact same thing. It's just like performing in the present.

Yeah, be present, be in the moment.

Is there anything you do to quantify a candidate? Like test projects, business case?

I've seen people do things like that. Hey, let me give you a problem. Let's come back in three days. I'd like to have you write something up, see something. I've never subscribed to a lot of that. Just over the course of a conversation, I get a sense of what a person can accomplish. There's not a bar that I'm looking for them to hit. Now, that being said, I'll share an old story. When I was doing Oracle work, I did use some technical code and I would hand it to a candidate. It was about a page and it was written in PL SQL and say, can you identify what the problem is in this code, not everyone would know that was informative to me because the code itself, it was recursive. It kept calling upon itself. It would be the equivalent of us watching us on video and then being an endless loop of you or I saying the same thing over and over. And you want to just hit the side of the television or slap your laptop monitor, like skip forward. That was probably the one time where I actually. I got some pretty technical of something. And I actually busted that out with a friend who was interviewing for a role. And he got so upset that I put him through that.

Oh, that's so funny.

He was really upset.

That's interesting. Cause I always thought it's good. I always try. When I do any kind of role, hiring is some kind of test project or some trial something.

I mean, maybe it comes out in the way I do some of the behavioral interviewing and just the flow of the conversation of speaking in some hypotheticals and seeing how people kind of handle that in the moment.

I think it's different to you sort of are looking at different roles and different background and professionality. Or earlier stage company, pick out kids right out of school. And it's like, let me just see if you can jump over this fire pit and if you can do the job there. Real quick, I want to flip it where I'm somebody that wants to come work for you. Big shot guy at Intel.

I'm just talking.

I don't know that I just saw your title. I don't come from this ideal background. That's my biggest concern. But I've been in maybe like a customer success role. Something that's a little, you know, there, but not super recognized being associated with M and A. But I'm just really interested. I read the headlines. I learned about it. I've heard when our company talks about doing stuff like that. But now I'm transitioning and looking for a new role. I want to figure out how do I get in, how do I position myself to stick out.

What are some of the common problems that you see in your current role in dealing with customers and how they interact with our business? I'm presuming you and I are in the same organization right now.

Okay. The biggest thing is we get a lot of angry customers to deal with. And the thing is, it's turning around.

Their experience in turning around those experiences. Are there common themes or are there common techniques that you've found that are really useful to getting a win win for people?

There's a couple of key questions I'll ask just to get to the root of their problem. I really want to understand what's irking them. And I found that more than half the time, people just want to be hurt out. If they get hurt out, they calm down. It gives us a lot of time. If we don't hear them out, they lose their stuff and they'll potentially blow up and they try to escalate it and start bugging the executives.

So how do, how do you handle those situations where perhaps maybe you don't have the answer? You say, look, give me 24 hours, I'll come back to you. How does that work and how do you think about that?

I just want to make sure I've had enough depth of conversation that they truly felt they've heard and that I've taken enough context so they got details and I don't have to come back for them for more specifics. Then usually by the time they've put enough detail, they felt that they've been heard, they've emotionally calmed down. And then it's my work to go get some feedback from the tech folks and see if we can resolve this problem. How long it's going to take.

And in articulating what you just did, do you see that would be valuable in aspects of M and A, how are you thinking about that?

You know, to be honest, I don't know that much of like, how it works. I know it's just interesting projects and it just seems like more complex. And that's what drives interest in it is just solving things that are more of a complex challenges.

Okay, time, meaning time. Let's stop role playing. Where I was going with the line of questioning was I was trying to get a sense of like, how do you deal with situations where you don't have the answer and maybe you need to go find more things. How do you listen to the customer? How do you enter into that dialogue to learn a little bit more? My mind in our conversation immediately went to maybe an aspect of being involved in aspects of like diligence. Hey, I've got a time to go. I get to sit down with someone at this, at the target, and I get to listen to what they do and how they do it. With my experiences and background, I know that it's done a little differently. So let me tease out some aspects of asking some other probing questions to get a better sense. How do they think about this or how do they think about that? That's a skill. And just being engaged, listening, that serves a lot of M and A professionals really well.

So that's how I link it back to. This is why I'm interested in this role as this sort of discovery that I'm already doing with the customers would apply pretty well.

Yeah, totally. Your hypothetical background of dealing with difficult customers is also can be valuable to not every person who you engage with in an M and A deal is excited about the outcome. You'll hear people say, well, yeah, you know, my company sold. It wasn't my idea. I didn't buy into that. No one asked me if that was good. You run across various emotional responses to deal work. If you were to take a customer experience, customer service background and be like, okay, I've dealt with happy customers, I've dealt with upset customers. How do I really get to the heart of the problem, defuse some of the emotion in the room and get to the facts?

I say there's sort of two views of know myself and just understand what my role. Because sometimes you don't think about it just like you're doing it day to day and you don't think of what you're actually doing. Yeah, that hey, I'm actually doing a lot of discovery conversations with these customers. This goes back to even the networking. Use the networking approach to connect with folks in M and A roles. Hey, openly, I'm looking really trying to pivot into M and A. Love to just learn from experience and just try to get more of their language of how they describe what they do so you understand how you sort of position that story of this is what I do. This is how it applies to M and A.

The great thing about networking is you may articulate and have a background that you're talking with somebody and they may in their own network be like, oh, I know someone over that organization or that company. They had that same background that you did. They did it 15 years ago. I should get the two of you connected. Yep, that's really valuable. Just having some intent and getting it on the table to talk about opens a lot of conversations and doors.

Totally. I just had that yesterday. I was like, one of the guys on the round table is going through a take private and I know two other people that just did that in the last few years. You should probably go talk to them.

Yeah, go have coffee with me.

Exactly. Okay. So that's how I would approach that I'm curious about. There's this evaluation of looking for folks for full time hires and then you got consultants that you bring in as well. Is there a different way that you evaluate those experiences? Or do you not get a crack at it? Somebody just hire the consultants because they know somebody higher up and you just have to work with them.

No, you got different organizations who want to make the investment. So sometimes they might run a team a little more lean and augment that with consulting when they need to flex up. Or then you've got larger teams who maybe when there's not as much active deal work, those people are putting their skills and skill sets into other programs and activities within the business. I can say with full confidence, I've worked with a lot of great full time people. I've worked with a lot of great consultants. I sometimes joke that anyone doing M and A is one job away from doing a consultant and anyone who's a consultant is one job away from being a full time employee doing this kind of work. There can be a lot of fluidness around that comes back to, I've worked well across aspects of teams built in in one regard or the other and it does come back to like, hey, are you a team player and can you lead? And in other instances I didn't mention this is can you follow? Sometimes people get enamored with I've got to be the leader, I've got it, I got to show leadership. There's also times where hey, I've got to follow someone else and I've got to be there to support them in their own leadership role journey and they're leading, that they're doing of something critical and how I'm part of that. Like I go back to my Stanford basketball example. I was lucky enough to play high level Division 1 college basketball and I remember coming in the locker room and looking around the locker room going, at one point, every single person in this room was probably the captain of their own team. And now it's okay, how are the dynamics of who we are in this room going to play out so that who are the leaders, who are the followers? How does that kind of transcend the locker room? You know, there's commonality around the juniors and the seniors, the guys who've been here a long time, but every now and then you get just someone who comes in and they might be the freshman and it's like, we're following you, you're our leader. And I learned a lot about how to be a good team player, how to be a follower, because it was evident to me that I was not the star athlete of the team. I didn't jump the highest, didn't run the fastest, didn't shoot the best. So I Said, how can I be the best teammate? How can I contribute? How can I ensure that the collective success of who we are maximizes everyone's capability around the table? There's an aspect of knowing how you can contribute when you need to be the follower in the room and how you can step up and be a leader when you need to be the leader in the room. That's important.

That's a really strong point. Or knowing when to lead, when to follow fire. LED M&A. I get a royalty, by the way. I get like a dollar every time I say that.

Yeah, you guys got it trademarked down here. How did that happen?

We sort of published a framework around it, and now I'm actually working on a book. But really putting all these themes together on driving deal from the buy side. And it's just where we see the puck going the next 10 years that companies are going to be more proactive about leading from the buy side. And it goes back to what you mentioned earlier, just connecting diligence to integration, really putting that thinking in the forefront of the deal process. And you got to do it proactive. It's a solid process and you're going to figure out integration after you close. It's not gonna work. And we just see it. I feel like this is like the fabled failure rate. 70 to 90% deals fail.

That's a point I haven't brought up. Here's my theory. I'm happy to have anyone push on this and say, todd, you're completely wrong. But I have a theory that there's a subset of M and A practitioners out there in the market who have done M and A really, really well over the years. But they're not the ones who are going out and saying, look how great we are. They just go about their business, they buy companies that integrate, the value shows up and they move on to the next one. I just have this theory that they're in the shadows, just doing really, really good. Don't need the visibility of look at me. Whereas you get this data point, and I'm sure there's research out there. I've seen it too, where 80% of deals don't return on the value that was intended when it was agreed upon.

Why are you going to sell consulting services on a low failure rate?

That's the thing. It's kind of like I'm going to sell my services just based on the fear that. Fear? Yeah, Based on fear.

Okay. Here's my view on it. The question is, what is failure? Because it's Not.

That's a really good question to ask.

My theory is that people tend to overpay for a deal because especially if you're buying a competitive banker led process, you're going to overpay for it. A winner is going to overpay and then you're scrambling to make up the value. So at the end of the day, hey, the target was to hit X revenue or X integration within one year. And it takes you 15 months. But still a failure.

True.

You know what I mean?

Understanding where the goalposts are.

Yeah, you'll still get there. It's just gonna take you longer. And I feel like that is actually most of the failure versus an AOL story or something like it doesn't completely tank. And then we work with a lot of rollups and those like pragmatic acquirers, they got a strong hit rate. If you look at their fail rate, it is like well below 10%.

Part of it goes to. Okay, when the deal was done, the goal posts were at the end of the end zone. Okay, Something happened in the business, maybe something changed. And now the goal posts are now 20 yards to the right. They're not in the middle of the field. Okay, well, someone either moved the post, they moved my cheese. You name the analogy. But there was a dynamic that changed. You go back and go, did it really hit the original value to get.

The deal approved is like you gotta inflate all your synergies to hit the goalpost up here and then reality strikes and. But by then it's on your plate.

Yeah, yeah. That's why you don't see very many deal people who continue to carry the charge through doing the integration when they hand the baton over.

You see when you're hungover after closing dinner and the skate. A good look.

Exactly.

Okay, my bar LED question.

Fire away.

Fire LED. M&A is all about building strong, aligned teams early. How do you think about building a team that's set up to win post close? Given what we just talked about, you.

Really got to have a tight understanding of kind of what is the end goal. Sometimes that does take a bit of poking and prodding from the integration side of the work to be a bit of the friction in the room. Is success really around a market adjacency? Is it really around maybe some product synergy? Is it around geographic expansion? So kind of what does good look like? What is the win? And understanding that there could be many different routes to get there. And it's important because those routes to get there are going to be Informed partly by what part of the business is doing the deal. If it's a big enough business that there's multiple business lines, some of the aspects of the dynamics of how that business works per se and then also the characteristics of the target. Are there things that are so visible about the way that target operates and works that you have to take that into consideration and be thoughtful around it? So if it's perhaps a very strong engineering organization that is very critical of high product quality and technical capabilities and that's coming into maybe someone who into an organization that maybe is, hey, we'll take a little more risk, we're okay with moving a little faster and knowing that we've got to maybe do a patch here or a patch there after a release of a product, you got to suss some of those dynamics out.

That's a good point. So I don't even think about that. I'm just like, oh, who are the best people? But it's like looking at the whole.

Scenario, full disclosure, like you say buyer led. And I'm thinking, okay, let me put my hat on about seller led. Have I ever been on a seller led journey? And I think to myself, no, I haven't. And here's why. I came up through the integration route and the integration route was always tied to. I'm the buyer, I am buying something that's coming to me. I as a company have to figure out how to make it work.

By the time you've screwed up enough deals, you're going to set up an integration function. And then so at that point, and that's what happens. I notice like first deal is usually like that. You don't think about any of that stuff.

Yeah.

Then around deal 10, then it's like, whoa. Their whole process is very much led on the buy side.

That's true. Because you start seeing that there's probably some power in understanding as an organization, why do we go do deals? It's almost like your DNA, like how does a deal fit into our DNA? How does it become successful? Because you could have two competing targets out there that both on the surface look good but you click into it and you. And maybe let's use culture as an example. Could be two completely different cultures. And you realize we are going to work better and integrate quicker with this culture versus that culture. It'll be something like that.

I like that. It's not just looking here's people for their characteristics, but looking at the whole picture. What's end goal going to look like? What is the characteristics of the situation, engineering focus, culture, top down bottom, management, whatever. Okay, so we got great team, we did a bunch of great deals. People eventually get bored. This is an interesting question because this comes up on these roundtables of, hey.

I've been in Corp dev, I got.

To the top a VP level title. Whether you're in the integration focus or the deal focus. What's next?

It's a good question to ask because sometimes you can fall into the trap of you enjoy this so much that you just never want to leave. It's more so you don't want to leave. The thrill of the work.

That's what usually happens. You do a deal and you run away or you stick around for a long time.

Yeah. And you stick around. You're like, something must be wrong with me. But you enjoy it. There's that thrill to it. I've got people in my network who've been doing deal work at one company their whole life, where I have folks who have done it across many different companies. I asked myself this question once and I thought to myself, if the question was posed, you can never do M and A ever again. What would you do?

Do a startup. No, I wouldn't do a startup again. Take that back. I would try to find a management like a GM in a company running some business division.

You're very close to how I was thinking about it too, which is in the work that you do, regardless of whether you're doing it on the deal side or the integration side, or you got a foot in both, you get a tremendous amount of exposure across a lot of different areas. And I don't think it's easy. Some people may have given this thought and said, oh, I'd immediately want to go be a COO or I want to be a CFO or I want. People may have taken that thought or taken time to think through that. But it's valuable for people doing M and A work to take the time and step back and go, you know what? I don't want to give myself any credit and say, oh, Todd's on something. But just think about it. If I couldn't do this work, what would I go do? And I look at it and say, there's a tremendous amount of just cross functional experiences and exposures that you have. And sure, you may not be a deep expert in everything that you've been exposed to, but you're going to find that as you think about it, there might be some aspects that you gravitate towards. I had someone pull me aside and they said, And I really like how you think about culture and communications transformation, that employee experience. You were acquired, you've gone through it yourself. You sometimes put the shoes on that others are going through and you would be really good in like a senior HR role. I had never thought of myself in that capacity, but that was interesting. That was an observation that I was blind to just thinking about myself. It's valuable to check out, take some time, give some thought to the experiences that you've had. Because I think people doing this work, if they step back, they can make the argument to aligning themselves to their next step because of some exposure they've done through M and A and something where it's, you know what, I remember that deal. I had to dive deep into some aspect of legal operations and privacy. I can really see myself getting deep into privacy. It's an interesting space. There's different on ramps in M and A. There's a lot of different off ramps.

I like that there's a big theme around just cross functional in nature, which opens up a lot of different management leadership roles. One I just popped in my head was the private equity operating partner or going to private equity, like portfolio support, operating support, whatever they call it. That's another one that you're seeing like continually emerge and get stronger.

There's some interesting aspects of. If you were to take someone who's had frontline M and A experience and how would you position that in being additive to a private equities portfolio of companies? These companies may have the need for some M and A experience or expertise, but maybe not a full time person. Hey, you're my investor. Can I lean on you? Do you have someone with experiences in this? Or take the other side of the spectrum of a venture capital firm who we haven't seen as many IPOs, we haven't seen exits, but you've got firms that are really mature, that are out there that perhaps are looking to do their first deals and working with, let's say you're on the payroll of a VC company but your services were. You're like an internal consultant to all their portfolio companies who either work in two different ways about it, who want to go do M and A, or who are thinking of M and A as viable exit because they've maybe reached the arc of where they think they're going to get to.

Yep. Prepping them for an exit.

Yeah, I think there's a lot of different avenues and things that you can think about if you just take pause and just give yourself a sense of time. To think through it.

Worst comes worse. You can become consultant again.

I always go back to consulting.

I don't remember the consultants. There's some great consulting firms out there.

There are. And it's always great working with consultants and hearing their stories from different clients. Now, clients protected. They're not. I respect not dropping names or not dropping clients, you know, but just sharing the story like I had a client. And here's what happened.

Absolutely. Hey, Todd, I gotta ask one thing. What is the craziest thing you see in M and A?

So a couple things, and they're very specific.

I like how you thought about this.

I did. I wrote these down.

Good thing is we interview so many people at big companies, so, like our process, we have to send an outline so we get comms approval. Because I can't surprise you with this question, but let's hear it.

Well, it's funny because I would say if I were to listen back to our recording, I've kept what I need to keep private and confidential and just referenced a situation or a story to.

All the comms people out there. I love you. Appreciate you.

There was one integration. We were doing a weekend move and small engineering team of maybe like 75 people. And they had a kegerator. Over the weekend, we snuck that kegerator into the acquiring office and we put it in a network server room. On Fridays, when you saw engineers walking out of the server room with red solo cups, it was because of the kegerator. Some other stories. I had a phase of my athletic journey where I played some hockey. I found myself in Europe during the dead of winter, and I actually traveled with my hockey skates and had a fun time just visiting local rinks. There were a lot of outdoor Christmas rinks. That was a lot of fun.

Oh, that's so cool.

Yeah, there was one where it could have been the size of two football fields. It was huge. I felt really bad for that unfortunate beginner who was drifting to the middle and there was no wall to hang on. And they look up and they realize they're 100 yards from crawling. They might have had some people out there helping retrieve them back or some way to get back to safety. Probably the one that hit the hardest was I was working on a deal and I had a critical conversation on one phone. And then second phone rang, and I forgot to put the first phone on mute. I had the second call. People on the first call were like, get off the line. And I realized after the fact that how big of a mistake that was.

Oh, boy.

Yeah. I went to all parties and admitted my mistake. We worked through what really transpired. Did it really impact what we were doing and learned a lot from that. That might not have been the craziest thing, but it's probably the one that like taught me that. One of the biggest lessons.

Yeah, make sure you hit the hold button.

Hit the hold button. Don't get off this donate. Just drop the call. Yeah, just say, sorry, I have to take this other call. I'll get back on.

That's true. Yeah, I've had similar things happen. Everybody has.

Even telling the story. I've got a little ptsd.

All kinds of crazy things happen when it comes to these deals.

For sure.

This has been fun, Todd. This has been great conversation. I want to thank you for taking the time to become better M and A scientist here.

I really enjoy the content that you put out there. I try to listen to as many podcasts and the YouTube content there. It's fun learning from others, fun hearing their stories and no thank you for all the stuff that you do to help the community.

Fellow M and A scientist, thank you for stay in tune this far. I'd love to hear from you. It's a little switch up on the typical podcast, but we wanted to get something a little broader for folks that are more of the career transition, whether going in or looking for the next thing. Hope you had fun listening to it. Love to hear your thoughts. If you liked it, what you liked about it, you hated it. What'd you hate about it? Take the criticism. So I learned to get better. Reach out to me on LinkedIn. Until next time. Here's to the deal.

Thank you for taking the time to explore the world of M and A with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you need help standing up an M and A function or optimizing one that you already have, we're here to help. And if we can't help you, we probably know someone that can. You can reach out to me by email Kisan K I S o n a science.com or you can text me directly at 312-857-3711. If you just want to keep learning at your own pace, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter. Again, that's mascience.com here's to the deal. Views and opinions expressed on M and A Science reflect only those individuals and do not reflect the views of any company or entity mentioned or or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.