How to Build and Align a Corporate Development Team with Multiple Mandates

Hello M and A friends. This podcast is brought to you by dealdo. M&A is coming back. Would you like to avoid wasting hundreds of hours managing Excel Trackers and building PowerPoint reports? Do you want to make your process more efficient? Well, I have great news for you. Deal Room is MNA management software to save you time, headaches and improves collaboration so you realize value faster. Learn more@dealroom.net here's to the deal.

I'm Kisan 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 M and A Science Live. Putting together companies is complicated and taking them apart is even more complicated. We take lessons from real practitioners and enable them through our Deal Room platform. In this podcast series, we interview leading M and A practitioners to learn lessons from their experience. Learning proven techniques is key to optimizing your M and A practice. If you're interested in learning more, connect with us at our networking events and access our educational resources@mascience.com we also have a happy hour next Wednesday so you can find more information about that on the website as well. Jeremy will probably be there. We'll make him join.

Definitely.

I'm your Host, Kisan Patel, CEO and founder of Dealroom. I spent 10 years as an M and A advisor and after seeing a slew of many industry wide challenges in 2012 I decided to pursue the dream to build the greatest software to manage M and A. Today I'm here with Jeremy Siegel, Senior Vice President of Corporate Development at Progress. Jeremy is a corporate development executive with 20 plus years of experience in the technology industry focused on M and A, strategic planning, joint ventures, divestitures, international expansion and strategic partnerships. He's led all aspects of 35 +acquisitions, divestitures and strategic investments with an aggregate value exceeding $8 billion. A little bit more with the recently announced deal, so maybe eight point.

I know I have to change that.

Today we're going to discuss how to build and align a corporate development team with multiple mandates. For example Corporate ventures, joint venture strategic partnerships. A characteristic of all corporate development teams is that each is completely different from each other. Can you share a view of your responsibilities in your specific role?

Sure, and thank you. I think it was great to hear the history of what I've done and it just makes me feel really old. But you're right, every corporate development function is different and it's been different for me from my days at Akamai to my years at LogMeIn to even at Progress. I mean, I would say that at Progress we are executing on more of a total growth M and a strategy. So Progress is a great company, has been around for over 35 years and is very focused on looking for assets that have sufficient scale that we can bring into our platform and leverage the strengths that we've built over those 35 years, including operational efficiency, strength and being able to sell to a broader base of customers. So it's different than in the past where I was more focused on technology, technology tuck ins and looking for technology that I could bolt on to different product suites, products that we had at LogMeIn. So it's true each corporate development leader probably has a different mandate as to what its focus is. And for us, it's really finding assets that have the scale that can make an immediate impact on the business and where we can implement some of our strengths from an operational efficiency standpoint to make them work with our business model.

Nice. So what do you do?

I spend a lot of time working with the leaders in the company to really understand each of the different businesses. Company today is broken out into three core business units and so I spent a lot of time working with each of them to really understand the strategy of those businesses, but also to understand the more macro company M and a strategy as well and where we're focused in taking that and then really understanding for Progress, understanding the entire infrastructure software ecosystem and as part of that DevOps is a key component of that and really spending a lot of time understanding who are the players in the different spaces, what are the key trends in those different spaces spaces. How could it fit within Progress in those respective spaces. And then it's really around going out there and sourcing these opportunities. I know a big part of today's theme is around relationships and building relationships. And for me, that's been a critical part of my success doing corporate development for as long as I have. It's about building those relationships not just with the companies that are the target companies that you want to have dialogue with, but it's having relationships with the venture capital and private equity communities that are going to provide a source of those opportunities as well in making sure that they understand what our priorities are. And then it's also having relationships in the investment banking community. Something I learned early on in my career was what I didn't want to have happen was my CEO come into my office and say, Jeremy, how come we didn't look at that asset? I just Heard that Company X bought it. So it's super important for me to have really good relationships with a broad set of the investment bank community as well, so that as they have mandates around different deals, they can say, oh, I gotta reach out to Jeremy because I know that this is something that could fit into a possible interesting area for them. And I think that being able to maintain those relationships and build those relationships over this extended period of time has been super helpful to me. It's not just about thinking about short term, what should we be doing, but it's really about thinking about that longer term M and A chess board and really thinking about what could be some of the moves we want to do in 2021, 2022. So while we certainly get involved in a lot tactical stuff and executing on the deals that are right in front of us, it's also important to be constantly building that pipeline for the next year and the year after that and so on and so forth, so that you can have that constant deal flow. And then it boils down to making sure that you can execute on these transactions well, from the diligence process to the negotiation process, to the integration process, which are all so critical, it's really important to put extra emphasis in all those different phases of the M and A process. So that's a lot. So I get to do a lot of fun things. When I go and talk to to my alma mater, Bowdoin College, and I tell them about all the fun things I do, I just can't help but get excited because it's a great role and we get to do a lot of really cool things and it's high impact for the business and it's just great.

It's amazing that you're able to do that all off the golf course.

I wish I had more time on the golf course. And trust me, my golf game will show you that I don't have a lot of time on the golf course.

Share with me how you ensure that you have an authentic and genuine relationship through the process. Process of initial prospecting and throughout the initial course of a transaction.

Yeah, and that's a great question. I think for me it's not about reaching out and saying, hey, we're interested in buying you. What do you think? It's really about building that trust, building that interest in wanting to be more engaged with each other. And that takes time. I have a great example of a deal that I did at Logmein, where I met this company when they were in their early stages and we just kept the dialogue open. I introduced them to other people within the company on the technology product side. They got more familiar with this company and the product that it was building. And once they had gotten to some level of scale, we had that relationship already in place. So we were in a position to be able to do that acquisition and be able to do that acquisition proactively, as opposed to reactively, say, in an auction process. And I think that it's important for me to, with all the CEOs and all the other folks that I interact with at companies, is to build that trust and to educate them more on Progress too, and get them or the company that I'm working for, whether it's progress or log me in in the past or Akamai and getting them excited about, wow, think about the things I could do at Progress that I can't do on my own or that if I want to do on my own, I'm going to need to raise a lot more capital to do it. It's going to take me a lot more time to do it. I'm going to have to take on significant more dilution to do it. This progress thing is a little bit more interesting. And then what I do is I try to get them introduced to more folks within the Progress family. So having them talk to the GM of a business unit, having them talk to folks on the product side, one of the best things for me is when you see product folks talking to product folks on the other side and you can just tell right away if there's a vision match there, because they just get so giddy and they could just go on for hours and hours talking about products, talking about technology. It's building those relationships, not just me, but the entire team of folks that will be involved in an acquisition. And over the course of the time, those conversations evolve and you can then start to segue into, well, maybe there's more that we should be doing together. And those are usually the points where the target companies are more receptive to it. Or if the target company is at sort of that inflection point, they know they have the relationship with me and they can reach out to me and leverage that relationship to potentially avoid having to go through a long process but do a deal with us.

Now, this is really interesting because as a CEO of a company, it can be pretty daunting to get approached by a strategic acquirer. It's not this post deal sunshine and rainbows sort of picture that you hear about. I'm curious if you can give me an example of maybe a deal or somebody you worked with where you sort of saw this CEO go through that light up moment and saw it as a greater opportunity as opposed to just a paycheck exit.

It's a great point. And it's funny because there are plenty of CEOs. Their automatic reaction is, well, I'm not really interested in selling the company, so I'm not really sure why we need to talk right now. And then I tried to just get them a little bit more comfortable, go into the, let's look at maybe some ways that we can partner together and take those baby steps to a bigger relationship. And we have thousands and thousands of customers. You don't. So you have access to all these customers. We have this great platform selling machine and you're just building up a team so we have access to that. So you start to get them more and more excited about the opportunity. And I would say it was interesting. I was working on an acquisition at LogMeIn and the company had just taken some initial funding. The CEO of the company was actually receptive to working with us. The investor was very skeptical. Obviously the investor had big visions of what this company could do. But the CEO stated its case and built its case and convinced the investor that, yeah, going and working LogMeIn makes a lot of sense and doing that now makes a lot of sense. So again, it's part of that building the relationship, building the trust, getting the people on your side so they can build the case to people that may be the naysayers on their side as well.

Is it more so I have this broad view that my business can merge with your organization and have potential for greater growth scale, faster pace, or is it more as a CEO, my comp's going to be better because I'm going to get paid out and have some potential other additional revenues for retention.

I think it's the former and I hope that it's the former because that's what I want them thinking about. I want them saying, hey, I want to see this company succeed. And I know this company has a bigger opportunity for success and a faster opportunity for success. And if it becomes a part of this bigger platform now, certainly in most of those cases it works out well for the CEO and hopefully a good chunk of the rest of their team as well. And that's certainly a nice piece. But for me it's really more of making sure that they're committed to wanting to really be engaged in the business still. Building that business together still and having that partnership on a go forward. Basis, I don't want them necessarily leaving on day one. And of course, that differs from some deals on the total growth side where you're buying things with more scale. Maybe it's not the case where you need that senior most leader, but certainly on the tuck inside, where you're bringing in new technology, where you have no familiarity with a space, having that leadership team to help you drive that is key. And so having them committed is key.

Having a CEO that's embodied in the business, thinking about the business for greater purpose, what's your ideal method of getting a prospect on board?

It all boils back to what I talked about before and building that trust and having a regular dialogue and exposing the CEO and exposing the target company to a broader set of folks within my company and getting them more excited about our company.

And at the same time, they're not coming to you.

Oh, so from a standpoint of like, how do I reach out to them?

Yeah, I'm just curious, how do you get them?

Yeah, no, that's a great point. One of the great things of having been around as long as I have been at this point, I do have a pretty good network. And so it's usually pretty easy for me to get access to these different executives. Whether it's through a mutual connection that we have at a VC firm or a private equity firm, or just someone that we know mutually, where I can easily leverage a contact that I have to get a connection. I'd prefer to have more of that warm connection than just doing the sort of cold call and just reaching out out of the blue. One of the benefits for having done this as long as I have is I usually don't need to do that out of the blue. Cold call, which can be tougher. And that's sometimes where you get that more initial adverse reaction to why is this guy calling? And I talk about the fact that while my mandate is on the M and A side, I work very closely with the company in helping to identify strategic partnership opportunities. Opportunities as well. If this is not an M and A opportunity, that could be a great opportunity from a partnership standpoint, and that can be a great way to start a relationship.

How does that differ? Twenty plus years ago, when you didn't have this expansive network to lean on.

That's a great question. Twenty plus years ago, I was doing this at Akamai and it was a lot more of reaching out and figuring out how could I get to those people? And it was building those relationships. It was building those relationships with the VCs I'd say when I started a corporate venture fund at Akamai, that was a great vehicle for me to get access to a great number of companies because I built this phenomenal network of venture capitalist folks. And I learned so much more about the kinds of companies that were in their portfolio that may not have been on my radar if I didn't have those relationships, if we weren't doing that corporate venture. P. So it was a great way for me to build that initial network and just build more relationships.

Your approach to nurturing relationships sounds very similar to my own approach for passive recruiting. And is it the very similar, or.

Are there some differences from a passive recruiting standpoint?

Yeah, you're sort of, hey, just getting to know somebody. I may reach out to you even and ask for advice, but just building that relationship over time, then I may say, hey, Jeremy, I want to come join your team, or something like that, you know?

Yeah, it's a great point. There probably are real similarities there, because it is all about just getting to know each other and sort of interesting. And having just gone through the Chef experience, where we had to do the entire process virtually, it makes you appreciate figuring out how to build those relationships. Certainly with Chef, we had to get a little bit more creative because it wasn't as if I was able to fly to Seattle to sit down with their CEO face to face.

So you didn't do any face to face with them?

A lot of face to face on Zoom, but yeah, nothing in person. Nothing in person. Whole transaction was done virtually. One of the things that we benefited from on the Chef transaction is that the company actually was over 60% virtual anyway. They were used to a more of a virtual type structure as opposed to everyone being in the office every single day, where something like this might feel a little bit more uncomfortable. But I'd have to say it was still uncomfortable for me because being as old school as I am, I put a lot of emphasis on getting to know folks, going out and meeting with them face to face, having dinner with them, having drinks with them, and again, just slowly building that connection.

I had a friend in Corp Dev told me he can't close the deal unless he can sit across the table and look the person in the eye.

A lot of people have said that, and certainly you have to deal with that challenge here, but we certainly had a lot of opportunities to look at across the virtual table and look each other directly in the eye because we were always on video.

So how many calls is that from the beginning to end?

Oh, my gosh a lot.

I'm sure it varies as you go through the different stages.

Yeah. Oh, plenty of calls every week. And then once you get into the diligence process, the activity picks up even more and you've got all the different functions talking to folks on their team every single day, all over the course of the day. But yeah, we did the whole thing virtually and we built out our entire integration plan as a virtual integration as well. So again, old school, very used to being there. Day one, kicking off the big rah rah session, big party, welcoming everyone in, having face to face sessions with everybody just couldn't do that. But we still had the virtual one on ones and we did try to make it as special of an experience as it possibly could be.

Did you do a virtual closing dinner?

I'm holding out on having a closing dinner face to face at some point, hopefully in the not too distant future.

Tell me about how you manage the wide breadth and depth of responsibilities you have. You manage acquisitions from sourcing through integration. So how do you manage those responsibilities?

I'd say that one of the pieces is being able to delegate and being able to build up a really good team. And for me, having good people to work with has always been key. I've built up the team at Progress, so I have someone who just recently joined me on the corp dev side. I have a couple folks who work closely with me who are integration specialists. One of whom has led over 80 integrations over the course of his career, so just brings a wealth of knowledge. I've also, and I did this starting at Logme and I work with a boutique firm called Bridge Street Advisors, which is a great firm that works closely to get to know the business and helps us in a lot of the sourcing because you're right. And when you're thinking about the number of companies that we're talking to, the amount of pipeline that we're building, being able to do with a two person team can get challenging. And so again, working closely with some great experts really helps us bring best of class abilities throughout the entire process from sourcing all the way through to integration and having ultimately a successful acquisition.

So you're really focused on bringing in the best quality people that you can find. I'm sure you spend a lot of time to identify and recruit those people.

Mainly people that read your book, they need to have read your book and if they've read your book, that's a good sign.

So that's the top thing you look for, is make sure they did some research and really understand the current trends of fa.

Exactly. Exactly. But no, on a serious note, I'm looking for folks who have experience going through the entire process, from sourcing deals, to executing deals, to leading a diligence process to negotiating a deal, all those different pieces that are so important to the success of a deal. On the integration side, I can find people that are more specialized in that specific area, and I've been lucky to find a couple of folks that are great there because I think that's super important. And it's important for me to find people that I know are going to be able to work well within progress because such a critical part of our role is working cross functionally. And working with people in finance and working with people in engineering can be very different personalities, very different approaches. And you need to find people who are comfortable working across all these different functions and where each of the different functions will be excited and want to work with me and my team, because if they don't want to work with me and my team, my job becomes a lot harder. So it's super important to me to find people that have that skill set, that really strong interpersonal skill set, and that have the comfort and ability to not only work cross functionally at their level or at levels below them, but also up executive level, board of director level, because we have a lot of interaction with our board. Because M and A is such a critical part of the progress strategy, we have regular dialogue with them and regular dialogue on a weekly basis at our exec team meetings.

Where do you find these M and A unicorns? They're not just frolicking around the neighborhood.

Actually, the one that I just hired, I actually met at a conference. And, you know, we built again going back to the relationship piece. We hit it off at the conference. We stayed in touch over the years, and when I had an opportunity, I reached out and he jumped on it. And I think part of it is building a reputation and for executing good deals and for being highly acquisitive. And other people who want to have this role want to come work in that environment. It becomes an easier sell and posting monster job posts.

And people are blocking from that.

No, definitely not. And I think that it's all about having fun. And I think people will recognize in listening to me and hearing about my role, just the level of excitement, enthusiasm that I have for doing this. Progress is exciting because we have a mandate that we've talked about publicly to the street and doubling the size of the business in five years, primarily through M and A and a lot of pressure, but a lot of excitement, too, to be able to go execute on that, that and be a key contributor to that and hopefully build really big shareholder value.

This is great for those listening that are actually looking for their next role, because as far much as they can look at the job post, they're better off going to happy hour next week and just networking with practitioners.

Exactly.

Very cool. And I think that's the way the industry works, because that sort of helps define your expertise, and we talked a little bit about the books and that you're constantly learning.

Yeah, I think that's a great point. Every deal that we do, we'll do a retrospective. And I'm the first one to say, even though I've done this for 20 years, that I am not perfect. And I know that there are great lessons learned on every deal and things that we could have done better on every deal. And I think that that's important. And when I came into progress, it wasn't as if I just came in and said, I want to do it this way, because this is how I've done it for the last five years. It was, well, how do you guys do it? Oh, that makes sense. I like that. And one of the things that was super exciting coming into progress was just the level of experience and expertise across all the different functional areas. At the team's ability to do M and A, it wasn't so much as if I could sit back and relax, but I had a lot more confidence in the whole process because I knew I had great people and all these different functions who really knew what to look for, how to uncover the bad things, how to ask the right questions, and that just makes my job so much easier.

That's really cool you use retrospectives because it's very much an agile thing to do. Give me an example of a retrospective you did and what a good takeaway was from it.

Well, I would say early on, one of the big ones that I learned in a couple of the first deals that we did at Akamai, we did not have that integration function attached at the hip with me from the minute that we signed that letter of intent through the entire diligence process. And that created challenges in having a more smooth integration process. From my perspective, once I've signed an loi, once I go into exclusivity with a company, the key person that I'm working side by side with is that integration lead. And I'm having that integration lead sitting on every single diligence meeting and every Single diligence readout session has a slide that's dedicated to what are the key things that you've learned that could have integration implications and how do you suggest that we address them? So by having that visit that early in the process, as we're building up the integration plan, we're that much smarter across each of the functions. So that was certainly something that I learned early on from doing that reflection and doing that retrospective. And I think it's super important. But over the course of the years, we've made changes just in our approach, in how we do different things and how we do a diligence readout. What are the key things we want to hear from the functional leaders when they come in and talk to us from a diligence readout standpoint? And again, it's just continuously building upon, improving upon your process.

That's great. You just scored 10 points on our MA science deal practitioner rankings. So I want to hear more about it because in the interviews I've done, I feel like this is essentially part of the evolution of developing Corp dev function, where they start off with this handoff and they build things out by their life cycle stage next, you know, there's a fabled wall that you throw your deal from diligence over for day one for integration team.

Yeah.

90% of them, like, they want to get involved earlier so they can actually be prepared. And your view from what you've learned, you've really brought this in and I like the phrase you used attached at the hip, because I think that is a clear resemblance of what that should be. Can you walk me through when do you bring that integration lead in and how do you think of them as you work through the transaction? I've talked to Carlos Sesta. We have a podcast coming out with him where he refers it to as another work stream for integration during diligence. How do you sort of think about that?

Yeah, I usually I bring them in as soon as I've signed an LOI and I get to that exclusivity point. And I know that I'm going to be doing a real in depth diligence review and there's a much greater likelihood of us doing a deal. We are not a company that's just sending out Lois for the sake of sending out Lois. If we're signing a letter of intent and moving to that point of exclusivity, it's because we are serious to get a deal done. If we're serious to get a deal done, I want to make sure that right from that starting point, I have that integration person working with me, me telling me what I should be thinking about, asking questions of the functional leaders that can help him or her. Because I have an integration specialist who's a woman as well on my team and really be able to sort of help them devise their plans. It's a great point. I, I, I guess I would refer to it as a separate work stream because they are both having separate meetings with the functional folks over the course of the diligence process to build those relationships to help understand some of the key things that they're finding in their diligence process and what that means. As we think about integration plan, we spent a lot of time with the HR team understanding what is the cultural environment, how similar of a cultural environment and what does that mean as we think about day one, what are some of the things that the employee base is excited about with their current company and what are some of the things that they're not excited about with their current company? And how can we progress, leverage that to get that team excited right when they come in to progress? It's super important to just give them as much visibility as possible and minimize the surprises. And then once we get to that day one point, point, I'm not doing that handoff. I am part of the integration management team. I am on the integration steering committee. So when we're in that integration phase, I'm still involved. And I think that's important too because you don't want things to get lost. From the diligence period to the integration.

Period, how are you incentivized to stay with that deal after it closed? Because the deal guys, you wipe your hands clean and move on to the next deal.

And I am incentivized because when I'm reporting to my board as part of our business case, I'm talking about what some of the key acquisition metrics are are for the deal. Those are usually revenue related, they're usually headcount related, they're usually product deliverable related. And if we drop the ball on those, then technically I've dropped the ball. And so I am just as incented to make sure that the execution is a success as the integration lead. I'm certainly not living it as much day to day once the deal's done. And I've done that handoff. But I'm staying close enough to it so that I know balls are not getting dropped. And I've lived that where balls have gotten dropped in the past, got hard.

Lessons, and you have some Key metrics to really define the success of the deal. That ties back to your investment thesis, which is built around some synergies, assumptions. Where does this integration lead come in play? Do they have any say or any input in determining those synergies?

I will say that they are very vocal. And when we were setting the integration metrics for Chef, my integration lead was very vocal in working with my executive champion and helping to clearly define, pushing him to set more aggressive targets. And I think that it's a great relationship. And again, similar to me being attached to the hip with my integration lead, the executive champion of the deal is spending a lot of time with him as well and talking about the things that are most important for the success of his or her deal. And so the integration lead knows that and is going to make sure that he's driving people to help achieve those goals.

Let's define the executive champion, because that varies company to company.

Oh, sorry. Sorry. Yeah. So for each deal that I do, I have someone on the executive team, depending on the size of the deal, but typically someone on the executive team who owns that deal, who's advocating for that deal, who's banging the table and saying, I want to do that deal. I have conviction around this deal. I will go in front of the board and tell the board, I want to do this deal, and here's why, and have that same level of conviction. My boss, our CEO, is going to look at that person and say, do you want to do this deal? Why do you want to do this deal? My job is to make sure everything across the process, from sourcing the deal all the way through, goes smoothly and goes well. But ultimately, at the end of the day, it's that executive champion who owns the success of that deal as well.

So when we look at that valuation model and we talk about a little bit about validating those assumptions, a lot of that influence is coming from yourself, the integration lead, basically the champion of the deal, the business unit head, basically, or whoever that is, and finance. And then is there anybody else that may get involved? Any other functional needs or.

Absolutely. When we're setting assumptions around a deal, we're going to work closely with the different functional teams, particularly as it relates to assumptions that affect their part of the business. Business. We're not going to do that in a vacuum, because the last thing you want to have happen is we make assumptions, we put it into a model, we say, all right, let's go execute on it, and then say the HR team finds out they have X and they needed Y. Or the IT team finds out that they have to convert all these systems into our systems in three months. There has to be a lot of collaboration across all the different functions through the whole modeling and financial deal modeling process.

How do you make that happen? A lot of meetings using GATT tools.

Or we try to integrate it into the diligence readouts, we'll integrate it into the diligence readout so that it can be part of those. Got a phenomenal finance team that puts the cycles into reaching out and working with each of the different functional areas and reviewing the key assumptions for their respective part of the model. I'm really fortunate that the team that I have at Progress, just phenomenal and the whole team is great, but the finance guys, and particularly the guys who are building out the model are just at a different level of awesome. And I've been doing this for 20 plus years. And so there's a lot of confidence in what they're building out and a lot of confidence in the assumptions that we're making because we're making them together with the people that, that the assumptions affect as opposed to just making assumptions.

You mentioned you use investment advisors earlier. How do you vet them out?

We use a bunch of different advisors. So we use transaction services advisors for a lot of the financial and accounting diligence. Depending on different deals, depending on the size of the deal, we might work with an investment banker. And again, part of it goes back to the relationships, part of it goes back to how well do they know my business, how much time have they spent with me to understand what's important to me in my business? And that's super important. And then obviously between me and other folks on the executive team who have come from other places where we've worked with different advisors and have good relationships and have good trust with them, it helps. But I think for us, building the skillset that we have allows us to do a lot of it on our own.

Got it. So a lot of it you're doing in house, when you do reach out, you have some existing relationships, but then if you got to go beyond that, you're looking for their understanding of the industry and your organization. How can somebody demonstrate that? What's going to get your attention? If I'm a guy that wants to come source your next deal, you're going.

To show a good understanding of the progress business by being able to come in and say, here's where you play, here's where you could play. Here are some of the players that play in those areas that could be interesting targets for you and for me, a lot of the investment banks will come in with the same idea. So it's when the investment banks come in with those different ideas that are more out of the box, that show that they have more of a thoughtful view of the company, that really helps.

A little strategic thinking there. And we show you some things you haven't already seen.

You may not have seen it before. Yeah.

So a critical aspect of being successful in corporate development is relationship you have with your leadership. How do you interact with the board of directors? How do you work out the dynamics between yourself and the CEO?

Yeah. So I think one of the things that was super important to me coming to Progress was the opportunity to be part of the CEO staff here and report directly to our CEO. Because I think it's really important, particularly at a company like Progress, where M and A in the execution of M and A is such a critical part of the overall company strategy, to be able to have that close interaction with not only the CEO but with the entire executive team. And I think one of the things that we've done really well and it worked really well through the chef processes within our board. We have an M and A committee that we spend a bunch of time with and meet with over the course of a deal process, but just to have a regular dialogue with and they ask good questions. That basically gets us to go focus on different pieces from a diligence standpoint to make sure we're more prepared. So then when we ultimately go in front of the broader board, the M and A committee is already excited about the deal. They understand the deal at a much deeper level. We've answered the questions that they've asked and gotten them comfortable with the level of work that we've done to understand the business, with the level of work that we've done to really think about what this business will look like within Progress. And I think that's super important. So from my perspective, having that M and A committee as a subset of the board is a great, great vehicle for us. And we talk to them about our pipeline and we get feedback from them there. And so it's just really good to have that sort of more regular cadence.

So you have essentially a sub board focused on M and A that you can can have as like a preliminary vetting and start gathering some of this information and start looking at things before you have a formal review.

Yeah. We met with the M and A committee multiple times over the course of the shift process to discuss different topics to get them Comfortable on understanding who the target company was to get them comfortable on the diligence work that we did to get them comfortable on the overall business case and what this would look like on a go forward basis.

We should be in the committee.

That's a great question. Someone that has a finance background to really push you on the financial model and the valuation analysis work. Ideally someone who has explained experience doing deals and can share great insights and tidbits from that. Potentially someone who has more of that people side and can provide the people perspectives. I've found that to be really helpful as well. That's a super important part for me is thinking about the cultural aspects and the people aspects. It's one of the key constituents. I mean you have the customers, you have the shareholders, you have the employees and then you have the community. And so you want to make sure that you're addressing them all.

Got it. You ever brought up a deal that you really believed in and it got shot down? Down. And why?

Oh yeah. Oh yeah.

Give me an example. I would grant any deal you wanted to do with your background experience.

I've had deals certainly in my life that I was excited about. Ultimately either there was just too much pressure because the board was just lukewarm on an opportunity and that gave my executive team pause and that made it harder for us to sell the case. So that certainly happened. I think it's super important for you to have the kind of. And I think having this M and A committee has been so valuable because it gives you an opportunity to state the case case. And even if the board or board members are skeptical, it gives you an opportunity to explain why you want to do a deal and get them excited about it. And it's funny on Chef when you know, my executive champion was presenting to the M and A committee and one of the board members comments was, you were just so enthusiastic and excited. I could feel the energy and the excitement that you have for this deal. Seeing that kind of conviction is huge. And not having an opportunity to provide that case building to potentially get them to think about an opportunity different, differently in the past has made it challenging on certain deals where they just have a more instantaneous sort of thinking of I don't really want to do that. I don't think it makes sense for you.

So you got to sell.

You do. Sometimes you do have to sell. That's part of what we're doing. It's part of my job. I feel like part of the time I'm acting as a psychologist, my wife's A social worker. Sometimes I feel like I'm a social worker. Sometimes I just on calls let people vent because they're frustrated. Whatever it takes to get through a process.

Is there a threshold where you can just sign off on deals without going through the approval process? Process?

No. It's a great question. We have in the past had governance guidelines. I think for progress given the fact that we're only doing deals that have scale, we're not doing small tuck ins. I think if we were doing small tuck ins, maybe the board wouldn't be interested in deals where that are sub 10, sub $50 million purchase price. But given the size of the types of deals that we're doing, it's important for them to be engaged and involved. But I have in prior lives had it set up in a way that there was governance threshold so that the executive team had the authority to approve smaller deals. Obviously notifying the board, not needing board approval.

Had the blank check, but not now?

Yeah, no blank check.

Now tell me a little bit about the CEO relationship. I'm curious what makes that work? Well, what are I guess even putting it from the lens of the CEO, what do they want from a corp dev leader? Because a lot of times that falls back on them and building the M and A function which falls back on you. So how do you sort of what do they look for that relationship? Healthy.

I have a great relationship with my CEO and I think part of it is because he's so enthusiastic and excited about M and A. It's something that he's passionate about. He's led M and A in his prior life. So that can be good and that can be bad. But for the most part that's good because he does have that interest in it. And I think for me it's just having a good open cadence and understanding what's important to him and understanding what's not important to him. Last thing I want to do is be bringing up ideas that are just completely irrelevant. And so a lot of that goes back to understanding what's important to us as a company from an M and A standpoint, understanding what the characteristics are of a company that would be an ideal candidate versus the types of characteristics that are not. Like, I'm not going to bring to my CEO a company that's bleeding money even if it's growing 50, 100%. That's not the kind of company that we at Progress are looking for. We are perfectly content with companies that are growing nicely but have an incredibly sticky customer base, an incredibly loyal customer base. With a high recurring revenue model where we see opportunities for implementing our operational efficiencies. And if I see companies like that or that have fit that profile anywhere across the infrastructure software ecosystem, those are the kind of conversations that my CEO is going to want to have, and he's going to be excited about that. It's really understanding what kind of deals we want to do and being able to have those conversations with my CEO. And I think he appreciates also my experience in me saying, well, I'm not sure if that's such a good idea in pushing back and questioning different things. And he's super awesome in listening and taking a lot of my inputs and saying, hey, you know what? That makes sense. All right, we'll take do that.

Awesome fact that you're aligned on goals and able to ask those questions. Push back.

And I'm sure, yeah, and I think you're just building it. I mean, again, going back to the whole virtual, I started at Progress virtually. I have yet to be in the office to meet my colleagues other than through the interview process. At some point, it will be great to be able to just have that more casual, just walk into my boss's office or him walk into my office and just chat about different topics, talked about different trends, talk about different deals that are getting done. But right now we have to rely on Zoom for that.

You got hired in the virtual world, you got a deal done in the virtual world. You're leaving no excuses for any other corporate leader out there listening.

No need to ever go back into the office. No, I'm just kidding. I do want to get back to those days because I do think that there is total value to that interpersonal aspect.

I'm sure this deal's going to appreciate your golf game, so check that out. So, Jeremy, this last question is really important. What's the craziest thing you've seen in M and A?

I can't go with the simple one, which would just be being able to get a whole deal done in the virtual world. Because a lot of companies, the craziest thing I ever saw in M and A is we had a deal at the finish line, literally getting ready to sign probably within a day or two, negotiated agreement, everything. And the founder of the company had second thoughts about valuation. And we basically said, you had plenty of time to talk to us about valuation when we were negotiating the loi and you didn't talk to us about it then, we're not going back and talking about valuation now. And we walked away from the deal. And that was really painful for us and it was more of a tuck in deal. So it wasn't a major impact of the company at all. But the fact that someone would walk away from a deal after expending all that effort and all that time to basically get a deal all the way to the finish line to unquestion valuation was crazy. Crazy was crazy to me. No surprise, a few months later the person was reaching back out saying are you still interested in doing that deal? And the answer was no.

Wow. So that they should have watched the tutorial negotiations 101 or read my book. One of the two.

Exactly. Well that's what I tell everybody. Ready book.

I appreciate it. Jeremy. Thanks so much for the time today. I appreciate the great conversation and learn some good lessons here.

Likewise. This is a lot of fun.

Hey, thank you for listening as well. Here's to the deal. Thank you for taking the time to explore the world of M and A with our podcast. Please subscribe for more content and conversations with industry leaders. If you like our podcast, please support us by leaving a five star review and sharing it. I enjoy hearing feedback and connecting with our listeners. You can reach me by my email. It's Kison K I s o nealroom.net M&A Science is sponsored by Dealroom, a project management solution for mergers and acquisitions. Additional educational content is available on Deal Room's blog@dealroom.net blog. Thank you again for listening to M and A Science. See you next time. 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 affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.