How to Handle Global M&A

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M and A Science. Joining me today is Pablo von Simenthal, Global Head of M and A at.

Swissport, the world's largest aviation services company.

Today we're going to talk about how.

To handle global M and A. Pablo.

How are you doing?

Good. Thanks a lot for having me.

Thanks for making this happen.

We're here live.

This is Swissport's global headquarters here in Zurich, Switzerland.

Absolutely. A couple of hundred meters away from the airport, we might actually even hear some of the aircraft taking off. So this is where the action happens.

We're going to see how good our podcasting processor is edited out or not.

Maybe in an hour, maybe in one and a half hours, the A380 will fly over our head and we'll definitely notice it.

Well, I appreciate taking time from doing deals to have a conversation with me.

Great to be here with you. As you know, I'VE listened to one or the other podcast in the past, even before we got introduced to each other. So great being part of it.

That's good to hear. Can we kick off a little bit about your background?

My name is Pablo Fons Eventhal. I'm global head of M A at Swissport. Swissport, as you mentioned, is the global leader in aviation services, which effectively means anything that happens around the passenger and around the aircraft. We're present at more than 300 airports globally. We're a company with operations in more than 50 countries. We manage a workforce of around 65,000 people globally. So very people intensive business, which obviously we'll talk about M and A, which obviously is always a key due diligence area. Also for us to really get comfortable with major investments for those who are interested in aviation, in the aviation industry. Swissport started some 30 years ago as part of the Swissair Group, how it was called back then, that's sort of the predecessor company of today's Swiss Airlines. These days Swiss Airlines is owned by the Lufthansa Group, but back then it was an independent company, one of the largest companies in Switzerland. Apart from the airline, it owned many other airlines too. It embarked on a very, very ambitious M and A strategy called the Hunter Strategy. Super interesting industry to be in. Obviously after the pandemic, the end of the pandemic, the industry experienced a very strong rebound and everyone got back to traveling.

Your background?

So my background, I've been in M and A and corporate development for the last 16 years. I started in corporate development originally, but then moved on quite quickly to M and A. I then was an M and A advisor for the next eight years or so before then moving on to corporate development. So out of the 16 years, I probably spent half of the time in a corporate environment and half of the time in an advisory role as well. I then joined the world's largest logistics company, transportation logistics company called Koenenagel. Swiss stock listed multinational, present in more than 100 countries with more than 30 billion of revenue. I think if I remember correctly, more than 6,7 billion in the US alone. So quite a massive company. I was their global head of M and A for around four years. And then two and a half years ago I was, let's say, invited to join this journey here. Joined the management team, the new owners of Swissport, on what is a very ambitious growth strategy and contribute my part to it.

A couple of interesting themes in your background. One, you flipped between the advisory slash consulting role into corporate development.

What was that like Very interesting question. I still have many friends in M and A Advisory. The main difference when I talk to them also now in more senior roles, because obviously I left when I was still more junior. The main difference is you're a principal. In my role, I'm daily in situations in which decisions need to be taken and in many cases people will look at me for those decisions. It's often as part of a team, as part of a group informed by different experts. But ultimately as an advisor, you don't need to take decisions, you need to recommend and you need to do it to the best of your knowledge. But you're not going to be around here when the acquisition is done, when the integration is in progress, and when the benefits that we're hoping to achieve through the acquisition will hopefully become reality. And sometimes obviously not. So you are a principal, you need to take decisions, you need to be comfortable taking decisions. But you're also involved much earlier in the M and A process and also much later you're part of the strategic evaluation process, which gives you much more context to an acquisition. You see it also coming much more and you're also part of the integration.

You have more accountability.

Accountability, exactly.

The last role was a public company. The current role is a private company. Is there any difference that you see between operating or executing M and A in the public environment versus private?

Couple of differences. Obviously it's always difficult to generalize and to. I want to come across specific enough so that listeners also maybe take away one or the other sort of key point and I don't stay too high level. But couple of things that come to mind specifically is, for example, when it comes to confidentiality around M and A in a stock listed company, you have a much stricter, much more mature framework around protecting confidentiality. Back at Kuhnenako we used to have defined rules of engagement. Who could be involved, who could be in the know. The need to know principle was adhered to much more closely, much, much more strictly. Obviously there was rules around when potential M and A would have to be disclosed, there were processes in place, how to react if there was leakage of information, et cetera. So that's probably one of the differences. This is not necessarily directly related to the fact that it's not stock listed, but it's a much more entrepreneurial, much more dynamic environment here.

Where'd you grow up?

I grew up in Switzerland, not too far away.

You're a native Switzerland, because that's not a common thing.

50% is probably the full answer. So I grew up here in Switzerland as a son of a Swiss father and a Colombian mother. And so that's where my first name comes from. I grew up in an environment where different languages were spoken, different cultures. We would travel to Latin America the beginning every year, then maybe every second year, every third year as we kind of grew up. So yeah, that was quite the privilege. Growing up in Switzerland is a privilege as well, but it's a bit of a bubble. So having had exposure to other parts of the world also helps me maybe sometimes nowadays. Navigating some of the Cultural Differences can.

You talk me through some of the unique challenges and rewards you've encountered when executing cross border deals?

If people ask me, are you happy in your job or what do you enjoy the most? It's probably this diversity of situations that obviously M and A inherently offers to any M and A practitioner. I am sure many of your listeners would agree. If you add then on top this global dimension where inevitably you're going to face challenges every time you enter a new market or every time you do a deal in an environment that you haven't done a deal, which obviously happens all the time, that's such a unique experience that just challenges you in an even different way. And I really enjoy that. I enjoy traveling as long as it's not too much, but I enjoy traveling. I enjoy seeing the world and getting to know people, getting to know new situations. So that's probably how I approach it overall. I see it as an opportunity also to grow as a person with regards to the challenges generally. Global organizations are typically quite experienced in managing situations where the cultural context of your counterpart is different to your own. I would also say despite being here in Switzerland and historically maybe Swiss companies have been quite Swiss, let's say this has changed in the last 10 to 20 years quite significantly. We have a lot of truly international companies in Switzerland and swissport is one of them. If you look at our global executive team, we're a very international company ourselves. And I think that also increases the awareness for some of the complexities that you're going to encounter in any big project, including M and A. The good thing is for me personally, as I've done deals in all continents essentially and as you said, more than 20 countries, you will always be surprised. Some of the countries that we're currently doing deals in never done a deal in those countries and nothing will prepare me for those new situations. What you benefit from is your experience in adapting and also anticipating some of the complexities. And I think this then also gives you the Confidence that stepping into a room, well, you're going to be surprised, but hopefully not overwhelmed. So that's how I sort of tried to approach it. And so, you know, with regards to maybe specifically how I approach or what we do in terms of being prepared or as prepared as we can be, the first step is always to try to understand the situation of the counterparty situation, as in who is the ultimate decision maker? What's the context, the economic or political context that this owner, business owner is operating in? Who is deciding, who is negotiating? What are their language skills? Do we negotiate in English or not? How experienced is that person in doing M and A? Is it the first time? Is it a private equity owner? Is it a government entity? Is it corporate? Is it a family owner? And I think that's what we do as a first step. Maybe we sit down with the full team, which consists not only of people here in my team or in Switzerland, but also people on the ground locally and in the region. And we sit down and we brainstorm, trying to anticipate as many of these complexities or challenges as possible.

Hold on, let me make sure I got this. So pros and cons. Pros is the traveling part. Sounds nice. The challenge is interesting. You mentioned that as a pro, but then you referenced it back to his professional growth. And then the challenges itself are some serious challenges which we're going to talk in more detail. And that basically there's not much that can really prepare you for this stuff. And then when you get into the preparation of handling a cross border deal, you mentioned understanding, really understanding who's a decision maker, the climate they're operating, what kind of political pressures and things like that, that they have, their language skills, common language, we're going to conversate in and then there I'm going to experience. That sound right?

Yep, absolutely.

I got a real short tension span, so I have to check myself to make sure I'm following along.

No, no, you summarized it better than I did.

And I gotta put disclaimer here too, because when I get in these conversations about culture, Pablo and I are here representing our own opinions, you know, not of any company we're associated with. And sometimes people blur it with stereotyping and things like that. Oh, hey, we're having a friend conversation. That's where we're opening this up. So don't take it personal because, you know, if people email me, and if you do go ahead and still email me, I'll take the feedback. I gotta ask in terms of cultural differences, I really want to break that down because one, it's one thing when I've interviewed folks and they've done deals in a couple different countries, but you've got a pretty broad range to hit 20 different countries. Tell me, define it. Define what are cultural differences? We have language, obviously we speak different language, but beyond that, you said it very well there.

Obviously no situation is the same as the previous one. We don't want to sound like we're using stereotypes here, but there are some patterns that over the many years that I've been doing this now in cross border M and A pretty much around the world, there are certain patterns that at least help you anticipate maybe the most likely reaction to a certain statement or to a certain action. And if the response is different to what you expected, so be it. But at least you had the mental preparedness and openness to think about how you then react also in return. So when talking about some of these patterns, then every situation is different depending who the seller is and if it's a family or private equity or whatever. But I think the differences are generally huge. So for example, you being from the US what I'd say to you listeners in the US which hopefully resonates with them is I've done several deals in the US and worked on many others which didn't happen ultimately. But one of the differences that I see, for example, when we start at the very beginning of M and A origination, my experience has been in the U.S. it's probably one of the easiest environments to start talking to someone about the potential sale of their company. In many other markets, I've experienced it as much more difficult to overcome this initial hurdle of getting to know each other, establishing contact, even first being introduced to someone. In the US I found it always super easy. People are typically okay. I've been representing global corporates, which naturally are one of the attractive buyer groups for privately owned businesses or also private equity owned businesses. So let's take that into consideration. But nevertheless, if we reach out, or if I reached out in my roles to anyone, typically the feedback in the US has always been super quick, generally nice and open and positive and constructive, let's say. And usually what I found in the US is people are generally open to hear you out, take an idea back and digest it, and then come back to you within a reasonable time frame. But generally I felt, and this is maybe a generalistic statement, but I found that people are typically open to do a good deal at the right price, which is very different from other geographies where relationship needs to be built first, trust needs to be built first. It's much less transactional than maybe in the us Moving on in sort of the deal cycle. Once you've established a first dialogue and the counterparty is willing to disclose some information. For example, in Latin America I found that confidentiality is usually a huge obstacle and issue. Maybe also it's also a trust issue. Negotiating or agreeing an NDA with Latin American sellers was not in all cases, but in quite a few cases some of the more painful experiences that I've made around NDAs. But also then it goes further than just NDAs. Also data room access to information. What kind of information is openly available in the data room? Or which information needs to be then separated into a clean room and made only available to your advisors. I found that in Latin America sellers are the most restrictive when it comes to that, which then also translates into negotiations around non compete and non solicitation clauses. Where this very same lack of trust is maybe one way of putting it also materializes then in quite a lot of back and forth around the exact clauses around those topics.

I know we're going to get into some comparison because we already covered the US and do we put Canada in there?

I think so, yeah. My Canadian colleague in my team would probably not agree to this statement. But yeah, I think if we compare it, it's probably even easier to work with.

Okay, then we got Latin America, same thing. People looked and say, hey, within Latin America you can look at the countries differently as well because it's almost like grouping Europe. What other regions would you sort of, you know, like I said, part of this just I want to go back and do at least kind of a comparison because you have a really unique experience as diverse. I want to take apart.

If we go to, let's say Middle east, for example, what comes to mind is in the Middle East Arabic countries, negotiations are much more, lets say emotional compared to, for example Asia, much more confrontational they can be. But I've made the pleasant experience that despite the fact that negotiations or also discussions of any sort become quite heated or can become quite heated quite quickly, maybe also from the perspective of a Swiss or at least 50% Swiss as I am, we try to stay calm for as long as possible. So the experience that I've made in the Middle east is that I need to be almost at the front foot in reacting or maybe even proactively be more aggressive than maybe what I would normally be. Obviously you don't do that straight away because you want to first get an understanding of the dynamics on the other side of the table, who is who and who is deciding and who plays a certain role, et cetera. But in general, when I go into a negotiation with Middle Eastern counterparts, I go into the room with the consciousness or the preparedness to be more aggressive than what I would naturally be. And we did a few transactions in the Middle east recently, and one experience that comes to mind is it was one of the best relationships in the end. But during the negotiations, you would have thought that we are very hostile, almost like calling each other out. Like you are not being solution oriented. Maybe you should leave the room. Maybe you should check with your client whether your position is really aligned with his goals to getting the deal done. Quite confrontational. Which obviously, in a nation environment, for example, or even in Switzerland, I would be very, very careful. That would be very counterproductive.

I've heard of this before. I talked to another practitioner. He said the exact same thing. He said, hey, when they shout at you, you got to shout back.

Exactly. That's probably how to summarize it. Some of this is maybe a bit of theater, but it's part of the game.

Okay, we have that. You said Asia isn't as emotional.

I have made the experience that Asia is big.

We just did an interview about Japan. I feel like that's its own of the whole world. It's its own culture definition. And then you got China, then you got India, which I think has some big differences there.

Yeah, exactly. You even have in our region, how we call it Asia Pacific. You even then have more Western societies and economies like Australia and New Zealand, which are again, very different. But no, of course, my experiences are mostly with Japan and Southeast Asia and China. So when I was at Kunanaku, we did a few transactions in China. China was back then still considered the gross market globally, where we wanted to expand into very, very quickly. At Kune Nagel, we did a $1.5 billion acquisition of one of the leading Chinese freight forwarders. That was a unique experience, but yes, yes, of course, you're right. It's a very vast region and very diverse within itself. My experience in Japan, for example, we once had a debrief meeting with our client. This was when I was with an advisory firm in Australia, and we had an inbound acquisition mandate with a Japanese multinational. Luckily, our sister firm or network firm from Japan was also part of the team advising the client. And this obviously helped us a great deal in guiding also our advisory approach and also helped a lot with translations. But I remember in this debrief meeting, after the meeting with the Australian counterparty, without thinking it through or without anticipating anything that goes kind of to my point from the very beginning, now that I have made these experiences, you anticipate much more and you think much more ahead. What maybe certain questions or certain statements can trigger as a reaction from the counterparty or even from your client. So anyways, I asked the question, so how did you find the meeting? Are you broadly aligned? What do you think are the, the biggest challenges or obstacles between the two parties positioned? I approached this as more like an open conversation, not even very structured, just a way to get temperature check and get a bit of a feedback from our client. No response. So there was literally no feedback. And it was a bit of an awkward situation where we didn't know what just happened and we didn't know why they are not answering. Essentially what happened is our Japanese client and the people representing this multinational or Japanese corporate with us in the room had no mandate to express their position as a company and they weren't comfortable sharing their own personal perspective, first of all because they weren't aligned as a group in the room and they obviously weren't aligned with their superiors back in Japan. So essentially we realized there is no way in getting any spontaneous feedback in this situation and we kind of then left it to the follow up and also to our partner firm in Japan to do the debrief once they had an opportunity to all align internally.

Consensus is like the huge thing. Absolutely whole topic of its own that you just what the process goes through to get consensus and then they'll respond.

Exactly. And then China, for example. One aspect that I would call out in China is, I mean obviously everyone knows about the importance of relationship and let's say the dining and spending time together and also you know, sometimes the drinking and all that.

Taking shots, taking shots. I heard that's like the thing like you have to take shots. And I don't know if the goal is not to blackout or if you do blackout still. Okay.

Like fortunately I was never. That's maybe the benefit of being a global corporate. We had a Chinese team, we had an Asian or Asia Pacific management team who then they already trained, they participated in that part of the relationship building. I had the privilege of not always having to participate in those activities. But you know, we did plenty of dining, we did plenty of drinking and there is a lot of cheering with, you know, glasses going on much more often than here. I think in the US it's not even a big thing. I Don't know, you probably just cheer across the table, you say cheers. And in China, people would stand up on a regular basis, multiple times through the dinner, they would walk around the table, come to you and then cheer with you. You know, on a repetitive basis. They would also pay attention that their glass is always lower positioned to yours if you're the more senior person and things like that. That I find super intriguing, super interesting. But what I wanted to call out in China is more, and you see this also in Southeast Asia, because in Southeast Asia, obviously many of the business entrepreneurial families, they have often some Chinese heritage as well, or they've been exposed to Chinese deal making and business dealings. In my experience, dealing with Chinese negotiating with Chinese negotiation is never over. And they're not afraid of doing something which at least here in continental Europe, but I think in general in the Western world, in M and A or in deal making is not seen as a legitimate way of negotiating, which is reopening or retrading, reopening positions that were previously agreed. And in China, I've made the experience that they are not afraid and they don't see it as a negative or as maybe an unethical thing to do to just revert back to a previously agreed point and just reposition themselves with regards to this point and just express a completely different position maybe in Southeast Asia more. Then we're doing a very interesting deal at the moment in a Southeast Asian country. And it's super interesting to see how then also some of the points that we thought were agreed are then positioned as misunderstandings. Not even openly saying, look, we've discussed this further internally. Unfortunately we have changed our opinion and we're no longer comfortable with this position. Then it's just positioned as a misunderstanding and rework the clause, maybe together, jointly, you walk out of the room, you send it across, a week later, you get feedback that there is no longer agreement on this point. It's just a legitimate way of doing business. And until everything is agreed, nothing is agreed.

That'd be tough. I don't have patience for that. Super painful. What about Europe? Europe boggles me because I feel like every country is so distinctly different. And I've just seen it between the French, the German, the Brits, the Italians. It's just, I don't know how they come together to do deals. But do you see that as sort of like, as widespread as what I've been exposed to?

Yeah, for sure. I mean, in the nuances, of course, there are many, many differences. So for example, we also, this is now outside of M and A. But we, my wife and I once lived in Australia for two years. Being so far away from Europe gives you a different perspective on things. And we had friends, expats, fellow expats from all over the world, but also different places in Europe. And all of the sudden you notice how similar you are as fellow Europeans. And whether you're then from Belgium or Switzerland or maybe France, we still have those friends now, even many years after us living there. And it feels like you're very, very similar. But of course there are nuances and differences. One thing that, for example, I did a few deals in France. What I find challenging sometimes in France is that they obviously that's again generalizing things, but typically they insist on French being at least in small and mid cap transactions, they insist on French being the language. The same actually is my experience in Germany as well. This is probably because we are Swiss based, Switzerland based, and obviously German and French are our official languages. So I guess people do expect you to speak some French or obviously German. We do speak spas in French, for example. In France, even our local management teams when we did this, this is my back in my time with Koene Nagel. Our French management teams, despite the fact that they were perfectly fluent in English, they insisted on having a French law firm, local law firm, French spa, French, NDA, everything in French. I think in Switzerland, because of the small size of our country, we're used to adapting to others. Whereas I think France and Germany are more used to maybe also insisting on their preference. In Germany, for example, we did a few transactions over the years. In Germany, people are still much more comfortable speaking and negotiating and dealing in German. It's a big difference. For example, when you consider that in our global executive team here, no one speaks German, or at least not native or fluent. And so then of course this creates just day to day creates some complexities. But it's deviating our approach from using this central sort of M and a lawyer resource. We need to deviate from that approach and use someone else, build a whole.

Expansive matrix on all these cultural differences. One question actually that sticks out is when you think about culture and differences, I think there's like a view of layers. You know, there's sort of like these broad things of what defines a culture at a high level. But even when I'm familiar with doing a lot of domestic deals in the US you start breaking down culture to the individual organization level in terms of their leadership style, how they make decisions and things like that. And then you can even click deeper because within the company the different departments could have different cultures. Do you sort of separate the two or is there anything like that you wrap your head around when you're approaching a deal?

As an M and A team, we are naturally going to be the intermediary between the different cultures. Internally finance team has a different culture, a different awareness of risks and opportunities due to their role as well. Legal, of course, naturally as well. Compliance, it is different again. And obviously all these work streams and then maybe also on the more risk seeking side, commercial teams, executive teams, all of these teams and people and approaches and also regional teams need to be somehow brought together and held together. And the glue is very often the M and A team who then needs to be almost the coordinator between the different roles and different opinions. And I think that's one of the main challenges also of an M and A team to stay close to everyone, close enough so that they come to you also and share their concerns openly so that you're seen as impartial. But yeah, in the end you need to make a triage as well. Which points do I now take on board and incorporate in our positions and which ones do I recommend to ignore maybe, or to adapt or adjust? These different cultures obviously do exist across companies and within the company, across regions and across functional teams as well.

And you're just trying to factor it in as much as you can to put a whole picture together.

Apart from the executive team, we're probably the team naturally. The MNA team is probably the team that knows the most people in our organization. Usually other teams, other functional teams or other regional teams. They're staying mostly within the region. Functional teams are staying mostly within their functions. Obviously that is not a true statement 100%, but it tends to be the case. Whereas we need to almost know the entire organization and also kind of be friendly with everyone and have access to people.

Teach me about the negotiations, specifically, how do you differentiate your approach when it comes to negotiations? And I'm also curious about the speed because I feel like generally in the U.S. we like to get deals done pretty fast and some countries take way longer. And I'm just kind of curious, like how does that. Do they come hand in hand, your negotiation approach? You know, we mentioned some countries have a bigger emphasis on building trust. Does that sort of impact the speed of the deal?

I think the main determining factor, and I would be interested in hearing some of your listeners and their opinion, but my experience that the main determining factor for the speed of a deal is the competitive environment. And the nature of the M and A market, whether there is cultural differences and how they affect the speed of execution. Honestly, I haven't experienced this as a major driver for sure, in certain regions you spend more time. As I said before, origination in the US is much quicker, typically one or two calls and you know if someone is open to sell or not. That's for sure. Different also recently since the market has shifted, maybe one or two years ago, I've been involved in so many deals across the regions and almost all of them have taken a long time.

So it's a big thing to adapt for is you sort of. The more gaps you have culturally, it's probably more time to get those understanding overcome. What about like cultural misunderstandings or miscommunications? How do you overcome it?

You start by being aware that these misunderstandings could occur or also the differences in communicating potential misunderstandings. Maybe in our cultural context it would be more normal behavior to just say that straight during the meeting, even. Hold on, sorry, I didn't fully understand. Can you clarify this point? Whereas in other cultural contexts, especially in Asia, I've made the experience. Of course, Asia is not just Asia, but again, in countries where maybe losing face is a stronger concept, it's typically more difficult. You may be in the wrong assumption that the meeting went very well just because nobody objected to your positions. So this is, for example, in Southeast Asia, has been my experience as a Westerner, you walk out of the meeting, you've had no open controversial discussions, and you misunderstand this as a silent acceptance of your position and you then find out only a couple of days later. And so I think once you've realized this, to your question, how do you deal with it once you've realized this happens, then you just try to anticipate it. So what we do sometimes is we then have local lawyers. So we typically use international law firms, but we then have a team consisting of local lawyers as well. We then very quickly, in particular, when it's a non private equity seller, let's say a family, we offer that they talk in local language, for example, that our lawyer walks them through an SPA or walks them through the main changes. I've instructed our external lawyer to be specifically slightly more impartial than maybe what he or she would be normally, just to gain this trust and this perception that he or she can explain things to them without taking a negotiation position in person. Meetings are more important. It's quite a lengthy process, so we try to check in with them once in a while. We try to triangulate positions as well. So if I have a counterparty that I speak to, then we make sure that we have maybe a different team member from our team, maybe a local team member, then also talking to someone else on the counterparty on the other side. And then we compare notes and we make sure that we're getting the same signals back. And then if there is differences, we try to then resolve them because we're conscious that there could be misunderstandings and that they wouldn't be proactively saying those. Those are some of the mechanics. Obviously we then try to put it on screen, we try to work on it together collaboratively. But that is typically, as I said before, more difficult.

You're teaching me how to be Swiss. That's what they say. Somebody's got to be Switzerland on the deal.

Sometimes it does. I think it does help a tiny bit the same way. We are now talking very general terms. Obviously everyone has a certain perception of people and I think the Swiss do have this justified or unjustified, but we have this aura of maybe being a bit more neutral or reliable in our position. So sometimes it does help.

That makes total sense in terms of overcoming the miscommunications or misunderstandings. The business development part still gets me because you're building a pipeline and you're running across multiple countries. How do you manage that? Like how do you manage their relationships with all these people across the world? What I want to dig into is, I feel like in the US you visit people like at the end of the day you want to spend face time to build a relationship, to build trust, to get that conversation of like, hey, can we do a deal here or not? You just suck it up and do it. Or is there maybe we have some more phone calls in between? Just teach me how to do it.

There is no way we can be centrally speaking or you know, as a, you know, from, from a central organization perspective we can be as close to our targets as maybe some of our private equity owned US competitors are. In the US we have mid sized competitors of ours that have been very acquisitive. So relationships are super important. As a global corporate, we can never be as close as some of our competitors can be. What we can do is obviously we, we do follow say a tiered approach where what I did two and a half years ago when I joined, first thing was I wanted to understand obviously who are the key targets out there? What is also the history with some of these targets? Do we have an established dialogue with some of them? Have we Even tried to purchase some of these businesses. Have we done due diligence on who have we done due diligence on, etc. So that's what I tried to understand immediately when I arrived. Then we identified the key targets, we made a prioritization, and then I started traveling. Indeed. And yes, you can't be in Latin America the same time you are in Asia, but I did travel pretty much around the world. I did go to India, I did go to different countries in Latin America, I did go to the us. You try to combine it with different meetings, maybe attending a conference, definitely meeting your local management because you want to stay close to them as well. You try to make it worthwhile. You also try to then include other people in your organization. So whenever our CEO is traveling to Latin America to meet customers, we try to arrange maybe some meetings with interesting target companies. The same in other regions, same goes for a cfo. And then of course, we rely on our local teams, regional management teams, country management teams to stay very close to these targets as well. So this is now going down the list or the level of priority. In many cases, relationships to local heroes are built through our local teams or they're even identified by local teams. They know who are they losing business, who is hiring some of our staff, or where is our best staff coming from. Which is also quite telling in terms of the commercial and the operational capabilities of these companies. So we do an approach that is based on prioritization, includes other people in our organization. Nowadays, video calls are used as well to stay in touch. But I would say maybe as a last point on this question, we have done the mistake in the past of thinking that you can replace an in person meeting with video calls. It's impossible, I maintain. Or even at the risk of sounding too traditional or conservative, I'm sure many people will agree. A handshake. What we have here in this room, being in the same room, cannot be replaced by a screen.

We're learning that.

So of course we use it as then a tool to follow up and stay close in between the in person visits. But for example, we are now talking to a very successful business in Latin America. They are in the market now. We very much like the business, it's family owned. And I started talking to the family two months after I joined two and a half years ago. And then at that point in time, of course the family said, look, we're not for sale. And we just maintained an open relationship. Two years later or one and a half years later, they started opening up and this is where we are today.

It's nice to get a local team when you have it, but for the rest of it, there's no real shortcuts. You got to hop on the plane. Give me the playbook on building that relationship. Because in America, I know you just take people to the bar, have some drinks, and then things just kind of flow pretty naturally from there. You get to know each other, about their family, their philosophy, share war stories. And I think that's sort of what I grew up around, is the approach to building that rapport and trust, to set things into motion, to do a deal. What's your experience? Because I can imagine it's gotta be broader where you're going to countries where people don't even drink. And then you got the other extreme, where they drink way more than most other countries.

It's true. The main challenge is exactly that. The main challenge is the wide range of norms and the wide range of contexts and environments that you're going to be naturally facing when you travel to all these countries. I must say I have the privilege of often having people in our global organization that I can talk to to understand the social and the business context that some of these people that I meet are in, or in many cases, I have a warm introduction. You can imagine a regional MD has met this person already. They have spoken about it. Then the next step was, okay, let me introduce you to our global head of M and A. Then I travel there, obviously, then I have the briefing from that person. And that helps tremendously. Of course, you know, you can do research, you can speak to people in your network that have been in these countries. My one source of, let's say, intelligence or just tips and tricks that I also have is I was part of this global organization, you know, in Kune Nagul, that was present in almost all the countries you would want to do business in as a Western corporate. And I can easily call people and, you know, ask them for input. That's what I do, get references, internal people that I speak to. For example, when I went to India, which is very foreign to me, I've never been, even as a tourist, I've never been to India. Then I went to India. First of all, I met several people that were introduced to me by other people in our organization. And secondly, we have several people from India that work in different parts of our organization that obviously it was super easy to talk to and get some insights.

But do you still take the same approach of getting people, getting to know people personally? Yes, that sort of Fundamentally universal. It feels like, yeah, kids, married, all that stuff. Where'd you grow up?

Sports helps as well.

I'm terrible at that part. Short tension span. No, I got the short tension span. Like I can't sit there and watch any sport.

At sports specifically. Yeah, but I mean, what Swiss people, again, talking in very generic ways. Swiss people are not typically as good as, for example, US Americans is small talk. So what I've learned those two years when we lived in Australia, how easy it is to get to know people in Australia. And the same experience I've had in the US where this initial barrier of starting to talk with someone, whether it's in the airplane or whether it's in the train or wherever, at some kind of event or bar or restaurant, there is no barrier. Almost no barrier. You can talk to everyone. And this is something that I learned over the years and I tried to maybe identifying. Sometimes it's easier and sometimes it's more difficult. I try to identify some kind of common interest. And that's why I said often sports helps. And I'm quite interested in sports and whether it's. Yeah, okay, I probably not that good at cricket, for example, but, you know, many other sports I'm interested in, so that helps. I try to be relatively broad in my scope of stuff that I'm interested in.

It's like part of M and A training is they have like improv acting. Is that a thing over here in Switzerland?

No, I've never been able to do any such training.

I had a couple years in doing this podcast. I started taking theater, stand up comedy, storytelling, and not improv. I did Meisner. It's a different acting approach, but it teaches you that stuff of just looking at someone and just. That's a cool watch. Is it a prerequisite to have a nice Swiss watch in Switzerland?

For sure, for sure. We talked a lot about differences across cultures and countries and regions. But I think what always works is just what you just did. Showing interest, whatever it is. Right. So I think that's quite universal.

All right, fair enough. It's definitely down on the fundamentals, especially when it comes to overcoming cross culture. What other tips and tricks do you have for someone like me that's aspiring to go do big cross border deals at some point in my career?

You're coming from the perspective of you've done M and A in your past. I know that M and A advisory, if I'm not mistaken. Right.

I've done everything. Most of it's domestically. I've done some cross border Company based in India acquiring a business in the U.S. but a little bit the same thing like here's your client and educating them how the climate works in the US is very different than India. I want to kind of get ahead of the learning curve of what are some of these things as I push myself and challenge myself to do more of it. Of things that may be unique that you learned from your experience that hey, be open minded about certain things. In approaching cross cultural type of relationships and the transactions themselves.

The technical stuff is pretty universal. Of course lawyers will be able to talk for hours about differences in spas across regions and across how WI insurances are more accepted in the US versus Asia or whatever it is. But in the bigger scheme of things, the technicalities are quite universal. The main part that I would highlight is probably just this awareness for different cultures, for different contexts, for different situations, maybe for different life goals, for different ways of being committed to your family, to your stakeholders, to different ways of doing business as well. I found so many times I was surprised about how, for example, different people look at compliance. Compliance with laws and regulation in some parts of the world is again seen in a more relaxed manner. It's more seen as okay, it's a guideline, but I don't need to stick to it 100% for sure not right. Whereas of course in our context, the US when it comes to bribery and corruption, for example, knows no mercy or no wiggle room. Whereas in some countries this does exist. You need to be careful that you don't say things that offend people or take them by surprise. So not judging other people and thinking twice before you make certain statements when you feel like, okay, this is maybe very different to what I would have expected. So let's be careful because maybe there is a good reason behind it, or maybe this is totally acceptable in this environment.

It sounds like mirroring is like the key skill here.

That makes a lot of sense to some extent. I like this approach as well. It helps if you are a person who doesn't want to step into the room and start shouting and everyone needs to look at you and listen to you, you better enter the room, you go into a corner, you observe, you learn, you listen to people, and then at the right moment, you then make your statement and you then define your position and then people will listen to you truly, because then whatever you say will be more powerful. If you're a person that likes this approach, but can also break out of this pattern when it's needed, or recognizes which approach is more tailored to which situation that will help you navigating those situations where you will be inevitably will be surprised.

I don't know if this necessarily is related to cross border or if it's more just fundamental, but how do you manage the coordination between different work streams like tax, finance, legal and the operations in your M and A team?

Our approach to coordinating M and A will be to many of your listeners will be very similar to what they do as well. It won't sound completely different. I think what we do is a normal project management approach where we have a project management office which in many cases is two people, one of my team members and then someone ideally locally in a regional management team or in a country management team in a senior enough position, experienced enough so that he or she knows the business well enough, knows the main stakeholders locally, knows how to get people to deliver on timelines. That's one of the challenges for a global corporate. You're coordinating different deals at the same time in different time zones. By the time we get to the office in the morning, it's almost evening in Australia. By the time the US colleagues, especially on the west coast, come online, our day is almost finished. So your day never really finishes. There is only a couple of hours where you truly can't be working 247 that you could be working. Naturally you're not going to be able to do that. So you need someone on the ground locally that can assist you in getting stuff done. Now in many cases that's not an M and a trained person, but it's for example a business development manager or a corp dev type of person who has maybe a COO role in a region or something like that. Or maybe someone who has even been in the corporate headquarters and is now in a national finance role, for example. So this is then the project management office who coordinates all the work streams. The work streams are the usual work streams, legal, finance, tax operations, commercial, it, hr, et cetera. These work stream leaders consist of global people, global roles and regional roles. One of our roles is really to leverage the learnings from other deals and to bring them into the current deal. So that's how we coordinate the day to day activities. The project management office then has typically two or three calls with all the work streams per week. In addition to that they will have one on ones with the most important work streams for sure. For example, when they're behind schedule or when we know there will be important findings, then we obviously always have external support, typically for legal, finance and tax. So this then helps to coordinate. We Then for externals, we try to use local teams, but always coordinated through central teams at our advisory firms that we know. So for example, when we do a due diligence in Vietnam, let's say one of the big four firms, which we don't know their office in Vietnam, we then make sure that we know the people centrally and that we have them involved as well. And they will do the quality assurance, which helps a lot with coordination because you're just much more efficient in terms of getting what you actually need ultimately for your decision making. The project management office then reports into the steering committee, which consists of the regional CEO, regional cfo, group general counsel and myself. The steering committee reports into the groups or the company's investment committee and ultimately into the shareholders. We have very active shareholders who are very supportive of ma want us to have a very active M and A agenda with a selective approach, but very active. And they also help us a lot and guide us as well. That's really how we coordinate the different work streams. It's obviously key part of our job, probably the most underestimated part of our job because key executives typically just see the end product and they don't see how much work goes into producing a certain deliverable, they just see the final product. They don't know how many times you had to chase person X person and how much support you had to give and guidance you had to give to person Y.

That's a lot in terms of coordinating managing which is needed, but in terms of any specific approaches to keep your team aligned on the highest priorities throughout a transaction, I think that's a challenge of its own where it fluctuates.

Absolutely. There is so much going on in the market out there that obviously M and A projects always compete for management attention, resources with other projects, organic growth opportunities. You need to have a focused approach on what is really important. Now, going back to one of my early points, being able to do this triage as an M and A team saying, okay, look in your work stream, I appreciate you could look into 30 topics. I want you to look into five topics. Then you need to take responsibility, of course, that the 25 other topics were not looked into. This requires certain alignment, of course, judgment, which alignment is necessary and which not. And ultimately how we try to provide this steering is through the calls that I mentioned through the steering committee. That's one of the tools how we try to leverage the insights from other deals that we create checklists for people to say, look, typically this is what we, we would like to understand this this and this. And of course you can always have one or two other items, but this is the other part of the core of what we do is really getting the people to focus. And there's never a one off effort. It's an iterative process. Finding out one learning or leads maybe to the next follow up and leads maybe to the realization, okay, there is a finding here that we may not have focused sufficiently on. Let's put focus on this topic. So it's an iterative process pushing your.

Teams to prioritize, making them prioritize.

Exactly.

Do you have an example of misunderstanding that you had on a deal, like a real cultural difference?

We pursued this opportunity in France and I think we didn't succeed in establishing mutual trust. Essentially the major misunderstanding was that we always talked openly and we had term sheets going back and forth. We had several meetings, including our CEO, cfo, myself, regional management teams meeting with the counterparty on different levels, including their CEO, the holding group CEO, the ultimate family, or the ultimate private owner, private individual. And somehow in the end we noticed and maybe this is a cultural element, maybe it's a personal element of that person, but we notice in the end that despite having had so many interactions, ultimately he was not willing to let go control over his company. But you know, this was not an obvious misunderstanding. We did say that we want to be able to fully consolidate, we want to be able to control the board, control the management team. But I think it was this cultural complexity that I think exists with private individuals, private owners, founder owners, at a certain point in time, after X interactions, they realize what it would actually mean to do the transaction, that it means to let go of a lot of things, social status, control over your baby, the company you built, control of what happens to your staff, your management team, etc. And then we reached a point where we said, you know what, actually what you're asking from us, we already told you months ago that we can't offer it to you. And you probably have a similar sensation that you're not getting from us what you believe you have told us before. So somehow we came to this point where we realized both that we were talking to each other, but maybe not listening or maybe not being clear on our messages or clear enough. And sometimes this happens when, you know, we talked about the mirroring a bit a few minutes ago. When you do that too much, it also creates this false impression that you are aligned. Whereas ultimately we are a corporate, we want to make money. If needed, we will reduce headcount. If needed, we will Generate synergies by letting go management team. If it's a duplication with our management team, many of these family owners have a certain desire for continuity post transaction and you try to bond or you try to establish a relationship by not being too confrontational and showing understanding. If that goes too far then you go too deep in your interactions on false premises, so to say. If that makes sense.

Yeah, I like it.

But you only realize late. Actually we were talking about different things.

That's a good example. Have you ever convinced somebody to sell their company?

Interestingly, we have 2018, if I'm not mistaken. In the US it's public. In Kuhn and Nagle we acquired a company called Quick International Courier. It was private equity owned owned by the Jordan company, Very well respected private equity firm. We got introduced through an advisor small advisory firm. We started talking and I obviously don't have an exact understanding of what their considerations were when they started talking to us. But for sure what I know is they sold approximately two years or so into their ownership of the company. We were able to offer them a deal that had a structure which provided them enough upside, enough return on their investment, but also additional upside based on an earn out structure that incentivized them to engage in this transaction with us on a bilateral basis but also allowed us to be protected enough and aligned enough in the incentives not only with the seller private equity firm but also the management team. And so that was maybe the situation that comes the closest to having convinced someone to sell in the first place. I guess you don't need to convince a private equity firm to come to sell, but we definitely made them an offer that incentivize them to sell earlier.

Than they had, but that was too good, they couldn't pass up.

Yeah, exactly.

I think other elements around it falls into things we've already covered. It's so much around building trust. At the end of the day there's some fundamental things there, but a lot of it's paying attention to the cultural nuances and being respectful. I think that's the right direction. What's the craziest thing you've seen in M and A?

The most surprising thing in hindsight that we did or that I've been part of was that we acquired again. This was a couple of years ago during COVID We did this large acquisition in China without having met the counterparty or the management team that would then form the management team under our ownership in person, not even once. It was all based on a relationship that we had built exclusively based on video conferences, having seen of the CEO not more than face to face. We didn't know what kind of person he is. It's difficult because also he didn't speak any English. He understood English was our impression, but we never really knew because there was always someone translating. He didn't know how tall is he, what's his body language, how energetic is he. It felt weird not having an understanding of who that person is. And nevertheless, again, this is public information too. This was the acquisition of Apex International by Koonagul. Huge transaction, by far the largest in Koonagles history. Based on, let's say trust as well. Obviously also based on extensive legal documentation, but based on trust built purely on basis of video calls.

The story comes up. Everybody's got a Covid experience that tends to be one of the craziest. But I remember during the time it was only pure software companies that are mostly working remote that were doing M and A, that were open about saying it at the time.

But yeah, and you know, it goes further than just relationship. It's also, you know, in our business or in logistics business, the same. Also important to do site visits. And I remember in Covid what came up was a service and I think the big four looked into that as well. Probably Covid didn't last long enough. I'm not sure if someone started this service, but it was essentially a certified way of obtaining video footage that was then certified by a credible party that it's actually true, you know, because how could you do site visits? How can you get reassurance that your equipment to handle the cargo is in good enough state that these warehouses actually exist, what the utilization is and how much cargo is in those warehouses, how clean is it, et cetera. So that's. That's super important. And that was not possible.

Opened up my eyes to a lot of interesting things about doing global M and A. Thank you so much for the time you've helped me become a better M and A scientist today.

Thanks for your interest.

Those of you still tuned in, fellow M and A scientist that listen through the whole podcast, I value appreciate you. Feel free to reach out. I love getting feedback and topic ideas. Usually I'm easiest to reach on LinkedIn. I think there's emails in this outro or in the show notes. They might have it in there too. We'll look forward to it. And 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 from 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 MNA 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.