How to Execute an Integration Plan (Day1)

Hello Ma Friends. Anyone that charges you per page for a virtual data room is not your friend. It made sense 20 years ago when people would show up to your office to scan documents, but with today's cost of cloud storage, it's a dirty scam. That's why I'm here to tell you about Firmroom.com's new data plan that includes 50 gigs of data storage for only $800 per month. And that would be over $300,000 in the per page pricing world. Don't take my word for it. Check it out for yourself by starting your own free trial@firmroom.com check it out firmroom.com 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. Welcome to M and A Science, where leading M and A practitioners share lessons learned from their experience. If you're interested in keeping up with the latest from M and a science, visit mascience.com and subscribe to our free newsletter. Every Monday we share highlights from our interviews and invitations to events as we build the greatest community of forward thinking M and A practitioners. Again, that's mascience.com I'm your host, Kisam Patel, CEO and founder of M and A Science. Joining me today is Gene Hu, Chief Financial Officer at Procure analytics, and John Moraida, Chief Operating Officer at M and A Science. Previously, John was the head of M and A integration at Ellie May that was acquired by intercontinental exchange for 11 billion. Gene was leading the financial integration for Intercontinental Exchange. In this interview we get perspectives on M and A integration from both sides. Today we're going to talk about how to execute an integration plan. Gentlemen, can we kick things off with a little bit about your background? Gene, do you want to start?

I went to school here in Atlanta at Emory and then after that I moved to Chicago to go into the corporate banking world, which kind of started my whole finance career. After a couple of years I moved over to the consulting side working for a couple of technology companies, factsets and global views. FactSet was probably my first foray into kind of the M and A world. I was on the sell side, so I worked with a lot of banks to help them build pitchbooks and evaluation models and et cetera. But using kind of FactSet technology, that was my, I would say my first foray into kind of getting that, getting my feet wet and just see how M and A valuation and I guess at the front side of the M and A world function. From There worked for GlobalView Software, which my main clients there were traders and risk management firms for utility and financial companies. And so they use the software technology to do a lot of pricing algorithm and real time pricing monitors for the kind of commodity world. And that kind of drove me directly into getting my relationship with I and then I moved to ICE where I was there for 15 years, started in the finance team and when I joined ICE was about $175 million in revenue and about 300 employees at the time. About 15 years ago I joined right after they purchased the New York Board of Trade and then shortly after I joined we purchased Yellowjack and CreditX were the two companies that we acquired. When I first started ICE kept me busy on the M and a front. My 15 years I was there after about six or seven years of finance where I dealt with a lot of the front side of the deal, a lot of the M and A modeling the valuation, meeting with the bankers, working through models and then pricing and so forth, target prices, looking at diligence and so forth. The second part of my career at ICE I moved into more of the backside of the deal. So once we bought the company acquired and how we do integration. So I ran the corporate systems group, the vendor management groups and the procurement groups at ICE were kind of my second part of my life at ice. So learned a ton just working through how we do integrations once we went through the acquisition and dealing with everything that comes to trying to put two companies together. So that was again a great learning experience on that side too. And then I left Ice about two months ago and Ice is now what a seven plus billion dollar company with about 10,000 employees. So it was a pretty good ride for 15 years. I was there to kind of see that growth, which was awesome. Again now I'm the Chief Financial Officer here at ProCure analytics and PA is a small hyper growth company that's owned by a PE company. But we drive a lot of the pieces that we did for valuing M and A companies and Target PA helps drive to the same kind of state spend, analytics, savings and added value for a different other firm. Put together a lot of complex, highly disparate purchasing categories and then using kind of technology and data and relationships that we have with our suppliers, we help all our members and companies save money and get the value from a bunch of different categories that they wouldn't otherwise get value out from. So it's been a great ride and again I'm looking forward to talking through it.

You have been around the block. They say one of the greatest professional skills to have is ability to integrate companies.

Gives you a wide breadth of dealing with a lot of stuff from people management to project management to expectation management. You got to go through the whole gamut going from an integration and handling it. So it takes a lot of growth and learning and honestly, a right mindset. And John's a great example too. He's one of those masters too, at making sure things were calm and working the way they should be to get those two companies together. So I agree, it is a wide burst of skills. Get that together, John.

You want to give us your background.

So my background is somewhat similar to Gene's. I went to school on the east coast, went straight into management consulting very quickly after undergraduate, and then I did consulting for many years and finally decided, hey, you know what? I love everything that I'm learning here in management consulting, but a lot of the knowledge I'm gaining, I wish I could have a bit more practicum to it. Part of my career being in management consulting, leaving it to go into an operational role in an actual company and then consulting back in. And then eventually I decided, okay, it's enough of that. And then I went to grad school in Chicago. So it's possible that Gene and I were just passing each other in the night as I was living in Chicago. So I did grad school in Chicago. It gave me that much more solid foundation to understand all the moving parts in a company and certainly imagine consulting help, being in operational roles in companies help. And it just helped compound all of that into what I've already been doing, which was lots of integration work throughout the entire process. The time that I came over to ICE was actually because of an acquisition. So I came over as part of the Ellie Mae transaction that was in 2020 and through. That's where G and I got to know each other. Actually built a great professional relationship with each other. And then also we became friends. We spent a lot of time having phone calls, having zoom calls, and through this entire alternate working world, if you want to call it that, we certainly found ways to connect with each other beyond be on a digital conversation.

Got another integration expert. Thanks for that context, John. And I do want to expand on how you guys know each other because that's what's going to be the fun part of this interview, that you both actually worked on a deal together. Gene was on the buy side, John, you were on the sell side. And this is also the first time on M and A Science that we have a duo who've worked together, and they were on opposite sides of the table. Maybe you can tell me a little bit about how that turned into a professional relationship.

John, Being on the sell side, it's really intimidating to have a company that has a market cap of $54 billion and at the time were 13x smaller than what they were in terms of market cap. One of the things that I found through my entire career is that you can't go with your tail tucked between your legs to the buyer and be like, okay, we're going to be successful together. You have to come in there with a level of confidence that you want to deliver success, that this acquisition actually makes sense for everybody, and let's move forward together. So one of the things I did was I basically went through the entire roster of executives as I saw them in the buy plan. I just started emailing folks and calling them, and Gene was first on the list. And I was like, hey, I'm John Morata. I'm going to be your integration lead. Wanted to spend five minutes to get to know you. And I did that with Gene, I did that with Jimmy, I did it with Ben and Mark and all these other executives that were on the roster. I think I did 20, 20 something outreach and just expressed, hey, I'm here to be as part of the team. I want this to be successful. What can I do to help make your role that much easier? So maybe it was just, it was that genuine outreach to say, I'm being acquired, but I want to help make this entire thing successful for everybody, hopefully, Gene, you saw that in me reaching out to you, just blind and saying hello.

I got to say, John, that has not happened actually in the previous acquisitions that ICE made too. So it really stood out, honestly. So John reached out to, introduced himself, walked me through what his experience was a really genuine guy. So definitely struck the core. Honestly, it was a great step just to get John more ingrained and more in the minds of the leadership team at ice. So, again, that was a great first.

Step, and that's how it started. You just, John, introduce yourself. Hey, I know you're acquiring us, but let's be friendly about it. And that sort of kicked things off. I'm surprised, John, you're not like Mike to get to get a job after this deal's done, pressing some other things that maybe of more concerning to your priorities.

I'd be dishonest if I said there wasn't other paths that I certainly could have taken same with Gene. We're probably chuckling a bit about that. But other things happen and life has its twists and turns and now I'm here at M and A Science and I'm totally loving it.

One of the things when I think of a transaction, it's the timeline that there's a whole series of events, people that get involved and it really progresses as you go through the deal. Just when you think it's over at closing, nope, it only intensifies because now you got to really execute the value driving activities through integration. I'd like to dig into that. In summary, what was the timeline of events as you progressed through the transaction.

On the Ellie May deal? It was the first foray into well, mortgage software side of how. So I had that strategy to look at. Building its mortgage portfolio with MERS was the first and then it was simplified which kind of what again the bet is that mortgages in the US are very paper and analog and ICE has been very good at trying going from analog to digital with a lot of the different kind of pieces that they built. So mortgage was the next foray and Ellie May is a great asset. When we first walked through, when we started planning, especially on the integration side and this is where we would say, hey, we need to look at what are the technologies, what are the people, what are the processes, what are the functions that we need to keep and which ones we need to integrate. Which ones do we need to. We have redundancies or duplicates in the process. So again it's really going through that and walking one by one saying hey, where do we go? What's the plan for each of these? If we're going to integrate or de duplicate, we need to figure out a timeline for it. So short term, midterm, long term. So that's really what we did. There's some conversation to figure out, hey, Ellie Mae is a unique asset. We need to go in and learn exactly what they're doing, how they process and that's the first step and that's where really John and I started walking through it and him being part of the TMO and how helping us figure out what the projects look like and how we go through each function and how do we figure out how those integrations happen. That was that very initial discussion. What are the procurement processes that you're doing today and how do we learn from that and how are we going to integrate that the most efficient way?

I find it interesting that you had an integration leader on the other side to work with to help scope that out. I didn't think that is particularly unique in this transaction.

Yeah, it was. And the funny story is we have a business development kind of team members or we had business development team members at ICE that were again very project high level oriented. I would say John and the Ellie Mae team have the kind of TMO office that ICE didn't have. They really had a transformation management office before. So again the structure going into Ellie Mae, Ellie Mae had a lot of that pretty well down packed, which is honestly very helpful for kind of the acquisition company coming in. And a lot of that John drove honestly and a lot of the team members drove at the Ellie May side. Say, these are the things that we need to look at. These are things we need to learn and have ICE learn about. And it helped a lot of kind of categorizing and carving out some of the things that we wanted to accept. So it was very helpful.

I want to hear your side, John, on the timeline events. And I think with this being mindful of a lot of companies aren't going to have a person like you that's running an integration that has a good lens across functions and understanding of how they've been integrating their acquisitions to be able to provide that intelligence to the buyer. So just thinking through of what would be some of those events on the sell side that would be ideal.

Let me be honest, I didn't hear about this until everybody in the company heard about it. So I heard about it at the exact same time as all of our other employees. That was certainly to the effect of no gun jumping rules were being broken there. But also at the same time I was running the IMO at Ellie Mae. I was just wrapping up a recent acquisition of an AI company. And so there were still a lot of things on my plate that I had to go through and manage and just close that out. The moment that I did hear about the news, which is the Q4 of 2020, it was like, okay, we got to go over all of it again. And it was perfectly fine. I had some frameworks I brought with me from prior integration work. Also I received great mentorship from the ICE side. When I began talking to more people, they said, john, the thing that we cherish the most here in our culture is just keep things simple. I had these just a plethora of PowerPoint decks and I think even Gene's first comment was like, whoa, buddy, that's a bit too much. So keep it simple. Maybe a four sentence email will probably do more than just like an entire one page deck and like okay, got it. It's about listening as well through the timeline. I was certainly listening to a lot of things that were being said from a cultural perspective at ice. Try to blend that with what we're doing at Ellie May. After things closed and we really started to plan for day one, there was a very short period there, but through that I was working again with my counterparts over at ice. So folks like Gene just helping lay out who are the key players, who do I need to put in the matrix that is going to be part of the work stream as we lay out the workstream leads and all the folks that are part of the work streams where all the moving parts. That was another set of activities we had to do after the we did the launch, which was effectively day one. We had our first a hundred days. Ajean, you and I probably built the best relationship together during that first a hundred days because there was so much to get done, not only from the financial side, but from the HR side, from the IT side. There were so many things that were moving and we were just like weaving into each other conversations throughout. And for me, I love to learn and I was learning as much about the ICE culture as much as I knew about the LMA culture, trying to find ways that we can create that bond between both companies in a way that wasn't disruptive. The worst thing you can do is create a very disruptive work life for our key folks. So as we move through that, we hit our first milestone, first hundred days and then post 100 days, it was about, hey, what are the next set of work streams that we need to work on so that we hit certain, let's say financial milestones.

Okay, so general themes I've heard from both of you. It sounds like a lot of work goes into planning. That's a big thing to take apart, really understand. I liked when you use the word deduplicating Gene, because it's understand that right away and really planning that. Then the other component was the cultural way of working. What's that going to look like and how's that going to come together? Because that's got to effectively work in a way that people are going to want to work together. And then there is the progress in terms of getting aligned on expectations of progress and making sure that everyone stays on track with those a hundred day goals. I didn't hear execution. When I think of integration, we emphasize a lot of this other stuff that when you come back to it, I'm curious if there's anything specific there like that applies. Is it majority of the work purely planning and getting that or and you do that and execution actually falls in place or there are really specific things that you had to do to drive to make sure things got done.

Planning is a big part of it. But execution and really decision execution is really the biggest piece of it too. And ICE was very good at making decisions. And when I say good again, good's kind of a, I would say it's a subjective word. But they're very quick and very nimble at making certain decisions. And I think that's one big piece that certain integrations or M and A projects don't go out so well or take longer than usual just because I think the decision making process is either long or has too many steps, too many people, et cetera, et cetera. I mean there's, I'm sure there's plethora of different reasons why it would take longer than usual. One thing that I strive for and make sure that we do is have the right people, the right leaders who have the right skills and data driven decisions, informed decisions, following the 8020 rule and figuring out what would happen if we made certain decisions and also having the authority to make that decision. That's the biggest piece that will kill a project or slow down integration when you have to go up 14 chains of command to try to get one answer. So having that authority, having the trust, having that skill set to make those decisions, you have those at key places where each of these functional and slash technical project plans are at, or these kind of exactly like John is saying, where we planned at these levels, you have one person that can make those decisions and it gets done, you execute. So I think having that is one of the biggest, I would say drivers of trying to get a successful and timely integration done is having those key people making those decisions decisions.

In terms of the pace at which we made them, there's a varying degree. Some decisions could be made within a 30 minute meeting. Some took two and a half weeks depending on the severity and the size and scope of the decision being made. What I love about working with Gene is that when we came to the question, let's call it the question about which financial system are we going to use? Gene was like, nope, we're using what I got. I was like, good, we're good to go. And there wasn't too much debate about it possibly beyond the imo, just to make sure that the chart of account and all that would work properly. But at the end of the day, it was like, no, we are the acquirer. We're going to use our financial system. I'm like, fine, that's good. Now there are other things that have that take a little bit longer, right? So that decision be Gene was probably, I don't know, Gene, maybe eight hours of some back and forth between different people. But at the end of the day, Gene was like, no, we're doing it this way. And I love that. So from my perspective in the imo, once that decision is cemented, it's documented and we go with it. That's how I like to run. Now there are decisions that take possibly three and a half weeks, multiple meetings, for example. It'd be like legal entity consolidation. We have entities in Poland, we have entities in India, so does ice. How do we bring those together? And that's a bigger scope, bigger conversation that takes three and a half, four weeks to weed out. What I like is that the agility of those folks who can make that choice and make that decision, vet it on their own, outside of the proper circle, just to make sure that themselves are on the right track. That is what I think is critical from an IMO perspective, which is the ability for folks to vet what they need to execute on that decision and then be done with it, and then we move on to the next one. From an IMO governance perspective, that's what we're always trying to drive to that decision so that we could keep moving to our next milestone.

What I'm getting is the biggest bottleneck when it comes to executing integration is your decision execution, which ultimately comes down to making decisions fast, because you don't. That's where things really get slowed down. I'm really interested now to understand how you gave some good examples, but give me a framework, give me a little bit of a step by step. I'm used to a small company environment, but in a larger company, when you have a bunch of different stakeholders, and that's the reason these decisions really get slowed down, how do you approach that? Is there certain things that you would set up in terms of steps of making a decision? What have you seen work best, especially in that larger company environment?

The responsibility of the imo, always first and foremost to deliver the best possible value from this acquisition or divestiture, whichever one we're doing at the time. What that means is, from the imo, we are always asking questions every single day, are we getting the best out of that decision? Do we have the right people at the table? This brings me actually back to. To A story that I remember which was President Eisenhower. Eisenhower, his Secretary of State was giving him a position on some particular topic for Department of State. And Eisenhower said, is this the best that you can do? So the Secretary of State mumbled and said, okay, I can do better. So he went away two days later, delivered the next version of that document. And Eisenhower read it and he said, is this the best that you can really do? And by this time the Secretary of State was getting a little peeved, but he was like, okay, fine, I'll go take it back. And he worked on it again. Five days later he came back and he showed it to Eisenhower, read it one more time, and he said, really? Is this the best that you can do? And by this point, the Secretary of State looked at him straight in the eye and said, this is the goddamn best that I can do right now with information that I have. You know what Eisenhower said? He said, great, I'll take it. So it's one of those things where you just have to make sure that everybody's working to their optimal level, making sure that decisions are being made with the best possible information that they have. And then you keep moving forward. From the IMO perspective, it's about our ability to make sure that we're governing the entire process. There's a lot of consensus driven decisions that are made at Ellie Mae and so there are a lot of things that happen in the periphery. But at the end of the day, the IMO's job is to make sure that all those conversations come together and that they congeal and that they are the documented decision that we move forward with. Why? Because there are a lot of things that happen consequent to that decision being made. And I'll hand it over to Gene because he can certainly attribute that to a lot of things that happen on the financial system side.

There's a lot of things in the IMO office help gather the right information to make those decisions quickly. So again, asking this question, having a data driven, informed decision is 100% key where I see it. And I think Kisan, I think we've had a discussion before about is it culture or is it framework? I think a lot of it is both. Framework is built by the culture of the company management team and so forth. So if you have a culture of a management team or organization where they trust their employees, it's not always the CYA kind of mentality. You have a lot of decision seekers and not a lot of decision makers. You're always. And you have a lot of decision seekers to say, hey, is this okay? Is this okay? That's where you kind of falls down. I think that's part of the culture of the company to drive that, to say, I trust you, I give you the authority, you have the right skill set, mindset and education to make those data driven decision. And then they work with people like John and the team and so forth who can gather that information and get the right decisions and then make that decision instead of trying to kind of speak the decision so that they don't want to make the wrong call. And they don't want to make the wrong call because there's ramifications. That's where I think a lot of the culture is driven from. That is if you're a ramification kind of punishing kind of authority or organization, you're going to have a lot of decision speakers and not a lot of decision makers, but you have a culture or a kind of process where you are allowed to make those decisions. And if you make the mistake, you own it, you fixed it and you move on. Then you drive that culture, then you build that framework by itself. That drives a lot more efficiencies, a lot more, I would say, quicker project timelines than if you have the other way around.

I like what I learned from both of you. I like the part around understanding what the IMO's responsibility is, which essentially is fostering that decision making and making sure that's proactively being done. And then you have a really good point, Gene, around thinking through the culture around decision making for each respected organization, which really gets into a lot of these elements that aren't as straightforward and tactical. But that aside, is there any tactical step by step approaches that you thought of or came across that could be helpful in trying to help create a structure environment to make faster quality decisions?

The way that, and this is actually done on launch day, by the way, or day one, which is by setting the workstream, let's call it hierarchy, for lack of a better term. It's all the players in the work streams. You define where the IMO sits, you define who the steering committee is and then who all the work stream is. And when you have 60 people on a call that is just to launch this entire program, most folks are wondering, where do I fit into this structure? Who do I go to if I have questions? The one thing I tried to emphasize during every launch day is this is the official set of leaders for the work streams. Here's where the IMO is and here's where our steering committee sits. But below that everybody is still making decisions on their own. Where you do not feel comfortable making a decision, just move it up to the workstream and then from there, if they feel like this is a cross workstream decision that has to be made, the IMO will step in.

Right.

That part of our job is to make sure that we keep the communication lines open among all work streams and no one is working in a silo where it is a highly impactful change that's required. Those will go up to the steering committee. So it would be things like legal entity consolidation, what is the impact to organization? What's the impact to our tax structure? Those are big. So those have to move up to the steering committee. But otherwise we try to empower the teams within the work stream to make those day to day choices. Because when you have two AR departments coming together, yeah, there will be, they're going to be working together eventually. So they might as well get used to working with each other now and making those decisions in the first hundred days. So that's the way that I feel IMO should run is the ability to provide governance and guidance. But allow folks at the day to day transactional level, let them do what they need to do because they do it best. They're in it every day. I am not. That's where I see things operating from IMO perspective.

A thousand percent agree with John, especially on that initial charter of who's responsible and who's accountable. Laying that out kind of starting in day one, you have to lay it out and be very crystal clear about who, who owns what, who's responsible for what, who do you need to communicate to. If you have questions, if you can lay all that out and communicate that in a real crystal clear way and also manage expectations about timelines, SLAs that'll make everything smoother down the road. You can't really have any gray like again, I don't really like having a group is responsible or a whole bunch of people are responsible. So you're. It's one person. One person is responsible. Yeah, you can have a lot of people who can help you inform decisions, but there's a single person accountable and that should be how you lay it out from the very beginning.

A lot of this is around the governance model to help manage decisions because you create this transparency on it. Everybody knows how it's laid out, who they need to refer to. When they have decisions they're not fully able to commit and execute right away that maybe more clarity or reference checks on, they can push it right up through that same governance model. This is good. I was expecting a real detailed formula and what you have to do to set up expectations. I was really expecting something more complex, but it sounds like it was easier in theory.

Keep it simple, keep it simple.

I think the one thing about managing expectations keeps on. You're right. There isn't really a straight formula for managing expectations because every stakeholder is different. So it's really art more than a science to say how does my stakeholders like certain information? How do they manage expectations? Yeah, I would say you'll be hard pressed to be successful if you follow a very static formula to manage all stakeholders. It is really that kind of art versus science.

Well, it's helpful even just getting clarity and how the approach should work really sets a pace because if I had to go out and do that, I would have screwed that up. So thank you. Let's go back to, to the very beginning. When do you start planning integration?

It's pre deal on the buy side. So we're planning before the actual kind of full deal is executed or right when the deal is executed. And same kind of thought process that I laid out before is you go through, you look at every function and kind of like John alluded to before, you look at all those pieces, hr, order to cash, proof to pay. You go to a legal entity, taxation, it, operations, compliance, everything and you kind of go through it as to figure out initially what the guidance is or target. Are we integrating? Are we taking what they have or are we deduplicating slash synergizing certain things? Again that's a framework that we used to go through to say these are what we are trying to achieve. Obviously things can change as we go through and as we kind of work with the different targets. But we always like to put that framework from pre deal going through it to see where we are using the diligence information we have. We'll go through and say try to make some sort of framework and I would say high level direction before we actually go in to the nitty gritty. From there obviously we will refine and figure out how to plan for that integration migration. But I think that planning starts pre initial review.

So the particular case where Gina and I worked together I wasn't brought in until after the announcement was made, at least internally to the company. There was some time for me to help prepare and think about what integration would look like prior to the official announcement being made to the street. One of the things I cherished the most about who my boss was at the time was that she was extremely open to the idea of the concepts around integration being a little bit more structured than what she's done in the past. And so she took parts of what I had in my framework and she said, I like this, but I don't like this. And so we took that framework and we broke it down into what will work. So, for example, one of the areas that she really did like was having the steering committee. The steering committee would be the core group of people who would make decisions, whether it be a cross work stream decision that had to be made. And so she liked that. But what she didn't like was that that's where the road stopped when it came to just information and dissemination of information about what the program was doing. What she said was, hey, let's take this broader. Let's do a readout to a larger audience of other stakeholders that would be part of this and want to know about information and decisions that were being made. So in a way, what we've just talked about for the past 35 minutes around decision and governance and structure was a great movement in our ability to then show that information and present that information out to the great audience. So they also knew what was going on. So that way this particular acquisition didn't seem like a little magical box where stuff went in and then you didn't know what happened in the middle and the stuff came out. What we did was we revamped the steering committee into more of a larger readout to a larger audience. And in so doing, we took those decisions Gina and I were making. We document those. We'd roll them up into this massive long email that said, here's where we are in terms of timeline. Here's where we are in terms of decisions. Here are open decisions that have to be made. And then we just expose it out to everybody so folks knew where they needed to contribute, where things were getting done, and then we just kept the ball rolling and the machine moving in that way.

A lot of detailing out planning to the point where you really get clarity on the direction creating that transparency in what the governance will approach is going to look like. What are like the Keith lessons learned? What should I do if I ever have to go through this? Make sure I don't screw something up.

You have. How much time do we have left? 10 minutes.

I got to give you a heads up. We're probably going have to do a part two.

Yeah, but Keith said the first lesson learned is you're going to mess up. There's lots to do with the integration and kind of what that fully entails is pretty much everything you're trying to put together. Two companies with all facets of front office, middle office and back office. So there are lots of moving parts and things that aren't going to work correctly. Most importantly is how you pivot, how you come back, how you fix and remediate things is really I say the key to it, to say, hey, it's going to happen. What do you need to do? What's the framework around trying to fix those things and how quickly can you go do it?

Totally agree with Gene. I'll give you a perfect example, Kisan, which is we were looking to bring together two systems that were the knowledge base between Ellie Mae and one of the other companies. And what happened was through that process we thought, okay, we can get some cost savings here if we end this contract early and then we just migrate all those records over. Somebody forgot to mention the fact that there were 90,000 closed archive cases that we still need to have because there was a lot of intellectual property and knowledge that was in those cases that we could still extract and either make it into an article, turn it into a knowledge based item for self service. There was just a lot there that we could go with and I was already pushing hard. We made a decision to migrate over and deprecate the old system by June 1st. And when we found out about this new piece of information, it would take another two months beyond June 1st actually migrate all that data over. Being in the IMO, I'm like, okay, that probably wasn't the best decision to just push hard to try to get a few hundred thousand dollars in license costs and synergy. So we had to extend another two months. Did we pay more for it? Yeah, probably than more than we should have. But we did because it was something that we didn't know at the time. But given the amount of information that we needed from those 90,000 cases, it was worth the cost because the opportunity cost for losing that would have been greater than the license fees that we had to pay. So lessons learned.

Yeah. The big takeaway I'm getting is really plan ahead, have your backup plan and think beyond your typical planning. But if this goes wrong, then what? If this person can't do what he needs to do, then who?

Yeah. Another thing is there was no blame, by the way, in my example, nobody put blame on anybody by not my house not knowing that there was 90,000 cases left that we had to go search through. It was just like, okay, new data Point we made the decision I think in four or five days to just extend the contract another two months, get the data out and then we moved on. And that's the culture that you want to instill in two companies coming together, which is, hey, to Dean's point, stuff is going to break. We're going to mess up on some things. People may withhold information. So you just factor that in and don't blame anybody and just make sure that you keep moving forward.

What was the new lesson for you, John? Because you've been on the buy side of these acquisitions, but this time around you're on the sell side. Was there any unique key lessons there?

Given that our transaction was happening during the pandemic, I couldn't do what I normally do, which is go meet everybody in person, go to Atlanta, go meet Gene. But I had to wait a few weeks for when they actually came over to us. So the lesson learned was how do I go about this where typically go out there, introduce myself and meet folks. That was something I had to learn in a different way and I think I'm probably better off for it now. Next transaction where I can actually get on a plane, I won't defer to going digital. I actually will get on the plane and go. Because there's something to be said for meeting people, engaging with them, building great professional relationships with them, making friends with them and having coffee. M and A is a very people driven type of activity.

Any other lessons out of the whole experience? Are there any big key lessons or takeaways to make it go as smooth as possible?

When Ben Jackson tells you we need to integrate our slack and teams, you get it done. I made you laugh.

Yeah, yeah, I try a lot of very specific tactical things that we learned not to do again, again, certain systems not coming together. I think the one thing too, and I think we'll talk about a different question too, is just the expecting the unexpected. Especially when you're dealing with people. Like John said, M and A is purely people. You're integrating systems and processes, but the human beings themselves are the ones running them that know the processes. And you have a whole group of people that probably won't be there in the future. That is a navigation of landmines already in the whole process. Inherently that's the one thing again, lessons learned about managing people relationships again, at the end of the day they're all people. You have to be treated like people and they need to understand how we communicate. What the future state looks like is very important. And ICE is very Good at trying to communicate as soon as possible if there are reasons to have synergies and so forth. And I do respect ICE to make sure that they do value those relationships, value the people and the skill sets they have. But again, it just might not be needed. Right. Going forward. So I think lessons learned of how we actually communicate, how we touch base with people and how we go forward with that, with kind of those conversations, I've learned a lot of lessons just on how to have that conversation, how to present certain information. So just nuances here and there every time we go through it is invaluable. Lessons learned as you go one M&A project to the next.

And I know I keep pressing for the practical how to's, but the big lesson of this interview is that it's all about the people over process.

Yeah, yeah. People are very important.

I'd say that executing an integration plan is 99% of people, you know, 1% about the framework. So if you're getting it right with the people, then the integration is going to go a lot better.

When we think of people and we talked about the time frame to get things done, how about setting those expectations like how do you determine the duration of integration? Who sets that?

Usually the timeline is as soon as possible is really initial outset, but I think it is, there's some calculus to it. How many systems are you integrating? What system, what functions are you integrating? How big is your organization? How many people? So when you're looking at that and you're calculating the scope and how many and so forth that you just add it all together. ERP with one entity might take three months. You got 12 entities and a more complex will be 12 months. Our average acquisition or target for ERP migration was about 12 months for the NYC deal, for the LA MA deal, for the IDC deal. So 12 months was on average what our ERP migration and integration, how long that's a filling system took a lot. Expand, expand the gamut of 6 to 18 months to integrate. You kind of add up all those pieces and now you're talking about functions. Also you're integrating groups and processes. So it all depends. And the one thing is how fast you can make those decision also drive what that timeline is. But I would say on average I did pretty full end to end integration in about 18 months. I would say was our target goal.

Never forget that. You also need to look at what the buy plan said for timing and the synergies that you were expected based on the buy plan. Because a buy plan is what was approved by the board, the more that you're closer to the number that is being created from value or cost synergies, you're closer to what the eventual goal is. And the IMO's job again is to derive the best an optimized possible value from this transaction. So this is where I feel strongly, and I'll emphasize this in every conversation I have, which is the imo, once we get the project going, does not mean that we recuse corporate development from their responsibility and accountability. We need to be working with them very closely to determine are we on track to what they calculated in the buy plan and if not, how do we recalibrate? Because there has to be some justification to say if we're going to make it early. Awesome. What did you do? What did you. What were the lessons learned? Can you repeat that? And then if you're not going to make it, what are the decisions that the steering committee has to make? Or how do we allocate further investment necessary to make sure that we get it done properly? So again, I would never recuse corporate development from participating and being a value added member during integration just because we're so closely tied at the hip around driving the value from the pipeline.

It all goes back to planning.

Yeah, and relationship.

Yep, that's right. Relationships. Gentlemen, we've only gotten like a third way through our outline here, but Gene, we're gonna somehow course you to do a part two of this interview and I'll be a lot quicker getting through some of our topics here, but there's more to unpack.

Yeah, no peace. I'll be happy to. Yeah, come back join for part two. So cool.

I really appreciate you doing this.

Great. I mean honestly, it's a good form for sure. And yeah, happy to help schedule some more time whenever you guys need it.

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