How to Build Better Deals: Sourcing and Integration with John Romeo

This episode is sponsored by dealroom, the only M and A platform designed for buyer led M and A. Most M and A tools were built for sellers or bankers, but if you're in corporate development doing two or more deals a year, you need something built for how you work. Dealroom is purpose built for the buy side from pipeline through diligence. It gives you centralized control over every deal, clear visibility into tasks, timelines and ownership, and reduces manual work with bulk updates and templated rooms. And when your process lives in one place, you're not reacting to the seller, you're driving the deal. And that's buyer led M and A. Whether you're looking to speed up diligence, keep integration on track, or just cut down on chaotic email threads, Dealroom gives you the structure to scale. Go to dealroom.net or hit the link in the episode description and check it out. Here's to the deal on June 4, I'm excited to be speaking at the Corporate Dealmakers Forum in New York City hosted by imn, an informa Business. I'll be joining execs from ge, Pfizer Johnson Controls and more to tackle the big topics AI powered diligence, faster execution, portfolio strategy, antitrust moves and what's actually getting deals done. In 2025, I'll be sharing real world insights from the buyer led M and A front lines. Not just ideas, but strategies you can actually use. Register now using the link in the episode description. That's informaconnect.com imn-corporate dealmakers. Come join me in New York and let's keep moving deal making forward. 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 seller led approach? It's dead. Buyer led M and A is all about strategy, alignment and efficiency, putting value creation at the center of every deal. Let's be real. It's not just about closing the deal, it's about making it successful. I'm your host Kisan Patel, Founder and CEO at Deal Room and Chief Scientist at M and A Science. Joining me today is John Romeo, CEO of the Oliver Wyman Forum and Head of M and A. Oliver Wyman. John has over 30 years of consulting experience advising the boards and senior executives of the world's leading private and public Sector organizations on strategy, organizational effectiveness, risk management and M and A. He has extensive experience helping private equity firms, pension funds and corporates make successful acquisitions, both as an advisor, now as a principal, leading Oliver Wyman's own M and A efforts. Today we'll explore how Oliver Wyman sources, executes and integrate acquisitions, balancing strategy, culture and financial rigor to create long term success. John, how are you doing today?

Great. Nice to be on the show.

Kisan, thanks for making this happen live here in New York. Is this global headquarters?

Yes.

It doesn't get better than this. Thanks for hosting. And can we kick off a little bit about your background?

I started my career back in the early 90s working for an investment bank. I loved it. But then a company called Oliver Wyman came across my path and had the opportunity to join. And I thought I would go for a couple years, figure out which role in the bank. I wanted to do research, sales, trading, investment banking. But over the years, as I saw more and more of consulting, the variety, the working with the caliber of people, the solving the problems, the intellectual challenge was just too compelling. I've stayed at the firm for a long time, been here over 30 years, seen the firm grow from 60, 70 people when I joined to now over 7,000. Started our private equity business. I moved back to New York. I ran Oliver Wyman in the Americas, set up the Oliver Wyman Forum, and as of last year I took over responsibility for leading our own M and A efforts.

You got a lot to talk about. How can you say banking was fun? I'm trying to go back. You said 90s. Was it like the three martini lunches? What made banking fun back then?

I think he was right at that nexus. In financial services we don't build anything. But in financial services, without it, nothing can be done. You're right at that intersection between the corporate world and driving that change. So it was exciting and it was evolving. In the UK you just had big bang in the 80s. So there's all sorts of potential and growth. We can't call it fun today though different now.

You mentioned you built the company's private equity practice. What was that sort of history like?

So we started the private equity practice back in the mid 2000s. We were as a firm relatively late to private equity, but we timed it well in terms of their interest in financial services, which was the part of the firm that I focused on at the time we built it up, it was about combining some of the content expertise that we had with the needs of the gps. And now we've turned that into a big practice within the firm. We support the GPs, we support sovereign wealth funds, LPs, hedge funds. @ the core, it's about commercial due diligence and then value creation work with their portfolio companies, but increasingly we help them with business model strategy, with risk management, with deal generation, with exit support.

I take it private equity and private capital is like synonymous?

It's synonymous. Private equity is a broad term. It started really referring to buyout, but now you have infrastructure, you've got real estate, you've got private credit. Do we think about that as any of these private market liquidity pools and investors playing in that ecosystem?

So did a lot of work grow the company there through organic means. And then this role that you have now as head of Oliver Wyman forum, what is that?

So the forum is really about bringing together leaders from across public and private sector to discuss the issues shaping the future. It's a mix between a think tank and a CEO and chair community. And we do a combination of thought leadership and convening, really focusing on issues, the big trends that are shaping the world. So technology, workforce demographics, things like that, ultimately to elevate the conversation, the brand, see the signal through the noise.

Who's involved with that forum?

The forum has a core dedicated team, but then it's really linked into every part of Oliver Wyman so that we're delivering all of the content expertise that we have and mapping that to what our leaders externally really care about.

That's pretty interesting. So you have a lot of different events and probably other channels to facilitate that communication.

Yeah, that's right. And ultimately it comes down to community. We're trying to build a community and not trying to necessarily sell work day to day. This is about building those relationships, thinking long term, establishing some of that thought leadership and helping work alongside those leaders to really tackle some of those shared challenges.

Is it just internal folks participating?

It's definitely not internal. Right. It's all about the collaboration with external and getting a lot of different perspectives. And at the core of the forum's focus is community and bringing those leaders from across private sector, public sector, third sector, together with those different perspectives. Because the level of change, the revolutions going on in the world, you think about geopolitics, economic nationalism, climate, demographics, AI. At any other time in history, these would have been era defining. But they're all happening at the same time. And they're not just concurrent, they're convergent. They're playing off one another. In a knowledge economy, compute is energy. We need those different perspectives and understanding that. And that's what the forum's all about. One of the things we're doing in the Oliver Wyman forum right now is our annual CEO survey where we partner with the New York Stock Exchange to reach out to all of their listed companies, not on sentiment, but on polling them on real hard business decisions. What are the decisions they're making now in terms of investment cost, all the shareholder value levers, how are they thinking about supply chains, long term investments? And it's out in the market right now. But one of the things that we're seeing already is that M and A is seen as a core strategic value lever. And the vast majority of CEOs are expecting to engage in strategic M and A over the next one to two years.

I'm pretty optimistic about M and A in that general sense. We see how companies mature, how they need to compete and be relevant in the market. A lot of times involves disrupting themselves, which means they need to acquire these little darling startups before they come after them. And then other things. As M and A gets more mature, they get better at doing it. And those companies have seen they get higher returns for their investors when they execute M and A.

Well, it's partly startups, but I think it's broader than that. If you were a company and you were fortunate enough five or six years ago to have the optimal portfolio, you think about the level of change that's happened, first through Covid, but then on some of the geopolitics, the demographic changes, technology changes, climate and risk changes. It's unlikely that portfolio that you had is perfect for now. And as you think about responding to some of those changes, differences in how do I think about my supply chains, how do I think about the impact of technology, how do I think about some of the workforce changes? M and A becomes a key part of rethinking the portfolio, both in terms of divestments, but also acquisitions, collaborations, partnerships. It becomes a real central value lever to all organizations.

It's a fast moving world, which is prompting you to rethink your business.

It's a fast moving world. The pace has never been quicker, but this is the slowest it's ever going to be. It's often said it's never been harder to be a CEO, but it's never been easier to blame the external environment. What we're seeing is the top firms are really having to understand what's happening, breaking down that signal and noise and being crystal clear over what is it that we really have as our central strategy. Where do we want to double down and go after that that we know is going to shape this over the next few years? That's a tricky thing to do, but everyone's facing that right now.

Brace yourself for change. What's like the philosophy of M and A at Oliver Wyman?

M and A has been a central part to Oliver Wyman's history. A lot of the firm now has come from different acquisitions. It's been something we've used to expand the footprint, expand the operations, the quality, the skill sets, the capabilities across the firm. We continue to have M and A as a core part of our growth going forward. Last year we completed four deals and on every deal, the way we think about it is strategy, culture and math. So it's M and A strategy really in service of wider firm strategy, helping us move towards that vision of the firm rather than just a series of deals. But when we think about our own M and A team, it's really about building a capability that can execute a series of orchestrated deals around a clear business case. It's not just a random collection of things. It's got to be linked to explicitly to firm strategy. And then we can use M and A to systematically build those businesses, build capabilities, help us expand into new geographies.

Is there like a big practice difference for somebody that worked at a well reputable consulting firm? You've worked on client facing M and A, but now you're working on all the in house deals. Do you see a difference?

There's definitely a difference. The two, I'd say are really complementary. You need to understand the business side, the day to day operations of how the firm works, of how we think about priorities, how you deliver that change, what it means to our partners day to day. You can't do M and A. In my experience in isolation, there's plenty of lessons I've learned from the work we've done with private equity firms with strategics on acquisitions and trying to translate that into our own world.

So there's the value of knowing the business, to me, I would assume is a challenge coming in as a consultant. And if you don't have the history of the firm, that's essentially your disadvantage is learning how the firm really operates. But now in your current role, you got all the time to keep learning and make sure you really know the business in and out.

Oliver Wyman is 7,000 colleagues, 90,000. If we think of the broader Marsh McLennan that are unified by common purpose, by shared values and a unwavering commitment to drive outcomes for our clients. And we need to link into that strategy. At our core, Oliver Wyman is focused around transformative moments, those high stakes inflection points that have the potential to shift the trajectory of a firm. And where we try to turn those moments of uncertainty and complexity and change into opportunity for our clients to adapt, to grow, to thrive. When we think about our own M and a capability, we're not an enormous firm. So you could certainly make a case that any acquisition would enable us to build into a new market, et cetera. And we're always open to those ideas. But what we've done in recent years is really think through our own priorities. What are the areas that we really want to bet and double down on, and the core priorities at that intersection between geography, industry and capability, and then be really clear on how to tackle it. So on any deal, the way we think about it is, how is this strategic or even transformational to Oliver Wyman? How will this make us better? And then we think, what value do we really add to the target? What makes us a unique buyer as opposed to just being willing to pay the most? And then the third is, is it executable? Can the staff and the partners of that target firm transition to Oliver Wyman in terms of some of the OW style arrangements, the compensation, the titles, the operating model? We need to get through those hurdles. And that takes a lot of work, a lot of discipline, and where that link to the business is just so critical.

I like when you use that term transformative moment, but you define that as these new markets based around geography, industry, capability. When you say value add, what does that entail?

Well, there has to be a reason to do a deal. We're not acquiring a company and then just leaving them on their own. It has to be. Everyone talks about one plus one being more than two. I prefer the idea of Paul Polman, the old CEO of Unilever, used to talk about acquisitions and partnerships where one plus one equals 11. And that's the type of mindset that we go in, that you need to be able to add value in a different way to just what they have. Any of the companies that we acquire, we admire the capabilities that they have. But then you think about some of the operational improvement that you get, some of the commercial improvement, how we can go to market together, whether it's bringing more capabilities into their client base or vice versa, and how we just can ultimately redefine what we're trying to do. That's the objective.

How do you get a sense of those ideas, become like confidence in them becoming tangible versus just smoking mirrors. It's just something I personally struggle with because you just get a lot of ideas and everything sounds good, but then when reality hits, this stuff's a lot harder to execute on. How do you get a sense of that when you're looking at opportunities?

In any process or whenever we're talking to these companies, we've spent a lot of time building out our own bespoke pipeline. And part of that is really about building relationships and getting to understand those firms. It takes time. There's no quick win. You've got to invest the time. We need to get to know those folks. We need them to get to know us. So in any process or any relationship building with a target company, we don't try to rush that. We do that over a very long period of time in an ideal world where we get to meet all of the key folks on their side, but we also make sure they get to meet the folks on our side. Because that cultural fit is just so important. If you don't get that right, there's no way the deal works.

Especially for a business that's all basically people.

It's all about people. So the people need to want to come here and then the people here need to buy into that and create a vision that is bigger than either firm is at the start.

This is something we chatted about a little bit before is the shift from banker led to buyer led and how that sort of impacted the deal process. Can we maybe talk through some of that?

Yeah, we think on our side about three channels of deals. We've got at the very top end what we call the big fish, the once in a career type deals that would transform the firm. Those by definition don't happen often, but you keep an eye on them, you nurture them, we think about them. Maybe they make sense, maybe they don't. But they're sort of their own category. And then you've got banker led processes and bespoke processes. Several years ago, we made a deliberate strategic choice to try to really build out our bespoke pipeline. Great companies that we could build relationships with that have a real high strategic fit with Oliver Wyman over the next five plus years and aim to originate deals outside of a process. Now that's a constant rolling search and it has a few components to it. We basically invest time in building comprehensive market maps. So our partners are out in the market every day. But it takes work to figure out what are all the companies out there. It's a constantly changing Source. So we invest in time in building those maps. Then we think about real, clear prioritization around any kind of business case. And then you come out with the outreach strategy. There's usually something we admire about what those companies have done, but it's very rare when you first reach out to them and talk that they necessarily want to do a deal. This is about building a relationship over time, telling our story. It's similar to the way in Oliver Wyman we think about client coverage and relationship building over time. But what we love on the acquisition side are companies that are, for instance, founder led, where the founder really cares about their legacy, cares about the people and what they leave behind. We take that long term approach. It's not to say the banker channel isn't important. The banker channel can be really valuable. We need the bankers to know the types of deals that we want to do, what we're in the market for. So when those opportunities come out, they know to give us a call. A good banker can be hugely additive to a process. So we maintain all of those relationships. And the last thing I'd say is the bespoke channel doesn't necessarily mean that we can make an acquisition more cheaply than through a process. Every process is competitive these days. We're not looking for that. What it does do though is it goes back to your original point. It lets us build that relationship, really get to know the firm and that de risks anything because you can see whether the culture fit is there and you've tested some of that relationship and you can jointly develop those plans for the future. And so it brings down the uncertainty and it enables us to have much more conviction around which deals to pursue.

Banker led bankers are essentially pitching you stuff. But there's this point of even if you build your bespoke pipeline, you get clarity of what you're looking for, which can actually help the bankers bring you stuff that's more in scope then when you look at the steps in building your bespoke pipeline. You talked about market mapping, prioritizing the business case and then doing the outreach. And then the other benefit of all this is that you can test your hypothesis in that approach of building the long term relationship. So you get a good sense if there's a good culture fit versus just finding about the company through an auction and trying to scramble to figure out if it's going to be a good culture fit. Can we break down these steps a little bit?

Yeah.

So market map. One question I had was big company, you obviously part run the M and A component of it. But then you have all these other stakeholders and they got their peripheral on emerging companies. How do you put all that together and be pretty comprehensive about market map?

On the market mapping? We do some of that ourselves. And you can break that down by region, by industry or capability. And we do those things. But we also work with the bankers who often help us with that process and uncover things we might not have seen ourselves. And then we've got partners in the firm who are out in the market every day sourcing some of those ideas where they admire things that are out there and are interesting. But then we put that against the filter of our own strategy and the priorities, both at a global level and at a regional level. That helps us narrow that down. The same way the markets are uncertain. It's never been more important to be crystal clear on what your strategy as a firm is. Who are the clients that you're covering? Why and how are you better than the competition? We focus on that and that helps us narrow it down. And then thinking who are the firms then we want to build relationships with over time, it's that prioritization process and the discipline becomes really important.

Is this consolidated in one place? Do you use like third party tools to mine data?

We use a lot of tools. We do consolidate it into one place. We use some of your tools to help us around the tracking of that and then ultimately the implementation. But it's gotten more and more professional and disciplined. We've sharpened all of our processes over time. There's always going to be a component that's a little bit opportunistic. But we try to capture that in one place that all of the team has access to.

I should put a disclaimer. Alroitman is a deal room customer and going to do our best, not make it a commercial pitch. You got all these data sources you're using, you get it consolidated. When you say prioritization business case, break that down for me.

So you have a long list of companies and names that are out there. We look first at just some of the economics. Are they in line with the types of productivity, the focus? Are they doing the same types of work, the same types of clients that would fit with Oliver Wyman. That's an important part. The culture is difficult to tell from the outside. And it's not that one culture is better than another. It's just when you get to know the firms, you get to see the culture shine through and whether that's a nice fit. The third was the math. And will those Economics work. Would you be able to take that firm? Would it be successful within and Oliver Wyman, given some of the processes, we apply those filters against that and you get to a shorter list. And then we'll reach out and we'll start to build relationships. Most of those firms are very keen to talk and get to know one another. Doesn't mean a deal happens right away, but you might find opportunities to collaborate together in certain situations. Anything that gives us an opportunity to get to know one another better and understand that fit is a valuable input to that process.

This is like lead scoring?

Basically, yes.

Do you do this over a meeting and collaboration or is this sort of, hey, we've got such tight criteria that we can go through and do that independently.

It's a rolling process. I'd say it's a living process. Within our team setup, we've got a few senior partners involved in the M and a team in each region that are coordinating that process. But ultimately we work really closely with the leaders on the business side because M and A can help and run that process and steer and guide it. But ultimately the business are the ones that own this need to be closely involved in all of that.

That sounds like a key part. Once you prioritize, then you're not wasting time going after the wrong targets. You're actually to the reason that you prioritized it. And then the fun, good old outreach. How does that work? Is it we got such a big name, we just go reach out to folks and then get a good response rate. You push for introduction somehow. How do you actually do your outreach?

We usually go direct to these companies right at the top and talk about them and we tell a little bit our story, the history, what we've. And inevitably there's something that we admire in what they've done. And it's part of having a conversation, beginning to build a relationship. It's not an aggressive approach. It's trying to jointly explore whether there's a win win in some ways from a collaboration.

You send a cold email.

Send a cold email, you make a call. People are willing to talk if you have something to say. In my experience, everyone wants to engage. If you can help them achieve something that is more of a struggle on their own. People are curious and want to do things and part of this is finding that overlap that is good for them and good for us.

So the framing is generally, hey, we saw you run an interesting practice, wanted to make the introduction and see if there's some opportunities for us to line around.

Yeah. And get to know each other. And it may be I just made that up.

How is this pitched down to your words?

Well, in a lot of cases we're competing with them, but there's also opportunities to collaborate. But I think about from our client side, the problems that they're trying to solve and some of those transformative moments, these are bigger than any one firm can deal with. What we're finding is we're working in different client situations alongside a whole range of other firms with different capabilities. And if I can help deliver more services to my clients to tackle their problems, that's great. That helps everyone. And maybe that ultimately becomes part of Oliver Wyman. Maybe that's us just collaborating and helping deliver things in coordination with other folks. Either way works for us.

Sounds like the right way to do it. When you get these early conversations, how do you get a sense of the actionability on a deal that, hey, this is a firm that's going to likely start thinking about some kind of exit. Is it something. Do you wait for clues or you just a little blunt and just generally ask?

It's a mix of all those things. Private equity have started to play in the professional services space. More and more those guys, you know there's an exit coming down the road. You can work to that type of timing.

Basically always for sale for the right price.

Yeah, but equally they're going to have to exit. Usually given their fund structure, in some ways, other folks are at a different stage. We've had a lot of success teaming up and acquiring founder led businesses. Those are really interesting because the founder has usually built a lot of their life around it. They really care about it. They care not just about it today, but the legacy they're leaving behind, the people in that team. And that fits very well with how we think about things because it's not just buying the capability we talked about. Anything we buy is mainly people. So the people need to want to come here. And part of that is the capabilities in the short term. But it's also creating an opportunity for them to build their career here and to thrive. These things you can't just do overnight in one meeting. This is about building those relationships. It's why we draw the parallel to a lot of our client coverage. On the core consulting side, you ever.

Convinced anyone to sell their company?

I don't think it's been us convincing them to sell. They have to want to be in that place. It's on us to convince them if they do want to do that, that this is a really compelling opportunity. And coming together with Oliver Wyman and plugging in usually to a bigger platform can create more opportunities for the business, more opportunities for them, and more opportunities for the whole team.

You're selling them on the future of growing better together.

Yeah, that's exactly it. It's trying to create a shared history. There's nothing in our firm that couldn't be done better. Our culture, the one thing that we have fixed is around the values. But the strategy can evolve, the people will evolve. What we're looking for is not they plug in just to our culture. Let's create a shared culture. Let's create that new shared history and build something special that no one else has.

And that ties back to that business case that you were developing on the value add that you talked earlier. Essentially you're bringing them to work on that together, share that same story.

That's right. You can't have a team off to the side doing that. And this is where we have to link in. On the M and A side in Oliver Wyman, we have to be really closely connected to the business partners because ultimately the business partners are the ones that own this. So a partner of mine often talks about the difference between a chicken and a pig. A chicken and a pig want to open a restaurant and have eggs and bacon. One is involved and one is committed. We think about that. Who are the pigs? Who are the ones that are really committed to this? Especially as you move to that bespoke pipeline, the expectations on the deal sponsor on the business side have gone up and up. They have to be willing to roll up their sleeves to get their hands dirty on execution and on implementation because ultimately it's their neck on the line on these deals. So they have to really need to buy into that. And that's where the link between the M and A and the business side becomes so important in the firm.

You got to make sure the post close success by linking that principle to set them up to be successful. Has it been easy to do deals? We mentioned doing four deals last year. Has the market been easy? I'm in tech and I'm just wondering. I see a huge bid ass spread gap is the biggest struggle that I'm coming across. I don't know. Is life easier for you?

I don't know if anything's ever easy. There's a lot of opportunities out there. I don't think there's a shortage of opportunity.

But do you come across that with this high expectation of valuation just because market's been on the run? It's been over the past years, there.

Are high expectations, especially on the tech side. We're not usually going out and buying a lot of technology.

I know. So the consulting firm is already a little more rationalized about what to expect in valuation.

We're not usually the ones willing to pay the most. There are folks that come in and will pay a higher multiple. What we're doing is thinking about how do we create the most value over a period of time. And that's why selling on the vision, why the alignment? So it's not just a transaction, but it's how do we build something together is so important. It's partly why we shifted from the banker LED processes to the bespoke processes in terms of that degree of emphasis, because it gives us a little bit more control and focus and willingness to really invest in building out those relationships.

You're taking a bilateral approach to build those relationships, which allows you to tighten up that story of better together. How are you going to create value? How do you correlate that part of, hey, we're going to do all these great things together with the actual deal structure? They take it. You're not just cutting one check and they're like, see you around, John, is there sort of a way you structure the deal that ties you both together? I'm thinking of, is it earnout, is it rollover equity, those type of elements that you bring in structuring your deals?

We're doing all of those things, right? We think about this over a period of time. So we use a whole wide set of metrics, we have a whole wide set of tools. As you'd expect, it's about that alignment of interest. We're really trying to do this together. It's certainly not all up front. One and done and then cross your fingers.

I was curious, is it more of using those tools as bridging valuation gap or more of, hey, let's keep this level of alignment that we got a vision of what we can succeed together. Let's make sure that we're both aligned on it, that, hey, we going to get rewarded for it? You're going to get rewarded. Or the trivial second bite of the.

Apple, it's much more of the latter. There's a lot of planning up front. You can think about diligence as being a balance between risk mitigation and preparation for integration. But in any deal, in any conversation, we're spending a lot of time with the folks up front thinking about the culture, thinking about the synergies, the pricing, the clients. But we're Also thinking about some of the technology, the human capital, the even things like the titles, the offices, how all those things come together. You got to think about the experience the people are going to have over time and how do we create the right foundations for them to ultimately be successful and to build their career.

I want to learn like how do you plan this psychology? Because at face, that's why I don't like that super transactional process. Because you're literally looking at the lump sum, total amount on an LOI versus what you described. Now you're nurturing this relationship, you're building this better together business case and that principle is bought into it. Now it's okay, here's short term game, but now I see long term value creation and catching the upside of it. That becomes more of a driver or interest than just that. Hey, I'm giving you this much money today, Is that the playbook? Is that what it comes down to?

Yeah, that's right. We go to great lengths to align the incentives for everyone joining us as well as the folks on the Oliver Wyman side. It's that long term approach that is our best weapon in terms of doing that.

I want to follow you around for a day and learn how to do this. That's the game changer because it goes back to that bid, ask, spread that always becomes a thing. People, when you start a conversation, you just want to know that, you want to know what to offer. Here, I'll sign NDA here, I'll give you some preliminary information. But there is that when you can build that relationship where you're actually really excited about working with that firm together and then you see all these upsides and all of a sudden you're looking more long term value creation.

And that's where the business involvement is so critical. Right, because you have to start to get into those conversations of what is the flying formation look like? How are we going to go to market together? How do we create some of these opportunities together?

You can't do that in the bank process, can you?

It's much harder in a bank process. You'll get the level of interaction. Each of these have some degree of variation in terms of timeline, the exposure, but in general we haven't found we can get quite the same proximity and depth of those discussions.

I think this is literally the crux of the buyer led approach. You're going to be able to test your hypothesis, get a better sense of the cultural fitness, but also you're building a much better alignment on the long term vision of what Both companies are going to achieve together.

In any M and A deal, there's always going to be anxiety. When you've been able to build up a little bit of that shared relationship conversation, then you can be transparent and you have the time on your side to do that. It's why we invest so much time in the deals with folks to let them meet people on our side too. So that we're very clear on what are some of the upsides certainly, but also what are some of the challenges. Because it's always going to be a different environment. It's going to be a challenge. So let's be transparent about that and figure out how we tackle it together.

Ready for story time? Well, we talk the talk. I want to get an example of a deal that you went through. I want to get how you identified the strategic cultural financial fit.

Let me give you an example. One that comes to mind is Avacyn Avocent was a company that we bought a couple years ago, November 2022. It's a terrific aerospace and defense firm based in Washington dc. We had known the team for a decade. In the run up to us doing the deal, they had had five plus years of really strong organic growth. It was a founder led business. They were servicing corporates, some of the public sector and private equity. We knew the culture fit was there because we had known these guys for a decade. We had competed with them, but we had also collaborated on a number of projects together. So we worked alongside them. The partners in our commercial aviation team knew them. We were looking to build up Oliver Wyman's aerospace and defense capability. The market fit was really strong because the commercial aviation guys were among the best in the market. And you combine that with aerospace and defense and we had great growth potential. Financially it worked out. We paid a fair price for a great company. As I said, it wasn't about buying these things cheap. It was more aligning the incentives for all the staff. So you had the retention schemes, you had some of the alignment. But we spent a lot of time thinking about how would some of these folks when they came into Oliver Wyman thrive. What were some of the opportunities for new clients, but how could they ultimately build a career on a bigger platform? And it's been a fantastic experience for everyone. It's got to a great outcome. The majority, almost all the partners are still here and doing bigger and better things. We've realized a lot of operational improvement, we realized the economic improvement. It's redefined a lot of the things that we could do. We've sold work together that neither one of us would have been able to do on our own.

In that example, how do you measure success?

So in any deal we have a wide set of metrics and it's not a one and done type of thing. And partly that is thinking about that one deal and tracking how it's progressing. But it's also about learning and developing and reducing the uncertainty on future deals. So we think about all sorts of things. We look at client retention, we look at new clients, we look at some of the operational and functional measures. We look at what we can do on pricing. We look at employee retention, employee engagement. We think about some of the functionality aspects, the synergies. We think about revenue from different types of angles. You have all those numbers, but it's not just the average numbers. You've also got to look at the variance. Is it just a few people that are really thriving versus the rest? So thinking about all of that as a whole is important to track the progress of a deal, but it's also a way to give us more conviction on future deals. What is the type of operational synergy or pricing uplift that we're really able to achieve? And then we can apply those lessons elsewhere.

I always think about these deals, even for us, like trying to do our early deals in this company is the surprises. I feel like there's good surprises and bad surprises. What has your experience been, John? Like, I'm trying to get a little peek into like a reality of what would be the type of bad surprises you come across in a deal via indigence or post close. And then good surprises. I got to assume there's got to be something. Like you gave examples. We won some deals that we never thought we would have won.

There's always surprises. One thing in M and A is something either unique or unusual will pop up in every single deal. It's not usually one of the really big things. It can be something very small that really matters to folks that you hadn't necessarily anticipated. It's getting used to more and more of those and being able to respond. Ultimately, the way we think about that is for any of the deals that have really worked well, it's when our partners have leaned into that both personally and professionally. Yes, there's the planning, but you need to bring in a wide variety of perspectives and teams. One of the things we found really important is having our support function folks involved from day one, not just in a confirmatory diligence perspective, but but in really helping to shape things. Creating a forum to raise concerns because often they can anticipate something that will come up down the line that the business may not have, making sure things don't fall between the cracks. And then it just goes back to that transparency. We're not trying to hide anything in the deals from folks. We're really trying to find where is that overlap between what we really care about and what they care about and being transparent on that and working through that together. Because ultimately it comes down to trust between those individuals because you can do all the work you want on the numbers, but this is really about people. At the end of the day, how.

Good can you mitigate these surprises that come up? Going back to this banker versus buyer led contrast in setting up a company for integration success, we use this example that in the front end of the deal you can get better alignment on what the goals and vision are culture. You can do that because you have more time in the relationship, probably control just some of the timelines of how the deal gets done versus you got to close as fast as possible. How would you look at the difference between the integration sort of planning or setting the deal up for success post close between the banker and more of your bespoke process?

You just have a lot more time to begin to anticipate some of those issues in a bespoke process where you've gotten to know each other. And it comes down to the culture. I've been at Oliver wyman for over 30 years. I understand the culture here, but I haven't ever written that down. Somebody coming in new. There are a lot of unwritten rules. There are a lot of ways of doing things that everything's flexible. But having someone that you can talk to and say, Kisan, really how important is this? It can be a 30 second conversation versus if you're not having that dialogue, Someone could go away and stew on that for a couple of weeks and it could turn into a much bigger issue than ever intended. So a lot of that just comes down to the transparency and alignment. And it's very difficult if you're part of a rigid process to get that conviction. It's not that it can't be done. It just pushes that level of risk or uncertainty more into the integration than into that diligence process. That's where the bespoke process to us is so valuable because you can reduce that level of uncertainty and it gives you just much more conviction on how you execute and where you're really willing to take the bets.

Transparency and alignment, that's like part of the playbook in terms of making sure integration goes smooth. You have a big broad form, company wide form model, but it's almost like you're using a variant of that for your individual deal.

That's right. We're not afraid to learn. Listen, we've learned from the consulting work that we've done. We learn from how our clients do these things. I go into this on the premise that there isn't a single thing that we couldn't do better. We're learning every day. We found this is working better and better for us. But I'd expect us in a few years to be even better at this than we are now.

That's a big part of the cultural alignment. Being open minded is part of the culture. So that way it's not, hey, you're going to integrate the way we tell you to and that's the end of it.

No, that's about building a shared future together. When someone comes into the firm, if we do an acquisition, it's their firm then as much as it is mine or any of the folks that were here before. Let's build something together that we're really proud of and excited and want to be part of.

What does all this M and A activity look like with the board? I'm just curious if there's just certain elements of, hey, here's our pipeline, here's stuff in flight, here's deals we've done in the past. How long do we measure success after we've done the deal?

It's a living process. We track these things to learn how well any deal is doing. But ultimately it turns into post acquisition reviews that we do on a regular basis and continue to track those. We've got a series of metrics both within Oliver Wyman and then working with the broader Marsh McLennan corporate development team. And we track all of those things over time, both, as I said, the numbers and the variance on different aspects of the financial side, but also the human side. And then we look at a lot of the retention, the engagement. It's not a one and done. It's something we have to live and breathe with.

Oliver Wyman is a subsidiary of Marsh McLennan. Marsh McLennan is public, private, public company.

Listed on the New York Stock Exchange. This is the global headquarters. We share the same building and we work across the four operating businesses. So Marsh Mercer, Guy Carpenter and Oliver Wyman. And there's a lot of collaboration and coordination between the group.

Do you roll up into the corporate team at Marsh McLean?

Yes, we work tightly with that group.

Does that work pretty easily.

It works really well because we've got, on the MMC side, we've done a huge number of deals. We've learned from that expertise. They've got world class sort of banking capabilities that plugs right in with our team. We work side by side on all the deals.

I mean you got a lot in house, you got a lot of resources and expertise. But is there anything unique you get from that relationship where it's bigger, umbrella, public? I don't know if there's any advanced sophistication.

Oh, I think it's a huge advantage both in terms of the caliber of the people that team, the experience, the number of deals that have been done that we get to learn. But Marsh McLean is 90,000 people, has an enormous reach, the ability to both tap into additional deals. But it becomes a key part of the career opportunities for folks that goes even beyond Oliver Wyman. So it helps on that front. It's listed. So we then have that capital as a currency which most of our competitors in the consulting side don't have. We think it's a huge advantage for us.

Do you ever find that because now you got much bigger footprint overhead that it could slow down or you got extra opinions on valuation on deals?

We get the benefit of the experience on the valuations. We're not trying to rush to do a deal right. We're not traders. We're thinking long term. We're not trying to go into a situation where we have to take a decision overnight. This is really about building those relationships and thinking long term. To be honest, we really haven't seen any downsides from that.

That's pretty cool. I just was curious, seen similar structures and seen it could get complicated at times. When we talked about integration and just setting a company up for post close success. You're running some real people businesses and I would think so much of it hinges on retention. Can we talk about what's the secret sauce to retaining people, keeping them happy and motivated?

The integration is the big question. It's the difference between an idea and an outcome. And you know better than me the percentage of M and A deals that fail. And it comes down to that. What we found is when that works is when our partners lean in personally and professionally. It's the planning up front on some of the financial side and the synergies that you can get. But it's just as much about the people and the career. We're very clear in any of those situations that we're thinking about this as A multi year journey for people.

Right.

And it's partly around the transaction, but it's partly around their career. We pay a lot of attention to their needs, both the folks joining as well as the folks in the team that they'll be coming into. And you got to spend a lot of time with those people. It's understanding those concerns and being transparent on what we can and can't do. Some of it's the finance side, sure. And the economics. That's part of the math of the deal that we think about. But a lot of it is that bigger picture, making sure they feel this is a home where they can have a career and thrive. And you need both of those to line up.

There is just the overall environment that they're going into with the partners leaning in. What about some of the more mechanical retention packages? Because I feel like that would be like a bigger emphasis compared to a tech. Depending on what you're buying, buying the tech, that becomes how much certainty we can have on integrating this tech versus the people. Do you see that of just mechanically having a strong retention package being a key lever?

Oh, I think it's an important. It's one of the inputs to me around that alignment of incentives. We like to make sure there's alignment. And that really means from this perspective, having some economics over time. But it's partly as you think about the transaction, but then you also need to think, okay, well, they're coming into Oliver Wyman. We've got our compensation system that works as it does. How will their compensation change in that? And oftentimes what we find is the upside from coming into that compensation model and then thinking not just how do I take the tools from my company and sell that to a client, but how do I think the other way around? What are the questions that my client really has? And then how do I then plug that into the 7,000 people I have in Oliver Wyman or 90,000 people in Marsh McLennan? Now I've got access to all of those capabilities that I can help deliver to my clients. When you start to think about it like that, the upside gets much, much bigger. Yes, we have the retention and the incentive packages linked to the deal, but then a big part of that is how can I plug that in for the rest of my career with some of the compensation and now the access to the whole range of tools of this bigger platform that I didn't necessarily have before, that we found has often been a compelling part of the equation.

If you offer like option awards, then it's public stock, right?

Yes, we have that for a lot of our senior leaders within Oliver Wyman.

Does that get perceived differently, private versus public? I don't know if you've been exposed to difference when you structure a deal. Obviously there's more liquidity with public stock.

It's part of the equation. It's one of the pieces of the conversation we have with folks. I don't think that is generally been the central point of any deal that I can think of. Again, we're trying to make things that are fair and aligned. We want to buy great companies and we want to do a fair deal for everyone where we're sharing both that risk and sharing that upside.

Yeah. Just curious of these little mechanics, because you got a lot of different things you could lean on. What lessons from private equity have you applied to Oliver Wyman's M and A approach, particularly when it comes to execution and value creation?

Private equity are obviously different in that they're not operators. But I'm not ashamed to say we've taken an awful lot from private equity and learned a lot of lessons on the sourcing side, the execution side, and the value creation. All of the top private equity firms build those market maps. They put a prioritization against it. They figure out the companies they really want to build relationships with. We think very similarly to that. But when you get into the execution, the best ones in private equity have real discipline through the funnel. And that's something we've spent a lot of time on the last few years. How do you make sure you're not getting swamped by small deals or deals that are slightly off strategy? That might feel compelling in the moment, but you can waste an awful lot of time. And some of the small deals might be compelling, but they won't move the dialogue. And if they don't have a banker, that can even make things worse and disjointed. But there's a huge opportunity cost to doing that. We've been sharpening that process on the value creation. The way PE firms think about it is what does this company look like in five years time that maximizes the commercial value of it and then work back. And we've taken elements of that. That's a useful discipline to think what are we trying to build? And get everyone bought into that. And then you can come all the way back to today. You go annually, then you go quarterly, you go monthly, et cetera. And you get the metrics against that, that both the management team of that firm and on the Oliver Wyman side buy into now. It's rare that ever plays out according to the plan. But that doesn't matter. What you've got is you've got everyone engaged in that and agreed to it. Then when you track those metrics over time, if they're different, you ask the question, why is it something that we got wrong at the beginning? Is it something different in the market? Is it just playing out different than we expected? And you can adapt as you go. We do that. It goes to the metrics that we talked about earlier. But we've also got within PE firms, they all have playbooks on their value creation levers, pricing, et cetera. We do the same. We think about that on pricing, uplift, on operational synergies and some of the functional changes. And it's all about part of building that real clear integration plan.

That's pretty cool. Yeah. There is a level of discipline to acknowledge with PE firms. I like the view of just working it backwards, almost like, all right, how are we going to achieve this optimal irr? But there is a sort of taken best from both thinking that discipline is.

Tricky because as you say, there's a lot of interesting things and you could spend your time very easily chasing after lots of things. We periodically just tried to check and pull up and work with the folks across Oliver Wyman and the regions and the industry and capability teams on what are the clear priorities and how are we really spending our time.

Any advice you give to any practitioners looking to build a scalable buyer led acquisition strategy, we're still learning.

I wouldn't want to be presumptuous as to advise people, but when we think of the best companies in the world, they've got real alignment among the top team. But then through the organization of what is it that we're trying to achieve and then everyone understanding how their role fits into that and moves that along. And I'd say one of the things that we've seen here is that if you want inorganic growth to be a key part of the firm's growth, then it's got to be part of the day to day business as usual. In Oliver Wyman, what that has meant is we need all of our partners thinking about M and A. And that's been a big mindset. Change means putting it into people's objectives and trying to change that behavior. And that's had a huge impact because then you start to build a lot of excitement, a lot of drive, but still recognize you need to counter that enthusiasm with recognizing not every idea is going to go through to a Deal. It's going to be a small percentage in terms of the yield that you get from that.

This is key. Creating a culture of M and A. So it's not a push, but more of a pull effort. How do you do that?

It takes a little bit of time. It takes explaining the vision. I think the senior folks need to have real targets. On what percentage of our growth would we like to come from the inorganic side? And then aligning that ambition with some of the time and the resourcing. If you have a gap between that ambition and the reality, it's unlikely to be achieved. Everything's got to be consistent.

Vision, targets, time and resources. John, what's the craziest thing you've seen in M and A?

One thing you know, in M and A, right, There's always going to be a surprise that pops up. Now yours is a family show, so I don't want to get into some of the things that we've seen. We had a deal a couple years ago where we had gotten to know the company over several years. We were, I think, their favorite partner to go with. We were getting close to a deal and then pretty much last minute from our perspective. Another firm came in and offered a price that was many multiples of what we were doing. And they called us up and they said, listen, we just had this come in. We said, there's no way we can match that price. That you should go with them if that's what you want, and good luck. They went with the other firm. It was crazy to me. Not in terms of the multiple. That's fine. Every firm can think about how it makes sense and it could plug in and maybe they had a much better upside from what they had. What was crazy to me was they made that binding offer meeting the leadership team once and that was it. We would never do that now. Maybe that would work for them. In that case, it didn't. But to us, it's so important to get to know those teams and all the things we've talked about on the culture, the integration, the alignment. Someone going in and paying any price after one meeting, to me just seems crazy.

Does the story have a happy ending?

We've hired a few of those partners individually as they left the firm. We'll see. But that's part of where question mark.

If they got their return back on it. But I agree. I've been known to be pretty impulsive and that takes the cake.

It can work. I'm not saying it can't work. It's not consistent with our philosophy and how we would do things.

I get it if it was like an asset based deal, a real asset based deal versus you're hiring of that many people.

We're acquiring people and the assets walk out the door every night.

John, this has been a great conversation interview. I appreciate you taking the time and helping me become a better M and A scientist.

Thank you for having me on the.

Show, fellow M and A Scientist. If you got this far, I'd love to hear from you. Give me some feedback, tell me what you liked, what you didn't like, some topic ideas. I'll take the criticism. I'll get better at doing this. Otherwise. Till 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 podcast. 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 affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.